Diadem adds to Otish Mountain portfolio

Diadem Resources (DIR-V) has agreed to acquire some 1,552 staked claims covering 810 sq. km in the Otish Mountains area of northern Quebec.

While no total price tag was mentioned, Diadem said it would issue to the 13 respective vendor companies special shares of a newly minted subsidiary equal to the staking costs and work carried out on the claims.

Should a diamond mine be put into commercial production on any claim, Diadem will pay a 2% gross diamond royalty to the vendor. Diadem can buy back the royalty for $1.5 million within 90 days of completion of a bankable feasibility study, or for $2.5 million within a year of commercial production.

The special shares are exchangeable, from 2005 to the end of 2006, into Diadem common shares at either party’s option. The exchange price would be based on Diadem’s weighted average share price during the 3-month period ended Dec. 31, 2004.

The deal has yet to be approved by regulators.

When the dust settles, Diadem will hold claims in the region totalling more than 1,500 sq. km. The claims are centred on discrete magnetic targets associated with diabase dyke structures.

Diadem is preparing to begin mapping, field examination and possibly till sampling.