Copy of article in Mining News today:Iron-clad deal for...

Copy of article in Mining News today:

Iron-clad deal for UKD
Michael Quinn
Wednesday, 4 October 2006
UNITED Kimberley Diamonds has paid a total of $1 million in cash and shares for iron ore leases in the Pilbara region of Western Australia that reportedly contain up to 119 million tonnes of mineralisation grading more than 60% iron.

The tenements lie near BHP Billiton's Mining Area C and Hamersley Iron's railway and were bought from DFD Rhodes. Consideration for the deal was $200,000 cash and 5 million UKD shares (at a deemed price of 16c), plus a 1.5% gross royalty.

According to UKD, previous work by Goldsworthy Iron identified 19Mt of Marra Mamba iron ore at Camp Hill grading 62.8% iron, while at Fork North, the work delineated 100Mt of Brockman ore grading plus-60% iron.

Phosphorous levels at the two prospects were put at 0.057% and 0.135%, respectively, and while further details were not available for Fork North, Camp Hill's silica level was 2.7%.

UKD is evidently very bullish on the ground.

"The potential for extensions to this known mineralisation or the discovery of new deposits on UKD ground cannot be overstated," the company said in a market statement today.

UKD chief executive Jim Richards told MiningNews.net that the exploration campaign would be planned over the next couple of months, with the aim of reaching development/production as quickly as possible.

Richards suggested the deal terms (specifically the royalty) showed the vendor was backing UKD's exploration and development credentials.

The deal was sourced by UKD executive director Mathew Hogan, with DFD Rhodes having a long association with iron ore in the Pilbara.

UKD floated in 2005 after a $10 million initial public offering/spin-off from Thundelarra Exploration based on diamond prospects. Focus in more recent times has been given to bauxite prospects in the North Kimberley region, where drilling is currently underway.

Shares in UKD were up 6.3% at 17c in midday trade.