June 03, 2008
Peregrine Diamonds and Peregrine Metals Plan to Merge as a New, Multi-Commodity Resource CompanyPeregrine Diamonds Ltd. ("Diamonds") and Peregrine Metals Ltd. ("Metals") are pleased to announce that they have entered into a letter of intent for the purpose of effecting a business combination whereby the two companies will merge to form a new multi-commodity resource company to be called Peregrine Resources Ltd. ("Peregrine Resources"). Both companies are currently working to establish independently calculated, NI 43-101 compliant resources; a copper resource at the Altar porphyry deposit in San Juan Province, Argentina for Metals and a diamond resource at the nine hectare DO-27 kimberlite pipe in the Northwest Territories, Canada for Diamonds. In addition to these two advanced projects, Peregrine Resources will have a portfolio of quality base and precious metal, iron ore, diamond and uranium projects in Chile, Argentina, Peru and Canada.
There are compelling reasons for this business combination including the following:
Throughout the merger process, Diamonds and Metals will continue to advance their respective projects.
About Peregrine Metals
Peregrine Metals Ltd. is a private, Canadian metals exploration company formed in 2005 with 86.9 million shares outstanding. The most recent financing of $7.9 million was completed in April, 2008 at a price of $0.50 per share and current working capital is $4.5 million. To date, Metals has spent $16.5 million on exploration including $9.5 million on the Altar project. Brief descriptions of the main projects of Metals follow.
Altar Porphyry Copper Project, Argentina
The primary focus for Metals has been the advancement of the Altar porphyry copper-gold-molybdenum deposit in San Juan Province, Argentina. An independent resource estimation based on a cumulative 28,850 metres of core drilling in 64 holes is expected to be completed in August 2008. A 24-hole, 12,300 metre, diamond drilling campaign was completed on schedule in April 2008. Following receipt of the resource estimate, Metals will initiate a preliminary economic assessment of the deposit.
The first drilling at Altar was in 2003. Some of the better drill intercepts to date include:
The deposit is located at relatively low elevations of 3,000 to 3,700 metres adjacent to the Chile-Argentina border and is accessible seasonally by an existing road. Ample water sources exist on the property and potential power sources are located 25 kilometers away.
Additional technical information on Altar is available in Appendix A as required by Canadian NI 43-101 Reporting Guidelines.
Caballo Blanco and La Higuera IOCG Projects, Chile
Caballo Blanco and La Higuera are Iron-Oxide Copper-Gold (IOCG) projects adjacent to one another in the coastal iron belt of northern Chile, approximately 50 kilometres north of the city of La Serena on the Pan-American Highway.
Caballo Blanco has coincident strong magnetic and IP anomalies measuring approximately 3.5 kilometres by 2.0 kilometres. A program of five diamond drill holes totalling 1,356 metres was completed in late 2007. Assays from the drill program are pending.
La Higuera was discovered by Metals in 2005 by drilling coincident magnetic and IP anomalies measuring approximately 1,200 metres by 800 metres. Twelve holes have been completed to date and the better intersections include:
Japuoco Polymetallic Project, Peru
Japuoco is a polymetallic epithermal copper-gold-silver-lead-zinc-molybdenum system situated in Puno Province, southern Peru. A surface geochemical sampling program where 880 samples were collected over an area of 9 km by 8 km identified two broad, multi-element anomalies returning up to 4.39% Cu, 1.87 g/t Au, 135 g/t Ag, 12% Pb, 3.3% Zn and 0.03% Mo. Additional sampling and ground geophysics is scheduled for the project this year.
About Peregrine Diamonds
Peregrine Diamonds Ltd. is a public company that was formed in 2003 and is listed on the Toronto Stock Exchange with 64.7 million shares outstanding. The most recent financing was completed in April, 2008 and consisted of flow-through shares priced at $0.44 per share and non-flow-through units, consisting of one share and one-half share purchase warrant, priced at $0.40 per unit. Current working capital is $4.5 million. Brief descriptions of the main projects of Diamonds follow.
The DO-27 kimberlite pipe is located approximately 11 kilometres from the Ice Road used to supply the Diavik and Ekati diamond mines. In 2005, 2006 and 2007, Diamonds completed a large bulk sample and core drilling program at DO-27 resulting in the extraction of 2270 carats. A parcel of 2,075 carats was independently valued in late 2007 and a modelled diamond value with a range of US$43-$70 per carat was determined. The average grade for the main phase of DO-27 was calculated by Diamonds to be 0.9 carats per tonne. An independently calculated resource estimation for the pipe is being completed by AMEC Americas Ltd. ("AMEC") with results expected by the end of June, 2008. Concurrent with the resource estimation, AMEC is also completing a preliminary technical assessment of DO-27 whereby possible mining and processing scenarios and potential project economics are being investigated.
Diamonds was successful in discovering a new diamond district in 2007 on its wholly owned, 201,000 hectare Nanuq property in the eastern Arctic region of Canada. In 2007, Diamonds drilled only three geophysical anomalies resulting in the discovery of three kimberlites, each with encouraging initial diamond results. Two of the kimberlites are over five hectares in size. The entire Nanuq property has been covered with high resolution airborne magnetic surveys and over 1,300 heavy mineral samples have been collected on the property and surrounding area. Over 100 geophysical anomalies, some with associated kimberlitic indicator mineral trains, have been selected for detailed follow-up on the ground.
Five geophysical anomalies are currently ready for drilling. 2008 field operations have commenced at Nanuq and scheduled work includes ground geophysical surveys over priority anomalies and additional heavy mineral sampling. Upon completion of this work, the data will be analyzed to select further drill targets. Priority targets are scheduled to be drilled in the summer of 2009.
Diamonds holds 2.7 milllion hectares of mineral permits on Baffin Island, Nunavut in the following six properties: Chidliak, Kimmirut, Flint Lake, Mirage Bay, Foxe Basin and Timijuuq. The Chidliak property hosts high priority kimberlite indicator mineral anomalies with many of these minerals having geochemical compositions that imply that their kimberlite source contains diamonds. The Chidliak property also hosts strong platinum and base metal anomalies. The Flint Lake and Kimmirut properties host strong and large scale uranium anomalies and copper and gold anomalies have also been identified at Flint Lake.
The Baffin Island properties were acquired through an alliance with BHP Billiton. The properties are 100 percent owned by Peregrine, subject to certain back-in rights held by BHP Billiton.
Work planned for 2008 on the Baffin Island properties includes geologic mapping, prospecting, ground scintollometer surveys and geochemical and indicator mineral sampling. Preparations are underway for a heli-borne magnetic/electromagnetic survey for the Chidliak property.
More information regarding DO-27, Nanuq, Baffin Island and other Diamonds projects can be found at: www.peregrinediamonds.com.
The Merger Process
Various structures are being examined to complete the merger in the most efficient and tax advantageous manner. It is contemplated that Peregrine Resources will assume the Diamonds public listing and that an equity financing will be undertaken concurrent with completion of the business combination.
Prior to this press release, the respective boards of Diamonds and Metals were comprised of the same seven members. The boards of Diamonds and Metals will now form special committees for the purpose of negotiating a mutually acceptable share exchange ratio and making recommendations to their respective boards. The Diamonds special committee will consist of Gordon Keep, Jonathan Challis and a new, independent director to be appointed. Messrs Keep and Challis have resigned from the Metals board with immediate effect. The Metals special committee will consist of Myron Goldstein, Richard Cohen and a new, independent director to be appointed. As a result, Messrs. Goldstein and Cohen have resigned from the Diamonds board with immediate effect.
The Metals and Diamonds special committees will each retain independent legal counsel.
The merger ratio will be negotiated after the completion of both the Altar and DO-27 independent resource estimations. In addition, it is anticipated that both Diamonds and Metals may seek an independent fairness opinion to evaluate the merger ratio. Completion of the merger, which is currently anticipated to occur early in the fall of 2008, will be subject to Diamonds and Metals shareholder and regulatory approval.
For further information about both companies please contact Eric Friedland, President and CEO of Metals and CEO of Diamonds at 604-669-8800 or Brooke Clements, President of Diamonds and Senior Vice President of Metals at 604-408-8880.
Mr. Jeff Toohey, M.Sc., P Eng., Vice President Exploration for Peregrine Metals Ltd. is a Qualified Person as defined by NI 43-101 and is responsible for the design and conduct of all of the work carried out by Metals in South America. Mr. Peter Holmes, P. Geo., Vice President Exploration for Peregrine Diamonds Ltd., is a Qualified Person under NI 43-101 and is responsible for the design and conduct of the programs carried out by Diamonds on the Nanuq Property and on Baffin Island. Ms. Jennifer Pell, Ph.D., Chief Geoscientist for Peregrine Diamonds Ltd., is the Qualified Person under NI 43-101 for the work conducted by Diamonds on the DO-27 kimberlite.
Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to statements concerning Peregrine's projects and other statements that are not historical facts. When used in this document, the words such as "could," "commonly," "confident," "plan," "encouraging," "estimate," "expect," "anticipated," "intend," "imply," "likely," "may," "potential," "should," "scheduled," "significant," "suggest", and similar expressions are forward-looking statements. Although Peregrine Diamonds Ltd. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are disclosed in the corporation's periodic filings with Canadian regulators.
Technical Information Relating to the Altar Project, Argentina
Altar is a large Miocene-aged (approximately 10 million years old) porphyry copper-gold-molybdenum deposit located in the Central Andes of western Argentina close to the border with Chile. It is situated approximately 250 kilometres northwest of Mendoza and about 25 kilometres north of the El Pachon and Los Pelambres porphyry Cu deposits. The geologic setting and style of mineralization are typical of large porphyry Cu systems in the Andes.
Dacitic to andesitic flows and ignimbrites of the Permo-Triassic Choiyoi Group are overlain unconformably by the Cretaceous Pachon Andesite. This stratigraphic sequence is intruded by Miocene quartz diorite porphyries. The Altar deposit is exposed at the transition between intense pervasive sericitic alteration (which overprints earlier potassic alteration) and the overlying advanced argillic lithocap. A deep zone of early potassic alteration is clearly exhibited in some of the deeper drill holes where it is unaffected by the overprinting sericitic alteration.
The broad sericitic alteration zone affects all lithologies on the property and is related to moderate to intense quartz veinlet stockworks within the quartz diorite porphyries and to a lesser degree within the intruded volcanics. At surface the alteration zone encompasses an area measuring 3 kilometres by 2 kilometres, within which a strong induced polarization (IP) geophysical anomaly with dimensions of 2.8 kilometres by 1.7 kilometres has been identified.
The deposit sits beneath a leached capping of variable thickness with an average thickness of approximately 70 metres. Oxide-Cu mineralization within the leached capping is very scarce and the copper mineralization comprises essentially all sulphides. There is an approximately 50- to 150-metre thick chalcocite enrichment zone within the upper part of a large body of chalcopyrite-dominant mineralization, which extends to depths beneath that of the deepest vertical drill hole (928.90 metres).
Hypogene Cu mineralization occurs as a high-sulphidation chalcocite-covellite-bornite assemblage related to strong sericitic alteration and moderate to intense D-vein development, overprinting an earlier low-sulphidation chalcopyrite-bornite assemblage related to A- and B-veins preserved in the underlying potassic alteration zone. Most of the hypogene Cu-sulphide mineralization occurs as disseminations and as fracture and vein fillings. Molybdenite occurs in fine quartz-molybdenite veinlets occasionally together with traces of chalcopyrite. Supergene chalcocite occurs in the upper part of the sulphide deposit and is most abundant near the contact with the overlying leached capping. Within the higher-level enrichment zone, supergene chalcocite makes a significant contribution to the copper grade but accounts for less of the copper enrichment than does hypogene chalcocite.
The higher-level chalcocite enrichment zone is generally of higher average grade than the underlying chalcopyrite-dominant mineralization, though deeper intersections of chalcopyrite mineralization without enrichment have also returned comparably high grades.
All drilling carried out at Altar to date has been diamond drilling, currently conducted at a nominal 200-metre drill hole spacing for step-out holes and at a 100-metre spacing for in-fill and resource definition holes. Approximately 50% of the area of the IP anomaly has been tested by the drilling completed to date. Of the 64 holes now completed, 13 are angle holes inclined at -58° to -80° and the rest are vertical. The drill holes are collared with HQ core size and extended as deep as possible before reducing to NQ core size. None of the holes have been reduced to less than NQ core size and many have been drilled completely with HQ core size. The average hole depth is 457.69 metres, the deepest hole is 928.90 metres, and the shallowest is 209.50 metres. Drilling conditions and core recoveries are generally good throughout the holes and there are no drilling, sampling, recovery or other factors that could materially affect the accuracy or reliability of the analytical results.
All drill holes are sampled in their entirety in a continuous fashion at a constant 2.00-metre sample interval from the beginning of core recovery to the bottom of the hole. The core is split in half with industry standard circular rotary rock saws with diamond saw blades, and using a constant flow of fresh clean water to cool and lubricate the saw blades. One half of the core is submitted for analysis and one half is archived.
The Primary Laboratory is Acme Analytical Laboratories (South America) who operate a sample preparation laboratory in Mendoza, Argentina and a full analytical laboratory in Santiago, Chile. The Altar core samples are submitted to Acme in Mendoza where the sample preparation is carried out. In Santiago, Acme performs the following analyses on all drill core samples currently being received from the Altar Project:
A formal comprehensive quality assurance-quality control (QA/QC) program was set up in 2007 under the direction of Dr. Barry Smee, who is a quality control consultant to Peregrine Metals. The QA/QC program, which includes the routine placement and monitoring of certified standards, blanks and duplicates in the sample stream for all samples submitted for analysis, is supervised by Jeff Toohey, M.Sc., P.Eng., a Qualified Person as defined by NI-43-101. Dr. Smee provides periodic monitoring of the quality control database as well as regular laboratory audits.
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