BRC DiamondCore Ltd. - News Releases BRC Diamond Corp. - BRC Diamond And Diamond Core To Merge, Creating A Growth-Focused, African Diamond Explorer And Developer

News Releases - BRC Diamond Corp.

	July 05, 2007 BRC Diamond And Diamond Core To Merge, Creating A Growth-Focused, African Diamond Explorer And Developer
	*Johannesburg, South Africa and Toronto, Canada - July 5, 2007* - BRC Diamond Corporation ("BRC") (TSX-V: BRC) and Diamond Core Resources Limited ("Diamond Core") (JSE: DMR) announce that they have entered into an agreement (the "Pre-Merger Agreement") to merge the two companies to create a new growth-focused African diamond exploration and development company (the "Merger"). The combined entity will be named BRC DiamondCore Ltd. ("BRC DiamondCore") and will have listings on both Canadian and South African stock exchanges, with current BRC and Diamond Core shareholders holding approximately 53% and 47%, respectively, at closing. The Merger will create a growth-focused African diamond explorer, with significant production potential, that will benefit from: key landholdings and infrastructure in proven diamond producing regions of South Africa and in prospective diamond districts of the Democratic Republic of Congo (the "DRC"); a pipeline of advanced alluvial exploration projects with recently commissioned bulk sampling plants as well as early stage exploration opportunities on prolific alluvial terraces; a spread of kimberlite projects including well defined bodies moving into bulk sampling programs and numerous drill targets across extensive prospective areas; management depth with an aggregate of more than 100 years of diamond industry experience; and access to global capital markets given listings on two key resource stock exchanges and share registers with strong institutional compositions. Dr. Michiel 'Mike' de Wit, President and CEO of BRC, said "The Merger is unique in bringing together complementary assets, management teams and shareholders. By combining our two companies we will accelerate growth and capitalize on the strengths of each business in exploration and development of both kimberlite and alluvial deposits. We believe we will be positioned as a leading growth-focused diamond explorer in Africa with an outstanding endowment of mineral licences and the managerial and technical skills to bring these to production as well as access to a broad pool of capital for growth. I look forward to what we can achieve in the short and long term." Theo Botoulas, CEO of Diamond Core, added "We have spent a considerable time in assessing all of the various parties active in diamond exploration in Africa in order to source a partner with whom to grow our business, and BRC easily stood apart from the rest in terms of a complementary management team and overall fit. We are confident that Diamond Core's early stage ground can benefit from the strength of the BRC geological team and similarly, from an operational standpoint, we are enthusiastically looking forward to applying our production expertise to designing, constructing and operating bespoke recovery plants on BRC's properties in the DRC. This really is a merger based on strong fundamentals and I am grateful of the strong support shown to us by our large shareholders." Exploration and Development Assets Upon completion of the Merger, the combined entity will have a broad suite of landholdings in South Africa and the DRC with an excellent spread of near production projects and early stage exploration ground across both kimberlite and alluvial areas. BRC DiamondCore's near term objectives will be to focus on generating cash flow and maximizing value from its various alluvial projects, including the following: Silverstreams (South Africa) -- With the recent commissioning of a 670 tonnes per hour ("tph") bulk sampling plant, Silverstreams is one of Diamond Core's most advanced exploration projects. Located on the northern bank of the Orange River in the Northern Cape Province, Silverstreams had been subject to previous test mining with good quality alluvial diamonds recovered from both the Primary and Rooikoppie gravels. Diamond Core has undertaken an extensive drilling program, including 426 percussion drillholes, to determine the extent and volume of both Primary and Rooikoppie gravel horizons. Two bulk sample trenches were recently excavated to more precisely determine the gravel structure, grade and diamond value. The results of the historical drilling and current bulk sampling are currently being reviewed with a view to producing a mineral resource estimate. Kwango River (DRC) -- This project of BRC consists of eight exploration permits on approximately 160 kilometres of the Kwango River covering an area of 2,150 square kilometres. This drains the Chitamba-Lulo kimberlite cluster in Angola and diamonds are known to occur within the active river channel as well as on flats and terraces within the river's flood plain. In 2006, a total of 642 manual and 35 excavator pits were completed by BRC along with 125 auger drillholes. These have generated a preliminary understanding of the extent, thickness and depth of the gravel horizons in anticipation of a bulk sampling program currently being designed as a priority by the two companies. Uitdraai (South Africa) -- Located contiguous and to the south west of the Silverstreams project, the focus at Uitdraai is on an ancient alluvial gravel terrace on the southern bank of the Orange River. Five bulk sampling trenches are planned in conjunction with the construction of a 670 tph exploration plant to be initiated in late 2007. De Kalk (South Africa) -- The first ever diamond discovered in South Africa, the 21.25 ct brownish yellow "Eureka", was found in 1866 at De Kalk. The De Kalk terrace has been drilled and a geological model created for the alluvial gravel paleochannel. Management is planning surface infrastructure, including the construction of a 670 tph exploration plant to be undertaken in parallel with the Uitdraai project. The combined kimberlite projects of BRC DiamondCore, which represent the longer term potential for the business, include the following: Paardeberg East (South Africa) -- A number of kimberlite bodies are known to exist on the Paardeberg East property with Diamond Core's current focus being on PK1 and PK3. Various historical bulk sampling and trial mining activities have been undertaken on PK1 by prior owners with variable results. As such, Diamond Core is currently undertaking a best practices bulk sampling program to determine diamond grade, size distribution and diamond values in the various zones of PK1. By April 2007, Diamond Core had dewatered and stabilised the pit slopes in the existing PK1 pit for bulk sampling operations to commence. The 50 tph trial mining/bulk sampling facility at Paardeberg East, which was commissioned in April 2007, is intended to also be applied as a regional bulk sampling/trial mining facility for company operations in the Free State and Northern Cape. Lubao (DRC) -- BRC's Lubao project consists of 14 exploration permits over an area of 5,025 square kilometres in the Kasai-Oriental province, historically the largest diamond producing region of the DRC. The geology of the region represents an extension of the Kasai Craton and the area has never been explored using modern techniques. Management believes the region is highly prospective and has undertaken stream sediment sampling and 11,000 line kilometres of airborne magnetic surveys. 21 priority targets have been identified by BRC for first pass drilling. Tshikapa (DRC) -- Totalling 9,210 square kilometres in the Kasai-Occidental province, BRC's Tshikapa project is located within the prospective Kimberlite Emplacement Corridor which extends northeastward from Angola. Historically, significant volumes of good quality diamonds have been produced from alluvial deposits in the Tshikapa area. However, exploration for primary kimberlite sources has been limited and was never conducted using modern technology. Ground work undertaken by BRC in the 2006 field season identified 53 drill ready targets and the assessment of the alluvial potential over these properties is also ongoing. Skeyfontein (South Africa) -- Prospecting by De Beers in the late 1990s located at least four kimberlite fissures on the property. Diamond Core has undertaken an exploration program including soil sampling and geophysics which is being supplemented by reverse-circulation and diamond drilling to locate further kimberlite bodies. Diamond Core has additional prospecting permits in the immediate area. Additional alluvial opportunities include the Sanddrift, Muishoek and Koa Valley projects in South Africa along the existing or historical courses of the Orange River. Sanddrift and Muishoek are immediately adjacent to the Silverstreams project, with the Koa Valley project in proximity to the town of Pofadder in the Northern Cape. In the DRC, additional exploration permit applications have recently resulted in several permits being awarded. These are located in the north of the country and cover some 3,890 square kilometres where alluvial diamonds are being produced by artisinal miners and the geology represents an extension of the Mboumou Craton from the Central African Republic. Other South African kimberlite opportunities include the Strydpan and Kuiltjiespan projects, as well as the kimberlite potential on Sanddrift, Silverstreams and Uitdraai. Generally, these project areas have seen less historical kimberlite exploration and Diamond Core intends to undertake a methodical exploration program of stream and soil sampling and geophysics for target generation to be followed by trenching and drilling, as warranted. BRC's projects in the DRC include both wholly-owned permits and those held under option agreements with local partners. After taking into account a required 5% government interest upon conversion to exploitation permits, BRC expects to retain an economic interest of between 80% and 95% for the significant majority of its permit holdings. Diamond Core holds the majority of its alluvial projects in partnership with two Black Economic Empowerment consortia, the Sefalana and Selang Consortia, with legal ownership split equally with each holding a 50% interest. As financing is being undertaken by Diamond Core, ultimately 85% of cash flows, once capital has been repaid, will accrue to the benefit of Diamond Core. Similar ownership and financing arrangements are being put in place for the kimberlite projects. Importantly, both BRC and Diamond Core benefit from existing in-country operations providing for good relationships with local communities, various government departments and all necessary service providers. Additionally, BRC DiamondCore will be able to utilize its strong logistical capabilities throughout south and central Africa. Management believes these relationships and expertise will allow for compressed planning and development times relative to competitors. Management and Board The complementary nature of the current BRC and Diamond Core management teams will provide for a combined organization with broad strengths including both exploration and geological skills to identify and delineate deposits and development and production capabilities to deliver maximum value from these projects. Senior management of BRC DiamondCore is expected to include the following: Mike de Wit (President) -- Mike recently joined BRC from DeBeers, where he spent 29 years in various roles, including recently as exploration manager for Africa and general manager within the DRC. Mike has a PhD from the University of Cape Town with a specialization in the alluvial diamond distribution of western South Africa. Theo Botoulas (CEO) -- Theo has guided Diamond Core through its relisting and restructuring, including the merger with Samadi in 2006. He has a total of 18 years of mining, asset management and financial industry expertise, following from an MSc in Mining Engineering from the University of the Witwatersrand. Craig Campbell (CFO) -- A chartered accountant, Craig brings more than 10 years financial experience with both private and JSE listed companies. Danie van der Merwe (Engineering and Operations) -- Danie has extensive experience in the diamond mining sector in the areas of metallurgy, engineering and mining production. He previously managed Saxendrift on the Middle Orange River for Trans Hex and the Koidu Kimberlite Project in Sierra Leone. Danie holds a National Technical Diploma in Mechanical Engineering, and has completed numerous supplementary courses including courses in metallurgy, diamond recovery systems, as well as safety and management. Fabrice Matheys (Geology, kimberlite) -- Fabrice holds an MSc in exploration geology from Rhodes University in Grahamstown and has 16 years of field experience most of which was with De Beers. He has an intimate knowledge of the DRC and has been working there for the last three years. Edmond Thorose (Geology, alluvial) -- Edmond graduated from the University of Toronto with a BSc.(Hons) degree and also holds an MBA from York University. Edmond has nine years of exploration experience in gold and diamonds and has been working in the DRC for the last two years. Hano Hamman (Geology, South Africa) -- Hano is a registered member of the South African Council of Natural Scientific Professions and holds an honours degree in Economic Sedimentology from the University of Stellenbosch. He has worked as a consultant to numerous local and international companies before joining AIM and ASX listed Dwyka Diamonds as Exploration Manager South African Operations in 2005. In 2003, he was employed as a Senior Exploration Geologist at the Fucuama project of Trans Hex in Angola. BRC DiamondCore expects to maintain a rapid development trajectory by focusing its senior management at or near the operations including having Mike de Wit based in Kinshasa, DRC and Theo Botoulas in Johannesburg, South Africa. The board of directors of BRC DiamondCore will be reconstituted on the Merger with four representatives from each of BRC and Diamond Core being appointed. The appointees are expected to be Simon Village (as interim Chairman), Mike de Wit, Theo Botoulas, Roger Davids, Greg Hunter, Arnold Kondrat, Richard Lachcik and Mike Prinsloo. These individuals provide a broad range of expertise, including broad resource sector and diamond industry experience, project management, financing, commercial and corporate governance skills. Growth and Value Strategies The growth and value strategy of the merged entity will be articulated and more clearly defined by the President and CEO of BRC DiamondCore taking the following into account: structuring the merged entity into clearly defined kimberlite and alluvial exploration divisions, each with its own clearly defined objectives, business plan and budget; analysing the exploration portfolio of the merged entity to optimally focus and prioritise the projects; identifying and acquiring additional exploration rights in prospective areas in close proximity to the current portfolios both in South Africa and in the DRC; aligning and optimising the administration structures and systems of both companies; and identifying and analysing potential acquisition targets which would supplement the current portfolio of alluvial and kimberlite assets and where the technical and managerial skills of the merged entity would add value. In order to accelerate the expected synergistic benefits of the combination, as well as demonstrate the commitment to this venture, BRC and Diamond Core are entering into an engineering services agreement with immediate effect whereby Diamond Core will assist in the scoping, design and construction of a bulk sampling diamond plant for BRC's use on its Kwango River project and elsewhere in the DRC. By constructing and commissioning this modular plant in South Africa and providing operator training before air freighting it to the DRC, the companies expect to significantly shorten the lead time to commissioning an operation in central Africa. This will fast track development of the DRC projects ahead of the planned Merger. Details of the Transaction The Merger is to be implemented by way of a court-sanctioned scheme of arrangement under the provisions of Section 311 of the Companies Act, 1973 (South Africa), pursuant to which BRC will acquire all of the outstanding shares of Diamond Core in exchange for BRC shares. At closing, all Diamond Core shareholders will receive 1 BRC common share for every 24.5 Diamond Core ordinary shares held. BRC shareholders will continue to hold their existing BRC common shares. This exchange ratio is reflective of the trading values of the two companies prior to Diamond Core's cautionary announcement on June 4, 2007. The combined company will be renamed BRC DiamondCore Ltd. BRC currently has outstanding approximately 13.6 million common shares. Diamond Core currently has outstanding approximately 296.2 million ordinary shares, which will be exchanged pursuant to the terms of the Merger for approximately 12.1 million BRC common shares, thereby resulting in a pro-forma BRC basic shares outstanding balance of approximately 25.7 million common shares. Therefore, based on the number of BRC and Diamond Core shares currently outstanding, current BRC and Diamond Core shareholders will own approximately 53% and 47%, respectively, of the combined entity. Diamond Core also has outstanding approximately 24.9 million listed options with a strike price of R2.00 that expire on September 30, 2007, prior to the expected closing of the Merger. These options may result (depending on whether they are exercised prior to their expiry) in the further issuance by BRC of up to approximately 1 million BRC common shares. The terms of the Merger contemplate the exchange of Diamond Core's outstanding employee options for stock options of BRC which, assuming all such Diamond Core options are still outstanding at closing, will result in the issuance by BRC of stock options to purchase a total of approximately 0.67 million BRC common shares. Diamond Core also has a deferred consideration agreement which may result in the issuance of up to approximately 35.2 million ordinary shares of Diamond Core contingent on the profitability of certain acquired assets in the first full year of their commercial production. An additional approximately 1.44 million common shares of BRC will therefore be reserved on closing of the Merger for potential issuance pursuant to this deferred consideration agreement. Each of BRC and Diamond Core has agreed to not solicit a competing offer to the Merger and to use their best efforts to obtain all necessary consents and approvals to effect the Merger. Each company has also agreed to pay a break fee to the other party under certain circumstances. In addition, each company has granted the other party a right to match any competing offer that may arise. BRC and Diamond Core have received support in favour of the Merger from Diamond Core's large institutional shareholders. The Pre-Merger Agreement between Diamond Core and BRC will not constitute a firm obligation to complete the Merger or a firm intention on the part of BRC to make any offer to the shareholders of Diamond Core, until the Exchange Control Department of the South African Reserve Bank shall have given all approvals required to be given by it in connection with the Merger and the transactions contemplated therein, and if the approvals are subject to conditions, the conditions are acceptable to BRC and Diamond Core, acting reasonably. The closing of the Merger will also be subject to typical conditions, including the approval of Diamond Core shareholders at a meeting expected to be held in the fourth calendar quarter. The board of directors of Diamond Core has agreed to recommend the transaction to its shareholders, subject to its fiduciary obligations and the receipt of a favourable fair and reasonable opinion for which Venmyn Rand (Pty) Ltd. has been appointed. BRC's board of directors has approved the transaction. Other transaction approvals include competition authorities, the TSX Venture Exchange and the JSE, for which applications are in the process of being prepared and filed. Advisors BRC's financial advisor is RBC Capital Markets. Diamond Core's financial advisor is River Group. Qualified Persons Mike de Wit, President and Chief Executive Officer of BRC, is the "qualified person" (as such term is defined in National Instrument 43-101) who supervised the preparation of and is responsible for the technical information in this release relating to BRC's projects (being the DRC projects referred to in this release). Hano Hamman, Group Geologist of Diamond Core, is the "qualified person" (as such term is defined in National Instrument 43-101) who supervised the preparation of and is responsible for the technical information in this release relating to Diamond Core's projects (being the South African projects referred to in this release). About BRC BRC is a Canadian-based diamond exploration company active principally in the DRC. Led by a management team with extensive experience in the DRC, BRC was one of the first companies to identify emerging diamond opportunities in the DRC and today has a commanding land position, directly controlling approximately 8,458 square kilometres and retaining a further 10,922 square kilometres through option agreements on three separate exploration properties. These properties are located in some of the most prospective diamond regions of the country. Banro Corporation, BRC's largest shareholder with a 27.5% interest in BRC, is a mineral exploration company focused on the DRC. BRC is listed on the TSX Venture Exchange under the ticker "BRC". About Diamond Core The objectives of the South African-based Diamond Core group of companies are to conduct systematic greenfields diamond exploration programs and to bring to account economically viable diamond discoveries, which result from the exploration programmes, as well as through the acquisition of assets considered uneconomic or marginal by others and which are value-accretive to shareholders. Diamond Core believes these assets can successfully be brought to account using its technical skills, entrepreneurial spirit and low cost operating structure. Diamond Core is focused on, and currently active in, the Northern Cape Province of South Africa. Diamond Core is actively involved in two kimberlite exploration projects, the Paardeberg East Project, situated 40 km west of Kimberley, and the Skeyfontein JV, located some 20 km south east of the town of Postmasburg. Through its acquisition of Samadi (SA) Pty Ltd., Diamond Core has a suite of three alluvial projects: Silverstreams, Uitdraai and the De Kalk Project. Diamond Core also has a suite of five applications with the Department of Minerals and Energy Affairs for additional prospecting rights in the Northern Cape Province. Diamond Core is listed on the JSE Securities Exchange in South Africa under the ticker "DMR". For further information, please contact: In Johannesburg: James Duncan, Russell & Associates, 27 11 880-3924 In Toronto: Arnold T. Kondrat, Executive Vice President, or Martin D. Jones, Vice President, Corporate Development, BRC Diamond Corporation, at (416) 366-2221 or 1-800-714-7938. Cautionary Note Concerning Forward-Looking Statements This release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that BRC and Diamond Core believe, expect or anticipate will or may occur in the future (including, without limitation, statements regarding mineral resources, future diamond production, future revenue, exploration results, potential mineralization and future plans and objectives of BRC and Diamond Core) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of BRC and Diamond Core based on information currently available to them. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of BRC and Diamond Core to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on such companies. Factors that could cause actual results or events to differ materially from current expectations include, among other things, failure to complete the Merger as a result of one or more of the closing conditions not being fulfilled (including failure to obtain all required approvals), the possibility that future exploration results will not be consistent with the expectations of BRC and Diamond Core, changes in equity markets, changes in diamond markets, foreign currency fluctuations, political developments in the DRC or South Africa, changes to regulations affecting BRC's or Diamond Core's activities, uncertainties relating to the availability and costs of financing needed in the future, delays in obtaining or failure to obtain required project approvals, the uncertainties involved in interpreting exploration results and other geological data and the other risks involved in the diamond exploration and development industry. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, BRC disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although BRC and Diamond Core believe that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

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