Vaaldiam Reports 2011-Q1 Financial Results

TORONTO, ONTARIO -- (Marketwire) -- 06/15/11 -- Vaaldiam Mining Inc. ('Vaaldiam' or the 'Company') (TSX: VAA) reports that, for the three months ended March 31, 2011, it has recorded a net loss of $7,641,000 or $0.11 per share compared to a net loss of $2,146,000 or $0.04 per share for the same period in 2010, reflecting the asset impairment of Duas Barras.

Vaaldiam ended the period with a cash position of $5.6 million and working capital of $3.7 million. Vaaldiam also holds 10.6 million shares in Flemish Gold Corp. ('Flemish'), which is focused on gold exploration in sub-Saharan Africa, marketable securities valued at approximately $2.0 million and royalties on two major exploration and development projects. Vaaldiam holds 51% of the Brauna diamond project in Bahia, Brazil as well as two diamond mines, Duas Barras in Minas Gerais, Brazil and Chapada in Mato Grosso, Brazil, both of which are on care and maintenance, as well as 100% interest in the gold deposit at Brauna and other kimberlite projects.

Company Highlights

Brauna Project

On March 4, 2011, Vaaldiam entered into an arrangement with the joint venture partners of the Brauna project to restructure the existing arrangement and to increase the ownership interest of the Company in the Brauna project from 20% to 51% by paying a transaction consideration of US$6.5 million over 15 months to the existing partners and financing the project development cost to production. Vaaldiam is the operator for the project. See press release of March 4, 2011.

On April 7, 2011, Vaaldiam issued a National Instrument 43-101 ('NI 43-101') compliant Preliminary Assessment Report ('PA Report') which presented two net present valuations ('NPV') at a 10% discount rate and an independent diamond value of US$338 per carat ('ct'): a base case pre-tax NPV of US$33.6 million and internal rate of return ('IRR') of 42%, using the NI 43-101 mineral resource of diamond grade of 16.8 cts per 100 tonnes ('cpht') by Coffey Mining, and the second scenario of pre-tax NPV of US$101.0 million and IRR of 107% using the NI 43-101 mineral resource diamond grade of 24.58 cpht presented by A.C.A. Howe International in December 2010.

Duas Barras Mine

During the first quarter of 2011, a total of 4,355 cts of diamonds and 6.9 kilograms (221 troy ounces) of gold were recovered from 58,397 bank cubic metres ('bcm') at Duas Barras, resulting in an average diamond grade of 0.07 cts per bcm and an average gold grade of 0.12 grams of gold per bcm. These are much lower than the diamond resource grade of 0.16 cts per bcm and the gold resource grade of 0.18 grams of gold per bcm. With the escalating fuel costs and other operating costs, and the lower than expected grades, Vaaldiam made the decision in April to suspend operations at Duas Barras until such time that rising diamond prices may improve the mine's economics and make it reliably profitable. Until then, Vaaldiam will focus its attention on the Brauna project. As a result of suspending operations at Duas Barras in April, Vaaldiam reviewed the carrying value of Duas Barras mine for asset impairment at the end of the quarter and recorded an asset impairment loss of $6.1 million for the quarter ended March 31, 2011, representing the full carrying value of the mine and plant and equipment as at March 31, 2011.

Vaaldiam continues to pursue its strategy of using cash flow from disposing of non-core assets to sustain itself and to advance its high-potential hard rock diamond and gold properties in Brazil.

Selected Financial Information
(Expressed in thousands of Canadian dollars, except share capital amounts):

                                                    March 31,      March 31,
                                                         2011           2010
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Net loss for the year                                   7,641          2,146
Loss per share                                           0.11           0.04

Total assets                                           32,222         34,314
Working capital                                         3,675         10,095
Mineral properties                                     15,395          8,364
Share Capital:
  Common shares (000s)                                 71,633         71,388
  Warrants (000s)                                       6,094          9,935
  Options (000s)                                        4,747          4,617
----------------------------------------------------------------------------

Cash Flow and Liquidity

As at March 31, 2011, Vaaldiam had working capital of $3.7 million, compared with $10.1 million at March 31, 2010. For the three months ended March 31, 2011, Vaaldiam used cash of $2.7 million, which included cash used in operations of $1.5 million, expenditures on plant and equipment and mine development of $0.3 million and payment of $0.9 million to the joint venture partners with respect to the Brauna transaction discussed above.

International Financial Reporting Standards ('IFRS')

This is the first unaudited condensed interim financial report prepared in accordance with IFRS. Under IFRS 1 First-time Adoption of IFRS, the IFRS are applied retrospectively at the transition date of January 1, 2010. The effect of the transition from Canadian Generally Accepted Accounting Principles ('Canadian GAAP') to IFRS is not material and the explanation of how the transition from Canadian GAAP to IFRS has affected Vaaldiam's financial position, financial performance and cash flows are set out in the financial statements.

The information above should be reviewed in conjunction with the Company's consolidated financial statements, which was prepared in accordance with Canadian GAAP, and management discussion and analysis for the year ended December 31, 2010 that is available on www.sedar.com and www.vaaldiam.com.

This release has been reviewed by Katya Masun P.Geo., who is a qualified person under National Instrument 43-101.

Certain of the information contained in this news release constitutes 'forward-looking statements' within the meaning of securities laws. Such forward-looking statements, including but not limited to those with respect to the prices of metals and minerals, purchase payments, royalty payments, estimated future production and estimated costs of future production involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any forecast results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual prices of metals and minerals, the actual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the documents of the Company filed from time to time with the Ontario Securities Commission.

Contacts:

Vaaldiam Mining Inc.

Frances Kwong

VP Finance and CFO

416-363-6927
frances.kwong@vaaldiam.com


Vaaldiam Mining Inc.

Robert Jackson

President and CEO

416-363-6927
rjackson@vaaldiam.com
www.vaaldiam.com