North of 60 Mining News - The mining newspaper for Alaska and Canada's North

In the wake of the departure of its former option partner, De Beers Canada Inc., Peregrine Diamonds Ltd. has reported discovery during the 2013 summer exploration program of three new kimberlite bodies at the Chidliak diamond project located 120 kilometers (75 miles) northeast of Iqaliut, the capital of Nunavut.

Discovered in 2008, the Chidliak Project covers 7,480 square kilometers (2,888 square miles) on South Baffin Island. Peregrine acquired 100 percent ownership of the project in February 2012, buying out the 51 percent participating interest in Chidliak held by former partner BHP Billiton Ltd.

The three kimberlites, together with three finds reported Sept. 9, bring the number of kimberlites discovered at Chidliak in 2013 to six and the total kimberlites identified on the property to 67. Seven kimberlites (CH-1, CH-6, CH-7, CH-28, CH-31, CH-44 and CH-45) on the Chidliak property, so far, are considered potentially economic for diamonds.

The three new kimberlite discoveries have been numbered CH-65 through CH-67. At CH-65, abundant kimberlite float was found associated with a linear geophysical anomaly that represents a kimberlite dyke. At CH-66, abundant kimberlite float was found associated with a circular magnetic high anomaly with an estimated surface expression of 0.5 hectares (1.24 acres) as determined by ground geophysics. At CH-67, abundant kimberlite float was found associated with a circular magnetic high anomaly with an estimated surface expression of one hectare (2.47 acres) as determined by ground and airborne geophysics.

In addition to the six kimberlites discovered in 2013, prospecting crews discovered kimberlite dykes associated with four known kimberlite pipes: CH-2, CH-5, CH-9 and CH-21. A kimberlite dyke is a sheet of rock that formed in a crack in a pre-existing rock body.

During the summer program, prospecting crews also discovered seven new occurrences of kimberlite float (pebbles, cobbles and boulders) for which a definite kimberlite pipe or dyke source has yet to be confirmed.

In previous programs, Peregrine has discovered 12 localities with unexplained kimberlite float.

At each kimberlite float locality, pieces of kimberlite were found by field crews that were evaluating priority kimberlite-type geophysical anomalies and/or unexplained kimberlite indicator mineral anomalies.

At one float locality named Area B, located about 15 kilometers (nine miles) east of the CH-6 kimberlite, kimberlite boulders and cobbles with abundant kimberlite indicator minerals were found over an area measuring roughly 1,000 meters by 600 meters.

Finding a source or sources for the Area B kimberlite float and other important unexplained float occurrences on the project will be a high priority in future exploration programs.

Ground gravity and ground electromagnetic (Max-Min) orientation surveys completed over select kimberlites proved effective at defining the kimberlite bodies. Peregrine geologists plan to use these two geophysical methods in tandem to complement ground magnetic surveys that have been completed in priority areas with unexplained kimberlite float and KIM anomalies, such as Area B. They also will consider conducting an airborne gravity survey if modeling of the existing gravity data suggests it could be successful in identifying new kimberlites in priority areas.

De Beers opts out of project

De Beers informed Peregrine in October that it declined to exercise its right to enter into an earn-in and joint venture agreement with the junior on the Chidliak diamond project. The agreement, first announced Sept. 5, 2012, provided for the companies to explore and develop the Chidliak diamond project on a 50.1 percent De Beers / 49.9 percent Peregrine ownership basis. It also required certain ongoing work and funding commitments by De Beers that the company said will be completed as agreed.

"Chidliak has benefited greatly from De Beers' involvement over the last year, and we are cognizant of their reasons not to proceed, given the challenging mining market our industry is currently experiencing. Our team looks forward to advancing Chidliak on a 100 percent ownership basis, and we are fast-tracking the processing of the CH-6 kimberlite bulk sample collected this spring with initial diamond content and valuation results anticipated in January 2014.," said Peregrine CEO Eric Friedland.

Peregrine and De Beers agreed to meet during the first week of November to complete the handover of all technical and other data as required by terms of the 2012 option agreement. The data was to include the final results from the 2013 field program, operated by De Beers, including the total number of new kimberlite occurrences that were discovered, final geophysical data, kimberlite geologic models, all surficial and structural mapping data and interpretations.

Importantly, all new kimberlite targets that have been defined by De Beers will be provided to Peregrine, the company said.

Bulk sample processed

Peregrine also reported that the 508-wet-metric tons kimberlite sample collected from the CH-6 kimberlite at Chidliak early in the season has now been processed to a heavy mineral concentrate by dense media separation.

One of a few companies to start winter exploration in the Far North in 2013, Peregrine commenced a 200-metric-ton bulk sample program Jan. 28 as part of a C$5 million work plan for the year that was to be funded by De Beers.

Peregrine more than doubled the size of the CH-6 bulk sample objective of 200 metric tons, collecting a total of 508 wet metric tons of kimberlite. The junior reasoned that the increased size of the bulk sample was expected to deliver a larger parcel of rough diamonds which will provide higher confidence in future diamond valuations.

Diamond recovery from about 1.1 tons of concentrate derived from about 262 wet metric tons of kimberlite is underway at the Saskatchewan Research Council facility in Saskatoon, Sask. The diamond grade results from this portion of the bulk sample are expected by mid-December. An independent valuation of the resulting diamond parcel will be completed in early 2014.

The DMS concentrate, weighing some 850 kilograms, from the remainder of the original 508-wet-metric-ton bulk sample is now in secure storage at the SRC, and diamond recovery from this concentrate is scheduled to commence in the first quarter of 2014.

The cost of processing the first 250 metric tons or so of bulk sample material and diamond recovery work at the SRC from the resulting concentrate will be paid for by De Beers as previously agreed. This work was budgeted at about C$3 million.

De Beers also funded the 2013 field operation, which was budgeted at C$2 million and included a comprehensive desktop mining study, kimberlite pipe characterization studies, ground geophysics, and new target generation work.

De Beers also agreed to process the remaining roughly 250 metric tons of the CH-6 bulk sample to concentrate, and this work was paid for by Peregrine at De Beers' actual cost to process.

A 14.11-metric-ton mini-bulk sample of drill core acquired from the CH-6 kimberlite in 2010 returned a grade of 2.84 carats per metric ton diamonds. If that grade is confirmed with further testing, CH-6 would be one of the highest grade kimberlite pipes in the world.

Future work

Peregrine said detailed information regarding plans for its 2014 field season at Chidliak will be provided in the first quarter of 2014, after it receives all of the CH-6 diamond valuations and conducts a thorough evaluation of all exploration data generated on the project in 2013 along with information from pre-2013 programs.

Friedland also said the results from CH-6 and new exploration and conceptual mining data generated by De Beers will be utilized to formulate optimum exploration and sampling programs for 2014 and 2015.