DIAMOND PAGE — Diadem funds work at Leek Springs, Mestiza

By means of a private placement, Toronto-based Diadem Resources (DIR-M) intends to raise $5.1 million for exploration and development work on the Leek Springs diamond project in northeastern California and the La Mestiza gold project in western Nicaragua.

The financing is to consist of two offerings, both of which require regulatory approval. The first is the issuance of 4.8 million shares at 27 cents each, for proceeds of $1.3 million. The second entails the issuance of 12.6 million units at 30 cents each, for proceeds of $3.8 million. Each unit consists of one share and one share-purchase warrant, with each warrant redeemable for an additional share at 45 cents. The warrants have a term of two years from the date of issue.

The placement, which will occur in Europe, is being arranged by two investment firms: New York City-based International Mining & Exploration and Zurich-based International Indexed Savings Portfolio.

* Leek Springs — Diadem is earning a 55% interest in this 4,300-acre diamond project from privately held Silverstone Prospecting Syndicate.

Having outlined 20 magnetic anomalies in total, Diadem reports that three of them — each a positive magnetic anomaly 40-50 acres in size — have been interpreted to be diatremes. The company believes these three features represent the major primary vents through which the volcanic breccias and flows erupted; moreover, they are believed to be the main source of the diamond- and indicator-mineral-bearing volcanics that outcrop in the area.

Drilling of the anomalies has yet to be carried out.

Seventeen smaller anomalies have been interpreted to be secondary volcanic vents. Drilling in 1995-96 found seven of these to be diamondiferous: 247 fragmented and broken diamond crystals ranging from 0.06 mm to 0.68 mm in diameter were recovered from olivine lamproite volcanic breccia.

Diadem plans to embark on a ground follow-up program covering 13 of the 20 anomalies. The work, to consist of sediment sampling, prospecting, mapping and geophysics, was to be under way by presstime.

* La Mestiza — Diadem is earning a 68.75% interest in this 1-by-2-km Nicaraguan gold property, for which a consulting engineer has calculated proven and probable reserves of 2.1 million tons grading 0.25 oz. gold per ton, equivalent to 518,610 contained ounces. Resources in the possible category stand at 2.8 million tons of 0.32 oz. gold, equivalent to 916,500 contained ounces.

Diadem is preparing to explore the 12 vein systems known to exist on the property, and plans to install a 50-ton-per-day pilot mill. The company envisages a 500-to-800-ton-per-day operation at La Mestiza.