Peregrine Diamonds Ltd. Feb. 15 reported that its 2017 resource development program has increased the inferred mineral resource of the CH-6 kimberlite pipe at the company's Chidliak diamond project in Nunavut by 58 percent.

The 2017 drill program at Chidliak delineated the high-grade CH-6 kimberlite pipe to a depth of 540 meters below surface. As a result, the inferred resource has been expanded to 17.96 million carats of diamonds in 7.46 million metric tons of inferred resource averaging 2.4 carats of diamonds per metric ton.

"Since we announced our maiden inferred resource at CH-6 in May 2014, we have grown this resource by an incredible 140 percent, from an initial 7.5 million carats to the 18 million carats we are proud to announce today," said Peregrine President and CEO Tom Peregoodoff. "The growth of the CH-6 resource is remarkable and together with the CH-7 kimberlite resource, brings the phase one diamond development resource at Chidliak to an impressive 22 million carats."

In 2016, the company completed a preliminary economic assessment for Chidliak that envisioned a phase-1 mine that would produce an average of 1.2 million carats per year over an initial 10-year mine life. This mine was calculated to produce an after-tax net present value of C$471 million, an internal rate of return of 29.8 percent, and payback the initial capital investment in two years.

The phase-one development plan contemplated in the PEA was based of 4.64 million metric tons of inferred mineral resource containing 11.39 million metric tons of diamonds in the CH-6 kimberlite, plus 4.99 million metric tons inferred mineral resource in the CH-7 kimberlite with 4.23 million carats of diamonds.

JDS Energy and Mining Inc. is revising the PEA to include the newly expanded resource base, with results expected in the second quarter of 2018.

"Today's announcement of the significant expansion of the diamond resource should have a material, positive impact on the forthcoming economic analysis and I look forward to sharing the results of the updated phase one diamond development PEA with all of our stakeholders as soon as possible," said Peregoodoff.

Drilling has also identified between 1.09 and 1.35 million metric tons of kimberlite from depths of 300 to 590 meters at CH-6. It will take further drilling, however, to determine whether this material can be upgraded to a resource.

The CH-6 kimberlite pipe remains open for expansion to depth and the company said the Chidliak property hosts a number of other kimberlites.

"This phase one resource is based on only two of the 74 currently known kimberlites at Chidliak providing significant resource expansion possibilities which the company intends to pursue in 2018," Peregoodoff added.

–SHANE LASLEY