Eric Friedland and Dr. Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD) closed unchanged at 14 cents on 233,000 shares. Investors have been increasingly frustrated with what they perceive as a delay in the results of the mini-bulk sample of the CH-7 pipe at Chidliak, on southeastern Baffin Island. They had been expecting partial results as early as late November, more on hope than a company promise. They are looking at a real delay, although it should be just a few weeks at worst as the new target is the first week of January. Dr. Peregoodoff said late December was a possibility, but the promotional challenges of the holiday period make that unlikely. He did say that the news will be out well before the rights expire in late January.
The batch of CH-7 kimberlite from the KIM-2 phase, which accounts for a big part of the 500-tonne bulk test, is still being processed. Peregrine had considered releasing partial results as the counts for each individual phase were received, but its lawyers cautioned that could potentially mislead investors. As a result, the company will wait until all the rock has been processed and the diamond counts for each phase have been rolled up into a global grade estimate.
The final grade is unlikely to be a surprise, pleasant or otherwise, although investors who have been talking up the possibility of CH-7 matching the 2.6 carats per tonne at CH-6 will be disappointed. Dr. Peregoodoff says that the kimberlite chips collected in the CH-7 sample were recovered on a 1.1-millimetre sieve so the grade for the test will be based on a 1.18-millimetre recovery sieve. That will diminish the grade somewhat. A 400-tonne test of CH-6 averaged 2.78 carats per tonne on a 0.85-millimetre sieve but just 2.56 carats per tonne on the larger sieve. That 8-per-cent drop is modest compared with decreases noted in pipes with less pleasing size distribution profiles, which in some cases have topped 20 per cent.
Peregrine is still expecting CH-7's global grade will be near the 1.04 carats per tonne that a 2010 test of the KIM-1 phase delivered. That grade was calculated on a 0.85-millimetre sieve, so the global grade that Peregrine will release in January may fall short of that mark because of the larger cut-off and also because reverse circulation drills are hard on diamonds. Dr. Peregoodoff says that an independent breakage report will be a part of the extra work that Peregrine is doing to fully assess CH-7, although the grade estimate will not include an adjustment factor to account for any losses. Investors will have to wait to see if the delay will be worth it, but Dr. Peregoodoff insists that doing the job carefully is vital to Peregrine and Chidliak.