Peregrine Diamonds Ltd. PGDIF

RE:Baffin Island Mine

[Kidlapik]

It is also causing major friction between the communities in the Qikiqtaaluk. Specifically between Iqaluit, who is very far from the mine, and Pond Inlet/Arctic Bay. The high north communities feel they are not receiving their fair share of the benefits of the mining royalties and more than their fair share of the socio-economic fall outs of being so close to the mine. They argue that QIA(Inuit birthright org that is responsible for the Qikiqtaaluk region) is allocating disproportional amounts of money to the capital, IQALUIT, through their various business arms(recently bought up a major hotel in Iqaluit and are building their own hotel) which enrich the lives of Inuit people/QIA members in Iqaluit and not enough where they live. They are currently fighting to break off from being under QIA and form their own organization that would then control where the royalties from the mine go. Or at the very least have QIA draft up a plan that allocates the majority of they money to the high-north communities which they say are more directly impacted than the southern communities. So while currently Iqaluit and the Qikiqtaaluk region are not solely dependant on Chidliak it is not all sunshine and rainbows when it comes to royalty allocation from Baffinland. As Baffinland was the sole reason QIA was able to post their first surplus in their history I see no reason what so ever that QIA would not be fully supportive (and all discussions I have had with members of QIA support this) of Chidliak moving forward. Now I think it is important to also distinguish between the City of Iqaluit and the QIA. As in no way does money from Baffinland flow into the coffers of the City of Iqaluit directly. They probably receive minimal income from workers that live in Iqaluit yet work in Baffinland but these are very small numbers. The vast majority of Inuit workers come from the surrounding communities of Arctic Bay, Pond Inlet, Igloolik etc. and the vast majority of other workers come from outside of the territory and fly directly to Baffinland with a fuel stop in Iqaluit. Sometimes an over-night but not regularly. This is minimal compared economic benefit compared to what a mine 100km directly outside of the city with an all season road would bring in. From accommodations, taxes, food consumption, workers relocating to or being from IQ, to road servicing contracts, etc. While QIA may be benefiting from Baffinland and benefiting Iqaluit indirectly by investing in Iqaluit the actual City of Iqaluit is not benefiting very much. Another thing to consider to consider about the two mines is the cost savings Chidliak would benefit from by tapping into the Iqaluit labour force as well as the benefit this would bring directly to the City of Iqaluit. One of the major contributing factors to high costs in the North is logistical costs. Accommodations, flights, material transportation, etc. For every worker you can hire locally you save a bundle by not having to transport, feed and house that person. And Iqaluit has by far the most skilled work force in the North and by far the most contractors available to choose from and by far the most developed housing market in the North. Far far far more benefits for the City of Iqaluit having Chidliak than anything Baffinland offers. Iqaluit is the seat of power in Nunavut and it is where all the decisions get made.