Peregrine Announces $5 Million Work Plan at Chidliak, Commencement of Bulk Sampling Program and New Diamond Results for CH-6

January 28, 2013 PDF version
Peregrine Diamonds Ltd. (“Peregrine” or “the Company”) (TSX:PGD) is pleased to report the commencement of a bulk sampling program at the CH-6 kimberlite, as part of a $5 million work plan, on the Company’s 100 percent-owned Chidliak project (“Chidliak” or “the Project”) located on Baffin Island, 120 kilometres from Iqaluit, the capital of Nunavut, Canada. As reported by the Company on September 5, 2012, the Project is subject to an option agreement with De Beers Canada (“De Beers”) whereby De Beers has the exclusive right until December 31, 2013 to enter into an earn-in and joint venture agreement (“the JV Agreement”) for Chidliak on a 50.1 percent De Beers / 49.9 percent Peregrine basis.

The bulk sample will weigh approximately 200 tonnes and be collected by surface trenching. As reported on December 6, 2010, a 14.11 tonne mini-bulk sample collected from CH-6 returned a grade of 2.84 carats per tonne (“cpt”). If that grade is confirmed with further testing, CH-6 would be one of the highest grade kimberlite pipes in the world. The field portion of the bulk sampling program will commence in early February and be completed by mid-April. Sample processing for the recovery of commercial-sized diamonds, with subsequent independent diamond valuations, is expected to commence in the fourth quarter, or earlier in the event De Beers has entered into the Chidliak JV Agreement. The diamond grade and value information acquired from the 200 tonne sample will allow for the development of a preliminary revenue model for CH-6 and serve as the foundation for future resource calculations. The bulk sampling program, currently being funded by Peregrine, is budgeted at $3 million.

Ongoing work being funded by De Beers, budgeted at $2 million, includes a comprehensive desktop mining study, kimberlite pipe characterization studies, ground geophysics, and new target generation work. De Beers’ expenditures will be applied to their earn-in obligation of $58.5 million should they enter into the JV Agreement. In the event De Beers does not elect to enter into the joint venture, Peregrine will not be required to refund these expenditures.

This jointly funded Chidliak program has been designed by Peregrine and De Beers to meet two objectives. Firstly, information from the bulk sample at CH-6 together with the desktop mining study, scheduled for completion this quarter, will be instrumental in the advancement of the Project towards development. Secondly, the results of the kimberlite characterization studies, ground geophysics and target generation work will optimize future programs that will include the evaluation of known kimberlites with economic potential and exploration for new kimberlite pipes.

Excellent new microdiamond results from CH-6 continue to support a commercial diamond size distribution. A cumulative 251.3 kilogram sample of near-surface core collected from six core holes drilled in 2011 returned 639 diamonds larger than the 0.106 mm sieve size, including 24 commercial-size diamonds larger than the 0.85 mm sieve size weighing a total of 1.47 carats. The two largest diamonds recovered from the samples were described by the Saskatchewan Research Council (“the SRC”) as a 0.45 carat yellow transparent octahedron and a 0.42 carat yellow transluscent tetrahexahedron.

Mr. Eric Friedland, Peregrine’s CEO said “With the preparatory work we completed in 2012, we are well-positioned to efficiently collect and transport this important 200 tonne bulk sample. I am confident that the resulting parcel of commercial-size diamonds will help us establish an initial average diamond value, revenue model, and inferred resource for CH-6. Integrating an inferred resource with the comprehensive mining study, currently being prepared by De Beers, could allow for the completion of a NI 43-101-compliant Preliminary Economic Assessment for CH-6 in the first half of 2014. Confirming the