Darnley Bay Resources Limited

Darnley Bay Resources Limited

October 04, 2011 09:25 ET

Darnley Bay Resources Announces Memorandum of Understanding ("MOU") With Diadem Resources

TORONTO, ONTARIO--(Marketwire - Oct. 4, 2011) - Darnley Bay Resources Limited (TSX VENTURE:DBL) has signed an MOU with Diadem Resources Ltd. (TSX VENTURE:DRL) for Diadem to acquire DBL's 50% interest in the Franklin Diamond Project on the Parry Peninsula and its 50% diamond interest in the South Lands. DBL retains its 100% interest to all other minerals on the South Lands. As consideration, Diadem will issue DBL 11,700,000 common shares and a 2% diamond royalty. In addition, Diadem shall undertake at least $1,250,000 of diamond exploration work on the Parry Peninsula and/or South Lands by September 30, 2012 (see reference map at www.darnleybay.com).

DBL shall retain the right to restore its rights in the subject areas if valuable minerals are discovered on the lands by paying in cash to Diadem, 200% of Diadem's aggregate expenditure on the subject lands incurred prior to the exercise of the repurchase. Diadem will retain the right to purchase 1% of the diamond royalty for a $1.5 million payment to DBL.

DBL CEO Jay Richardson said, "We believe this transaction will result in a simplification that will enable Diadem to utilize its significant diamond exploration expertise to maximum advantage. DBL would continue to be the beneficiary of Diadem's success through its back-in rights and, without further cost, through its shareholding and NSR. We will continue to emphasize exploration for other minerals on all of our lands."

About Darnley Bay Resources Limited:

Darnley Bay Resources Limited was formed in 1993 to explore for and develop base metal deposits related to the 50 km x 80 km, 132 mGal Darnley Bay gravity anomaly near Paulatuk, Northwest Territories, Canada. The source of the anomaly remains unexplained. Darnley Bay is exploring for base and precious metals on its 4,600 km2 land holding and has had a partnership with Diadem Resources Ltd. on 33 claims, as described in the news release of July 9, 2010, which encompass thirteen kimberlite pipes (seven proven diamondiferous), which is being resolved by the present MOU.

Forward-Looking Information

This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that Darnley Bay expects are forward-looking statements. Although Darnley Bay believes the expectations expressed in such statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the statements. There are certain factors that could cause actual results to differ materially from those in forward-looking statements. These include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. For more information on Darnley Bay, investors should review registered filings at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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