News

February 16, 2011

Sanatana Announces Option and Joint Venture Agreement with Augen Gold

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES FOR DISSEMINATION IN THE UNITED STATES

Vancouver, British Columbia, Canada, February 16, 2011 - Sanatana Diamonds Inc., ("Sanatana" or the "Company", TSX-V: STA), is pleased to announce that, further to the Company's news release of December 15, 2010, it has entered into a definitive option and joint venture agreement (the "Definitive Agreement") with Augen Gold Corp. ("Augen"), a company listed on the TSX Venture Exchange (the "Exchange") under the trading symbol GLD. Sanatana has been granted an option to acquire up to 51% undivided interest in the rights to 46 mineral concessions in Ontario (the "Claims") owned by Augen along with a right of first refusal to acquire nine mineral concessions in Ontario (the "ROFR Claims") owned by Augen (together, the "Transaction"). The Claims and the ROFR Claims are located within the townships of Yeo, Chester, Neville and Benneweis, Ontario and total approximately 19,006 acres.

Pursuant to the terms of the Definitive Agreement Sanatana will have an option to earn a 50% undivided interest in the Claims (the "50% Interest") by:
  1. on or before the dates indicated below, making the following cash option payment and share issuances:
    1. paying to Augen $150,000 within 10 days of applicable regulatory approval for the Definitive Agreement (the "Effective Date"),
    2. allotting and issuing to Augen 2,000,000 shares in the capital of Sanatana, as fully paid and non-assessable, within 10 days of the Effective Date,
    3. allotting and issuing to Augen a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the first anniversary of the Effective Date,
    4. allotting and issuing to Augen a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the second anniversary of the Effective Date; and
  2. on or before the dates indicated below, making the following exploration expenditures on the Claims (collectively, the "Expenditures"):
    1. $1,000,000 in exploration expenditures on or before the first anniversary of the Effective Date,
    2. a further $1,500,000 in exploration expenditures on or before the second anniversary of the Effective Date, and
    3. a further $2,500,000 in explorations expenditures on of before the third anniversary of the Effective Date.
Pursuant to the terms of the Definitive Agreement if Sanatana earns the 50% Interest in accordance with the provisions set forth above, the parties will enter into a joint venture agreement with respect to the Claims. Sanatana will have the right to earn a further 1% interest (for a total interest of 51%) (the "51% Interest") in the Claims by completing and delivering to Augen a pre-feasibility study on or before the fifth anniversary of the Effective Date. It is also a term of the Definitive Agreement that for as long as Sanatana and Augen are parties to an option or joint venture with respect to the Claims or the ROFR Claims that Augen will have the option to purchase up to 10% of any securities issued in any future equity offerings by Sanatana, on the same terms and conditions of such offering.

Closing of the Transaction is subject to Exchange approval. The Company may pay a finder's fee in connection with the Transaction within the maximum amount permitted by the policies of the Exchange.

About the Company

Sanatana Diamonds Inc. is an exploration stage company seeking new projects to complement its existing properties in the Northwest Territories and the Yukon. With an experienced management team and board of directors, Sanatana has the skills required to identify, develop and fund economic mineral properties. Sanatana is based in Vancouver and is listed on the TSX Venture Exchange (TSX-V: STA).

SANATANA DIAMONDS INC.

Peter Miles
President and Chief Executive Officer

For additional information on the Company, please contact:
Sanatana:
Mr. Peter Miles, President and Chief Executive Officer
at 604-408-6680 or email investor@sanatanadiamonds.com

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Cautionary Statement Regarding "Forward-Looking" Information

Some of the statements contained in this press release are forward-looking statements and information within the meaning of applicable securities laws. Forward-looking statements and information can be identified by the use of words such as "expects", "intends", "is expected", "potential", "suggests" or variations of such words or phrases, or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements and information are not historical facts and are subject to a number of risks and uncertainties beyond Sanatana's control. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except as may be required by law.

Neither TSX Venture Exchange nor its Regulations Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.