News

January 27, 2006

Sanatana Announces Two Financing Arrangements

Toronto, Ontario, Canada, Friday, January 27, 2006. Sanatana Diamonds Inc ("Sanatana or the Company") today announced that it has entered into two financial arrangements to support its ongoing exploration programs at the Mackenzie Diamond Project, located in the Northwest Territories.

$7 Million Flow Through Financing
Sanatana has entered into an engagement agreement with Canaccord Capital Corporation ("Canaccord") pursuant to which Canaccord will act as Sanatana's agent and use commercially reasonable efforts in connection with a placement by way of long form prospectus, in the provinces of British Columbia, Alberta, Manitoba and Ontario, of up to 4,000,000 flow through common shares at an issue price of $1.75 per share for gross proceeds of $7,000,000.

The proceeds of the financing will be used for exploration expenditures, eligible for flow through share treatment under the Income Tax Act (Canada), on the Company's Mackenzie Diamond project. The Company plans a drill program in Spring 2006 to test a minimum of 12 drill ready kimberlite targets that the Company identified through its drill sampling and geophysical activities performed during the 2004 and 2005 exploration seasons. The Company also plans a Summer 2006 exploration program consisting of drilling additional potential kimberlite targets, till sampling, geophysics and prospecting.

Completion of the financing is subject to regulatory approval. It is anticipated that insiders of the Company will participate in the private placement.

Kennecott Letters of Credit
Sanatana is pleased to announce that Kennecott Exploration Canada Inc ("Kennecott") has agreed to provide the necessary Letters of Credit to cover the Annual Bonding Requirements for exploration activities at the Company's Mackenzie Diamond Project. This agreement highlights the continuing collaboration and cooperation that exists between Kennecott and the Company in advancing the Mackenzie Diamond Project.

Sanatana and Kennecott have entered into an exploration and development agreement for the Mackenzie Diamond Project in terms of which:
· Kennecott provided C$2.5 towards the financing as part of Sanatana AIM admission,
· Sanatana manages and operates exploration program,
· Kennecott contributed C$2.5 million on August 31, 2005 and may contribute a
further C$2.5 million in April 2006 towards exploration programs,
· Upon completion of C$7.5 million investment, Kennecott acquires a 15% interest in Mackenzie Project and acquires the right to earn into any individual kimberlite project on following basis:
o 49% interest by taking each individual project to completed feasibility study within 4 years,
o Further 11% by taking project to completed bankable feasibility study.
Sanatana is listed on the London AIM market under the trading symbol "SAN."