Diadem doubles its Otish Mountain portfolio

Diadem Resources (DIR-V) has agreed to acquire some 1,552 staked claims covering around 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 December 31, 2004.

The deal is subject regulatory approval.

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

Diadem plans to begin mapping, field examination and perhaps till sampling this month.

Diadem shares shot up 2.5, or 33.3% of value, to a dime in early trade in Vancouver following the news on Aug. 1.