Blina Diamonds takes control of Kimberly diamond field

Perth-headquartered diamond explorer Blina Diamonds NL has reached an agreement to acquire 100 percent control of a tenement previously held in a joint venture with Atlantic Gold Ltd in the Ellendale Lamproite field in the Kimberly region of Western Australia.

Under the joint venture agreement, Atlantic held a 53 percent interest and managed the project.

Under the sale agreement Atlantic will receive 1.5 million fully paid shares in Blina as full payment for Atlantic's 53 percent stake in the tenement.

Blina's acquisition consolidates its hold on the Ellendale diamond field and will result in a much more co-ordinated and efficient exploration strategy.

The exploration licence covers the northwestern section of the Ellendale Lamproite field and includes 20 known lamproite pipes.

Of particular note among these is the relatively diamond-rich Kimberley 18 lamproite, discovered and previously sampled by Kimberley Diamond Company in 1999.

A number of the other lamproites identified in the area also require re-evaluation. Most of these have been inadequately explored or in several cases, not tested at all.

THE FULL ASX REALEASE APPEARS BELOW.

ASX ANNOUNCEMENT 20 March 2006

ACQUISITION OF ATLANTIC GOLD'S INTEREST IN E04/813

Blina Diamonds NL (ASX: BDI) (Blina) is pleased to announce that it has finalised an agreement to acquire 100 percent control of exploration licence E04/813 located within the Ellendale Lamproite Field. The tenement includes the northwestern section of the Ellendale Field, previously covered by a joint venture agreement Atlantic Gold Limited (Atlantic) and Blina. Under that agreement, Atlantic held a 53 percent interest and managed the joint venture. Under the terms of the sale agreement Atlantic will receive 1.5 million fully paid shares in Blina as full and complete payment for Atlantic's 53 percent stake in the tenement.

Blina's acquisition of management control and the remaining share over the area consolidates the Company's hold on the Ellendale Diamond Field and will result in a much more co-ordinated and efficient exploration strategy.

As previously mentioned, E04/813 covers the northwestern section of the Ellendale Lamproite Field and includes 20 known lamproite pipes. Of particular note among these is the relatively diamond-rich Kimberley 18 lamproite, discovered and previously sampled by Kimberley Diamond Company (KDC) during 1999. KDC reported recovering 176 diamonds weighing 5.22 carats from 135 tonnes of what they considered was "heavily contaminated" lamproitic material. At the time of discovery, the pipe was considered too low grade and/or too small to be considered as a viable, stand-alone mining target.

With the development by KDC of mining operations at Ellendale Pipes 4 and 9, the establishment by Blina of a processing facility at Terrace 5 and the rapid increase in diamond prices over the last 5 years, the commercial significance of smaller diamondiferous lamproites needs to be re-evaluated. Blina believes that Kimberley 18 may have the potential to contribute ore to a central processing facility in the Ellendale area. To examine this possibility, the Company is planning to excavate a 5,000-10,000 tonne sample from the Kimberley 18 lamproite to establish a more reliable grade and gain some idea of diamond values.

Other targets of high interest to Blina also occur within E04/813. The Terrace 5 palaeo-channel crosses the southern section of the tenement and although partially eroded, it has been shown by previous explorers to be significantly diamondiferous. A number of the other lamproites identified from E04/813 will also require re-evaluation. Most of these have been inadequately explored or in several cases, not tested at all.

On a regional level, Atlantic completed a detailed[1] aeromagnetic survey over E04/813 during 2005 but did not get the opportunity to undertake ground follow-up. Blina geologists have not examined the new survey data in any detail at this stage; however several geophysical anomalies that may represent lamproite pipes have been identified.