Commissioning of Mbala Diamond Recovery Plant proceeding.

TORONTO--(BUSINESS WIRE)--June 12, 1997--United Reef Limited (TSE:URP.) announced today that commissioning of the joint venture's 30-tonne per hour diamond recovery plant, proceeded on schedule during the month of May. The plant is located near the village of MBala on the joint venture's Bamingui River diamond property in the Central African Republic. During May a total of 291.44 carats of diamond were recovered from processing of 3,680 tonnes of alluvial gravel.

Management is encouraged by the fact that the average size of the diamonds that were recovered during this period has increased to 0.46 carats per stone, which represents a 21% increase over the historic average. The individual diamonds that were recovered during the month range in weight from 0.10 carats, to a high of 10.55 carats. Management believes that this increase in stone size, and their good quality will reflect in the sales value of the goods.

In May, a second shift of plant employees were trained and during the last week of May the plant operated an average of 11 hours per day. Once fully commissioned the MBala plant will operate 18 hours per day. Overburden removal is now taking place on a 21 hour per day basis, and the mining of the diamond bearing gravel is being carried out on two 6 hour shifts each day.

Management expects that the operation will initially produce between 600 to 800 carats of gem diamond each month from the Bamingui River deposit. To date, the sale of 5,731.27 carats of diamond from the Bamingui River diamond deposit has returned an average sales value of US$182 per carat. Management expects to have a parcel of diamond ready for sale by early July.

For additional information please contact Michael D. Coulter, President, or Kenneth Johnson, Executive Vice President at [phone].

CONTACT: United Reef Limited

Michael D. Coulter, 416/368-0993

or

Kenneth Johnson, 416/368-0993