Diamonds North Resources Ltd.

Diamonds North Resources Ltd.
Uranium North Resources Corp.

Uranium North Resources Corp.

May 31, 2012 09:40 ET

Uranium North and Diamonds North Acquire Gold Projects in Washington State

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 31, 2012) - Diamonds North Resource Corp. (TSX VENTURE:DDN) and Uranium North Resources Corp (TSX VENTURE:UNR) ("the Companies") announce the formation of a 50:50 strategic partnership, Minerals North LLC, a Nevada incorporated company. The partnership allows both companies to explore new opportunities in Washington State at reduced cost and risk while maintaining our northern Canadian assets. The 100% owned private company was created to acquire projects with the potential for high grade ore deposits that allow for underground mining and direct access to existing processing facilities.

Minerals North LLC is targeting north eastern Washington, an area where numerous historical mines exist and due to previously depressed commodity prices may have been overlooked. These areas have never been explored using modern exploration techniques or geographical models. The projects include two gold/silver leases on private land, Golden Reward and Poland China (See terms below). The southern geographical location, infrastructure and climate allow for year round, low cost exploration activities and consistent news flow.

"We believe that Washington is equally as prospective as northern Canada, however, exploration costs in Washington are estimated to be 75 to 80% less than northern Canada. Numerous high grade deposits have been mined in Washington State and it is currently host to one of the highest grade gold deposits being mined in the USA today. The development of the Kinross Buckhorn Gold Mine in 2008 indicates that Washington State is serious about mining and the door is open to this type of investment," says Mark Kolebaba, President and CEO of Uranium North and Diamonds North Resources.

The Poland China Gold Historic Mine is located approximately 10 kilometres from the Kinross Buckhorn gold mine and less than 75 kilometres, by existing road, to the Kinross Kettle River gold processing mill. Poland China is considered to be a sedimentary hosted vein gold deposit. The main Kismet Vein had a mining grade of 8.2 g/T to 12.7 g/T gold. The vein averages 2.1 metres in width increasing up to 4.5 metres wide and is hosted within graphitic argillite.

Historic reports state that the Kismet vein is traceable on the surface for a length of 750 metres and there are at least three other veins in the area that have been partly developed, one of which was 2.6 metres wide and traceable for 1,500 metres. The mine workings cover only about 100 metres of strike length along the Kismet vein with two levels, leaving much of the vein un-mined. Since mining at Poland China ceased around 1940 there has been no recorded systematic and comprehensive exploration program on the property.

Samples collected during a recent site visit yielded a sample with 26 g/T gold 3 kilometres north of the historic mine site on the property. As well, two samples collected from the main adit returned 12.7 g/T and 15.5 g/T gold.

The 2012 initial exploration program will include detailed mapping, ground geophysics and soil sampling to delineate the extent of the Kismet vein and identify additional mineralized veins on the property. The exploration work will be conducted in the context of the sedimentary hosted vein style deposit model. This deposit style has the potential for multi-million ounces of gold. An example of this style of deposit is the Ballarat gold deposit in Australia with an estimated total resource of ~20 million ounces of gold.

The Golden Reward property is located approximately 60 kilometres from Kinross's Kettle River mill. The property hosts an epithermal gold bearing vein system that extends across the property for more than 1 kilometre. Small scale historical mining was conducted from several adits on and near the property. The property has had little modern exploration with the exception of seven drill holes from three drill sites by Kennecott in 1989-90. Two of the 7 holes steepened and failed to intersect the target. The remaining 5 holes intersected the mineralized structure at shallow depth. The best reported gold values from this limited drilling campaign were 1.40 g/T gold over 8.5 metres and 1.09 g/T gold over 9.8 metres including 2.74 g/T gold over 4.27 metres.

A grab sample collected during a recent site visit from exposed vein material yielded 14 g/T gold; other grab samples assayed from 0.52 g/T to 1.59 g/T gold.

Golden Reward is close to drill-ready. Historic surface sampling data indicates that in general gold values improve at lower elevations. This target has never been adequately tested at depth. The opportunity here is to test for high grade gold/silver zones below depths of 200 to 300 metres.

During the 2012 exploration program the detailed historic geological map will be geo-rectified prior to outcrop sampling. A detailed magnetic survey will be completed to better position the mineralized structure in preparation for drilling and attempt to identify other existing structures on the property to test.

Minerals North LLC is a 50/50 partnership and 100% of all costs associated with Minerals North will be shared by Diamonds North and Uranium North. Uranium North will serve as the initial project operator.

The Terms of the Lease Agreements:

Poland China

Minerals North LLC has paid US$5,000 to access the property until September 1, 2012, and following that, by making the following lease payments:

  1. US$15,000 on or before October 1, 2012
  2. US$25,000 on or before October 1, 2013
  3. US$30,000 on or before October 1, 2014
  4. US$35,000 on or before October 1, 2015
  5. US$40,000 on or before October 1, 2016 and for each subsequent anniversary until purchase of the property.

Minerals North LLC has the right to purchase the entire property at any time for the greater of US$7,500,000 or 200% of fair market value of surface rights only, excluding any value attributed to any minable commodities that may be deliniated. The property is subject to a 3% NSR, of which 1.0% can be purchased for US$1,000,000 and a further 1.0% can be acquired for an additional US$2,000,000.

Golden Reward

Minerals North LLC has paid US$20,000 to access the property until August 1, 2012, and following that, by making the following lease payments:

  1. US$25,000 on or before September 1, 2012
  2. US$30,000 on or before September 1, 2013
  3. US$40,000 on or before September 1, 2014 and each subsequent year until 2032 or purchase of the property.

Minerals North LLC has the right to purchase the surface rights at any time for US$8,000,000 and the property is subject to a 3% NSR, of which Minerals North, LLC has the option to purchase one-half of the NSR (1.5%) for US$2,000,000.
Each property has a 0.25% royalty payable to a consulting geologist. Each royalty may be purchased at any time for the value of 300 ounces of gold.

Washington State is a highly prospective mineral rich region steeped in mining history. The same productive geological belts in British Columbia extend into the state. The region has a prolific mining history dating back to the 1800's and in the last 50 years, Washington has produced an estimated 6 to 8 million ounces of gold, and significant amounts of silver and copper. Over the last 25 years there has been limited modern systematic exploration conducted in Washington. The most recent mine development in the state is the Kinross Buckhorn gold mine that opened in 2008 and has an estimated resource of one million ounces gold with an average grade of 11.3g/T gold. Kinross also operates the Kettle River gold processing mill which is currently operating below full capacity.

Washington State is highly accessible and has well established infrastructure. A dense network of roads provides inexpensive, easy access. Electricity, nearby mineral processing facilities and access to major ports and labour force all contribute to lower cost of operations. Working in this area will allow for a much larger percentage of our exploration resources to be allocated to our geological efforts.

The Companies actively seeking joint venture partners for our northern Canadian projects as they represent significant opportunity. We are eager to initiate our exploration programs in Washington State and look forward to reporting further developments in the coming weeks and months.

Graham Gill, P.Geo, is the Qualified Persons as defined by National Instrument 43-101 reviewing the data in this news release. All the Minerals North samples were completed by ALS Canada Ltd. The historical work is from private reports and has not been verified by the Company, however, it appears to have been completed under standard best practices consistent with the time and appears to be of reasonable quality.

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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