Diamonds North Resources Ltd.
TSX VENTURE : DDN

Diamonds North Resources Ltd.

October 26, 2006 16:15 ET

Diamonds North Resources Ltd.: $6 Million "Bought Deal" Financing

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 26, 2006) -

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Diamonds North Resources Ltd. (TSX VENTURE:DDN) (the "Company" or "Diamonds North") reports that it has entered into an agreement with a syndicate of underwriters led by Clarus Securities Inc. and includes Loewen, Ondaatje, McCutcheon Limited and Raymond James Ltd. (the "Underwriters") who have agreed to purchase 6,315,790 flow-through common shares ("Flow-Through Common Shares") at a price of $0.95 per Flow-Through Common Share for aggregate proceeds of approximately $6,000,000 (the "Offering"). In addition, the Underwriters have the option to purchase an additional 1,052,632 Flow-Through Common Shares at the issue price at any time until the closing date. The Offering is expected to close on or about November 14th, 2006.

Diamonds North plans to use the net proceeds of this financing primarily to fund the exploration drill programs on its core diamond projects including the Amaruk project. The Company recently announced (September 20th, 2006) the first 5 kimberlites drilled on the Amaruk project and is planning an aggressive target testing program. Immediate plans include formalizing budgets and contracts to secure drill rigs and helicopters for this exploration program.

The Underwriters will be paid a cash fee equal to 7.0% of the gross proceeds raised in the Offering. The Underwriters will also receive compensation options (the "Compensation Options") entitling them to purchase that number of non-flow through common shares which is equal to 7.0% of the number of Flow-Through Common Shares sold. The Compensation Options will expire fifteen months after the closing of the Offering. The exercise price for the Compensation Options will be $0.85 per common share.

The Pelly Bay region is Canada's newest diamond district. Diamonds North has the dominant land position in the region and is exploring a kimberlite field with proven diamondiferous kimberlite and exceptional diamond characteristics. With the recent discovery of 23 new kimberlite occurrences by drilling and prospecting, the Company believes that the Amaruk project offers shareholders increased opportunity of discovering Canada's next diamond mine.

The completion of the Offering is subject to all necessary regulatory approvals.

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

ON BEHALF OF THE BOARD OF DIRECTORS

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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