June 24, 2008
Mr. Eric Friedland, Chief Executive Officer, and Mr. Brooke Clements,
President of Peregrine Diamonds Ltd. (“Peregrine” or “the Company”) are
pleased to report a Canadian NI-43-101-compliant indicated mineral
resource of 18.2 million carats in 19.5 million tonnes of kimberlite for
the nine hectare DO-27 kimberlite. The estimated grade of the
indicated resource is 94 carats per hundred tonnes (“cpht”). The
resource estimate was prepared by AMEC Americas Ltd. (“AMEC”), an
internationally recognized engineering firm with extensive experience in
evaluating advanced diamond projects. An additional 6.5-8.5 million
tonnes of kimberlite below the indicated resource was classified as a
potential mineral deposit and DO-27 remains open at depth.
DO-27 is situated on the 15,000 hectare WO property in the Northwest
Territories, Canada, approximately 27 kilometres southeast of the
DiavikTM Diamond Mine and 11 kilometres east of the Tibbitt to Contwoyto
Ice Road used to supply the two diamond mines in the area. Ownership
interests in the WO property are as follows: Peregrine 71.74%, Archon
Minerals Limited 17.48% and DHK Diamonds Inc. 10.78%. Peregrine holds
97.92% of the diamond marketing rights.
In addition to the resource calculation, AMEC completed an internal
preliminary technical assessment (“PTA”) study of DO-27 where a number
of mining engineering parameters were examined in conjunction with the
resource estimate, currency exchange rates, fuel and other consumable
prices, diamond valuations and capital cost trends in the mining
industry, to determine the current economic potential of DO-27. Both a
“scrub-only” and “stand-alone” operation were investigated. For a
“scrub-only” operation, a kimberlite concentrate with a grade up to ten
times that of run of mine material would be produced at DO-27 by
conventional open-pit mining, crushing and scrubbing techniques. The
resulting concentrate would be transported elsewhere for final diamond
recovery. For a “stand-alone” operation, rough diamonds would be
recovered at the site by way of a conventional open-pit mining and
diamond processing facility. The economics of a potential “scrub-only”
project were determined by the PTA to be currently more favourable than a
AMEC investigated whether the DO-27 indicated mineral resource had the
potential to pay back capital on an undiscounted cash flow basis. A
preliminary financial analysis for a “scrub-only” mining operation was
performed which achieved this objective, supporting the resource
Although Peregrine management has concluded that the development of the
DO-27 project is currently not economically justifiable, both the
Company and AMEC believe that there is a reasonable chance that DO-27
could support a mining operation in the future. Factors that could
enhance the economics of a mining operation at DO-27 include:
- Higher rough diamond prices.
- Possible underestimation of the average DO-27 diamond value
because the current estimate is based on a parcel of only 2,075 carats.
- More favourable Canadian-US currency exchange rates.
- A diamond processing arrangement with one of the nearby diamond mines.
- Increased revenue potential from downstream cutting and polishing of DO-27 diamonds.
- Mining and processing technology advances.
- Regional infrastructure developments.
- An ultimate run of mine grade greater than the current grade estimated by reverse circulation (“RC”) drill samples.
Friedland, CEO of Peregrine stated “This independent resource
calculation and associated PTA is the result of over three years of hard
work by many people, much of it under harsh conditions with difficult
technical challenges. We were successful in proving that the diamond
grade of DO-27 is almost three times higher than previously estimated
and the work was to a standard and quality that allows for the formal
classification of a resource. Data from the resource and engineering
studies in combination with fut