Diadem Resources Ltd. continues to focus its efforts on the Franklin diamond exploration project. The work currently is being conducted north of 69 degrees, 25 minutes North Latitude on the Parry Peninsula near Paulatuk in the Inuvialuit Settlement Region of the Northwest Territories (near the Mackenzie River delta). The company has identified 18 new high priority drill targets, in addition to the 10 known kimberlite pipes already identified and previously drilled. Of the known, previously-drilled, kimberlite pipes, six were diamond-bearing.

The Inuvialuit Settlement Region is unique in the Canadian Arctic – it was the first aboriginal settlement in the Arctic and because of the sovereign nature of the region, where a cost and benefits agreement is a precursor to exploration and development, Diadem is already ahead of the game because it is a party to such an agreement under which its rights and obligations already are set forth clearly.

Diadem has formed a 50/50 joint venture with Darnley Bay Resources Ltd. (DBR) for diamond exploration of the Franklin project. Diadem is the operator of the joint venture. Diadem has expended over $4 million on exploration to date, including on land south of where work currently is being carried out. Prior to Diadem forming the joint venture in 2003, DBR had spent at least an estimated additional $5 million of diamond exploration in the area of the project, including drilling.  Since June, 2008 Diadem has an undivided 50% participating interest in the project, with DBR holding the other 50%. DBR is required to contribute its 50% share of costs.  However, Diadem has agreed to carry DBR for the first $1.0 million of its share, to be repaid without interest out of DBR’s share of revenue from a diamond mine. The Inuvialuit Development Corporation has the right to back into the project on a participating basis for a 10% working interest (with dilution to be shared proportionately by Diadem and DBR) when a decision is made to place a diamond mine into production. If a decision is made to carry out a feasibility study, Diadem will have the right to fund the feasibility study, and if the property is placed into commercial production Diadem’s interest will increase to 75% and the DBR interest will decrease to 25%.

Originally, DBR was attracted to the area by the discovery of the strongest isolated gravity anomaly in North America. Many of the major magmatic nickel-copper and platinum group element deposits in the world are hosted by mafic intrusives. In exploring the gravity anomaly, an aeromagnetic survey of the area revealed a number of anomalies with characteristic kimberlite signatures. These results prompted a diamond-exploration program in an area of 240 km by 300 km.

Diamonds have been found in till and drill-core samples, and the results to date confirm the presence of a diamond-bearing mantle. The Franklin diabase dike swarm, which has focused, and to some degree constrained, the kimberlite intrusions in the Paulatuk area, is analogous to the Mackenzie dike swarm in the Central Slave District (which is host to Canada's first producing diamond mines, Ekati and Diavik). A mini bulk sample of about 2.5 t was collected and analysed by De Beers and 157 micro diamonds were recovered. One of the kimberlite pipes has been dated at 270 million years (Permian), older than the majority of the Lac de Gras pipes (65 million years) and closer in age to the Jericho pipe (172 million years) in Nunavut and the Victor pipe in the Attawapiskat area (136 to 190 million years) in the Hudson's Bay lowlands of Ontario.

Exploration Encouragement
Exploration results suggest that it is "highly likely" that many of the kimberlite indicator minerals analysed over the past year or so originated from diamond-bearing kimberlites. Based upon this information, Diadem's management has now identified 18 new, high-priority drill targets in addition to the 10 kimberlite pipes already identified.
A geochemical survey has been carried out, with three main goals. First, to provide additional detail in areas where anomalous kimberlite indicator mineral results had been obtained from previous regional surveys. Second, to test geophysical anomalies identified during previous airborne and ground geophysical surveys. Third, to identify the indicator mineral signature of the known kimberlite pipes. In total, 223 samples of glacial till were collected, 163 in the vicinity of airborne and ground magnetic anomalies, within the Parry Peninsula Kimberlite Field, which exhibited signatures similar to those recorded over known kimberlite pipes and the other 60 in the vicinity of existing till sample anomalies and previously unsampled areas within Diadem's central claim block.

Testing procedure
Heavy mineral concentrates generated from these samples were examined optically for the presence of kimberlite indicator minerals (KIMs), principally pyrope garnet, chrome diopside, picroilmenite and chromite. A total of 527 KIMs identified were then subjected to electron microprobe analyses to determine their mineral chemistry and kimberlite provenance. The results were plotted as metallic oxide ratios in chart form referenced to a diamond inclusion field (DIF) created from the chemistry of the various KIMs from known diamondiferous kimberlites. The results from the analyses of the pyrope garnets were plotted as metallic oxide ratios against established chemical domains for G10, G9, eclogitic and Iherzolitic garnets.

The chemical composition Cr2O3:CaO (wt%) of eleven of the pyrope garnet grains analysed fell within the G10 pyrope domain, and the bulk of the remainder fell within the G9 pyrope domain. A small number of the garnets were found to be eclogitic with chemical compositions TiO2:Na2O (wt%), FeO:MgO (wt%) and TiO2:CaO (wt%) that fell partly within, or immediately adjacent to, the diamond inclusion field. The chemical composition Cr2O3:CaO (wt%) of over 95% of the chrome diopside grains fell within the diamond inclusion field.

Sixty-six grains of ilmenite were analysed and, when plotted, were found to form a tight cluster with MgO compositions ranging between 10 and 14 (wt%), with Cr2O3 compositions up to 7 (wt%) exhibiting a reducing trend, and therefore a strong indication of diamond preservation. Of the 85 grains of chromite analysed, the chemical composition Cr2O3:MgO (wt%), one fell within the diamond inclusion field and, although the others plotted outside the diamond inclusion field, they exhibited a strong kimberlitic trend.

The management of Diadem is encouraged by the results of the electron microprobe analyses, which suggest that it is highly likely that many of the kimberlite indicator minerals analysed originated from diamond-bearing kimberlites.

Recent Exploration
In 2006, Taiga Consultants Ltd. was commissioned by Diadem to prepare an assessment report of the 2005 geochemical and geophysical exploration program. Among other things, Taiga reported that:"In addition to the ten known kimberlite pipes in the Northern Block, there are eleven high-priority targets for further exploration and two new targets identified by the 2005 airborne survey". Since issuing the report, Taiga has identified an additional five potential targets, bringing the total to be drilled to 28. In the report, Taiga said "Till sample kimberlite indicator mineral counts and mineral chemistry will assist in prioritizing drill targets but ultimately geophysical signatures should be used to define drill targets within areas of anomalous indicator mineral counts". Taiga concluded: "the known kimberlite pipes at MT9, MT100, MT101, MT103, MT104, MT105, MT106, MT107, MT108 and MT109 should be further tested by diamond drilling. The objective of the drilling should be to outline the dimensions and size of the pipes and also to collect larger samples for micro-diamond analysis.”

In recognition of the strong results from earlier exploration, Diadem has been developing a detailed diamond drilling program, with an estimated budget in the range of C$1.5 million to C$2.9 million. This includes a further ground magnetic survey which was completed in April 2008 which was designed to more precisely locate and define a number of airborne magnetic anomalies on the ground that Diadem management determined was necessary prior to initiating the diamond drilling program. Collectively, a total of 327.7 line km of survey was carried out over 13 individual control grids overlying 16 separate airborne magnetic anomalies. These anomalies are part of the 28 exploration targets referred to in various news releases and other disclosure made by Diadem.

The survey was carried out by JVX Ltd of Richmond Hill, Ontario under the supervision of Tim Sandberg of Taiga Consultants using three GSM-19W walking v7.0 Overhauser magnetometer systems (roving magnetometers) with an associated GPS board. Two stationary non-GPS base station GSM v7.0 magnetometers were also used in the survey to measure the diurnal variation in the earth's magnetic field within the survey area. Magnetic data were collected on foot with three instrument operators reading the "roving" magnetometers.

Preliminary, unrefined field data suggests that several of the airborne magnetic anomalies that were surveyed on the ground have magnetic signatures similar to those recorded by previous ground surveys over known diamond-bearing kimberlite pipes on the Project. The ground magnetic anomalies are characterized by well-defined, circular magnetic lows and magnetic high signatures that appear to be spatially related to major structural features. The magnetic expressions of the known kimberlite pipes on the Diadem property contrast sharply with the weakly magnetic carbonate and clastic sedimentary rocks that they have intruded, enabling the recognition of potential kimberlite pipes with a high confidence level.

The raw data collected from the ground magnetic survey is being processed and analyzed by JVX Ltd. and management.  The results of this analysis will form the basis to finalize the drilling program for the Project which Diadem hopes will be carried out later this year.  In addition to arranging the necessary financing, in order to carry out the drilling program Diadem will need to complete the requisite permitting and extend its current land access agreement with the Inuvialuit Regional Corporation.  A drilling crew and drill have been contracted for work on the Project when the prerequisites have been arranged.

In order to minimize mobilization costs for the drilling program, in July 2007 Diadem transported bulk supplies and consumables (including diesel and helicopter fuel, calcium chloride and propane) to Paulatuk. These supplies are still in place in Paulatuk awaiting commencement of the program. Diadem was able to take advantage of the Project's good access to water transport, by delivering these supplies by barge from Hay River, NWT via the Mackenzie River and Arctic Ocean to Paulatuk. Normally, the Project location has unobstructed water access four or five months of the year. This is in marked contrast to most Arctic mining projects which must rely on land transport, usually over ice roads which are only available in the middle of winter and are subject to variances in climatic conditions.

The technical information in this summary has been reviewed and approved by Thomas Skimming, P.Eng., a Director of Diadem and a Qualified Person as defined by NI 43-101.