|Diadem is buying out Damley Bay Resources' shares in the Franklin diamond project in the Northwest Territories|
Diadem Resources Ltd. has entered into a Memorandum of Understanding with Darnley Bay Resources Limited (DBL) to acquire DBL's 50% interest in the Franklin diamond project in the Northwest Territories and DBL's diamond exploration rights on the Paulatuk South Lands, the company reported Monday.
Upon completing a definitive agreement between the parties, Diadem will have exclusive rights to all diamonds in the Parry Peninsula and Paulatuk South Lands.
Under the terms of the MoU, DBL will receive 11.7 million treasury shares of the company and will retain a 2% royalty on any diamond production from the project properties. Diadem will have the right to purchase 1% of DBL's 2% royalties for $1.5 million in cash.
Darnley Bay will also retain the rights to purchase back a 50% interest on minerals other than diamonds that Diadem discovers on the Franklin Diamond project properties, as well as its back-in rights in all valuable minerals in the Paulatuk South Lands.
This acquisition is subject to the approval of the TSX Venture Exchange and other applicable regulatory authorities and by both companies’ boards of directors.