From Will P Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD), up one cent to 19.5 cents on 47,000 shares, is apparently pressing ahead with a Plan C at Chidliak, a promising diamond project on southeastern Baffin Island. The company's consultants, who completed a preliminary economic assessment of the project last year, had initially proposed a $15-million program of bulk sampling and core drilling at the two main pipes, CH-6 and CH-7, which host the Chidliak resource estimate and which were the focus of the promising dream sheet.
Peregrine's stock has been hovering near the 20-cent mark for months, leaving Mr. Peregoodoff, president and chief executive officer, and Mr. Friedland, executive chairman, loath to press ahead with the full program, as it would have required the company to complete another big stock sale at a big discount, to the chagrin of the company's shareholders once again. As a result, the company had been saying it was "continuing discussions with various entities regarding various options" to finance further work at Chidliak, a comment that investors took as Peregrine's Plan B: landing a major co-venturer or potential white knight merger candidate.
Mr. Peregoodoff and Mr. Friedland now say that its potential partners faced challenges, especially later in the year, and this had an impact on Peregrine's commercial discussions. They add that the company's position has been consistent throughout the talks: Peregrine "will only do a deal if it creates shareholder value and recognizes the unique value of the Chidliak project." With talks seemingly going nowhere while the calendar marched relentlessly into spring, the company is now looking at a scaled back plan for this summer.
Peregrine is planning a significant core drilling program that would be limited to CH-6, the biggest and richest of the pipes that the company considers potentially economic. The drilling would probe the pipe to a depth of at least 500 metres. That can quickly rack up big bills but to cut costs, Peregrine is planning to wedge many of its holes, resulting in multiple shoots branching off from the initial hole at each site. If all goes well, Peregrine would have plenty of new core at depth, enough to upgrade its existing resource and conceptual targets for use in a revised study.
At last report, Peregrine had delineated 4.64 million tonnes to a depth of 260 metres as an inferred resource, and at an average grade of 2.45 carats per tonne it contains an estimated 11.4 million carats. The key to the company's plan for this year is the deeper rock, down to 380 metres, which includes a target for further exploration of between 2.15 million and 3.49 million tonnes. That rock, at a similar grade, could hold between five million and 8.5 million carats more. Deeper still, down to a depth of 500 metres, Peregrine is vaguely hopeful that its drilling will encounter a similar amount of kimberlite and diamonds -- but the company cannot ascribe any tonnages or grades to what it deems to be "conceptual" rock.
If Peregrine's concept bears out, the company is likely to add an underground component to its CH-6 mine plan, which it is likely to roll out in a revised preliminary economic assessment later this year. In the meantime, Mr. Peregoodoff and Mr. Friedland are likely to continue talking with anyone who will listen, but Peregrine's name crops up less frequently these days on the market's rumour mill.