Diadem Resources Ltd.

Diadem Resources Ltd.

January 06, 2005 17:09 ET

Diadem Completes $1,133,200 Flow Through Share Financing-Otish Special Shares Become Exchangeable




JANUARY 6, 2005 - 17:09 ET

Diadem Completes $1,133,200 Flow Through Share
Financing-Otish Special Shares Become Exchangeable

TORONTO, ONTARIO--(CCNMatthews - Jan. 6, 2005) - Diadem Resources Ltd.
(TSX VENTURE:DIR) announced that on December 22 and 30, 2004 it
completed a previously-announced non-brokered private placement of
7,554,670 Units at $0.15 per Unit to raise $1,133,200. Each Unit
consisted of one flow through common share and one-half of one flow
through common share purchase warrant. Each warrant entitles the holder
to purchase one additional flow through common share at a price of $0.20
per share for a period of nine months after the closing of the private
placement. Although the placement was non-brokered, Diadem agreed to
protect offers received from registered investment dealers. In those
cases Diadem paid a cash commission of 8% of the purchase price of such
Units and issued nine month (non flow-through) broker share purchase
warrants equal to 8% of the purchase price of such Units. A total of
$46,396 in cash commissions was paid and 309,307 broker warrants were
issued. The Units and shares issued on exercise of the warrants have a
hold period of four months from closing.

In 2003, a wholly owned subsidiary of the Company acquired from 14
companies a 100% interest in staked diamond claims in the Otish
Mountains area of northern Quebec. The acquisition was made using
special shares of the subsidiary having a value equal to the staking
costs and work carried out on the claims by the vendor companies. In
addition, when a diamond mine is put into commercial production on any
claim, Diadem will pay a 2% gross diamond royalty to the vendor company.
The special shares have now become exchangeable, at any time up to
December 31, 2006, into Diadem common shares at the option of either
Diadem or the vendor company. The exchange price is $0.118 per share,
which was the weighted average price of the Diadem common shares during
the three month period ended December 31, 2004. The special shares were
issued for an aggregate of $384,248 resulting in a total of 3,256,338
Diadem common shares being subject to issue on exchange of the special

After giving effect to the private placement, Diadem has outstanding
121,872,727 common shares. On a fully diluted basis, giving effect to
exercise of all outstanding share purchase warrants and incentive stock
options granted under its stock option plan, and the exchange of the
subsidiary special shares, Diadem would have 175,303,793 common shares
outstanding. All share issuances have received the approval of the TSX
Venture Exchange.

Diadem is a Toronto-based diamond exploration and development company.
Currently Diadem is focused on its substantial land holdings in the
Franklin Bay area in the Inuvialuit settlement region of the Northwest
Territories. Diadem is also exploring for diamonds on the mineral claims
in the Otish Mountains region of Quebec, has an option to acquire a 51%
interest in diamond claims in the Attawapiskat area of the James Bay
Lowlands in northern Ontario and has a minority interest in a bedrock
diamond prospect in northeast California.


Contact Information

    Diadem Resources Ltd.
    Paul A. Carroll
    Chairman and CEO
    416-369-6088 (FAX)
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of the information contained in this news release.