Drilling Underway At DO-27 Kimberlite

January 18, 2006 PDF version
Update On Wo, Lac De Gras And Pellatt Lake Projects

January 18, 2006 - Vancouver, Canada - Peregrine Diamonds Ltd. (“Peregrine”) (TSX-V: PGD) is pleased to announce the following:

DO-27 Kimberlite

Core drilling has commenced at the DO-27 kimberlite pipe. The DO-27 pipe is part of the WO Diamond Project and is located 23 kilometres south-east of the Diavik(tm) diamond mine, N.W.T., Canada. The first of two core drill rigs, operated by Connors Drilling, began drilling on January 12th, 2006 with the objective of collecting geological and geotechnical information in advance of large diameter, bulk sample drilling, which is scheduled to commence late January / early February, 2006.

The WO Diamond Project comprises a total of 15,107 hectares and currently contains nine known kimberlite pipes, the largest of which is DO-27 which covers an area in excess of 9 hectares. A 151 tonne, mini-bulk sampling program conducted by Peregrine at DO-27 during 2005, revealed an average grade of 0.98 carats per tonne from five of six holes drilled (sample PDL-1). A sixth hole returned an average grade of 0.70 carats per tonne (sample PDL-2).

As reported on August 29th, 2005, these grades compare favorably with published data for kimberlite pipes at BHP Billiton’s EkatiTM Diamond Mine. The Annual Information Form of Dia Met Minerals, dated June 14, 2000, reported, as part of the feasibility study, an average grade for five of the EkatiTM pipes of 1.09 carats per tonne. The average value was reported as US$84 per carat.

Three independent valuations on the diamonds collected from the 2005 mini-bulk sample returned values of US$59 to $78 per carat for sample PDL-1. The average values combining both PDL-1 and PDL-2 ranged from US$53 to $67 per carat with the highest value diamond being a 1.85 carat, clean, white octahedron, valued at US$1,591 to $2,063. The valuations were actual primary producer sales values on the day of the valuation, not modelled valuations. As bulk sample sizes increase, there may be a correlation with higher average diamond values as a proportionally larger population of larger, higher value diamonds may be recovered. Modelling of the diamond size distribution and diamond values attempts to predict average diamond value in a larger sample.

The bulk sample that Peregrine will collect this winter will be extracted from DO-27 using two, 24” diameter, reverse circulation (RC) drill rigs operated by Encore Drilling of

Edmonton. The sample will be processed at BHP Billiton’s Ekati(tm) Diamond Mine Test Plant starting the second quarter of 2006.

DO-18 Kimberlite

In addition to the bulk sampling program which has commenced on DO-27, Peregrine is awaiting micro-diamond results from seven core holes drilled during the summer of 2005 on the nearby DO-18 kimberlite. DO-18 is in excess of 3 hectares in size, and located approximately 700 metres north of DO-27. Previous drilling at DO-18 returned encouraging micro-diamond results as high as 1.41 carats per tonne over 242 metres. The micro-diamond analyses from the holes drilled in 2005 are being performed by Saskatchewan Research Council Geo-analytical Laboratories in Saskatoon, and results are expected in February, 2006. In the event that results are encouraging, a mini-bulk sampling program will be conducted at DO-18 during the summer of 2006.

Previous drilling and the results of a Falcon(tm) Gravity Survey previously flown by BHP Billiton in 2001 over DO-27 and DO-18 suggest that a third pipe may be located between the DO-18 and DO-27 kimberlites. Further core drilling is planned this year in the area between the DO-27 and DO-18 kimberlites to test this hypothesis. Drilling is also planned on a number of other high-priority targets within the WO Diamond Project area that have coincident geophysical and geochemical anomalies.

Peregrine holds a 54.475% interest in the WO Diamond Project, which includes both the DO-27 and DO-18 kimberlites, is the Project Operator, and holds 92.65% of the Diamond Marketing Rights.

Lac de Gras East Project

As a result of the amalgamation with Dunsmuir, Peregrine’s land holdings both around, and contiguous with the WO Diamond Project, is now 55,603 hectares. This new ground, called the Lac de Gras East Project, is not part of the WO Diamond Project Joint Venture, but rather optioned 100% by Peregrine or 65% Peregrine/35% Thelon Ventures Ltd., depending on the claim. Peregrine believes that this ground holds significant potential for the discovery of new and as yet undetected kimberlites. During the spring of 2006, Peregrine plans to conduct ground geophysical surveys over priority airborne targets and drill test the most prospective targets.

Lac de Gras West Project

The 35,234 hectare Lac de Gras West Project, located immediately south and contiguous with the Ekati(tm) Mine Block, was also acquired through the amalgamation with Dunsmuir and currently has a number of high priority geochemical and geophysical targets which require follow-up. Of particular interest are two adjacent anomalies with coincident Falcon(tm