Diamonds North plans U3O8 spinoff

Aptly named diamond explorer Diamonds North Resources (DDN-V, DNORF-O) plans to hive off its uranium assets under a new exploration vehicle dubbed Uranium North Resources.

Under the plan, Diamonds North would reorganize; shareholders would then receive one share in Uranium North for each Diamonds North share held. The plan, which will be put to a shareholder vote on May 10, needs at least two-thirds of the votes cast to be approved. It must also pass muster with the Supreme Court of British Columbia and TSX Venture Exchange.

Diamonds North will loan the upstart $300,000 in cash to get going, with the loan converted into Uranium North shares at a rate equal to the planned prospectus offering price. The parent will also be issued around 1.5 million additional shares.

In the end, Diamonds North will hold just less than 10% of Uranium North; existing shareholders will hold around 40%, with the balance held by prospectus purchasers.

Uranium North will be charged with exploring Diamond North’s 110,000-sq.-km land package in northern Canada, including 12,140 sq. km in the Thelon, Baker Lake and Hornby Bay basins. The Thelon and Baker properties are already home to at least 10 historic bedrock showings and boulder trains with U3O8 grades of 0.2%-5%.

Meanwhile, Pathfinder Resources (PHR-V, PFDFF-O) is preparing to launch a ground-based geophysical survey to better define a 6-km-long basement conductor on the northeastern part of the Thelon joint-venture project, 500 km east of Yellowknife. Pathfinder believes the conductor is coincident with an unconformity, which, in turn, may be associated with a fault zone.

Looking ahead, Pathfinder plans a 7,000 line-km MegaTEM II airborne survey over the majority of the property in June.

The work is part of Pathfinder’s agreement to earn an 80% stake in the project’s uranium rights by spending $4 million on exploration over three years. Thereafter, Diamonds North will be carried at 20% through a bankable feasibility study.

Shares in Diamonds North were 11 or 12.6% better at 98 in early afternoon Venture Exchange trading following the news.