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Tue Jul 14, 2015
SVH Tracker: Peregrine to test targets in Botswana during 2015 summer
Publisher: Kaiser Research Online
Author: Copyright 2015 John A. Kaiser
Peregrine Diamonds Ltd (PGD-T: $0.23)
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SVH Tracker - July 14, 2015: Peregrine to test targets in Botswana during 2015 summer
Peregrine Diamonds Ltd announced on July 14, 2015 that it has closed the acquisition of licenses in Botswana covering 574,600 hectares within the Central Kalahari Game Reserve first announced on March 30, 2015. These licenses were assembled by a team of former De Beers employees after Botswana re-opened the CKGR for diamond exploration after allowing Gem Diamonds to develop the Gaghoo pipe (formerly called Gope). Peregrine has broken down the licenses into 3 groups: the 66,400 hectare Moralane project which hosts a diamond prospective kimberlite indicator anomaly whose chemistry is not explained by that of known kimberlite clusters in the area, the 100,100 hectare Gope project north of the Gope kimberlite cluster that hosts Gaghoo where multiple geophysical targets exist that have never been tested, and the 383,000 hectare Nata project which hosts numerous geophysical targets. Peregrine plans to spend $200,000 testing four magnetic anomalies with a rotary air blast drill (RAB) on the Moralane project during the summer of 2015. At the Gope project Peregrine plans to run a reinterpretation of exisiting geophysical data in an effort to prioritize targets for local KIM sampling, with drilling planned for 2016. At Nata Peregrine plans to ground check known geophysical targets and conduct local KIM sampling. The budget for Gope and Nata in 2015 is $100,000. The total $300,000 budget does not sound like much, but that amount can go a long way in Botswana compared to the Canadian Arctic.
At the 100% owned Chidliak project on Baffin Island Peregrine decided not to airlift any of the CH7 unit samples for quick processing because it could not get a slot at a DMS plant. The entire CH7 bulk sample is now enroute to the SRC facility in Saskatchewan where processing is expected to begin early August. Peregrine will most likely process the 22 tonnes from the KIM-5 unit first because it appears to have very high grade potential (greater than 300 cpht). Although the KIM-5 unit represents only a small portion of CH7, its location at the surface allows it to serve as a starter pit if grade and value turn out to be high (see SVH Tracker - May 14, 2015). Because of the short drilling season last winter Peregrine was unable to get a bulk sample from CH6, but got enough material from CH7 to end up with a representative understanding of this pipe for whose various units the market does not yet have a good understanding of grade and value potential. At the moment the market is still viewing Chidliak mainly in terms of the high grade CH6 pipe (equivalent to a medium grade, open pittable 3 million ounce gold deposit); good grades and values for the various CH7 units suggesting a doubling of the "gold equivalent" resource would boost market interest in Peregrine (see SVH Tracker - Mar 10, 2015). We may get initial CH7 results in September. The stock has retreated from its April peak of $0.385 because the diamond industry has experienced a softening of demand as global economic growth slows, investors were disappointed that the CH6 and CH44 bulk samples could not be extracted, and there is still an institutional overhang suffering from redemptions as the 2015 capitulation washout in the resource sector unfolds. However, Peregrine is properly financed in the wake of the warrant exercise in April, the valuation is very cheap relative to what we already know about the CH6 pipe, and CH7 is poised to deliver good news in Q4 of 2015. The Botswana drill program is unlikely to make much of a difference in 2015 unless a target with decent size delivers very good micro-diamond results, which does not happen very much in Botswana where only Orapa and Jwaneng stand out as medium to high grade world class pipes. Peregrine Diamonds Ltd remains a Good Relative Spec Value Buy at $0.23 with the expectation that Chidliak results will push the stock back into a fundamentals driven uptrend in September.
*JK owns shares in Peregrine Diamonds Ltd
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