Diagem Inc.
TSX VENTURE : DGM

Diagem Inc.

October 27, 2005 17:11 ET

Northbrock Capital Inc. to Backstop Diagem's Right's Offering Funds to Be Used to Evaluate the Collier-04 Kimberlite Pipe and Diagem's Other Properties in Brazil

MONTREAL, QUEBEC--(CCNMatthews - Oct. 27, 2005) - Diagem Inc. ("Diagem")(TSX VENTURE:DGM) is pleased to announce a rights offering to its shareholders for gross proceeds of up to $3,979,186 (the "Offering"). Pursuant to the Offering shareholders will receive 39,791,862 rights or one right for each four shares of Diagem held as of November 4, 2005. One right will entitle the holder to subscribe for one common share at a price of $0.10.

Northbrock Capital Inc. ("Northbrock") has agreed to subscribe, on a stand-by basis, to all of the common shares that are not subscribed under the Offering pursuant to the initial subscription privilege and the additional subscription privilege. Diagem is currently indebted to Northbrock in the amount of $2,900,000 plus accrued interest (the "Loan") representing advances made to provide working capital to Diagem. Northbrock has agreed to convert its Loan into common shares of Diagem either pursuant to its stand-by commitment under the Offering or pursuant to a parallel private placement at a subscription price of $0.10 per share. As compensation for guaranteeing the entire Offering on a stand-by basis, the Company has agreed to issue to Northbrock a non-transferable share purchase warrant to acquire 2,383,177 common shares during a period of 6 months from the closing of the Offering at a price of $0.10 per share.

Complete documentation of this rights offering can be viewed under the Diagem's public documents on the sedar.com website.

Cash proceeds from the Offering will be used for working capital, the continuation of the broad front exploration program encompassing both primary (kimberlite) and secondary (alluvial gravels) sources of diamonds, and for the acquisition of capital equipment such as a second pilot plant and heavy earth-moving equipment. Diagem will begin its testing of known kimberlite pipes with an evaluation of the Company's Collier-04 kimberlite pipe (see September 23, 2005 Press release).

THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS PRESS RELEASE.

Contact Information

  • Diagem Inc.
    Paul Einarson
    Chief Financial Officer
    (514) 866-6001
    (514) 866-6193 (FAX)
    or
    Diagem Inc.
    Claude Durocher
    Chief Executive Officer
    (416) 368-3601
    www.diagem.com