from Will P tonights stockwatch Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD), up two cents to 21 cents on 203,000 shares, is pressing ahead with a summer exploration and development program. It expects the work will lead to a larger resource estimate and a crucial preliminary economic assessment of its Chidliak diamond play on southeastern Baffin Island. Meanwhile, the results of the company's 500-tonne test of CH-7 are not expected until mid-November. This is longer than investors had expected. The delay is mainly the result of a long lineup at the processing lab but bad weather on Baffin Island also played a role. (Meteorologists are unlikely to be in Mr. Friedland's good graces. An early spring forced the company to call off large diameter drill holes into CH-6 and CH-44. Now, summer is refusing to come: Frobisher Bay was recently packed with ice delaying the shipping season.)
In any case, the key to promoting -- and therefore to advancing the project -- will be the upcoming dream sheet. Mr. Friedland and Mr. Peregoodoff say investors frequently ask about the potential economics of Chidliak, but the company is not allowed to say anything until it completes a preliminary study. As a result Peregrine wants to have as large an inferred resource as possible by early next year. At last report it had 3.32 million tonnes inferred at CH-6 and with a grade of 2.58 carats per tonne that rock contains 8.6 million carats. The company also lists 3.2 million to 4.4 million tonnes as a target for further exploration, presumably with 8.2 million to 11.3 million more carats. At this point Peregrine expects to convert about 2.5 million of those carats to an inferred resource, giving it 11 million carats available for the dream sheet.
Peregrine also expects to have an inferred resource at CH-7 early next year. The company currently lists 3.7 million to 6.0 million tonnes as a target for further exploration, and at the previously estimated grade of one carat per tonne it would have an equal number of carats. Only a portion of that material is likely to make it into the maiden resource estimate, but it will help the bottom line of the financial estimates, especially if the CH-7 diamond value matches the $213 (U.S.) per carat estimate for CH-6.
Peregrine is forbidden from touting financial parameters for Chidliak but investors have already taken up the challenge. The amount of rock potentially available for a 10-year mine is capable of supporting a 3,000-tonne-per-day processing plant and similar mines elsewhere typically cost between $400-million (U.S.) and $700-million (U.S.). Meanwhile, Arctic diamond mines have operating costs ranging between $60 (U.S.) and $125 (U.S.) per tonne. With the CH-6 rock worth $550 (U.S.) per tonne -- and the value of the CH-7 rock not yet known -- Peregrine's dream sheet seems off to a good start, but with the usual uncertainties to clear up.