Peregrine Diamonds and Peregrine Metals Plan to Merge as a New, Multi-Commodity Resource Company

June 3, 2008 PDF version
Peregrine Diamonds Ltd. (“Diamonds”) and Peregrine Metals Ltd. (“Metals”) are pleased to announce that they have entered into a letter of intent for the purpose of effecting a business combination whereby the two companies will merge to form a new multi-commodity resource company to be called Peregrine Resources Ltd. (“Peregrine Resources”). Both companies are currently working to establish independently calculated, NI 43-101 compliant resources; a copper resource at the Altar porphyry deposit in San Juan Province, Argentina for Metals and a diamond resource at the nine hectare DO-27 kimberlite pipe in the Northwest Territories, Canada for Diamonds. In addition to these two advanced projects, Peregrine Resources will have a portfolio of quality base and precious metal, iron ore, diamond and uranium projects in Chile, Argentina, Peru and Canada.

There are compelling reasons for this business combination including the following:
  • Diamonds shareholders will acquire exposure to the Altar copper resource in a time of strong copper prices.
  • Metals shareholders will acquire exposure to the DO-27 diamond resource, located only 27 kilometres from the Diavik Diamond Mine.
  • Peregrine Resources will have exposure to numerous excellent exploration projects in diamonds, copper, iron and other precious and base metals, thus spreading commodity risk and assuring news flow throughout the year.
  • The merger will capitalize on managerial and technical team synergies between Diamonds and Metals and increase administration efficiencies.
  • Peregrine Resources will have a significantly larger market capitalization than Diamonds and still maintain a solid and diverse shareholder base.
  • Metals will gain a Toronto Stock Exchange public listing through the merger, creating more liquidity opportunities for shareholders.
Senior Management of Peregrine Resources will consist of: Eric Friedland, Chairman and CEO; Brooke Clements, President; Rod Davey, Chief Operating Officer; Greg Shenton, Chief Financial Officer; Jeff Toohey, Vice President Exploration-Metals; Peter Holmes, Vice President Exploration-Diamonds; Wendy Mathison, Vice President Operations; and Jennifer Pell, Chief Geoscientist. Several directors from the current Diamonds and Metals Boards are expected to join the Board of Directors of Peregrine Resources.

Throughout the merger process, Diamonds and Metals will continue to advance their respective projects.

About Peregrine Metals

Peregrine Metals Ltd. is a private, Canadian metals exploration company formed in 2005 with 86.9 million shares outstanding. The most recent financing of $7.9 million was completed in April, 2008 at a price of $0.50 per share and current working capital is $4.5 million. To date, Metals has spent $16.5 million on exploration including $9.5 million on the Altar project. Brief descriptions of the main projects of Metals follow.

Altar Porphyry Copper Project, Argentina

The primary focus for Metals has been the advancement of the Altar porphyry copper-gold-molybdenum deposit in San Juan Province, Argentina. An independent resource estimation based on a cumulative 28,850 metres of core drilling in 64 holes is expected to be completed in August 2008. A 24-hole, 12,300 metre, diamond drilling campaign was completed on schedule in April 2008. Following receipt of the resource estimate, Metals will initiate a preliminary economic assessment of the deposit.

The first drilling at Altar was in 2003. Some of the better drill intercepts to date include:
  • 542 metres @ 0.67% Cu, including 82.00 metres @ 0.97% Cu and 149.90 metres @ 0.93% Cu;
  • 408 metres @ 0.63% Cu, including 100.00 metres @ 0.98% Cu;
  • 444 metres @ 0.45% Cu, including 116.00 metres @ 0.70% Cu;
  • 346 metres @ 0.56% Cu, including 106 metres @ 0.79% Cu;
  • 430 metres @ 0.55% Cu, including 46 metres @ 1.32% Cu;
  • 518 metres @ 0.72% Cu and 0.14 g/t Au, including 194 metres @ 0.93% Cu and 0.19 g/t Au;
  • 394 metres @ 0.49% Cu including 60 metres @ 0.65% Cu.
The copper mineralization at Altar includes both supergene chalcocite and hypogene chalcocite-covellite-bornite replacing earlier chalcopyrite in the upper 300 metres of the deposit. The average depth of the leached capping is 70 metres. Preliminary metallurgical test-work on the chalcocite enrichment zone suggests that this material would be amenable to relatively low cost heap leaching and solvent extraction/electrowinning (SX/EW). The alteration zone at Altar encompasses an area measuring three by two kilometres with a strong, coincident induced polarization (IP) geophysical anomaly of approximately the same size; approximately