Peregrine Diamonds Commences 2017 Work Program at Chidliak
19 June 2017
June 19, 2017
VANCOUVER, CANADA – Peregrine Diamonds Ltd. (TSX:PGD) (“Peregrine” or “the Company”) is pleased to announce that it has completed final preparations for the 2017 work program at its 100%-owned Chidliak Diamond Project (“Chidliak”) near Iqaluit, Nunavut, Canada. Field crew mobilization will commence on June 27, 2017 and core drilling of up to 7,500 metres at the CH-6 kimberlite pipe is expected to commence on July 5, 2017. Drilling at CH-6 will further delineate the kimberlite, with the objective of expanding the high grade CH-6 resource to a depth of 500 metres below surface. Approximately 1,000 metres of HQ-diameter core drilling will be used to gather geotechnical information and to allow completion of further open-pit design and optimization studies. Environmental base line studies also will form part of the 2017 work program and will focus on the collection of additional environmental data within the Chidliak Project area and the proposed transportation corridor between Iqaluit and the project site.
- CH-6 OPEN PIT PLUS UNDERGROUND CONCEPT STUDY
As reported on March 6, 2017, the Company engaged JDS Energy & Mining Inc. (“JDS”) in December 2016 to complete an internal, concept-level study to define the potential economic uplift that could be realized by developing the CH-6 kimberlite to a depth of 500 metres as a combined open-pit plus underground mining operation. The study clearly demonstrates the benefit of proving up the resource potential at the CH-6 kimberlite pipe below a depth of 260 metres, which is the current bottom of the Inferred Resource in the 2016 Preliminary Economic Assessment (“PEA”).
The 2017 work program at Chidliak will focus on three main objectives:
Expansion of the current Inferred Resource at CH-6 - through approximately 7,500 metres of diamond core drilling to further demonstrate geological continuity, establish pipe margin pierce-points and obtain spatially representative kimberlite samples for caustic fusion diamond analysis. The main objective is to increase the depth of a categorized resource from 260 metres to 500 metres. Caustic fusion results will be used to model diamond grade and grade distribution of the kimberlite to a depth of 500 metres.
Refine open-pit geotechnical design parameters - as part of the 2017 drilling program approximately 1000 metres of oriented HQ-diameter core and other geotechnical data required to refine the open-pit parameters, particularly the pit slope angles, will be acquired. This data will enable assumptions regarding open-pit design to be tested and further refined.
Advancing permitting - through continued environmental monitoring programs of the Chidliak project area and the proposed transportation corridor.
The Company expects the microdiamond analyses to be completed in the third quarter of 2017 and anticipates an updated resource estimate for CH-6 to be issued in the fourth quarter. If the resource at depths below 260 metres is of sufficient size and diamond grade, a new Preliminary Economic Assessment outlining a combined open-pit and underground mining operation for CH-6, in addition to an open-pit operation at CH-7, could be completed in the first quarter of 2018. The total cost for the work program is estimated at C$8.5 million.
- FINANCING FOR THE 2017 PROGRAM
The Company is in final discussions regarding financing for the 2017 program and management is confident such financing will be obtained. Detailed information will be provided when the terms of the financing are finalized.
To enable the 2017 work program to commence immediately, the Company’s Executive Chair, Eric Friedland (the “Lender”) has agreed to lend the Company up to C$1,000,000 (the “Loan”). The Loan, which is unsecured, will accrue interest at a rate of 12% per annum, compounded yearly and not in advance. The Loan will be repayable on or before the earlier of September 30, 2017 and two business days after the date on which the Company closes any equity financing by way of issuance of shares. The Loan cannot be converted into, exchanged for, or otherwise modified to create any obligation on the Company to issue, directly or indirectly, any equity or voting securities of the Company or any subsidiary of the Company, for the repayment of either principal or interest on the Loan.
As the Lender is considered a “related party” under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the Loan is considered to be a “related party transaction” within the meaning of MI 61-101. The Company intends to rely on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in section 5.5(a) and 5.7(1)(a) or (b) of MI 61-101 in respect of related party participation in the Loan. The securities of the Company are listed on the Toronto Stock Exchange. The fair market value of the Loan is less than C$2.5 million and neither the fair market value of the Loan, nor the fair market value of the consideration for the Loan, is expected to exceed 25% of the Company’s current market capitalization. The Company has received the requisite non-interested directors’ approval of the Loan.
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