North Arrow Minerals Inc. Jan. 17 said it has agreed to acquire Stornoway Diamond Corp.'s interests in Qilalugaq and Pikoo, which will give North Arrow full ownership of both northern Canada diamond projects.

Under terms of the agreement, North Arrow will acquire Stornoway's roughly 18 percent interest in the Qilalugaq project in Nunavut and 15 percent interest in the Pikoo project in Saskatchewan in exchange for 2 million North Arrow common shares.

Stornoway will retain 0.5 percent and 1 percent gross overriding royalties on diamonds, and 0.5 percent and 1 percent net smelter returns royalties on base and precious metals mined from Qilalugaq and Pikoo, respectively.

North Arrow has also agreed to pay C$2.5 million and C$1.25 million to Stornoway at the time that first royalty payments for Qilalugaq and Pikoo, respectively, are due.

"The agreement announced today allows North Arrow to consolidate our ownership of the Qilalugaq and Pikoo projects without up-front cash payments and provides the company with greater flexibility to manage continued evaluation of two of the most compelling exploration stage diamond projects in Canada," said North Arrow President and CEO Ken Armstrong.

Qilalugaq hosts the Q1-4 kimberlite, which contains a population of fancy orangey yellow diamonds that are unique in Canada. North Arrow said it has mobilized a drill to Naujaat, a community about nine kilometers (5.5 miles) from Q1-4. The company plans to carry out a drilling and sampling program there this spring and summer.

-SHANE LASLEY