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а Mon Apr 26, 2004
Summary of December 31, 2003 Financial Statements

а Diamonds North Resources Ltd. ("the Company") is an exploration stage company engaged in the acquisition and exploration of diamond mineral properties in Canada. The principal properties are located in northern Canada throughout Nunavut ("NU") and the Northwest Territories ("NWT"). The following is a summary of the audited financial statements and management discussion and analysis for the year ended December 31, 2003, both of which can be found on the Company's website at

Mineral Properties

As at December 31, 2003, the carrying value of the Company's mineral properties was $5,774,989 (2002 - $3,293,206). For the year ended December 31, 2003, the Company's net mineral property expenditures were $2,987,617 (2002 - $3,293,206), which includes $624,845 (2002 - $1,856,378) in acquisition costs and $4,770,322 (2002 - $3,357,645) in exploration costs. Deductions from mineral properties expenditures include $2,343,550 (2002 - $1,900,447) in recoveries from project partners and $64,000 (2002 - $20,370) in option payments.

In 2003, the Company operated a total of nine exploration projects as follows:

Blue Ice Project, Victoria Island NU/NWT

On June 18, 2003, the Company entered into an agreement with Teck Cominco Limited whereby Teck Cominco completed a $1,000,000 private placement of 909,091 units at $1.10 per unit, with each unit consisting of one common share and one half warrant, and by funding 50% of a $3,000,000 exploration program on Blue Ice in 2003. Upon completion of the 2003 exploration program, Teck Cominco earned the right to elect to earn into the Blue Ice Project:

On March 24, 2004, Teck Cominco elected to initiate an option to earn a 30% interest in the Blue Ice property. In addition, the agreement was amended to allow Teck Cominco to expand the agreement to include the Company's adjoining White Ice and Hadley Bay properties. In consideration, Teck Cominco paid the Company $55,000 on signing of the amending agreement and increased the 2004 expenditure requirement from $2,000,000 to $3,000,000. Teck Cominco can elect to include any portions of the White Ice and Hadley Bay properties under the agreement by paying the Company an additional $55,000 and increasing the initial 30% interest aggregate expenditure requirements from $9,500,000 to $11,500,000.

Total acquisition and exploration expenditures on the Blue Ice Project in 2003 were $82,030 and $2,645,975 respectively.

Hadley Bay, Victoria Island NU

Total exploration expenditures on the Hadley Bay Project were $309,924.

Wellington Project, Victoria Island NU

Total acquisition and exploration expenditures on the Wellington Project in 2003 were $81,078 and $472,758 respectively of which $551,881 was recovered from the project partner.

Holman, Victoria Island, NWT

In 2003, the total exploration expenditures on the Holman Project were $369,204.

White Ice, Victoria Island NWT

During the spring, the Company staked 239,141 acres to the west of the Blue Ice Project, which forms the White Ice Project. The cost of staking the claims was $192,703. Total exploration expenditures on the White Ice Project were $92,132.


Drilling was completed on several targets, no kimberlite was intersected and the claims were allowed to lapse. The Company's partner operated and funded the $390,942 drill program.

Misty Lake, NWT

The Company has a 40% interest in the Misty Lake Project. The Company and joint venture partner completed drilling of five geophysical targets on the Misty claims and no kimberlite was intersected. The Misty Lake project was written down by $396,163 to reflect the 31 claims that where dropped after the yearend. The Company and partner, still hold title to 8 claims on the Misty Lake property.

Kidme Project, NWT

The Company owns 40% in the Kidme Project. On May 2, 2003, a federally appointed tribunal awarded the Kidme claims to the Company and joint venture partner. The Company's share of the 2003 exploration costs were $92,132.

Amaruk, NU

The Company acquired a 100% interest in the Amaruk Project by staking 418,000 acres in late 2003.
On February 16, 2004, the Company announced the signing of a joint venture agreement with BHP Billiton Diamonds Inc. on lands surrounding the Company's 100% owned Amaruk project. The agreement covers 34 exploration permits totaling and approximately 464 claims, totaling an estimated 3,000,000 acres.

Selected Financial Information

The table below includes selected annual information from the audited consolidated financial statements for the year ended December 31, 2003 and the period, February 13, 2002 ("Date of Incorporation") to December 31, 2002. For more detailed information, please refer to the Company's audited consolidated financial statements and notes included therein.

                                             2003              2002
Total Revenues                       $           Nil     $         Nil
General and administrative expense   $    (1,410,434)    $    (632,983)
Loss for the year                    $    (2,483,340)    $    (953,258)
Basic and diluted loss per share     $         (0.14)    $       (0.14)
Weighted average number of
shares outstanding                        17,986,142         6,685,551
Total Assets                         $    10,884,162     $   5,707,314
Total Long-term liabilities          $           Nil     $     183,920
Working Capital                      $     4,722,717     $   1,507,724
Cash dividends per share             $           Nil     $         Nil

The Company has no source of revenue as it is in the exploration stage and currently does not have an operating mine. The Company's loss for 2003 represents a $1,530,082 increase over fiscal 2002 due to higher general and administrative expenses, property investigation expense and write down of mineral properties.

General and administrative expenses increased $777,451 over fiscal 2002 as fiscal 2002 was only a partial period and the Company did not commence full-time operations until July 2002. Items of note which are discussed below include bad debts expense, investor relations and promotion, stock-based compensation and wages and benefits.

* Bad debt expense of $34,319 (2002 - $Nil) reflects the Company's write down of the uncollectible portion of the 2002 accounts receivable whereby a settlement was reached subsequent to the year end.

* Investor relations and promotion expense of $272,270 (2002 - $151,082) reflects Company's attendance at several trade shows to promote its Victoria Island projects and the name of the Company and financing trips to Toronto and Europe.

* Stock-based compensation expense of $451,173 (2002 - $91,939) reflects the Company's early adoption of the CICA released amendments to Section 3870 "Stock Based Compensation and Other Stock-based Payments".

* Wages and benefits expense of $246,137 (2002 - $107,921) reflects the hiring of an exploration manager and project geologist of which a portion of their wages and benefits expense is capitalized to various exploration projects and the addition of a part-time controller.

Mineral property investigation expense of $147,293 (2002 - $1,349) reflects the cost of grass roots exploration in the search of new projects. During the year, the Company was successful with the discovery of the new Amaruk project. However, some areas did not merit acquiring and the corresponding costs have been expensed.

Write-down of mineral properties expense of $505,834 includes $23,206 for the Calling Lake, Alberta Project, $86,465 for the Salisbury, Quebec Project and $396,163 for the Misty Lake, NWT Project. The Calling Lake and Salisbury grass roots projects did not warrant further exploration and accordingly both projects have been written off. The Misty Lake Project was written down to reflect the 31 claims that where dropped after the year end. The Company and joint venture partner, SouthernEra, still hold title to 8 claims.


Subsequent to December 31, 2003, the Company received $969,835 pursuant to the exercise of warrants and stock options. In addition, Teck Cominco Limited elected to take up the initial option on the Blue Ice Project and will spend $3,000,000 in exploration over the Blue Ice, Hadley Bay and White Ice Projects (see Blue Ice Project). The combined effects of these two subsequent events along with the Company's working capital at December 31, 2003 will allow the Company to achieve its planned business objectives for fiscal 2004.

On behalf of Diamonds North Resources Ltd.

Mark Kolebaba,

For further information, please contact:

Corporate Communications: Nancy Curry
Diamonds North Resources Ltd.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy of this news release

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