WillPDiamond & Specialty Minerals Summary for Oct. 28, 2015
2015-10-28 21:11 ET - Market Summary
by Will Purcell
Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD) lost one cent to 17 cents on 480,000 shares. Much is riding on the company's 500-tonne mini-bulk test of the CH-7 kimberlite at Chidliak, northeast of Iqaluit on Baffin Island. (Full results are expected in early January but there is a good chance investors could get a Christmas present.) The company has a "tonnage estimate" of between 3.7 million and 6.01 million tonnes at CH-7 and Mr. Peregoodoff, chief executive officer, wants to declare at least an inferred resource to support the preliminary economic assessment planned for next year. Most investors assume the pipe holds between four million and six million carats, since a 47-tonne test last year averaged 1.04 carats per tonne, but Peregrine's loyal retail shareholders are hopeful for an even larger carat crop. There cause for optimism: The 47-tonne test came from the KIM-1 phase of CH-7 and two other phases produced significantly higher diamond counts. Most of the chatter centres on the KIM-5 rock, where 207 kilograms of kimberlite yielded 39 diamonds larger than a 0.85-millimetre sieve, a 0.84-carat parcel that suggested a diamond content of 4.06 carats per tonne. Further, the size distribution profile within KIM-5 was roughly comparable with that at KIM-1, which produced plenty of larger diamonds. Unfortunately, KIM-5 accounts for perhaps 10 per cent of CH-7 at best.
Another encouraging phase, KIM-4, spans about 30 per cent of the pipe according to diagrams prepared by Peregrine earlier this year. A 396-kilogram batch of kimberlite yielded just 22 commercial diamonds but two were large enough to boost the average grade to nearly three carats per tonne. That is unrealistically high if the two largest gems were flukes, but the size distribution pattern roughly matches that at KIM-5 and KIM-1. Peregrine is therefore treating KIM-4 conservatively, saying it has a diamond content comparable with KIM-1. It says much the same about KIM-3, where 200 kilograms of kimberlite averaged 1.3 carats per tonne, again with a size distribution curve comparable with the top phases.
Not all the news at CH-7 is good. The KIM-2 phase, roughly 40 per cent of CH-7, has a significantly lower diamond content. A 207-kilogram batch of rock averaged just 0.53 carat per tonne and although the size distribution pattern was erratic, it is weaker than what the four other phases produced. Nevertheless, a future CH-7 resource grade could easily top the one-carat-per-tonne target, perhaps significantly. The best news is that the size distribution data and diamonds already recovered provide no clear reason to expect the CH-7 diamond value to differ dramatically from the pleasing $200 (U.S.) per carat obtained at the high-grade CH-6 pipe.