Lydia Diamond reports from the courts

Unable to reach agreement on the fair value of the Lydia Diamond shares held by Ms. von Anhalt, Lydia Diamond commenced an application to the Court seeking an order fixing the value of her Lydia Diamond shares. On January 5, 2011 the Court determined that the fair value of the Lydia Diamond shares was $0.048 per share and ordered that a total of $1,071,162 be deposited into court including the $400,000 previously deposited by Lydia Diamond.

On May 19, 2011 the Court approved a series of transactions designed to settle various outstanding claims agains Emilia von Anhalt with the proceeds of the dissent award. These transactions are summarized below.

Crown William Purchases Shares of Crown William from Lydia Diamond for Cancellation

Pursuant to the Dissent Rights Support Agreement the following transactions were undertaken:

1. Crown William repurchased 3,718,512 (approximately 37% representing all of Ms. von Anhalt’s portion) of the 10,022,943 Crown William shares issued on the purchase of the Madoc Project for the sum of $1,071,162; and

2. Crown William paid that amount by converting the $400,000 loan to Lydia Diamond into a portion of the purchase price, and by delivering a promissory note in the amount of $671,162 (the “Crown William Note“).

The Crown William Note was ultimately returned to Crown William in recognition of its having satisfied the claims of Litigation Creditors against Lydia Diamond and Emilia von Anhalt as discussed below.

Funding of Fair Value Payment to Emilia von Anhalt

As noted above, the fair value of the Lydia Diamond shares was $0.048 per share for a total of $1,071,162. However, both Lydia Diamond and Emilia von Anhalt owed certain amounts to creditors as follows:

1. Lydia Diamond and Emilia von Anhalt were jointly liable for two judgments aggregating approximately $982,000 (the “Judgments“) owed to separate groups of litigants (the “Litigation Creditors“) arising from legal proceedings relating to fraudulent misrepresentations. Crown William purchased these Judgments from the Litigation Creditors for $982,000, payable by way of two promissory notes (one for $260,000 payable out of funds in court for the benefit of Lydia Diamond; one for $322,000 payable on November 1, 2011) and $400,000 payable by Crown William issuing 200,000 common shares at an ascribed value of $2.00 per share;

2. Emilia von Anhalt owed the Ontario Securities Commission a total of $100,000 pursuant to an outstanding fine (the “Fine“); and

3. Emilia von Anhalt owed professional fees as a result of her dissent action (the “Fees“);

The foregoing items were partially satisfied by payments out of the cash held in court for the benefit of Lydia Diamond, being $413,372.83 (the original $400,000 deposit plus interest):

1. $260,000 was paid out of court at the direction of Crown William to the Litigation Creditors in satisfaction of one promissory note, $100,000 was paid out of court to the OSC with respect to the Fine, and the remaining $53,372.83 was paid out of court in partial satisfaction of the Fees;

2. Crown William paid the remaining Fees plus further amounts necessary to satisfy Lydia Diamond’s obligations to pay costs of the applications to the Court; and

3. Lydia Diamond returned to Crown William the Crown William Note in full and final satisfaction of the Judgments (leaving Crown William with a shortfall of $51,000 plus the remaining Fees).

As a result of these transactions, Lydia Diamond’s obligations to Emilia von Anhalt were satisfied in full, and her obligations to the creditors noted above were also satisfied in full. Her shares in Lydia Diamond have been cancelled. In addition, the purchase price for the 3,718,512 shares of Crown William purchased from Lydia Diamond by Crown William for cancellation was satisfied in full.

Now that the dissent action has been resolved, Crown William will focus on its continuing efforts to raise financing for exploration on the Madoc Project, to prepare and clear a prospectus for its shares to allow the distribution of shares held by Lydia Diamond to its shareholders, and to conclude the winding up of Lydia Diamond, as approved by its shareholders at the meeting on December 23, 2009.