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UPDATE: CMKM DIAMONDS, INC. (Pink Sheets: CMKX) - LESS AND MORE

Investigative Reports

June 22 2004

CMKM Diamonds, Inc. (Pink Sheets: CMKX) continues its reign as the most actively traded stock on the Pink Sheets. The Company, which says it is exploring for diamonds in Saskatchewan, Canada, continues to attract curious investors, despite the absence of current public information concerning its financial state, management team, and outstanding shares. See CMKM Diamonds, Inc. - A Familiar Drill. As we have discovered, there is considerably less, and monumentally more, to CMKM than immediately meets the eye.

First the less.

Diamond Lite

A June 10, 2004 press release from CMKM proclaimed that samples recovered from the Company's "Carolyn Pipe" drilling project had been confirmed to be "diamondiferous" by an independent laboratory.

What was the extent of "diamond content?" The CMKM press release did not elaborate, although it did offer a routine disclaimer that "[t]here is no guarantee that further exploration or drilling will produce any economic benefit to the company or the shareholders of the company."

Fortunately, other participants in the project eventually were more forthcoming.

As the Company noted in its press release, the "Carolyn Pipe" is located on property in Smeaton, Saskatchewan that is jointly owned by CMKM and three other companies listed on U.S. and Canadian exchanges - United Carina Resources Corp. (CDNX: UCA), Consolidated Pine Channel Gold Corp. (CDNX: KPG); and U.S. Canadian Minerals Inc. (OTCBB: UCAD).

The diamondiferous announcement may have fueled investor interest in CMKM, but it had a decidedly different effect on two of its partners, United Carina Resources and Consolidated Pine Channel Gold. The CMKM press release was issued at 6:26pm on Thursday June 10th, after the U.S. markets had closed for a long weekend that included an unusual Friday closing in honor of President Ronald Reagan's funeral.

Canadian markets were opened for business as usual on Friday June 11th, which might have allowed CMKM's Canadian-listed joint-venture partners to profit from the diamondiferous disclosure. Instead, trading in the two stocks was suspended by the Toronto Stock Exchange (TSE) on June 11th before the market opened. The TSE said that the suspension had been requested by United Carina Resources and Consolidated Pine Channel Gold "pending an announcement." All trades prior to the halt were cancelled because of an imbalance of material information.

Four days later, a press release from United Carina Resources balanced the available information and removed the luster from CMKM's diamondiferous find. The June 15th press release indicated that the samples were only marginally "diamondiferous." Indeed, one 40.01 kilogram sample contained two diamonds having a combined weight of less than .000005 carats. No diamonds were recovered from eleven other samples.

The United Carina press release shed further light on some earlier statements from CMKM. In a March 29, 2004 press release, CMKM announced a new kimberlite discovery on the Smeaton property, which it said would be named "The Carolyn Pipe" after the wife of CMKM's President Urban Casavant. According to United Carina, however, the kimberlite at "The Carolyn Pipe" was hardly new. It said that kimberlite had first been intersected on the Smeaton property in 1996, but was not fully tested at that time. Since that time it had been referred to as the Smeaton kimberlite.

Investors who have been relying upon news emanating from CMKM may not be aware of these details; CMKM has not yet issued a press release revealing the minimal nature of its diamondiferous discovery.

And now for the more.

BILLION SHARE POPULATION GROWTH

As we have noted here, and in our earlier article on CMKM, investors have been trading billions of shares of the Company's stock each day, so many shares in fact that the reporting systems are unable to record the total number.

Considering that massive volume we could not help but wonder just how many shares CMKM is authorized to issue. That information is not easy to obtain since CMKM has elected not to file regular reports with the SEC. It is, however, available from the Office of the Nevada Secretary of State.

When we contacted the Nevada Secretary of State's Office to find that number we were initially greeted with a chuckle from a representative who then explained that her office had been swamped with requests for information about CMKM. When we then asked how one might obtain copies of all amendments to the CMKM Certificate of Incorporation, we were told that, at a price of 20 cents per page, it could be costly since there had been multiple amendments and the material was "voluminous." We also were advised that it could take days to receive the material because of the numerous pending requests.

Fortunately, the Nevada Secretary of State's Office was kind enough to send the information we were requesting, quickly and free of charge. What we learned was startling. As of March 1, 2004, CMKM was authorized to issue 500 billion shares! To place that in some perspective, it means there is enough CMKM stock to give every one on earth (approximately 6.4 billion people according to the U.S. Census Bureau) about 78 shares of CMKM common stock.

Imagine that, everyone in China could share a piece of those two diamond fragments.

In February 2003, shortly before the Company ceased filing public reports, it indicated that it had recently decided to increase its authorized stock from 500 million to 10 billion shares - a healthy bump. In fact, the records we have now reviewed indicate that the Company had increased its authorized shares to 100 billion shares by December 2003.

It was just getting started. As we have now learned, the Company increased its authorized shares from 200 billion to 500 billion on March 1, 2004. That, however, was only the latest in a series of amendments increasing the Company's authorized capital on the way to 500 billion shares.

How many of these shares have been issued? That remains a mystery, but as a rule companies do not tend to dramatically increase their authorized capital unless they have issued all, or nearly all, of the available stock.

At this rate, the prospect of a trillion shares does not seem that far away.



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