Peregrine Diamonds Ltd. PGDIF

Another interesting scenario

[justanormalguy]

The longer we continue to wait for any news from the PGD camp, the more more I think one of 3 things will happen, in order of probability, IMO: (I'm getting bored)

1. A fully financed deal to Production for CH6/7

2. Convertible Debenture or Debt for CH6/7 further exploration, prep of PFS

3. Care and Mainteance

I'll speculate on the first one because this makes the most sense to me, and some more information posted by Mike (index adjusted) and Madmann (Globe's ROB article) got me thinking. A win-win for everyone. And this one probably has a trillion permutations itself.

The question I keep asking myself: How does a potential buyer/partner make a reasonable risk-adjusted investment in Chidliak and pay the Freidlands “the price” and returns they want, with possible future shared risks/rewards?

We know De Beer's Snap Lake is up for sale and Victor runs out in 2018. Anglo listed Diamonds as one of their top 3 industries in their restructuring. We also know that De Beers and Attawapiskat First Nation have been and likely still in discussions about Tango Extension which would I presume will keep the Victor plant running for a few more years.

If an agreement is not made or De Beers decides to shut everything down there, they need to get rid of everything (plant, camps, equipment, conveyors, maintenance buildings, etc). All of this stuff has been likely paid for (or leased) and amortized on the books. Now, this is quoted from the writer of the ROB article:

“Even though mine production will cease by 2018, Victor will continue to contribute to the economy in the area for about another decade during a lengthy postclosure reclamation process. The project is expected to take place from 2019 through 2025, with environmental monitoring to continue on a regular basis afterward.

De Beers has already started to look for people to fill hundreds of new jobs that will assist in the removal of man-made structures and the replanting of vegetation.”

So, if this is the case, De Beers has to get everything off site and sold/disposed of (or they of course could use this scenario as a negotiating tool with the First Nations). I presume these costs for dismantling/removal/transportation have already been included/accrued in the P/L for Victor. It's a sunk cost and a cost of doing business at Victor.

I would fully expect that De Beers has looked at any incremental costs to transport/re-assemble at another diamond bearing, economically feasible site across the Hudson. Like Chidliak. And of course do a detailed assessment to ensure that such equipment is appropriate and will work with the challenges at Chidliak and its buried diamonds and recovery.

Now here's the win-win answer to the question. De Beers could say we will take Chidliak (part or some or all of) to pre-production, we will cover all costs til then (at a fraction of PEA capital and operating costs), for X% of ownership. Huge legal and financial analysis work required! We have a highly experienced Design/Construction crew from GK and a highly experienced Mine Operations crew from Victor, and we love working in the North.

And, by the way, we've got a mine at Snap Lake that we've shut down. It's not that far from DO-27 and DO-18.

[madmann]

Option #4: Sell D027/18 (to Debeers or DDC) for $50M and continue on with Chidliak to production. #4a) cut losses in Botswana.

[ekim]

Ontario has access to more money then Nunavut. Cut a financing deal with Ontario in exchange for some chidliak stones going to crosswork / Sudbury as that centre may die off after Victor goes away. Getting fed/Nunavut/Ontario funding to help build chidliak is an option. Govt's invest in lots of lossing ventures for the sake of growth and jobs. They should not turn a blind eye to a profitable

[MrBigger]

Sorry but Ontario is going broke and people are going to be more broke when January comes and all the new carbon taxes hit us.