River Diamonds Signs Option Deal With Brazilian Rio Tinto Unit

River Diamonds today announces that it has entered into an option agreement with Rio Tinto Desenvolvimentos Minerais Ltda (“RTDM”), a wholly owned subsidiary of Rio Tinto Mining and Exploration Inc regarding the exploration and development of two large prospective terrains Batovi and Alto Paraguai in the Mato Grosso State, Brazil.

The blocks include the current Alto Paraguai diamond property and the Paranatinga region.

Under the agreement, RTDM has the option to acquire up to a 60 percent interest in the properties by spending a minimum of $10 million within a four-year period. In addition RTDM has the option to increase its stake to 80 percent in each of the properties by completing a standard feasibility study that Rio Tinto submits to the Investment Committee of the Board of Rio Tinto plc together with all related reports and supporting documentation.

RTDM has the right to exercise its option to earn in this interest following a review of the exploration results generated by River Diamonds during the Initial Exploration Programme. The objective of the Initial Program will be to identify and prove the locality, morphology, and geometry of any kimberlites on the properties and in addition provide an indication of the diamondiferous content of these kimberlites.

As part of the agreement, RTDM will provide geophysical data, drilling results, sampling results, and reports on the properties carried out to date. River Diamonds will pay Rio Tinto $150,000 over a period of a year and a quarter for the data. Further to examining and reinterpreting this information River Diamonds will spend at least $1 million on an exploration programme of the areas.

River Diamonds has retained the exclusive right to develop any kimberlite deposit within the properties which do not meet the development criteria of RTDM. In this regard, River Diamonds has the exclusive right to market diamond production from any kimberlite or alluvial diamond deposits developed for its own account. 

Colin Orr-Ewing, Executive Chairman said, “We are confident that our experience in diamond exploration in Brazil combined with Rio Tinto’s expertise will jointly serve to realise the true value of these prospective projects. The joint venture will also allow us to focus our efforts on developing the other target regions within our portfolio, including our new project in Sierra Leone.”