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

Peregrine Diamonds Ltd. continues to focus on the exploration and potential development of its Chidliak diamond project located roughly 120 kilometers (75 miles) north of Iqaluit, the capital of Nunavut.

Since 2008, 71 kimberlites have been identified on the 748,000-hectare (1.85 million acres) Chidliak property, eight of which are considered to be potentially economic.

In July, the company published results from a preliminary economic assessment for an initial phase of development at two of these kimberlite pipes, CH-6 and CH-7.

The PEA envisions an open-pit diamond mine with a life of roughly 10 years. Production would start at the CH-6, a kimberlite with 4.64 million metric tons of inferred resource averaging 2.45 carats per metric ton (11.39 million carats) diamond to a depth of 260 meters, followed by CH-7, a kimberlite with 5.99 million metric tons of inferred resource averaging 0.85 c/t (4.23 million carats) diamonds to a depth of 240 meters. Both resources remain open at depth.

Highlights from the phase-1 PEA base case include: an after-tax net present value (7.5 percent discount) of C$ 471.2 million and an after-tax internal rate of return of 29.8 percent; after-tax payback period of two years. The mine is projected to produce an average of 1.2 million carats of diamonds per year from kimberlite averaging 1.67 c/t. The capital costs to build this mine are estimated to be C$ 434.9 million, including C$ 56.7 million in contingency.

Pre-production capital includes the construction of a 160-kilometer (100 miles) road to Iqaluit.

To advance Chidliak further, Peregrine plans to complete a C$10 million to C$15 million drilling and bulk sampling program at the project during the 2017 winter season. The objectives of the proposed program are to collect additional kimberlite from CH-6 for micro-diamond sampling; and upgrade inferred resources at the CH-6 and CH-7 kimberlites to the higher confidence indicated resource category.

Peregrine President and CEO Tom Peregoodoff said, "As we develop Chidliak further, we expect to identify further upside to the economics of the project through optimization studies of the phase-one mine, including the expansion of the CH-6 resource to depth and through the development of a potential, phase 2 resource expansion from the numerous other kimberlites on the property, of which six currently show economic potential."

Peregrine has full ownership of Chidliak, including all of the diamond marketing and sales rights, and there are no non-government royalties or other encumbrances on diamond production.

Peregine's portfolio also includes: Qilaq, a diamond and metals project adjacent to Chidliak; Nanuq and Nanuq North, diamond projects north of Rankin Inlet, Nunavut; and the Lac de Gras project, a group of three diamond properties in Northwest Territories. The company also holds prospecting licenses that cover six separate diamond project areas in Botswana.

-SHANE LASLEY