Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD), unchanged at 15 cents on 18,000 shares, remains mum about its summer exploration program at Chidliak, its promising diamond project on southeastern Baffin Island. The company is working on an updated preliminary economic assessment of its CH-6 and CH-7 kimberlites, which now host a significant resource, but Peregrine is also expected to mount another big exploration program this summer. The flagship CH-6 pipe has been the focus for the past few years, but the company has just received regulatory approval for trenching at CH-7 and CH-44. As well, the enigmatic CH-1 kimberlite could also be in line for another look.
Peregrine's Chidliak project is largely based on the 7.46 million tonnes inferred at CH-6. At an average of 2.41 carats per tonne, the resource hosts nearly 18 million carats, modelled with a value of about $149 (U.S.) per carat at last report. Further, there between 1.09 million and 2.35 million tonnes, presumably at comparable grades and values, deemed a target for future exploration. The CH-6 pipe provided the bulwark for the company's 2016 preliminary economic assessment, which showed a discounted net present value of $471-million after taxes for a $435-million mine.
Nevertheless, CH-7 is certain to remain a key part of the Chidliak plan. The pipe held nearly five million tonnes of inferred kimberlite at an average of 0.85 carat per tonne, providing 4.23 million carats. As well, another 900,000 to 2.3 million more tonnes were deemed a target for further exploration. The diamond value was lower, $114 (U.S.) per carat, but that was based on a smaller parcel of recovered diamonds.
Peregrine's promotional eyes could be larger than its treasury, but when the company applied for approval for its trenching last fall, it pondered a trench 25 metres long, 10 metres wide and between three and five metres deep -- that could provide up to 3,000 tonnes of kimberlite, or about 2,500 carats, enough to get a better idea of the diamond value. Meanwhile, the smaller CH-44 has not had a new look in a few years. It does not hold a formal resource, but Peregrine lists between 1.27 million and 3.19 million tonnes of kimberlite as a target for further exploration. Work done previously suggests the pipe has a grade comparable with CH-7.
Further, the CH-1 kimberlite remains an enigma. A 95-kilogram sample a decade ago produced commercial-sized diamonds weighing 0.157 carat, or about 1.65 carats per tonne. A subsequent 2.28-tonne mini-bulk sample yielded a grade of 1.56 carats per tonne, although it was skewed by a 2.01-carat stone deemed a gem-quality, white diamond. In 2009, a 49.6-tonne test of CH-1 produced 20.26 carats, or 0.41 carat per tonne, although the site was deemed unrepresentative of the entire pipe. While the grade may be lower than CH-6, CH-7 and CH-44, the CH-1 pipe is large and therefore a tantalizing target.