Dunsmuir Ventures And Peregrine Diamonds Announce Proposed Business Combination.

November 15, 2005 PDF version

Canaccord Capital, Dundee Securities, Orion Securities, TD Securities and Westwind Partners to Raise $40 Million.

Dunsmuir Ventures Ltd. (TSX-V: DVV) (“Dunsmuir”) and Peregrine Diamonds Ltd. (“Peregrine”), a private, CBCA incorporated company, have reached an agreement effective November 8, 2005 for a business combination of the two companies. The business combination will effectively constitute an acquisition of Dunsmuir by Peregrine. Peregrine, like Dunsmuir, is engaged in the exploration, development and acquisition of diamond properties, primarily in Northern Canada.

Peregrine’s primary diamond asset is its 54.475% majority interest in the WO Diamond Project in the Northwest Territories, Canada, which contains the 9 plus hectare DO-27 kimberlite pipe, located 23km SE of the Diavik(tm) Diamond Mine, that will be subject to a second and large scale, bulk sample this winter. Peregrine also holds various interests in the IM, TW, Pellatt Lake, and McKay Lake diamond exploration properties in the Northwest Territories and the Area 2/Arivat and NANUQ diamond exploration properties in Nunavut, Canada. Peregrine also holds a three-year exclusive arrangement granted by BHP Billiton to use one of BHP Billiton’s Falcon(tm) airborne gravity gradiometer systems for all of North, Central, and South America. The exclusive arrangement expires September 30, 2006 and may be renewed by mutual consent.

Dunsmuir’s primary diamond assets consist of various interests in a number of mineral properties in the Lac de Gras diamond district of the Northwest Territories which are in close proximity to the WO Diamond Project and Ekati(tm) Diamond Mine. Dunsmuir also has interests in the NANUQ and NANUQ North properties in Nunavut. The NANUQ property was acquired under a strategic alliance with BHP Billiton under which BHP Billiton has agreed to provide Dunsmuir with certain proprietary kimberlitic indicator mineral data over selected areas of Canada in which BHP Billiton has certain back-in rights. Dunsmuir also has a joint venture with Majescor Resources Inc. on the Lac Laparre Property in Quebec, Canada.

A detailed description of the companies’ respective assets, including a summary of a NI 43-101 Report on the DO-27 kimberlite pipe, will be contained in the Information Circular for Dunsmuir’s Special Meeting to approve the transaction to be held on January 6, 2006. Additional information can be found at each company’s web site: and

Pursuant to the parties’ agreement, Dunsmuir will complete a statutory amalgamation with a newly formed wholly owned subsidiary of Peregrine, under which Dunsmuir shareholders will receive one share of Peregrine for every twenty (20) shares of Dunsmuir previously held, with warrants and options of Dunsmuir being exchanged for warrants and options of Peregrine in proportion to the share exchange. Dunsmuir currently has 38,233,233 outstanding common shares and a further 9,696,500 shares reserved for issuance for outstanding convertible debentures, warrants and options. Peregrine currently has 36,150,788 outstanding common shares and a further 10,091,625 shares reserved for issuance for outstanding warrants and options. In addition, Peregrine has a commitment to issue US $825,000 in value of Peregrine shares by April 20, 2007 at the market price per share (less 10%) at the time of issuance in connection with certain property interests held by its affiliate company, Peregrine Metals Ltd.

In conjunction with the transaction, Canaccord Capital Corporation has entered into an agreement dated November 8, 2005 with Peregrine pursuant to which Canaccord has agreed to lead a syndicate for a private placement of up to 8,000,000 special warrants of the new Peregrine subsidiary at a price of $5.00 per special warrant for gross proceeds of $40,000,000 (subject to a 2,000,000 units/$10,000,000 over-allotment option). Each special warrant will be convertible into a unit consisting of one common share and one half of a share purchase warrant to be issued initially by the Peregrine subsidiary and, upon completion of the business combination with Dunsmuir, exchanged for equivalent units of Peregrine. Each unit of Peregrine will consist of one common share of Peregrine and one half of a Peregrine warrant which are to be issued without any statutory hold periods in Canada. Each whole Peregrine warrant will be exercisable to purchase one common share of Peregrine at an exercise price of $7.00 per share until 18 months after completion of the business combination.

The syndicate will include Dundee Securities Corporation, Orion Securities Inc., TD Securities Inc. and Westwind Partners Inc. and will be granted compensation options which are ex