RE:RE:RE:From Will P. tonightWhy don’t I just post it?
because I asked 1 Star Willy to please not arbitrarily give me a 1 Star for 2 kinds of posts:
1) for market depth
2) Will P’s blog on PGD
I really don’t care about getting a 1 Star, but when it’s for information for the benefit of the board members, that has nothing to do with my opinion, that’s were I draw the line...
I’ll give 1 Star Willy a second chance, so I’ll post the entire article:
Diamond & Specialty Minerals Summary for July 11, 2018
2018-07-11 15:40 PT - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Wednesday was a bleak 58-91-128. The TSX Venture Exchange lost 12 points to 728 while polished diamond prices inched higher. Lukas Lundin's Lucara Diamond Corp. (LUC) traded briskly, dropping three cents to $2.10 on 1.53 million shares. There is no recent news. Trent Mell's First Cobalt Corp. (FCC) lost two cents to 44 cents on 2.98 million shares. The company had new assays from its Kerr project in Ontario earlier this week.
Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD) closed unchanged at 17 cents on 63,000 shares. The company and its consultants, JDS Energy and Mining Ltd., believe that the Chidliak diamond project on southeastern Baffin Island "is of sufficient merit" to proceed to prefeasibility. (And, presumably, JDS Energy would love to do the work.) In making the recommendation, JDS pegged the cost of the study at $27-million, spread over two years. Unfortunately, which two years is uncertain: Peregrine does not have the cash to get started this year, and winter, or at least a blustery fall, is just a few months away.
Bulk sampling is a big component of the required work. Approximately $4-million would go to large diameter drilling at CH-6 to test the high-grade KIM-L kimberlite phase. Another $3.5-million is needed for trenching a 600-tonne sample from the surface of CH-6 and a further $4-million is budgeted for a similar bulk sample from the surface of CH-7. Peregrine and JDS expect that processing the samples would cost another $1-million, a resource update requires a further $1.5-million and camp and operating costs are pegged at $2-million. In all, Peregrine needs $16.5-million for the bulk sampling.
More core drilling is also needed. Peregrine and JDS believe 2,000 metres of HQ drilling are needed at CH-6 and another 1,200 metres at CH-7 for geotechnical assessment and pierce point determination, with a further 1,500 metres of NQ drilling needed at each pipe for further microdiamond recovery. Camp costs, operating costs and management and supervision costs add another $2-million, and the microdiamond recovery will incur another $600,000 in laboratory charges. The drill portion of the program carries a total cost of $4.6-million.
The less promotable parts of the proposed study are the engineering and environmental studies needed to reach prefeasibility standards. The engineering will cost nearly $1.2-million, half of it for geotechnical work. The environmental studies carry a $4.45-million budget, including $3-million for a baseline study covering the Chidliak area and the route for a proposed all-weather road.
Peregrine's preliminary economic assessment, completed this spring, was based upon 7.46 million tonnes inferred at CH-6 at a grade of 2.41 carats per tonne or nearly 18 million carats, and another 4.99 million tonnes inferred at CH-7 averaging 0.85 carat per tonne, which provide a further 4.23 million carats. The plan called for a $455-million, 2,000-tonne-per-day mine that would recover 16.7 million of those carats. The discounted net present value is a pleasant $679-million after taxes, at least to the less rigorous standards of a dream sheet.
Peregrine's plan was based on an average diamond value of $151 (U.S.) per carat for CH-6 and $114 (U.S.) per carat for CH-7. Rising diamond prices would bolster the project's value and Peregrine's proposed bulk sampling programs could add to the diamond valuation if some larger gems are recovered from the larger tests. A significant portion of the rosy valuation depends on rough diamond prices outstripping inflation by 1.75 per cent annually. That escalator makes the value of the CH-7 diamonds, which would be mined in Chidliak's last years, look much better than today. Of course, that will require jewellery makers to pay more for rough year after year, something they have been unwilling to do for the past decade.
Still, even with the increased rigours of feasibility and price uncertainties, Chidliak appears to be Canada's most promising new diamond project. Unfortunately, it will remain stalled until Mr. Friedland and Mr. Peregoodoff can raise a big pot of cash or find a willing partner.