JK comments on KDIAnd says buy PGD. Dr herman Grutter (world diamond expert) says Chidliak is the coldest mantle even he has ever seen world wide.Thats why it hold 75% to 85% white gem diamonds.This is unherd of in a diamond deposit.
JK:
Although the rights offering represents dilution, existing shareholders except disenfranchised American shareholders are positioned to benefit from the financing. At the very least they will have exposure to upside as Peregrine releases results for the various CH7 kimberlite units in stages over the next two months, some of which could contain large, high value outlier diamonds. Currently the optimistic expectation is that the Chidliak pipes resemble the Diavik pipes: high grade and good value, but not much potential in the special category above 10.8 carats, a reality that has proved a big disappointment for both the Ekati and Diavik clusters at the heart of the Slave Craton. The recent recovery by Lucara of a type IIa 1,111 carat stone from the Karowe Mine in Botswana, the second largest stone recovered by commercial methods, has caught the market's imagination. By all appearances this stone is a rather fresh fragment of a bigger stone, suggesting that Lucara's recovery plant broke an even bigger stone. What Canadian diamond plays need to get some excitement going is evidence that they can deliver large, high quality stones, not just excellent mid-sized diamonds of the sort that North American consumers are increasingly ignoring in favor of their US $3,000 smartphone budget for every two years.
There is reason to hold one's breath. The Chidliak cluster is on a different craton about whose diamond populations very little has been published. My expectation is that the CH7 bulk sample results will support a Peregrine valuation in the $0.30-$0.50 range ahead of a PFS, but my outside hope is that we get evidence that Baffin Island is home to the special sized diamonds for which there will always be a luxury goods appetite. The downside risk is that the Friedlands will continue to pursue their self-punishing strategy of funding each stage at a lower overall valuation. My view is that this expectation is a function of the current dire times which expose the Friedlands to relying on retail investors to prevent this project from being swallowed by a much bigger class of Chortlers such as the Irish Guys who just sank $48 million into a stalled diamond project called Kennady North. The enfeeblement of the Friedlands is such that Shore Gold's Star project in Saskatchewan has a higher implied value at $61 million. It is tempting to speculate that Robert Friedland is trying to finesse a bigger stake of Peregrine into his pocket, but the truth I suspect is that he needs retail investors more than anybody needs him these days. Spec Value Hunters should take advantage of this moment because fair opportunity is a rarity in an arena normally dominated by the Chortler Club.
*JK owns shares in Peregrine Diamonds Ltd