Peregrine Diamonds Ltd. PGDIF

RE:RE:RE:RE:RE:RE:RE:RE:PGD Drill NR Sept 21st 2017

[ekim]

Depth of an underground is incremental once you have the main infrastructure put in (portal, power, etc.)

From there... it is really about margin. You have a relatively fixed profit margin per tonne when you take revenue per tonne minus the operating cost per tonne. That needs to pay for the capital cost of developing (ramp) to wherever you are headed.

The incremental capital cost to ramp down 50 metres is about $4 million plus all the extra bits. So lets assume $5 million.

How much tonnage in a 50 metre block x 0.9 hectares = 1.2 million tonnes.
Revenue per tonne = $500 per tonne
Operating cost per tonne = $150 per tonne (conservatively, IMO)
Profit margin = $350 x 1.2 million tonnes = CAD$420 million.

Small pipe relatively to a lot of underground mines out there...but rich in value = rich in margin.

Would spend $5 to $10 million to develop an additional 50 metres lower to get back $420 million?

If the kimberlite pipes maintains width and tonnage and grade and value indefinitely...the underground will continue indefinitely at an incremental basis.

This is why I have repeatedly mentioned that this program wasn't just about poking out the pipe down to 500 metres...but if it successfully pokes it out to 500 metres...the probability that it continues down to 750 metres goes way up.

LONG...PGD

EKIM