TORONTO, ONTARIO--(Marketwired - May 7, 2013) - Darnley Bay Resources Limited (News - Market indicators) ("Darnley Bay") announced today that it has entered into a purchase and sale agreement (the "Definitive Agreement") with Diadem Resources Ltd. ("Diadem") providing for the purchase by Diadem of Darnley Bay's interest in the Franklin diamond project in the Parry Peninsula of the Northwest Territories. Under the terms of the Definitive Agreement Diadem will have exclusive rights to all diamonds in the Parry Peninsula. This Definitive Agreement is intended to supersede a memorandum of understanding entered into by Darnley Bay and Diadem on September 27, 2011. Closing of the transaction is scheduled for June 30, 2013 (the "Closing Date").

Consideration for the purchase by Diadem will consist of: 11,700,000 common shares of Diadem; 11,700,000 warrants of Diadem, each warrant entitling Darnley Bay to purchase one common share of Diadem at a price of $0.10 per share for a period of 30 months after the Closing Date; and Darnley Bay will retain a 2% Net Smelter Royalty ("NSR") on the sale of diamonds and all other minerals produced from the project. Diadem will have the right to purchase 1% of the NSR for $1.0 million in cash. Diadem currently has outstanding 50,008,848 common shares and 53,208,848 common shares on a fully diluted basis. Within 7 days of the Closing Date, Diadem shall also reimburse Darnley Bay to a maximum of $40,000 for Diadem's share of the cleanup costs associated with the 2010 drilling program. In addition, Diadem shall grant Darnley Bay the right to purchase up to $40,000 worth of securities of Diadem, at the lowest price per security offered by Diadem to third party investors, in connections with the first equity financing completed by Diadem after the Closing Date.

Diadem has agreed to incur a minimum of $1,500,000 of expenditures with respect to the project within 24 months of the date of the Definitive Agreement. In the event that Diadem fails to incur the expenditures within the 24 month period, then in addition to all of the compensation paid to Darnley Bay, Diadem will transfer 100% of its interest in the project to Darnley Bay in return for a two percent (2%) net smelter royalty from the sale of diamonds produced from the project.

This acquisition is subject to the approval of the TSX Venture Exchange, other applicable regulatory authorities and the Inuvialuit Regional Corporation and its affiliates.

The Darnley Bay property hosts North America's strongest isolated gravity anomaly, which has been favourably compared by the Geological Survey of Canada to other prominent gravity anomalies such as those at the prolific mining camps of Noril'sk in Russia and Sudbury basin in Ontario. It is located near Paulatuk, Northwest Territories, on the Arctic coast. The Darnley Bay anomaly is larger and stronger than any of these comparatives by a wide margin, measuring 100 kilometres long north to south and about 80 kilometres wide. The GSC discovered the anomaly in 1969, and its source has never been explained. The company has 100-per-cent control of its exploration and potential development subject to certain back-in and other rights of Inuvialuit Regional, which holds the land on which it occurs.

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.