DO-27 Diamond Project Indicated Mineral Resource: 19.5 Million Tonnes, 94 CPHT, 18.2 Million Carats

June 24, 2008 PDF version
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 “stand-alone” operation.

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 classification.

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.
Eric 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 future diamond valuations will give Peregrine the ability to efficiently assess the economic potential of DO-27 on an ongoing basis. At a time of projected future shortfalls in diamond supply and expected increases in rough diamond prices, the diamond resource at DO-27, which is contained within one large kimberlite, close to existing diamond mining infrastructure, is well-positioned as a candidate for future development.”

DO-27 Resource Statement
The reported mineral resource for the DO-27 kimberlite extends to a depth of approximately 325 metres below surface. Can