ALLAN BARRY REPORT ON CANADIAN DIAMOND EXPLORATION 12TH EDITION October 9, 2007 Welcome to the 12th edition of our report on Canadian Diamond Exploration. Earlier this year, we mentioned seeing a trend develop that looked like the three-year bear market for diamond stocks had ended in the last quarter of 2006. This trend reflected the stock price lows that the group of companies featured in this report hit in late 2006 when compared with prices in the first quarter of 2007, when there was significant improvement in almost every company. We viewed this as a sign that the beginning of the recovery phase had started and the next major move would be a more bullish trend. In addition, it would appear that supply and demand of rough diamonds is pointing toward stronger diamond prices. These two trends coming together is no coincidence and the remaining months of 2007 and early in 2008 is a likely time to see stronger stock valuations of companies involved in the diamond mining industry. The balance of supply and demand of rough diamonds is tipped toward higher prices, as demand is stronger and growing at a faster pace than supply coming from annual diamond production from mining. In addition, it looks like the gap between supply and demand will continue to grow and gain momentum in the next few years. Based on global projects in advanced exploration and mine development stages, and current mines nearing the end of their mine life, it looks like this flat supply will stay that way for the next decade and most likely well beyond that timeframe. While supply has been flat, demand is growing at a faster pace than production from mining operations each year. It is likely there has been some stockpiling of diamonds in the past that have been coming into the market for the last few years to fill the gap between supply and demand or diamond prices would have taken off dramatically. Stockpiled diamonds can be turned into cash and that is why they are mined. It is doubtful that this source is that big; in fact, this source is probably getting smaller each year with strong demand buying whatever comes into the market, especially in the larger stone sizes. Some speculation has been that De Beers is the one with the stockpile. De Beers has been the dominant producer of rough diamonds for over 100 years and if any group is sitting on a stockpile, they would be the prime candidate. While this could be a possibility, if it is them their actions seem to indicate that they are running out. Currently they are spending around two billion dollars developing two mines in Canada. If they are sitting on a stockpile why would they bother to spend two billion dollars when they could just sell the stockpile? Actions speak louder than words and this speaks volumes. An overwhelming argument is that if they have been sitting on a stockpile, they must see that source getting smaller and they need new sources of stones; otherwise why are they spending so much money on new mines. On the other hand, if De Beers is not the source of diamonds coming onto the market to fill the gap between supply and demand, then who is? We feel that this is not overly important because no group has a better handle on the diamond market than De Beers. They clearly understand the supply and demand situation and also the volume of rough diamonds coming onto the market and, again, their actions are telling a story. With the money they are spending on new mines, it is pretty clear they don’t have a great deal of concern of any stockpiled diamonds that could come into the market or they would not be in a hurry to start new mines. If they didn’t think the market was going to buy, they would not take the risk of spending billions of dollars. The bottom line is if De Beers or any other group were sitting on a significant stockpile of diamonds De Beers would have a pretty good idea. Their actions to spend a couple billion to start new mines tell us they are not worried about a stockpile of diamonds coming onto the market. Supply from annual mining is flat and this looks to be the outlook for many years. A stronger argument for increased prices of diamonds is the demand outlook. The largest market for diamond jewellery is America and this market has been growing for many years. The health of consumers in America has an impact on demand for diamonds. Some economists feel that with recent jitters in the stock markets globally, America could be headed toward a recession, as they were a leader in the corrections. One of the arguments of why the markets have fluctuated dramatically was the housing market weakness of the last couple of years. Yes, we agree that the prices of houses had gotten overheated and prices needed to correct and this correction has caused financial pain. However, if you look at corporate America (primarily the S&P 500) these large companies are in healthy shape with strong earnings. The economic health of these companies says a lot about the employment prospects of workers throughout the country. Employment is at multi-decade highs and basically anybody who wants to work is working. As long as people are working and interest rates are at historically low levels, consumers will continue to consume. Against this backdrop it is difficult to see a recession coming any time soon. Based on these arguments it looks like demand from America should stay healthy in the coming years. If one looks outside America at emerging economies you will find a major source of future demand for diamonds. China and India are the key engines of emerging economic growth. If these two economies continue to grow as aggressively as they have been for many years, so will their demand for diamonds. The growth from these two countries has played a major role in the impressive price moves in many commodities. The demand growth for commodities will be similar to the demand from these two countries for diamonds as well in the future. The reality is that the marketing of diamonds into these countries has really just begun. Until the last few years marketing diamonds was not that important because the amount of potential consumers had not grown enough. As wealth is created, there is a growing consumer base in these countries that can afford diamonds and evidence so far is that as wealth is created consumption is growing at a robust pace. Over 2000 years ago India was the first place diamonds were found, so diamonds are not something new to the Indian people. Now India is the diamond cutting capital of the world. They have really monopolized turning a rough diamond into a finished stone ready to be made into a piece of jewellery. As wealth is created in India they are becoming a bigger consumer of the stones that they help turn into jewellery. Indians have for many years been a major consumer of gold – adorning themselves with this precious metal is an integral part of the culture. Diamonds are starting to play a growing role. China and India are not the only sources of new and rapidly growing source of demand for diamonds. In the last few years the price of oil has been extremely strong and has created a great deal of wealth in the Middle East. Dubai is quickly becoming the economic hub of this region and its powerful growth is a reflection of growing wealth in the region. The demand for diamonds in this region is also very powerful. It is more than reasonable to argue that demand from these emerging markets of China, India and the Middle East will play a growing role in the demand for diamonds. With these strongly growing new sources of demand and the economic health of the more mature markets it is reasonable to expect significant demand growth over the coming years. For many years there has been speculation that demand would grow at a strong pace while supply stayed flat and this would cause around 5% annual increases in prices of diamonds. It isn’t a stretch to see a few years over the next decade when prices spike upward by 10% or more. An important reason we follow trends in diamond prices is that the trend in stock prices seems to closely follow a similar trend. At the same time as we are seeing a more bullish market for diamond prices, it also seems that diamond stocks are poised to follow. Generally speaking, in the mining business small exploration companies are the ones that have historically been the ones that go out and make the major new discoveries. The companies we have picked have the potential for significant future growth because they have all made discoveries with significant potential. And in a more bullish market exploration success will be rewarded handsomely. In addition, due to a few years of a tough market, diamond companies’ valuations are excessively undervalued relative to their realistic potential. While the market has not been kind to these companies, they have improved their chances for success by continuing to move their projects forward in the face of a tough market. It looks like the sentiment is headed toward a much more bullish trend. With undervalued market values and projects with significant realistic potential, these companies are primed for exceptional growth. Our Diamonds In The Rough As we mentioned earlier, in the coming months we think the market for diamond exploration stocks are heading toward a more bullish trend. As we are still currently in the recovery stages, the companies we follow are still extremely undervalued relative to the realistic potential of their projects. We will begin this section with a new addition to the group of companies we follow and then feature some of our past selections again. All of our other companies not featured in this section will have updates in the “Report Card” section. A new addition Sanatana Diamonds Inc. Sanatana has a focus on diamond exploration in an area around Great Bear Lake that is northwest of Yellowknife, Canada. They have spent the last few years doing all the work to prepare for drilling, mainly geophysics and surface sampling. These efforts have recently resulted in their first kimberlite discovery. We are not shareholders of the company. They began their search in this area by getting involved with a very large claim block covering several million acres. One issue a company has to figure out when they have such a large land package is to do regional work to narrow down the search and find the key ground to focus exploration efforts. Detailed exploration work to narrow the search includes geophysical work and surface sampling. Surface sampling that finds diamond indicator minerals is one of the most effective techniques to narrow the search. Diamond indicator minerals come from the upper mantle and make their way to the surface via a kimberlite. Thus diamond indicator minerals have to have a source kimberlite; focusing exploration in areas that contain high counts of indicator minerals is a very sound way to prioritize drill target selection. They have gone through the stages of large land acquisition followed by exploration work to narrow the search that resulted in drill target selection and now they have found a new kimberlite. They found diamond indicator minerals in close proximity to this discovery. This suggests a very good chance of the kimberlite being a diamond bearing kimberlite if indeed this is the source kimberlite of the diamond indicator minerals that were found in the surface samples. From a big picture perspective the recent discovery tells them their methods are effective and they have many more areas with diamond indicator minerals in the surface to focus future drilling on. Kimberlites are always found in clusters and there are usually on average 20 or more in a kimberlite field. They have found a new kimberlite within an area with a great deal of diamond indicator minerals and this gives them a very good chance to find several more kimberlites. We look forward to the diamond testing of their first kimberlite and then future drilling. Sanatana’s stock symbol is STA and the shares trade on the Toronto Stock Exchange Venture Market. They also trade on the London AIM Exchange and the symbol there is SAN. Their website is www.sanatanadiamonds.com. On their website you can find past news releases and additional information to do your own due diligence. Updates on some of our past picks Diamonds North Resources Ltd. Diamonds North had another successful season of exploration drilling on their Amaruk project with the discovery of 11 new kimberlites. They also did additional work on a couple of their discoveries from last year with one of those being bulk sampled this year. Their exploration season is almost over and we hope to hear more details of their drilling efforts. Most importantly we are awaiting the lab results for diamond recovery on the various kimberlites. We are shareholders of the company. The company feels they have the realistic potential of finding a large number of kimberlites at the Amaruk project and this year’s drilling suggests that is an achievable goal. In the diamond exploration business, the discovery of new kimberlites is always an exciting event as there is the potential that what has been found could be very impressive. Another exciting event is when a bulk sample is taken from a diamond bearing kimberlite to better understand the grade potential. The company has achieved two milestones this year: additional discoveries and a larger sample from a past discovery. In the group of new discoveries, 5 of the 11 kimberlites were found near the Qavvik 1 kimberlite, which is the past discovery currently being bulk sampled. In addition, 4 of the new discoveries were found in an area with high quality diamond indicator minerals in surface samples. If these are the source kimberlites that the indicator minerals came from it gives them a very good chance of being significantly diamond bearing. One of the discoveries was found in an area with several untested targets that remain to be drilled. The remaining kimberlite is called Umingmak 2. It was found near Umingmak 1, which was one of the diamond bearing kimberlites from last year. So far they have 16 kimberlite discoveries with results pending from further testing of last year’s discoveries and the diamond testing from the 11 discoveries from this year. In addition, they indicated in their recent news release announcing these new discoveries that they have hundreds of targets that remain to be drilled. It is obvious they are onto a significant cluster of kimberlites. Some kimberlite clusters can reach over 100 in the cluster and they have demonstrated they have that kind of potential on the Amaruk project. In the coming months we look forward to the results from the testing of all their various kimberlites. So far it definitely looks like they are onto something very significant at Amaruk. Determining how significant they are will be partially revealed in the pending test results. It is safe to say they have a kimberlite cluster that has kimberlites with size potential and the potential of being significantly diamond bearing. They have set the stage to pass several milestones in the future and this year’s work is an even more impressive breakthrough than last year’s efforts. Diamonds North’s stock symbol is DDN and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.diamondsnorthresources.com. On their website you can find past news releases and additional information to do your own due diligence. Indicator Minerals Inc. Indicator Minerals Inc. has two projects in Nunavut in Canada’s Arctic that they are drilling this year. Their Darby project is their most advanced with five kimberlites found last year. This year they have added an additional four new discoveries. At the Barrow project, they are nearing the end of the drilling season, so it remains to be seen if they will get the holes drilled that they had planned. We are shareholders of the company. At the Barrow project, they are rushing to test a couple of targets because they are located in proximity to where they had found a highly diamond bearing kimberlite boulder in past surface sampling. If the boulder is representative of the kimberlite it came from, and they are able to find the kimberlite with their drilling, this could add another compelling project in the area to complement the Darby project. Their Darby project is what initially caught our interest because of the size of their Iceberg kimberlite discovered last season. Large kimberlites can have variable grades in different portions of the kimberlite. The testing last year was very small and when small amounts of drill core are tested the main thing we look for is if diamonds are present. To get a clearer idea of the realistic grade potential, much larger tests are needed from various areas of the kimberlite. This year’s drilling has included another hole drilled into the Iceberg kimberlite that will hopefully reveal more about the variable grades of diamonds in various portions of this large kimberlite. They have also found four new kimberlites on this project and all the kimberlite from this year’s drilling will be sent for diamond recovery. In this season’s drilling, they had to rely to a large part on testing geophysical targets, and they have been testing various kinds of magnetic targets. This is encouraging because some highly diamond bearing kimberlites can have subtle magnetic responses and if they only tested the highly magnetic targets could miss more subtle features that could be highly diamond bearing kimberlites. Another very encouraging effort that the operator Teck Cominco did this year was to conduct an extensive surface sampling program to recover kimberlitic indicator minerals. Indicator minerals are a very useful means to assist in the exploration for diamond bearing kimberlite as they help prioritize key areas with highly prospective diamond indicator minerals to focus drilling. Combining geophysics and diamond indicator minerals helps significantly in the search for new diamond bearing kimberlites. These new samples obviously won’t be used in this year’s drilling but should play a major role in target selection for next year’s drilling. We look forward to the results from the surface sampling in the search for diamond indicator minerals as this will help understand next year’s drilling campaign. This year’s pending results have the potential of adding to the profile of this project. Indicator Minerals and Teck Cominco are spending a lot of money and energy on this project and are doing a very thorough job to get an idea of its realistic potential. So far the potential is clearly showing this project has the potential of discovery of several kimberlites with large size and significant diamond potential. Indicator Minerals’ stock symbol is IME and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.indicatorminerals.com. On their website you can find past news releases and additional information to do your own due diligence. Peregrine Diamonds Ltd. Peregrine recently announced the results from the largest bulk sampling program they have completed thus far on the DO27 kimberlite located in the Lac De Gras region of the Northwest Territories of Canada. In addition, they are awaiting results from a preliminary technical assessment and the evaluation of diamonds from the bulk sampling. We are shareholders of the company. During the last three winters they have completed three bulk samples of varying sizes. In 2005 they did 151 tonnes. They did 548 tonnes in 2006 and 2520 tonnes in 2007. These samples came primarily from the main lobe and consistently came back with a grade around 0.90 carats per tonne. Based on these samples, they have a pretty good understanding of the grade in carats per tonne in the main part of the kimberlite. In order to get an idea of the value per tonne they need to have a grade in carats per tonne as well as a grade in value per carat. Once these two values are known then one can come up with an estimate of the value per tonne. The above samples have established a fairly sound estimate in the grade in carats per tonne. The diamonds from the 2007 sample have been sent for valuations on a per carat basis. The parcel of diamonds from the current sample is much larger than in past tests and thus will add confidence to the valuations on a per carat basis. The company is also awaiting the results of a preliminary technical assessment (PTA). This PTA could be as important as the grade in carats per tonne and value per carat. The assessment is a more thorough look at the pre-washing tests that were announced earlier this year. This kimberlite is a very soft kimberlite and early tests demonstrate that it was very amenable to washing prior to dense media separation. The first test used moderate water pressure and in some levels of the kimberlite, the water was able to wash away most of the kimberlite. This could play an important role in that it could reduce the amount of rock going through the dense media separation plant. With less material going into the DMS plant, the plant doesn’t need to be as large and this could have a big impact on the economics of bringing the project into production if the economics prove it viable. By using different water pressures, it would affect the amount of “waste slurry” and also could start to reveal if it is in fact a more gentle method for recovery of the larger stones. The larger stones have a big impact on the profits in a diamond mine and any effort that improves the recovery of these stones is very important. As mentioned earlier this PTA is very important; although it wouldn’t change the number of diamonds in the kimberlite, it could very significantly affect the amount of kimberlite going into the dense media separation plant and could play a big role in the economics of the project. The DO27 kimberlite is the company’s most advanced project. It has passed several milestones and is now moving onto the kind of tests that could prove its potential of becoming a future mine. Obviously more work is needed to determine the economics but so far it is going in the right direction. In addition, the company has a large portfolio of projects that have a great deal of exploration potential. They have a large land package in the Lac De Gras area of the Northwest Territories of Canada. This region is home to the Ekati and Diavik diamonds mines. There is an old saying in the mining business that the best place to look for a new mine is where an old mine was found. This area has two mines so far and DO27 looks like it has good potential, so we are looking forward to more work on that kimberlite and their exploration efforts. The combination of their exploration and development work has them well positioned for growth. Peregrine’s stock symbol is PGD and the shares trade on the Toronto Stock Exchange. Their website is www.pdiam.com. On their website you can find past news releases and additional information to do your own due diligence. Shear Minerals Ltd. Shear Minerals recently announced partial results from their 400 tonne bulk sampling work and the results look very promising so far. Although this Churchill project is in the eastern Arctic region of Canada, it is in close proximity to the community of Rankin Inlet that has deep water access. We are shareholders of the company. Whenever a new kimberlite is discovered and proven to contain diamonds, the quicker they can get a sizable tonnage sample out, the better. The main reason is that diamonds are very small in the host kimberlite rock. If a kimberlite has one carat per tonne, that is a very healthy grade. One carat is 0.20 grams; due to the small size of the diamonds compared to a tonne of kimberlite, it is really important to get a reasonable number of tonnes tested in order to get a realistic estimate of the carats per tonne. In many places in Canada, due to their remote locations, moving a 400 tonne or larger sample is very expensive. Due to the logistics of Shear’s project, even though it is in the eastern Arctic, it does have certain advantages. As mentioned earlier, it is in close proximity to Rankin Inlet, where there is an airport and deep water access for using large ships to move rock and equipment. In addition, it is not a long distance to Churchill, Manitoba where there is rail access. These logistical advantages play an important role, not only in the exploration stages, but will also play a big role in the economic evaluation of anything they find. They have been exploring this project for a few years and last year was a real breakthrough for the company. Up until then they had found several kimberlites but those kimberlites were only slightly diamond-bearing at best. Then, last year they found some much more promising kimberlites. The 400 tonne sample comes from one of these discoveries and so far the diamonds recovered and the carats per tonne are looking very promising. In addition, the potential for overall tonnage also looks good based on work done to date. They will need to do a lot more drilling to get a clearer picture of the tonnage of the kimberlite but if they continue to get good results on the carats per tonne the next important steps will be larger samples to add to the confidence of the carats per tonne estimates and further drilling to delineate the kimberlite. The Kahuna kimberlite is not their only kimberlite. They have found other kimberlites that show good potential as well. In addition, they have a very large area where they have a great deal of diamond indicator minerals. This area has the potential for many more discoveries based on the large area of indicator minerals; it is unlikely they have found all the source kimberlites of the indicator minerals from surface sampling. They have a lot of room for growth based on their potential for new discoveries and the further assessment of their past discoveries. Shear’s stock symbol is SRM and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.shearminerals.com. On their website you can find past news releases and additional information to do your own due diligence. Snowfield Development Corp. Snowfield recently completed the extraction of 500 tonnes of kimberlite from the Mud Lake kimberlite and will be sending that off for dense media separation and this will lead to diamond recovery. In addition, exploration drilling is focused on testing around areas with unique diamond indicator minerals found in surface sampling. We are shareholders of the company and a consultant to the company. On the bulk sampling front this is the most important milestone for the company. When a company makes a discovery of kimberlite and has done small tests of kimberlite to determine if diamonds are present, the next important step is larger testing. In general, once a kimberlite has proven to contain diamonds and if good sized macro diamonds are found in small tests, the recovery of more and larger stones is a function of sample size. In order to get the value of a kimberlite on a per tonne basis, two things need to be known: what the grade in carats per tonne is and what the value of the diamonds per carat. In most kimberlites worldwide, samples larger than 500 tonnes are needed to get these two answers but even a test of 500 tonnes can usually give a pretty good idea of the grade in carats per tonne. In addition, once you know the grade estimates from a test of this size, it can be determined how big of a sample needs to be taken in order to get the second answer on value per carat. Recently there has been a change of the focus of target selection from testing mainly geophysical targets toward drilling in areas with elevated counts of unique diamond indicator minerals. The Mud Lake kimberlite was found in close proximity to an area where elevated counts of indicator minerals were found in surface sampling. A new area north of Mud Lake has also found areas with elevated counts of indicator minerals in surface sampling and will be the focus of drilling. We look forward to results from the bulk sampling effort, as it will start to give clues about the realistic grade potential of the Mud Lake kimberlite. In addition, the exploration for new kimberlite discoveries has the potential of changing the profile of this project quite significantly. The combination of these two efforts has the company well positioned to pass significant milestones. Snowfield’s stock symbol is SNO and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.snowfield.com. On their website you can find past news releases and additional information to do your own due diligence. Our Report Card We started this report midway through 2005 in what had been around a two year period of a poor market for diamond related companies. Stock price performance had been poor and the entire year of 2006 had continued this trend. Toward the end of the year the various companies we follow had reached very poor levels but in early 2007 we saw an improvement in the first quarter that had showed significant improvement in share prices of several of the companies we follow. During this period we noted in the report that we felt that we were seeing signs that made us believe a more positive market was near. Then during the second quarter a significant sell-off of stocks throughout the world happened in the month of August 2007. This saw a lot of weakness in many mining related companies and the diamond related stocks suffered as well. Another reason for our optimism that a recovery and the start of a bullish markets was near for diamond stocks had to do with improving prices for diamonds during most of 2007. We feel it is not a coincidence that when it looked like diamond stock prices were bottoming and looking to get more bullish, diamond prices were getting stronger. Even though the last couple of months have been challenging for diamond stocks, we still feel a more bullish market is near. And as we mentioned earlier, based on the outlook for supply and demand imbalance that suggests much higher prices for diamonds, we feel that a parallel bullish market for companies exploring for diamonds will happen as well. The various companies we follow have the potential for significant discoveries and have moved forward in the face of a challenging market. Whenever an industry goes through a bear market, the following bull market is led out of the doldrums by those companies that stayed focused and determined during the tough period. This takes character and conviction on the part of the management and the shareholders of the companies. And when the next bull market comes it is usually those groups that are the most highly rewarded. As always the companies are listed in alphabetical order and the prices are in Canadian dollars. Past performance of our Diamonds In The Rough Aber Diamond Corp. First featured in Aug.15/2005 edition, price on that date $38.75 Second feature in Feb.28/2006 edition, price on that date $42.90 Third feature in Feb.19/2007 edition, price on that date $43.86 Current price $39.14 Aber has not been a “diamond in the rough” kind of company for several years but in our opinion they are still an undiscovered gem when it comes to larger mining companies. We have them in the report as a model for diamond exploration companies that want to grow into much larger companies. They also started as a small diamond exploration company like those featured in this report. The success of finding the Diavik diamond mine and maintaining their 40% interest through the mine development stages turned them into a diamond mining company. The profits from mining diamonds enabled them to purchase Harry Winston; one of the most well known retailers of high end jewelry in the world. The combination of mining diamonds and also being a retailer has them in a strong position for growth, especially as diamond prices look to be strong for many years into the future. As diamond prices improve this will add to their earnings growth potential and it looks like the company has a strong future. We have often mentioned that they are an example to us of what can happen to a small diamond exploration company that makes a major diamond discovery. We are not shareholders of the company. Aber’s stock symbol is ABZ and the shares trade on the Toronto Stock Exchange. Their website is www.aber.ca. On their website you can find past news releases and additional information to do your own due diligence. Arctic Star Diamond Corp. First featured in Aug.15/2005 edition, price on that date $0.24 Second feature in Feb.28/2006 edition, price on that date $0.26 Third feature in Jan.2/2007 edition, price on that date $0.26 Fourth feature in Feb.19/2007 edition, price on that date $0.36 Fifth feature in Apr.16/2007 edition, price on that date $0.36 Sixth feature in July 17/2007 edition, price on that date $0.20 Current price $0.15 Arctic Star has been having a challenging year in 2007 on several fronts but in our view they still have a strong portfolio of projects. In the spring of 2007 they drilled their key Credit Lake project in the Northwest Territories of Canada in the Lac De Gras area. The past drilling they had done had been focused on testing geophysical targets with no success in drilling into a kimberlite discovery. One good thing that did come out of this year’s work is it seems that the company now realizes that geophysics is not helping them. In some areas geophysics can work very well but one problem that can arise is if the ground being explored has a lot of magnetic noise in the country rock it can throw them off the trail. In that kind of a challenging area more drilling in areas with elevated counts of indicator minerals in the surface sampling has a much better chance for success. We hope that future drilling in the Credit Lake area is focused in areas where they have found high quality diamonds indicator minerals. The quality of their indicator minerals is why we would not give up on this project and with future drilling focused on areas with the minerals in the surface samples, they could be rewarded. They are also involved with another project as a small percentage partner with Metalex and we will have more on that project when updating Metalex later in this report. The third project area we are following is their joint venture with Diamonds North in the Arctic but it doesn’t look like they will get drilling done on that project this season because it has been a shortened work season due to poor weather. Winter is the peak season for exploration on the ground in Ontario followed by spring being the peak season for their Credit Lake project and the summer months for their ground in the Arctic. Our hope is that they get some good fortune on these various projects and this time next year they will have had a year much better than this year. We are shareholders of the company. Arctic Star’s stock symbol is ADD and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.arcticstardiamond.com. On their website you can find past news releases and additional information to do your own due diligence. Ashton Mining of Canada Inc. First featured in Oct.20/2005 edition, price on that date $1.09 Second feature in Feb.28/2006 edition, price on that date $1.26 Third and final feature in Aug.14/2006 edition, price on that date $1.17 Final trading price $1.14 Now that Ashton has been taken over by Stornoway, we will keep them in the report only for comparison purposes. From now on we will also use the final trading price on their last day of trading in place of a current price. Contact Diamond Corp. First featured in Oct.20/2005 edition, price on that date $0.55 Second feature in Feb.28/2006 edition, price on that date $0.35 Third and final feature in Aug.14/2006 edition, price on that date $0.41 Final trading price $0.40 Now that Contact has been taken over by Stornoway, we will keep them in the report only for comparison purposes. From now on we will also use the final trading price on their last day of trading in place of a current price. Diamonds North Resources Ltd. First featured in May 30/2006 edition, price on that date $1.00 Second feature in Oct.19/2006 edition, price on that date $0.83 Third feature in Jan.2/2007 edition, price on that date $0.72 Fourth feature in Feb.19/2007 edition, price on that date $0.81 Fifth feature in Apr.16/2007 edition, price on that date $0.93 Sixth feature in July 17/2007 edition, price on that date $0.86 Current price $0.70 We have presented our current update previously in the report so no need repeating here. We are shareholders of the company. Diamonds North’s stock symbol is DDN and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.diamondsnorthresources.com. On their website you can find past news releases and additional information to do your own due diligence. Hudson Resources Inc. First feature in Jan.2/2007 edition, price on that date $0.77 Second feature in Feb.19/2007 edition, price on that date $2.19 Third feature in July 17/2007 edition, price on that date $0.89 Current price $0.72 Hudson has a very interesting kimberlite that has a lot going for it; specifically, they have already found a sizable stone of almost three carats in the limited testing done so far. Their Garnet Lake kimberlite in Greenland has a significant challenge as well. The challenge is that this kimberlite is quite dense and therefore it presents challenges in diamond recovery from this kind of kimberlite. Normally, what makes diamond recovery from its host kimberlite rock relatively easy is that in most kimberlites the diamonds are much denser than the host rock and this enables using dense media separation to recover the diamonds. The Garnet Lake kimberlite is unusually dense and this is going to require some work to figure out. It could be as simple as adjusting the crushing before it goes into the DMS plant to maximize diamond recovery. They have their own DMS plant on the property so they have the ability to try and tweak things and test those tweaks to see if it fixes the problem. If they aren’t able to maximize recovery, there are experts that work on these kinds of problems in the mining business. Perhaps it will take some kind of novel idea to overcome this density issue. The bottom line is the company needs to work hard on this because the kimberlite has already proved to carry large sized stones and at the end of the day there is a much bigger problem a diamond company can have: no larger stones in the kimberlite. They have the DMS plant so they can work on solving the riddle and we will be watching closely how things go on the diamond recovery. If they get good answers on grade and recovery they could see a lot of growth. We are shareholders of the company. Hudson’s stock symbol is HUD and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.hudsonresources.ca. On their website you can find past news releases and additional information to do your own due diligence. Indicator Minerals Inc. First featured in Aug.14/2006 edition, price on that date $0.76 Second feature in Oct.19/2006 edition, price on that date $0.70 Third feature in Jan.2/2007 edition, price on that date $0.45 Fourth feature in Feb.19/2007 edition, price on that date $0.44 Fifth feature in July 17/2007 edition, price on that date $0.48 Current price $0.355 We have presented our current update previously in the report so no need repeating here. We are shareholders of the company. Indicator Minerals stock symbol is IME and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.indicatorminerals.com. On their website you can find past news releases and additional information to do your own due diligence. Metalex Ventures Ltd. First featured in Jan.9/2006 edition, price on that date $0.84 Second feature in Feb.28/2006 edition, price on that date $0.70 Third feature in Jan.2/2007 edition, price on that date $0.48 Fourth feature in Feb.19/2007 edition, price on that date $0.62 Current price $0.39 Metalex has a lot of key ground in the Attawapiskat region of Ontario where De Beers is developing the Victor diamond mine. This area has a lot of exploration potential and so far Metalex has found a few kimberlites. They started a bulk sample on their T1 kimberlite but they have been halted as they await a permit to continue. This is a very important issue because in this area the Victor kimberlites don’t have a lot of stones per tonne nor a high grade in carats but what they do have is extremely high quality diamonds that garner the highest value on a per carat basis of any primary kimberlite in the world. This is very exciting but to really appreciate these issues large bulk samples are needed to understand the grade in carats per tonne and value per carat. Not being able to do these bulk samples adds a big hurdle to advancing kimberlites found in this area. In the company’s recent news release they indicated they are making progress on the permit front which really revolves around them coming to terms on development from the local Attawapiskat First Nation and other affected first nations in the area. De Beers was able to come to terms with the first nations groups and we are hopeful Metalex will be able to do so as well. Resolving this issue will have a big impact on exploration and thorough testing of any kimberlite discoveries, so we think this is a major catalyst to unlocking value. Until this is resolved, things seem to be in limbo and this is important to realize when evaluating the company; the main reason we aren’t giving up on them is because of the potential for more discoveries like the Victor kimberlites with extremely high quality diamonds. We are shareholders of the company. Metalex’s stock symbol is MTX and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.metalexventures.com. On their website you can find past news releases and additional information to do your own due diligence. New Nadina Explorations Ltd. First featured in May.30/2006 edition, price on that date $0.76 Second feature in Jan.2/2007 edition, price on that date $0.245 Third feature in Feb.19/2007 edition, price on that date $0.20 Fourth feature in Apr.16/2007 edition, price on that date $0.295 Fifth feature in July 17/2007 edition, price on that date $0.23 Current price $0.175 New Nadina was able to get some drilling done this summer on their Monument project in the Lac De Gras area in close proximity to the Ekati and Diavik diamond mines – Canada’s two largest diamond mines. The results so far have shown that this project has a lot of potential but we would like to see more aggressive work done as we think the project warrants aggressive drilling. They have known diamond bearing kimberlites that need a lot more drilling to understand their sizes and diamond grades. In addition, they have high quality indicator minerals that warrant more exploration to search for their source kimberlites. We look forward to the results from the work done this summer and really look forward to more aggressive work on this project in the future. With more aggressive work, this project has the potential of being a very significant diamond project in the near term. We are shareholders of the company. New Nadina’s stock symbol is NNA and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.nadina.com. On their website you can find past news releases and additional information to do your own due diligence. Peregrine Diamonds Ltd. First featured in Aug.14/2006 edition, price on that date $2.75 Second feature in Oct.19/2006 edition, price on that date $1.60 Third feature in Jan.2/2007 edition, price on that date $1.45 Fourth feature in Feb.19/2007 edition, price on that date $1.89 Fifth feature in Apr.16/2007 edition, price on that date $1.92 Sixth feature in July 17/2007 edition, price on that date $1.64 Current price $1.18 We have presented our current update previously in the report so no need repeating here. We are shareholders of the company. Peregrine’s stock symbol is PGD and the shares trade on the Toronto Stock Exchange. Their website is www.pdiam.com. On their website you can find past news releases and additional information to do your own due diligence. Shear Minerals Ltd. First featured in Aug.15/2005 edition, price on that date $0.32 Second feature in Oct.20/2005 edition, price on that date $0.28 Third feature in Jan.9/2006 edition, price on that date $0.30 Fourth Feature in Feb.28/2006 edition, price on that date $0.36 Fifth feature in Jan.2/2007 edition, price on that date $1.30 Sixth feature in Feb.19/2007 edition, price on that date $0.85 Seventh feature in July 17/2007 edition, price on that date $0.61 Current price $0.51 We have presented our current update previously in the report so no need repeating here. We are shareholders of the company. Shear’s stock symbol is SRM and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.shearminerals.com. On their website you can find past news releases and additional information to do your own due diligence. Snowfield Development Corp. First featured in Aug.15/2005 edition, price on that date $0.13 Second feature in Jan.9/2006 edition, price on that date $0.13 Third feature in Feb.28/2006 edition, price on that date $0.12 Fourth feature in Oct.19/2006 edition, price on that date $0.14 Fifth feature in Jan.2/2007 edition, price on that date $0.155 Sixth feature in Feb.19/2007 edition, price on that date $0.31 Seventh feature in Apr.16/2007 edition, price on that date $0.315 Eighth feature in July 17/2007 edition, price on that date $0.295 Current price $0.20 We have presented our current update previously in the report so no need repeating here. We are shareholders of the company and a consultant to the company. Snowfield’s stock symbol is SNO and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.snowfield.com. On their website you can find past news releases and additional information to do your own due diligence. Stornoway Diamond Corp. First featured in Jan.9/2006 edition, price on that date $1.18 Second feature in Feb.28/2006 edition, price on that date $1.17 Third feature in Aug.14/2006 edition, price on that date $1.16 Fourth feature in Oct.19/2006 edition, price on that date $0.95 Fifth feature in Jan.2/2007 edition, price on that date $1.16 Sixth feature in Feb.19/2007 edition, price on that date $1.12 Seventh feature in July 17/2007 edition, price on that date $0.97 Current price $0.73 Stornoway has pending news on several of their projects that include a joint venture project with Shear Minerals called the Churchill project that we discussed earlier in the report in the update on Shear Minerals. In addition, they have had another good season of work on their Aviat project further to the north of the Churchill project. Another project with pending news is their project near Repulse Bay also in Nunavut, Canada as is Aviat and Churchill. They have new discoveries and further testing on the Repulse Bay and Aviat projects and we look forward to these results. In addition to these projects, they also have pending results on the advanced testing on their Renard kimberlites in Quebec. And recently they announced a drilling program on their project in Botswana, Africa. This is one busy company and good results from any or a few of these projects could really help them meet their growth goals. We are shareholders of the company. Stornoway’s stock symbol is SWY and the shares trade on the Toronto Stock Exchange. Their website is www.stornowaydiamonds.com. On their website you can find past news releases and additional information to do your own due diligence. What makes the Allan Barry Report Unique For the last 13 years, the editor of this report has had a career as a consultant to publicly traded junior exploration companies. This experience has provided a unique opportunity to learn, from an insider’s perspective, the challenges that junior exploration companies face. Additionally it has opened doors to meeting a very accomplished group of people. Spending this time as a consultant to junior exploration companies has provided a unique perspective that is an asset few analysts or newsletter writers possess. In Closing We would like to take this opportunity to thank you for taking the time to read this report. We hope this information proves to be informative and helpful. We ask the reader not to post this report on any website for at least three days after you receive it and that if it is posted to post the entire report without any editing. We invite our readers to pass on our contact information to anybody they feel may be interested in receiving this report or future reports and we would be glad to add them to our email list for future publications. There is no charge for this publication. In order to be added to our email list we prefer to have your name, phone number and email address. You can call us on our toll free number at 1-877-574-4575 or locally at 604-530-4940 or email allanbl@shaw.ca with the above information. Regards, Allan Barry Laboucan, Editor & Writer Allan Barry Reports Disclaimer: The information included in this Allan Barry Report on Canadian Diamond Exploration, is for information purposes only. No statement or expression of opinion, or any other matters herein, directly or indirectly, is an offer, solicitation or recommendation to buy or sell any securities mentioned. The information contained in this e-mail is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does the editor Allan Barry Laboucan or his companies, or affiliated companies, assume any liability. We do not receive or request compensation in any form in order to feature companies mentioned herein. The editor may have equity positions in companies referenced in this newsletter, or offers consulting services to some of these companies and will notify the reader of these positions or services provided in the section of the report on each individual company. The editor his personal company or affiliated companies, disclaims all responsibility and accepts no liability (including negligence) for the consequences for any person acting, or refraining from acting, on the information provided in this publication.