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Distributed: Nov 5, 2007

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Sydney, Nov 5, 2007 (ABN Newswire) - In a significant expansion of its business, DiamonEx Limited (ASX: DON) has acquired a known diamondbearing exploration project, the Sloan 1 and 2 kimberlite pipes, in the United States of America. Announcing the acquisition today, DiamonEx Managing Director Mr Dan O'Neill said the US acquisition provided a second stage in the company's strategy of acquiring and developing advanced diamond exploration projects on a global basis.

The Brisbane-based diamond exploration, mine development and mining company is currently bringing into production the Lerala diamond mine in Botswana. Mining is scheduled to commence at Lerala in November 2007 and diamond production in early 2008. The Lerala Mine is expected to produce an average of 330,000 carats per year over 10 years.

In the United States, DiamonEx has taken out an option to purchase the mineral rights to 160 acres (64.75 hectares) containing the Sloan 1 and 2 kimberlite pipes, in the State Line district of northern Colorado. DiamonEx has also acquired more than 1000 acres (>400 hectares) of prospective diamond properties in the State Line and adjacent Happy Jack districts and has identified more than 150 prospective targets in the region where the company will undertake exploration with a view to making new kimberlite discoveries.

"DiamonEx has maintained rapid momentum in bringing the Lerala mine into production less than four years after the company listed," Mr O'Neill said. "We now plan to accelerate even further with the United States project which is potentially bigger than our successful initial development in Botswana.

"Like Lerala was when DiamonEx acquired it, the new project is considerably advanced in that the kimberlite pipes are known to contain diamonds. It is located in the United States which represents 50% of the world's market for gem diamonds, yet there are no diamond mines in the country."

Mr O'Neill said that, in making the acquisition, DiamonEx had engaged as consultant Mr Dan Hausel, former Deputy Director and Senior Economic Geologist with the Wyoming Geological Survey and an authority on diamonds in the United States, who had advised that:

- Since 1998, North America has become a major source of gem-quality diamonds and could possibly become the world's largest producer.

- The greatest potential for the discovery of commercial diamond deposits in the US lies within the Wyoming Craton within which the Colorado-Wyoming State Line district is located.

- The principal primary diamond deposits in the United States are located in the Colorado- Wyoming State Line district.

- The State Line district is the largest kimberlite district in the US.

- More than 40 known diamond pipes and dykes had been identified in the State Line district in the past.

- The interconnected Sloan 1 and 2 kimberlite pipes and the transitional zone between, cover a surface area of 9.3 Ha and have been estimated by previous explorers to contain a non-JORC resource of 27.5 Million tonnes to a depth of 122 metres. Bulk sampling undertaken by previous explorers suggests grades ranging from 1.2 to 59.8 cpht (information from published data but are not JORC-compliant figures).

- 2,698 tonnes of hypabyssal kimberlite were processed from a 187 metre long, 2.5 x 2.5 metre adit excavated in Sloan 2 by a previous explorer in 1994. The average grade reported was 12.68 cpht, assuming a 2mm cut off. The largest stone recovered was a 5.51 carat white octahedron. This adit explored approximately half the know length of the Sloan 2 portion of the Sloan Ranch kimberlite complex.

- Bulk sampling from the Sloan 1 and 2 kimberlites have yielded a total of 39,616 diamonds over the 1980's and 1990's. The primary source of diamonds at Sloan is eclogite.

- Recovered diamonds from past exploration and mining operations in the State Line district ranged from microdiamonds to a 28.3 carat gemstone that reportedly sold for over US$300,000. Gem-quality macrodiamonds greater than 5 carats in weight recovered from past operations in the district include stones of 5.5, 6.2, 9.4, 10.5, 11.9, 14.2, 28.2 and 28.3 carats and an octahedral chip estimated to have fragmented from a 80 to 90 carat stone.

- Diamonds from the former Kelsey Lake diamond mine in the northern portion of the State Line district were primarily white to colourless stones. Coloured stones trended towards honey brown. Large canary yellow stones were also recovered including some smaller pink and blue diamonds.

- The State Line district is located along the edge of the Wyoming Craton. This Craton encloses the two largest kimberlite districts and the largest lamproite field in the US along with several hundred kimberlitic indicator mineral anomalies. The Wyoming Craton is part of the larger North American Craton that continues to the north under Canada where several hundred kimberlites have been found in the past few decades including a group of commercial diamond deposits.

Mr O'Neill said that DiamonEx would proceed immediately to a large diameter drilling programme which would provide bulk samples that would be evaluated for grade, with the aim of establishing a JORC-compliant Resource.

Mr O'Neill said that the company's primary focus was getting the Lerala Mine into production. "We continue to be committed to our ongoing exploration effort in Botswana and will allocate appropriate additional resources to the Sloan evaluation process", he said.

Global diamond supply deficit

"The company's US acquisition is based not only on the deposit's production potential but also on the extremely positive outlook for producers in the world diamond market," Mr. O'Neill said. "Stockpiles of diamonds that dominant producers maintained for many years are now believed to be virtually eliminated. Demand is expected to rise at 4 to 5% a year over the next 7 years at a time when supplies are expected to actually decline. The world is facing this sustained undersupply because there are not enough new diamond mining projects in the global pipeline to meet demand. Against this background, diamond prices should increase strongly, a trend that could be accelerated if demand from China and other emerging markets moves in the same way as it has for metals.

"We plan to proceed rapidly to a feasibility study and associated exploration in the United States. With cash flow expected to commence from the Lerala mine in early 2008 , we will be in a strong position to pursue our growth strategy based on advanced, high potential projects in Botswana, the United States and globally," Mr O'Neill said.


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About Diamonex Limited

DiamonEx is an emerging diamond producer having developed a 330,000 carat per year diamond mine at Lerala, in eastern Botswana. The mine is 100% owned and is located in an area that produces up to 30% of the worlds diamonds by value. The company also owns 15,000 sq km of mineral rights in Botswana which it is actively exploring for diamonds, as well as a 9.3 hectare diamondiferous kimberlitic pipe in northern Colorado, USA, which it is currently evaluating for grade and value. DiamonEx is listed on the Australian Stock Exchange (ASX), the Alternative Investment Market in London (AIM), and the Botswana Stock Exchange (BSE).

Contact

Dan O'Neill (Managing Director)
+61 7 37208944 (Office)
+61 7 37208988 (Fax)
+61 407596942 (Mobile)

Greg King (Chairman)
+61 7 37208944 (Office)
+61 7 37208988 (Fax)
+61 411473730 (Mobile)
Email: diamonex@diamonex.com.au

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