Indicator Minerals (CVE:IME) said Tuesday it has optioned its Barrow property in the Pelly Bay diamond region in Nunavut to Diamonds North Resources (CVE:DDN).
Under the agreement, Diamonds North can earn a 60% interest in the diamond rights on the property by spending $2.0 million over five years. The company's shares rose more than 6.6% on Tuesday to trade at $0.16 as of 10:02am EST.
The Barrow property is next to Diamonds North's Amaruk claims, where a total of 25 kimberlites have been discovered. Kimberlites are a type of volcanic rock best known for containing diamonds.
"This transaction provides access to a larger, prospective geological area to test a new generation of kimberlite targets," said president and CEO of Diamonds North, Mark Kolebaba.
Diamonds North will be the operator of the project during the earn-in period, and will remain operator provided it holds the largest single interest in the property.
Indicator is exploring for diamonds on more than 2.3 million acres of ground in the Eastern Arctic of Canada. It owns an 80% interest in the diamond rights of several properties, acquired from Hunter Exploration Group, including Darby, Barrow, Nanuq North and Grail.