Agreement between Majestic's Brazilian subsidiary, Golden Tapajos, and Red Dragon to provide exploration and development funding up to US$6 million

BELLEVUE, Wash., Dec. 2 /PRNewswire/ -- Majestic Diamonds & Metals, Inc. ("Majestic") is pleased to announce that its majority owned subsidiary company, Golden Tapajos Mineracao Ltda. ("Golden Tapajos"), has signed a Letter Agreement ("Agreement") with Red Dragon Resources Corp. ("Red Dragon") to provide exploration and development funding for its Boa Vista Gold Property ("Property").

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Under the terms of the Agreement, Red Dragon will pay Golden Tapajos US$600,000 on signing of the Definitive Agreement, and have an option to acquire 51% interest in the Property after incurring US$3,000,000 in exploration expenditures within the first two years ("First Option"). An additional 19% interest can be earned by Red Dragon for an additional US$3,000,000 in exploration expenditures before the fourth anniversary of signing the Definitive Agreement ("Second Option"). Golden Tapajos will have the option, at its sole discretion, to form a Joint Venture with Red Dragon after the First Option, or it may elect to grant Red Dragon the Second Option, at which time Red Dragon will also pay Golden Tapajos US$1,000,000. Golden Tapajos will be the project operator during the First Option period, led by Pedro Jacobi, Majestic's co-founder and Managing Director of Golden Tapajos.

"With gold at historical highs, securing up to $6,000,000 in development funding for our Boa Vista gold project is very timely," said Walt Guidice, CEO and Co-Founder of Majestic. "We are encouraged that Red Dragon sees the same great potential in our Boa Vista gold project that we do and we look forward to rapidly advancing exploration in hopes of confirming a sizeable economic gold resource in the near future."

Golden Tapajos has granted Red Dragon a 30 day due diligence period commencing on the first day of signing the Agreement. The transaction is subject to customary closing conditions, including but not limited to, TSX Venture Exchange acceptance.

Boa Vista Property

The Property is located in southern Para state, within the Tapajos Mineral Province ("TMP"), and consists of two exploration concessions covering an area of 12,536 hectares. The TMP underwent wide spread alluvial gold mining by local miners (garimpeiros) in the last 40 years resulting in the largest gold rush in the world in the latter part of the twentieth century. While many of the alluvial deposits are nearly exhausted, the primary source of these deposits have only recently been explored by junior and senior mining companies. Exploration to date has identified a number of 1 million ounce or greater gold deposits that are amenable to low cost, bulk mineable open pit extraction.

The Property covers a number of historic alluvial deposits (garimpos) that have been partially explored by Golden Tapajos. Exploration work to date includes mapping, soil and rock geochemistry and a geophysical survey (induced polarization) over selected garimpos, including Jair and Almir. The Jair target coincides with a northwest trending drainage along which alluvial gold has been mined over a distance of 4 kilometers. Bed rock exposed in pits along this structure consists of quartz+/-sulphide veins and stockworks hosted in sericite+pyrite altered granite. Grab samples of the vein material grade several grams per ton gold. A soil survey over Jair has identified a gold in soil anomaly that is 1.6 kilometers long by 400 meters wide and open along strike at both ends. The Almir target consists of a gold in soil anomaly that is 1 kilometer long by up to 400 meters wide that is coincident with a number of garimpo pits with alluvial workings and quartz vein exposure. Gold mineralization is similar to that exposed at Jair. Other high priority targets with known gold mineralization also exist within the concession boundaries.

About Golden Tapajos Mineracao Ltda.

Golden Tapajos Mineracao Ltda. is a Brazilian company owned 55% by Octa Mineracao, Ltda., and 45% by D'Gold Mineral, Ltda. Octa Mineracao, Ltda. is a wholly-owned subsidiary of Majestic Diamonds & Metals, Inc. headquartered in Bellevue, WA (USA).

About Red Dragon Resources Corp.

Red Dragon Resources Corp. is a Canadian based public company with a focus on acquisition, exploration and development of mineral properties. The Company has a balance sheet of Cdn$9.4 million in cash and cash equivalents of Cdn$8 million in investments as of July 31, 2009.

For further information:

Contact
Walt Guidice, CEO
Majestic Diamonds & Metals, Inc.
10900 NE 4th St, Suite 2300
Bellevue, WA 98004
walt@majesticdm.com
425.990.1009

SOURCE Majestic Diamonds & Metals, Inc.

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