Capital pool company Spirit Banner II Capital Corp. entered into a binding letter to purchase all of Five Star Diamonds Ltd.'s six diamond projects in Brazil.

Five Star intends to change its name to Star Royalties Ltd. and continue as a royalty and stream company, according to a March 25 release.

To acquire Five Star unit FSD Brazil Ltd., Spirit Banner will issue 100.0 million shares, pay C$250,000 cash, and grant a 3% net smelter returns royalty over the Catalao project and a 1.5% net smelter returns royalty over all other diamond projects.

Following the transaction, Five Star shareholders will hold a majority of Spirit Banner, which will continue Five Star's diamond business in Brazil.

Matthew Wood is a director of Spirit Banner and the president, CEO and director of Five Star. Wood holds 10.34% of Spirit Banner and 6.32% of Five Star.