$5,100,000 Financing Agreement Signed.

TORONTO--(BUSINESS WIRE)--July 2, 1998-- Diadem Resources(ME:DIR.) Diadem Resources Ltd. (MSE-DIR) is pleased to announce that it has signed an agreement for a private placement financing in the amount of $5,100,000. The proceeds will be used to continue exploration and development work on its Leek Springs diamond project in California and its La Mestiza gold project in Nicaragua as well as general working capital purposes.

FINANCING DETAILS

The proposed private placement, which is subject to regulatory approval and completion of satisfactory due diligence by the investors, is comprised of two offerings. The first offering is in the amount of $1,300,000 for the issue of 4,814,815 common shares at $0.27 per share (of which the issue of 444,445 common shares will require shareholder approval). The second offering which is also subject to shareholder approval entails the issue of 12,666,666 units at $0.30 per unit for proceeds of $3,800,000. Each unit is comprised of one commonshare and one common share purchase warrant. Each common share purchase warrant permits the holder thereof to purchase one additional common share at a price of $0.45. The warrants have a term of two years from date of issue. The placement, which will take place in Europe, has been arranged by International Mining & Exploration Corp. (a U.S. publicly traded company, symbol "IMEF", OTC Bulletin Board) and International Indexed Savings Portfolio Ltd. of Zurich, Switzerland. A special shareholders meeting will be held in early September to seek approval of the second offering by the shareholders. A commission of 481,482 common shares and 1,266,667 units is payable upon closing.

LEEK SPRINGS DIAMOND PROPERTY, CALIFORNIA The Leek Springs property, consisting of 4,300 acres, is located in the Sierra Nevada mountain range in Eldorado County, California. It is approximately 120 miles north-east of San Francisco and 22 miles south-west of Lake Tahoe. The Company is earning a 55% interest this property by making certain option payments and work commitments.

A surface and airborne exploration programme during the 1997 exploration season included geological mapping, sampling, petrographic studies, whole rock analysis, indicator mineral analysis, land sat interpretation and airborne geophysics. An interpretation of the results of this work by the Company's consultants has outlined twenty magnetic anomalies. Three large positive magnetic anomalies of 40-50 acres each were interpreted as diatremes. They are believed to be the major primary vents through which the volcanic breccias and flows were erupted and represent the main source/conduits of the widespread diamond and indicator mineral bearing volcanics outcropping in the Leek Springs area. They have not been drilled.

Seventeen other smaller anomalies were interpreted as secondary volcanic vents. Seven of these anomalies were drilled by Diadem in 1995/1996 and all were diamondiferous with the recovery of 247 fragmented and broken diamond crystals ranging in size from 0.06mm to 0.68mm. The diamonds occur in an olivine lamproite volcanic breccia. This is significant since the largest diamond mine in the world, the Argyle Mine in Australia, produces from a lamproite.

The Company is planning an exploration program for 1998-1999 of ground follow up on 13 of the 20 anomalies including sediment sampling for indicator minerals, prospecting, geological mapping and ground magnetic surveying. The purpose is to assess the anomalies prior to commencement of a diamond drilling, core sampling and testing program. Work is expected to commence in mid-July.

Diamonds were first discovered in California during the gold rush commencing in 1848. More than 800 diamonds were recovered and documented by the gold miners. The average size was 0.86 carats with several being larger than 1.0 carat. The largest recorded diamond weighed 7.25 carats. Most were understood to be of gem quality. The discovery of diamonds by Diadem on the Leek Springs property is the first time that a bedrock source of diamonds has been recorded in California. Indications are that the majority of the diamonds recovered during the gold rush had their origins in the area of the Leek Springs property.

LA MESTIZA GOLD PROPERTY, NICARAGUA The La Mestiza gold property is located 100km north of Managua, the capital of Nicaragua. It covers an area 1km by 2km and is held under a 5 year exploitation permit dated April 4, 1994. The Company has the right to earn a 68.75% interest by making certain option payments and work commitments.

The Company's consultants estimate that this property contains resources of 4,962,000 tons grading 0.29 ounces gold per ton for an aggregate of 1,440,000 ounces. While additional exploration and development work are required to confirm the resources, the property has excellent potential to increase the resources and to support a 500-800 tons per day mining operation. An exploration program is being prepared for 1998-1999 to further explore the 12 vein systems on the property. It is anticipated that a 50 tonnes per day pilot mill will be installed on the property within the very near future as part of this program. An environmental permit has been received for the operation of the pilot mill.

CAPITALIZATION The Company currently has 26,465,005 common shares outstanding (43,946,486 when this financing is completed and 65,404,096 fully diluted). An additional $12,197,863 would be realized if all existing stock options and share purchase warrants were exercised.

Diadem is a diversified mineral exploration and development company with its primary focus of activities being diamond and gold exploration and development.

   CONTACT:  Diadem Resources Ltd.
              Daniel Farrell, 416/ 364-2893
              416/ 368-2579  (FAX)