Diamonds North Resources Ltd.

Diamonds North Resources Ltd.
Arctic Star Diamond Corp.

Arctic Star Diamond Corp.

October 12, 2006 09:00 ET

Diamonds North and Arctic Star to Explore in Canada's Newest Kimberlite District

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 12, 2006) - Diamonds North Resources Ltd. (TSX VENTURE:DDN) and Arctic Star Diamond Corp. (TSX VENTURE:ADD) announce that Arctic Star has entered into an option agreement with Diamonds North on the Siku property. The Siku property consists of approximately 455,000 acres of claims in the south western part of the Amaruk property, located in eastern Nunavut. The Siku property surrounds the Darby project which is currently being explored by Teck Cominco Limited and Indicator Minerals Inc.

Indicator and Teck Cominco recently reported the discovery of five kimberlite bodies on the Darby project, with one estimated to be as large as 11 hectares in size. The Arctic Star option agreement applies to claims surrounding the Darby property on three sides. Till samples collected from the property by Diamonds North have yielded indicator minerals indicating that the Darby kimberlite field may extends onto the property. An airborne magnetic survey over the claims has been initiated for drill target delineation.

Under the terms of the agreement, Arctic Star can earn a 50% interest in the property by:

1) Funding bonds on the claims.

2) Issuing Diamonds North 1.5 million shares of Arctic Star.

3) Spending 2.5 million dollars on exploration over 3 years with the first year's expenditures at $700,000.

4) Issuing an additional 100,000 shares for each of the first five kimberlites discovered on the property.

Arctic Star has paid $763,420 in bonds on the claims and will reimburse Diamonds North an additional $238,886 in February 2007 for bonds originally posted by Diamonds North. All bonds are refundable to Arctic Star upon filing of sufficient assessment work on the claims.

This area is Canada's newest kimberlite district. It offers potential for large kimberlites associated with encouraging indicator minerals. The property requires funds for bonding making it an ideal candidate for partnership. By providing the bonding Arctic Star acquired entry into this new kimberlite district giving Diamonds North the capability to continue exploration on the Siku property through the partnership, while focusing its financial efforts on the Amaruk property in the Pelly Bay Diamond District.

Diamonds North recently drilled five kimberlites on the Amaruk project in the Pelly Bay Diamond District (see news release NR06-29) and are awaiting diamond results. The Siku property is located in the Franklin District which is southwest of the Pelly Bay Diamond District. Diamonds North is the dominant land holder in the region.

Diamonds North will operate the project. The agreement is subject to regulatory approval.

Diamonds North is a dynamic exploration team focused on strategically advancing diamond opportunities and is determined to discover Canada's next diamond mine.


Mark Kolebaba, President & CEO

Diamonds North Resources Ltd.

Patrick Powers, President & CEO

Arctic Star Diamond Corp.

Statements in this press release, other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, may include forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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