Will P from stockwatch yesterday and court case Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD), down one-half cent to 33 cents on 115,000 shares, has wrapped up its mini-bulk test at Chidliak, on Baffin Island. As a result of an early spring, Peregrine did not drill its planned hole into each of CH-44 or CH-6. All its drilling took place at the CH-7 pipe, which had yet to receive a substantial mini-bulk test, because its size makes it a vital cog in the company's Chidliak mine plan. CH-6 has already been tested and CH-44, although likely to be included in the eventual mine plan, is smaller and of less importance. As a result, the holes into the latter two kimberlites were deemed expendable when the warm weather arrived.
Peregrine drilled six holes into CH-7, ultimately bagging 558 tonnes of kimberlite chips larger than a 1.18-millimetre screen. The amount of kimberlite ground to dust by the big reverse circulation drill remains to be determined. To do so, Peregrine will estimate the volume of its drill holes and calculate the theoretical tonnage. (That figure is typically used for grade calculations.) An earlier 47-tonne test of CH-7 yielded an average grade of 1.04 carats per tonne, so Mr. Peregoodoff, CEO, and Mr. Friedland, chairman, are expecting several hundred carats of diamonds from their CH-7 test. That would be sufficient to model a rough diamond valuation for the pipe, which in turn will allow the company to model the economics of its mine plan.
The grade and value estimates will be available later this year, while the economic details should become clear next year when Peregrine completes a preliminary economic assessment of Chidliak. Neither the grade nor the diamond values are likely to be showstoppers, but the company will have to show it has the tonnage to support a mine. (It will presumably have to do so without CH-44, where Peregrine now plans a mini-bulk test in 2016.) Even without CH-44, Peregrine's tonnages are shaping up nicely. The company has 3.3 million tonnes inferred at CH-6 and another 3.2 million to 4.4 million deemed a target for further exploration. At a grade of 2.6 carats per tonne, the CH-6 material could hold nearly 20 million carats. Over half of those carats are currently unavailable for dream sheet calculations, so Peregrine will be drilling this summer to upgrade the rock to a formal resource. That is also the case at CH-7, where Peregrine has between 3.7 million and 6.0 million tonnes of target kimberlite. That potential for up to six million carats could make or break the upcoming dream sheet. As a result, Peregrine will be working hard to maximize its CH-7 resource.
Peregrine asks courts to halt BHP royalty sale
2015-05-14 08:16 PT - Street Wire
by Mike Caswell
Eric Friedland's Peregrine Diamonds Ltd. has asked the Supreme Court of British Columbia to halt the transfer of a royalty that BHP Billiton Canada Inc. holds on the Chidliak property in Nunavut. Peregrine says that it has a right of first refusal to acquire the royalty, and that such an acquisition could change the economics of the project. Peregrine is seeking a court order that would force BHP to offer it the royalty.
The request is contained in a notice of claim that Peregrine filed at the Vancouver courthouse on Tuesday, May 12. The royalty at the centre of the lawsuit is one that Peregrine granted to BHP in 2012 when Peregrine acquired BHP's 51-per-cent interest in Chidliak. As part of that deal, BHP retained a 2-per-cent royalty on any production. Peregrine claims that the terms of the agreement required BHP to offer the royalty to Peregrine before selling it to any other party.
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| PEREGRINE DIAMONDS |
| Eric Friedland |
According to the lawsuit, BHP is now trying to transfer the royalty in breach of that agreement. On May 6, 2015, BHP's shareholders approved a "demerger transaction" in which BHP would move a substantial portion of its assets to an entity called South32 Ltd. That entity would operate independently from BHP. Among the assets included in the South32 deal is the Chidliak royalty.
As Peregrine sees it, the transfer to South32 constitutes a sale of the royalty. When the demerger transaction closes, South32 will no longer be affiliated with BHP. Consequently, the terms of the agreement between BHP and Peregrine require that BHP offer the royalty to Peregrine on the same terms as it has offered it to South32. (It is not clear from the notice of claim what those terms could be.)
Peregrine also contends that the royalty is of little consequence to BHP. The matter did not even come up in an information circular describing the demerger transaction. By contrast, it is of much importance to Peregrine. The economics of a mine at Chidliak would change significantly were the royalty to be eliminated, Peregrine contends.
Peregrine is asking for a court order that would force BHP to offer it the royalty or pay appropriate damages. The company has also filed an application for an interim order restraining BHP from transferring the royalty. The matter is of some urgency to Peregrine, as the South32 transaction is scheduled to close on May 18, 2015.