News

August 23, 2006

Sanatana Diamonds Announces Kennecott Makes Further $2.5 Million Exploration Contribution

Toronto, Ontario, Canada, August 23, 2006 -- Sanatana Diamonds Inc. (AIM:SAN, TSX-V:STA) is pleased to announce that Kennecott Canada Exploration Inc. has made a further contribution of C$2.5 million to Sanatana's 2006 exploration program. After this contribution, Kennecott has earned a 15% interest in the Company's Mackenzie Diamond Project pursuant to the July 2005 exploration and development agreement between Sanatana and Kennecott.

The principal terms of this exploration and development agreement are as follows:
•Sanatana manages and operates its exploration programs;
•Kennecott subscribed for C$2.5 million worth of Sanatana's shares at the time of Santana's admission to the AIM Market of the London Stock Exchange plc ("AIM");
•Kennecott contributed C$2.5 million towards Sanatana's 2005 exploration programs; and
•Kennecott contributed a further C$2.5 million towards Sanatana's 2006 exploration programs.

By making this C$7.5 million investment, Kennecott has earned a 15% interest in Sanatana's Mackenzie Diamond Project.
The exploration and development agreement also grants Kennecott the right to earn additional rights in any individual kimberlite project within Sanatana's Mackenzie Diamond Project on the following basis:
•Kennecott will earn a 49% interest in each individual project by completing, at its sole expense, a bulk sample and a positive feasibility study within four years; and
•Kennecott will earn a further 11% interest in each individual project by solely funding and managing all future evaluation through to such time as a decision to mine is made, provided that a decision to mine is made within 20 years of Kennecott earning the initial 49% interest in the individual project.