MONTREAL, QUEBEC -- (Marketwire) -- 03/14/13 -- Stornoway Diamond Corporation (TSX: SWY) is pleased to report that it has entered into option agreements with 0954506 B.C. Ltd. (the "Optionee"), a private company controlled by Ms. Eira Thomas, formerly a director of Stornoway, relating to Stornoway's interest in each of the Qilalugaq, Pikoo and Timiskaming exploration projects. Under the terms of the option agreements, the Optionee will acquire an 80% interest in each of the Qilalugaq, Pikoo and Timiskaming exploration projects upon completion of a defined exploration program (the "option work program") specific to each project. The option work programs will be funded and operated by the Optionee. Stornoway retains a one-time back-in right to re-acquire a 20% interest in each project, thereby increasing its interest to 40%, by paying the Optionee an amount equal to three times the cost incurred by the Optionee in connection with the project-specific option work program. Stornoway has a 100% interest in each of these projects; the Qilalugaq project is subject to a 3% net smelter returns royalty on metals produced and a 3% gross-overriding royalty on the sale of industrial minerals, including diamonds.
The Optionee has notified Stornoway of its intent to assign its interest and obligations in the option agreements to North Arrow Minerals Inc. (TSX VENTURE: NAR) ("North Arrow"), as permitted under the terms of the option agreements. Upon closing of the assignment, North Arrow, as optionee, will assume the rights and obligations of 0954506 B.C. Ltd. under these agreements.
The option work program for the Qilalugaq, Nunavut project is designed to evaluate the potential of the Q1-4 kimberlite by the surface collection and subsequent processing of a 1,000 tonne bulk sample. The option work programs for the Pikoo, Saskatchewan and Timiskaming, Ontario projects are designed to evaluate the potential for bedrock kimberlite occurrences at each project. The Pikoo option work program will consist of a minimum of 2,000 meters of diamond drilling within the project, with a minimum of two drill holes for each of the North and South Target areas. The Timiskaming option work program will consist of single core drill holes testing three separate geophysical targets. The Timiskaming option agreement excludes the previously identified 95-2 kimberlite. Stornoway expects that exploration on these projects will commence in 2013, subject to receipt of all required permits and authorizations.
Matt Manson, Stornoway's President and CEO commented: "This option agreement allows us to move these promising exploration projects forward while allowing our management team to focus on the development of the Renard Diamond Project, our core asset. The bulk sample program at Qilalugaq, for which an Inferred Mineral Resource of 26 million carats was declared by Stornoway in June 2012, is designed to recover a large enough parcel of diamonds for a preliminary valuation and economic assessment. The Pikoo and Timiskaming work programs are designed to test for the presence of kimberlite with economic potential. At the end of each program Stornoway and the Optionee will be well placed to make a determination on whether to advance each project further within a joint venture, if results warrant."
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