Diamonds North Resources Ltd.
TSX VENTURE : DDN

Diamonds North Resources Ltd.

July 07, 2008 15:29 ET

Diamonds North Closes $12.5 Million Bought Deal Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 7, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR VIA U.S. NEWSWIRE SERVICES.

Diamonds North Resources Ltd. (TSX VENTURE:DDN) (the Company) is pleased to announce it has closed the bought deal financing announced June 19th, 2008 and subsequently increased June 26th, 2008. The financing, led by Canaccord Capital Corporation and including Dundee Securities Corporation, GMP Securities L.P. and Haywood Securities Inc. (collectively, the "Underwriters") consisted of 3,833,600 units (the "Units") at a price of $1.05 per Unit and 7,083,700 flow-through common shares ("Flow-Through Shares") at a price of $1.20 per Flow-Through Share for aggregate proceeds of $12,525,720 (the "Offering"). A Unit consists of one common share and one-half of one transferable common share purchase warrant (a "Warrant"). Each whole warrant entitles the holder to purchase one additional common share at a price of $1.30 for a period of one year from the date of closing.

In consideration for their efforts, the Underwriters were paid a cash commission of 6% of the total proceeds raised in the Offering. In addition, the Underwriters received non-transferable underwriters' warrants ("Underwriters' Warrants") equal to 6% of the securities issued pursuant to the Offering. Each Underwriters' Warrant entitles the holder to purchase one common share for a period of twelve months from the closing at a price of $1.30 per share.

In addition to the bought deal financing, the Company has also closed the first tranche of the non-brokered private placement announced on June 19th, 2008 and subsequently increased June 20th, 2008. A total of $2,946,799 was raised pursuant to the closing of the first tranche and involved the issuance of 1,391,666 Flow-Through Shares and 1,216,000 Units. Finders fees were paid consisting of $22,140 cash and the issuance of share purchase warrants entitling finders to purchase up to 24,000 common shares for a period of one year from the closing at a price of $1.30 per share.

All securities issued pursuant to the bought deal financing and the first tranche of the non-brokered private placement are subject to a statutory hold period expiring on November 8, 2008.

The funds raised from the issuance of the Flow-Through Shares shall be used for general exploration expenditures which will constitute Canadian Exploration Expenditures ("CEE"). The funds raised from the issuance of the Units will be used for the advancement of the Company's mineral assets and for general working capital purposes.

Diamonds North has discovered 25 kimberlites to date on the Amaruk property. Of the 22 analyzed kimberlites, more than 90% of the known kimberlites are diamondiferous and 50% exhibit diamond counts that require follow-up exploration. At least 500 geophysical targets remain to be tested on the property.

Diamonds North Resources is focused on discovering Canada's next diamond mine. The Company is rapidly evolving and committed to building long-term value through ongoing diamond discoveries.

On behalf of Diamonds North Resources Ltd.

Mark Kolebaba, President & CEO

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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