Dunsmuir Ventures and Peregrine Diamonds to Merge to Form a New Diamond Exploration Company

July 19, 2004
Peregrine arranges a minimum $4 million Flow-Through and Non Flow-Through financing at $2 per share

Eric Friedland, President of Peregrine Diamonds Ltd., and Art Ettlinger, President and CEO of Dunsmuir Ventures Ltd., are pleased to announce that the companies have agreed to merge pursuant to a binding letter agreement dated July 16, 2004. The new merged company, to be called Peregrine Diamonds Ltd., will have an extensive portfolio of diamond exploration projects in the Western Churchill and Slave Geological Provinces of Canada, as well as a developing portfolio of copper/gold projects in Latin America.

Peregrine Diamonds is a private Canadian incorporated diamond and metals exploration company formed in 2002 that has the exclusive use of 40,000 line-kilometers of annual capacity for all of North, Central, and South America from one of BHP Billiton’s revolutionary Falcon™ airborne gravity gradiometer systems. Falcon™ is the world’s first high-resolution airborne gravity gradiometer system capable of direct mineral occurrence detection. Peregrine Diamonds has land holdings in the Slave Craton that have been flown with the Falcon™ system, which detected numerous anomalies. Follow-up till sampling programs around these anomalies are scheduled for August. In addition, Peregrine Diamonds owns a 38.475% interest in the large and diamondiferous Tli Kwi Cho (DO-27) kimberlite pipe located approximately 30 km southeast of the Diavik diamond mine, NWT. Peregrine has an option to increase its equity in the project to 54.475% by completing a 200 tonne bulk-sampling program on the pipe. The engineering and permitting process is underway to begin the bulk-sampling program next winter. Peregrine is also in the process of acquiring a significant land position in the Western Churchill Province, Nunavut. In Latin America, the company has an ongoing drill program on Falcon™ derived anomalies for iron oxide-copper gold mineralization (IOCG) in Peru and is acquiring ground with IOCG potential in Chile and copper-gold potential in Mexico. The company, which has approximately $10 million in its treasury, was founded by Eric Friedland, President and controlling shareholder, and has a proven management team consisting of Alan Carter, COO, Myron Goldstein, Non-Executive Vice Chairman, and Jeff Toohey, VP Exploration. BHP Billiton currently owns 12.34% of the issued shares of Peregrine Diamonds.

Dunsmuir Ventures initiated diamond exploration in Canada and the United States of America in mid-2002 under a strategic diamond alliance with BHP Billiton Diamonds Inc. The company has developed its Nanuq project in Nunavut and amassed a large land position in the Lac de Gras diamond district, NWT. At Nanuq, two well-defined kimberlite indicator mineral trains with diamond stability chemistry have been identified and now warrant a Falcon™ survey. Dunsmuir has also become one of the most active diamond exploration companies in the United States, where it explores for commercial diamond deposits in new geologic terrains. Art Ettlinger, President & CEO, and Jennifer Pell, VP Exploration, manage the company.

Management of the new Peregrine Diamonds will consist of Eric Friedland, President, Alan Carter, Chief Operating Officer, Art Ettlinger, Executive VP-Corporate Development, Jeff Toohey, VP Exploration-Metals, and Jennifer Pell, VP Exploration-Diamonds. The Board of Directors will consist of Alan Carter, previously Manager Business Development for BHP Billiton Diamonds Inc., Jonathan Challis, President and COO of Cornerstone Capital Resources Inc., Art Ettlinger, Eric Friedland, Myron Goldstein, previously holding senior management positions with Chevron Resources Co., Lac Minerals Ltd., and Global Mining Management, Gordon Keep, and Bernard Poznanski, founding partner of law firm Koffman Kalef.

The terms of the merger are as follows: the new Peregrine Diamonds will issue one common share for every one outstanding common share of the old Peregrine Diamonds and one common share for every five outstanding common shares of Dunsmuir Ventures. All outstanding options, warrants and convertible securities of Dunsmuir and Peregrine will also be exchanged for options, warrants and convertible securities of the new Peregrine Diamonds on the same basis. As a condition precedent to the closing of the merger, Peregrine is required to raise a minimum of $3 million by way of a private placement of common shares in the current Peregrine Diamonds at a price of $2.00 per share. To that end, Peregrine has engaged Dundee Securities Corporation to place, on a best efforts private placement basis, a minimum of 1.5 million Flow-Through Special Warrants at $2.00 per Special Warrant. Endeavour Flow-Through Limited Partnership will purchase a further $325,000 of Flow-Through Special Warrants directly with Peregrine. Peregrine expects to simultaneously be raising Non Flow-Through dollars through a separate private placeme