Peregrine recovers 1.15-carat diamond from new Baffin Island discovery

One of the new kimberlites Peregrine Diamonds (PGD-T) discovered this summer at the Chidliak project in Canada’s Nunavut territory has coughed-up a gem-quality 1.15-carat diamond from initial sampling.

Among the 233 microdiamonds recovered from an 840-kg sample of the CH-31 kimberlite, were 5 commercial-size stones that exceeded a 0.85-mm screen size and weighed a total of 1.39 carats.

The parcel includes a single 1.15-carat diamond, described as off-white in colour and tetrahexahedron-shaped. Of the remaining four stones, one is classified as white or colourless, while the other three are grey-coloured.

These initial results from CH-31 are exceptional in that such a large diamond has been recovered from an early-stage small sample. The implied diamond content is 1.65 carats per tonne. If the 1.15-carat diamond is treated as an outlier or irregularity and ignored, the implied grade of the sample falls to 0.29 carat per tonne, which is still very encouraging for an early sample.

“These diamond results are very significant because CH-31, at five hectares, is the largest kimberlite discovered at Chidliak to date and the fifth kimberlite with economic potential in arctic settings,” stated Eric Friedland, chief executive officer of Peregrine.

According to John Kaiser, publisher of the Kaiser Bottom-Fish report, the market has been slow to react because it doesn’t understand the implications of the latest news.

“This news tells us that large pipes exist at Chidliak which have likely sampled the same diamond populations as the smaller higher-grade bodies, such as CH-6, and the odds of critical mass for a large-scale Ekati style diamond mining camp at Chidliak have improved substantially,” Kaiser told his newsletter readers.

“Although further sampling may surprise us, CH-31 is not likely to be stand alone mine,” states Kaiser. “But if sampling demonstrates potential for large high-quality gems, CH-31 could provide the feed needed to support a large scale, long-lived mining operation at Chidliak, which exploits the smaller high-grade pipes up front to achieve rapid payback and then chugs along with lower grade feed.”

Covering 9,800 sq. km, the Chidliak project is on the end south Baffin Island, centred 120 km northeast of Iqaluit. Chidliak is held 51% by BHP Billiton (BHP-N) and 49% by Peregrine. BHP Billiton has a one-time option to earn an extra 7% interest should it choose to fund the project to completion of bankable feasibility study. BHP Billiton has until the end of November to decide.

The CH-31 kimberlite is one of 12 new discoveries made this summer by Peregrine, bringing the total number of kimberlites discovered to date on the Chidliak project to 50. This new kimberlite camp extends 70 km in a north-south direction and 40 km east-west. Peregrine also discovered two diamond-bearing kimberlites, Q1 and Q2, on its adjacent 100%-owned Qilaq property, further expanding the potential of the region.

During this summer’s program, eight of the new discoveries were tested by reverse circulation (RC) drilling and one by core drilling. In addition, 11 core holes and 10 RC holes were drilled into six previously identified kimberlites to increase the understanding of their size and diamond potential.

The discovery of CH-31 was announced by Peregrine on August 4. Boulders of kimberlite were found while investigating a subtle magnetic low and a strong coinciding electromagnetic anomaly. Peregrine cut a 410-metre long intercept of kimberlite while testing the CH-31body with a 45-degree angled core hole. This equates to a true horizontal width of at least 290 metres. A vertical hole from the same setup ended in kimberlite at a depth of 90 metres.

“This 5-hectare kimberlite represents a 25-million-tonne footprint that likely expands into the 30-40 million tonne range when taken to a depth of 300 metres,” calculates Kaiser.

CH-31 is described as a volcaniclastic kimberlite with varying amounts of carbonate and basement xenoliths. Occasional mantle xenoliths were recognized, including peridotites and eclogites. Based on preliminary logging, CH-31 appears to be a uniform kimberlite body. Distinct kimberlite phases are not recognizable.

At an estimated size of 5 hectares, the discovery of CH-31 illustrates the region’s potential for larger size kimberlites. Seven of the kimberlites discovered to date are likely to be bigger than 1 hectare in size based on drill data and ground geophysical signatures.

The CH-31 kimberlite is 4 km southeast of the promising CH-7 kimberlite and 5 km southeast of the CH-1 kimberlite, both of which show very encouraging coarse diamond size populations.

One of the other new summer discoveries, CH-28, is estimated at 2 hectares in size, though it hasn’t been drilled yet. CH-28 was discovered while investigating a magnetic high geophysical anomaly. Abundant kimberlite boulders, many over 1-metre in size, were found in a 160-metre-wide depression.

A 239-kg sample collected from the boulders shows a very promising coarse diamond size distribution for CH-28. The sample held 174 microdiamonds, including 5 commercial size stones weighing 0.196 carats in total, suggesting a diamond content of 0.82 carat per tonne.

“With these highly encouraging initial diamond results, CH-28 is currently the fourth kimberlite pipe at Chidliak that has economic potential in arctic settings, joining CH-1, CH-6 and CH-7,” Peregrine’s President Brooke Clements stated in a press release.

CH-28 was found near the CH-17 kimberlite in the northern half of the project. This area hosts several unexplained high-interest kimberlite indicator mineral trains and at least 10 high-priority geophysical anomalies, which will be the target of future exploration work.

Additional mini-bulk sample results from the CH-7 and CH-6kimberlites are expected later this month and into December, as well as microdiamond results from additional kimberlites discovered this summer.

After reporting the latest results from CH-31, Peregrine said it was increasing a previously announced $10-million brokered private placement by an additional $2 million. A syndicate led by Dundee Securities, and including Salman Partners and Cormack Securities, have agreed to place on a best efforts basis up 4.8 million units priced at $2.50 per share, with a half warrant exercisable at $3 for one year.

“Peregrine Diamonds is a must have stock for anybody who has ever had an interest in the Canadian junior diamond sector, and should be owned by ever speculator who has ever wondered what it is like to own a $2.50 stock that zooms to $10-20 because it owns a substantial part of the most important diamond field discovery during the past decade,” recommends Kaiser.

Peregrine is trading around $2.60 at press time in a 52-week range of $1.38-2.74.