Peregrine Diamonds (PGD-T) March 8, '16 is pleased to announce the results of an independent diamond valuation for an aggregate 735.75 carat parcel of commercial-size (+1.18 mm square mesh) diamonds recovered from five geological units of the CH-7 kimberlite pipe at the Company's 100 percent owned Chidliak Diamond Project, Nunavut, Canada. The current average price was US$100 per carat, and ranged from US$73 to US$154 per carat across parcels from the five geological units represented. The modelled average price ranged from a low of US$94 per carat to a high of US$155 per carat, with a base modelled price of US$114 per carat. The eight highest value diamonds ranged in size from 1.35 carats to 5.33 carats, weighed 21.58 carats in total, and had a current average price valuation of US$1,619 per carat.
The diamond valuation was undertaken in Antwerp, Belgium by WWW International Diamond Consultants ("WWW"), an international diamond valuation and consultancy company. Diamond prices were determined using their February 1, 2016 price book and their proprietary price modelling techniques which predict the average price per carat in a mine production scenario. Through its partnership in Diamonds International Canada Ltd., WWW performs the Canadian federal and provincial government diamond valuations for producing diamond mines in Canada and has been working with Canadian diamond production since 1998.
Photos of the valued diamonds from CH-7 are available at http://www.pdiam.com/s/PG_2015-CH-7-bulk.asp.
Mr. Neil Buxton, responsible for geostatistical modelling at WWW stated "based on our analysis of the parcel, WWW believes that if CH-7 were in production in the current diamond market, it is unlikely that the average price would be lower than the low average modelled price. It is equally important to understand that the high average modelled price does not represent a maximum price and that the ultimate diamond price could be higher than US$155 per carat. These results need to be confirmed with a larger sample."
Mr. Tom Peregoodoff, Peregrine's President and CEO stated "This result represents the successful culmination of the 2015 Resource Development Program at Chidliak and is further confirmation that Chidliak is Canada's highest potential undeveloped diamond resource. The diamond valuations from CH-7 provided by WWW will support the maiden CH-7 resource statement expected this month and, together with the revised resource at CH-6, will form the foundation of the independent Preliminary Economic Assessment of a Phase 1 Diamond Mine expected this June."
CH-7 DIAMOND VALUATION
As reported on January 12, 2016, Peregrine recovered an aggregate 717.65 carat parcel of commercial-size (+1.18 mm) diamonds from 814.0 dry tonnes extracted by large diameter reverse-circulation drilling of the KIM-2, KIM-3, KIM-4 and KIM-5 geological units in the CH-7 kimberlite. The diamonds were shipped to Antwerp in January 2016, and were accompanied by a previously unvalued 47.29 carat parcel obtained in 2010 by excavating 47.2 dry tonnes of the KIM-1 geological unit of CH-7 from surface. The CH-7 diamonds were deep-cleaned by acid boiling and sized to the +3 DTC sieve class in Antwerp, resulting in an aggregate 735.75 carat commercial-sized parcel for valuation.
WWW determined current market values ranging from US$73 to US$154 per carat for five parcels ranging from 46.01 carats to 306.37 carats in weight, with each parcel representing one of the five geological units at CH-7. The average current market value of all diamonds examined was US$100 per carat.
WWW determined the modelled prices for the parcel of +3 DTC size diamonds from CH-7 using proprietary statistical methods that predict the proportion and price of each size class of diamonds that may be possible in potential future run of mine production. Data used for the model included diamond size frequency distribution, market prices for each size class, and estimated market prices for larger diamonds that would be recovered in a production scenario but were not fully represented in this diamond parcel.
For both market prices and modelled prices, WWW used its most current price book of February 1, 2016. This price book reflects the current diamond market prices.
SUMMARY OF CH-7 KIMBERLITE DIAMOND VALUATION*
CARATS
VALUED
(+3 DTC)PARCEL
VALUEAVERAGE
PRICEBASE MODEL
AVERAGE PRICELOW MODEL
AVERAGE PRICEHIGH MODEL
AVERAGE PRICE|
| 735.75 | US$73,223 | US$100/ct | US$114/ct | US$94/ct | US$155/ct | | * based on WWW pricebook as at February 1, 2016 |
WWW recommend that their US$114 per carat base model price be used for base case diamond valuation for CH-7 as part of the Company's pending Preliminary Economic Assessment of a Phase 1 Diamond Mine at Chidliak. WWW provide low and high model prices to support informed, objective examination of price sensitivities when in a realistic mining scenario.
The eight highest value diamonds ranged in size from 1.35 carats to 5.33 carats, weighed 21.58 carats in total and had an average current market value of US$1619 per carat. They are described as follows: From KIM-4: A 5.33 carat sawable, white/colourless octahedron: US$16,555 (US$3,106 per carat)
From KIM-3: A 5.01 carat makeable octahedron: US$6,216 (US$1,241 per carat)
From KIM-2: A 2.00 carat sawable octahedron: US$2,729 (US$1,364 per carat)
From KIM-1: A 2.18 carat sawable octahedron with low fluorescence: US$2,479 (US$1,137 per carat)
From KIM-2: A 2.03 carat sawable octahedron: US$2,308 (US$1,137 per carat)
From KIM-2: A 2.28 carat makeable octahedron with low flourescence: US$1,995 (US$875 per carat)
From KIM-2: A 1.35 carat sawable octahedron: US$1,654 (US$1,225 per carat)
From KIM-2: A 1.40 carat sawable octahedron with visible impact mark: US$998 (US$ 713 per carat)
WWW further stated that "The overall parcel valued by WWW presented well in terms of quality, colour and shape. Around 25-30 percent of the diamonds were classified as white gem goods which attract the highest prices. There was very little boart present and brown diamonds made up only 25-30 percent of the parcel. Fluorescence is another issue which can affect value, particularly that of the gem white goods. WWW therefore tested several gem, white goods across various sizes from the parcel and although some light fluorescence was present, very few stones showed strong fluorescence".
The entire diamond valuation was monitored by Dr. Jennifer Pell, Peregrine's Chief Geoscientist and Qualified Person for diamond valuations.
IMPACT OF BREAKAGE ON CH-7 DIAMOND VALUATION
As reported by the Company on January 12th, 2016, a high level of diamond breakage was observed in the CH-7 diamond parcel during diamond recovery and sorting. It was further noted that the impact of this observed breakage on the diamond parcel valuation would be taken into account during diamond value modelling.
During the CH-7 diamond breakage analysis completed by Dr. Tom McCandless, fragments of seven high quality white to off-white diamonds were partially reconstructed as whole diamonds that would have occurred in the 3 carat size class. The absence of these seven large stones negatively impacted the US$100 per carat average current market value assessed by WWW for CH-7 diamonds.
WWW has over many years developed and refined proprietary, value-modelling techniques that were applied to obtain mining-scenario values for the diamonds from CH-7. WWW concluded that there were sufficient unbroken diamonds within each size category to allow for price modelling of the diamond parcels. This modelling also took into account the absence of diamonds lost due to breakage, such that the model values tabulated above represent the whole-stone profile that would be expected in a present-day mining scenario.
2016 DIAMOND RESOURCE DEVELOPMENT PROGRAM UPDATE
The development of a revised Inferred Mineral Resource Statement for CH-6 and CH-7, incorporating the 2016 results, is progressing. As previously reported November 17, 2015, the CH-6 microdiamond results support continuity of the 2.58 carat per tonne ("cpt") grade and the potential to add an additional 1 million to 1.2 million tonnes, or an additional 2.5 million to 3.1 million carats, to the existing 8.57 million carat Inferred Resource at CH-6 that occurs shallower than 250 metres of depth. This tonnage is currently considered as a Target For Further Exploration ("TFFE"), which is conceptual in nature and it is uncertain whether the 2016 Diamond Resource Development Program will result in this being delineated as a Mineral Resource.
The development of a maiden Inferred Resource statement for CH-7, incorporating the bulk sample and diamond valuation results, together with the 2015 microdiamond results reported on November 17, 2015, will commence immediately. The CH-7 kimberlite, located approximately 15 kilometres southeast of CH-6, has a surface expression of approximately one hectare. A TFFE of 3.72 million to 6.1 million tonnes shallower than 290 metres of depth has previously been reported for CH-7. This TFFE is conceptual in nature and it is uncertain whether the 2016 Diamond Resource Development Program will result in this TFFE being delineated as a Mineral Resource.
The Phase 1 Chidliak diamond resource will comprise the updated Inferred Resource statement for CH-6, and the maiden Inferred Resource statement for CH-7. The Phase 1 diamond resource statement is expected this month and will be included in a planned, independent Preliminary Economic Assessment ("PEA"), scheduled for June, 2016.
Dr. Jennifer Pell, Professional Geologist and Peregrine's Chief Geoscientist was Peregrine's internal Qualified Person for the diamond valuation. Dr. Tom McCandless, a Professional Geologist and an independent consultant to the diamond industry, is Peregrine's independent, external Qualified Person for diamond breakage analysis. Dr. Herman Grütter, Peregrine's Vice President, Technical Services, is a Qualified Person and is responsible for the design of the Diamond Resource Development Program at Chidliak.
Dr. Pell, Dr. McCandless, and Dr. Herman Grütter have reviewed this release and approve of its contents.
ABOUT PEREGRINE DIAMONDS
Peregrine Diamonds core asset is its 100 percent-owned, 582,476 hectare Chidliak project, located 120 kilometres from Iqaluit, the capital of Nunavut where 71 kimberlites have been discovered to date with eight being potentially economic. An Inferred Mineral Resource of 8.57 million carats in 3.32 million tonnes of kimberlite at a grade of 2.58 carats per tonne has been defined for a portion of the CH-6 kimberlite. In addition, a target for further exploration ("TFFE") of 3.20 to 4.38 million tonnes of kimberlite to a depth of 380 metres below surface has been identified at CH-6. An independent diamond valuation by WWW International Diamond Consultants, of a 1,013 carat parcel of diamonds from CH-6 returned an average market price of US$213 per carat and modelled prices that ranged from a minimum of US$162 per carat to a high of US$236 per carat, with a base model price of US$188 per carat (all using the February 24, 2014 price book). A TFFE of 3.72 to 6.01 million tonnes to a depth of 290 metres has been defined at the CH-7 kimberlite. In 2010, a 47 tonne mini-bulk sample collected from the surface of CH-7 returned a grade of 1.04 carats per tonne. A TFFE of 1.27 to 3.19 million tonnes to 250 metres depth has been defined at the CH-44 kimberlite pipe. The TFFEs identified above are conceptual in nature and are not Mineral Resources. It is uncertain whether further exploration will result in any of these tonnages being delineated as Mineral Resources.
In addition, Peregrine now controls eleven prospective diamond prospecting licenses in Botswana that cover 661,330 hectares.
Peregrine Exploration, a wholly owned subsidiary of Peregrine Diamonds, holds the 8,493 hectare Lac de Gras project in the Northwest Territories, located approximately 27 kilometres from the Diavik Diamond Mine. The nine hectare 72.1%-owned DO-27 kimberlite, located at Lac de Gras, hosts an Indicated Mineral Resource of 18.2 million carats of diamonds in 19.5 million tonnes of kimberlite at a grade of 0.94 carats per tonne and it is open at depth. Through comprehensive evaluation of its extensive diamond exploration databases, Peregrine Exploration is working towards acquiring and developing new diamond properties in North America. A key asset being utilized in the search for a new Canadian diamond district is a proprietary database acquired from BHP Billiton that contains data from approximately 38,000 kimberlite indicator mineral samples covering approximately three million square kilometres of Canada.
For information on data verification, exploration information and resource estimation procedures see the technical reports entitled, "2015 Technical Report for the Chidliak Project, 66° 21' 43" W, 64° 28' 26" N Baffin Region, Nunavut" dated February 23, 2015, and "Peregrine Diamonds Ltd. Lac de Gras Project Northwest Territories, Canada NI 43-101 Technical Report" dated July 15, 2014, both of which are available on SEDAR and the Company's website.
For further information,
please visit www.pdiam.com or
contact Mr. Eric Friedland, Executive Chairman,
Mr. Tom Peregoodoff, President and CEO,
Dr. Herman Grütter, Vice President, Technical Services, or
Peregrine Diamonds Investor Relations,
at 604-408-8880 or at
investorrelations@pdiam.com . |
