The project is the largest undeveloped diamond property in Canada and represents significant potential due to evidence that the project is hiding fancy vivd orangey-yellow diamonds, a colour recognised by the Gemological Institute of America.

This colour is expected to sell at high premiums to white diamond prices.

BHP owned the site in the early 2000’s before it was acquired by North Arrow in 2013, making it the only diamond property in Canada not controlled by a major mining company.

Previous bulk sampling has not revealed a strong enough supply of diamonds to cement the value of the coloured stones.

Australian-based EHR is pledging $C5.6 million ($6 million) in funding for a preliminary bulk sample next year, which will give the company the option to earn a 40 per cent interest in the project.

This is expected to reveal the value of the stones in the area.

“We are delighted to announce the Naujaat diamond project as the next investment under our broader diamond strategy which we outlined in March – to establish a high quality portfolio of world-class diamond projects,” EHR managing direct Peter Ravenscroft said

“The historic project economics substantially omitted the significant population of highly valuable and rare coloured diamonds, providing EHR with an opportunity to unlock latent project value that will drive long-term shareholder gains.”

Ravenscroft believes the investment will pay off under the current environment for the rare mineral.

“Crucially, our attractive entry price for this investment comes at a favourable time in the diamond cycle for asset acquisitions,” he said.

“We look forward to continue working closely with North Arrow on the modelling of Naujaat diamond quality and value, with both companies strongly agreeing that there is a substantial upside opportunity in value provided by the population of rare coloured stones.”

The Naujaat project has identified a total of eight kimberlite pipes over 10,740 hectares of mineral leases and claims.