Chidliak’s results compare favourably to Diavik

While it’s still early days at Peregrine Diamonds’ (PGD-T) Baffin Island Chidliak diamond project, mini-bulk sample results from the promising CH-6 kimberlite compare well to the kimberlite pipes being mined in similar Arctic conditions at the world-class Diavik and Ekati diamond mines in Canada.

A 14.1-tonne sample of drill core collected from the CH-6 kimberlite pipe returned 40.04 carats of commercial- size diamonds larger than a 0.85-mm sieve size, for an overall diamond grade of 2.84 carats per tonne.

“If these spectacular results are confirmed by future work, CH-6 will be one of the highest grade kimberlite pipes in the world, comparing favourably to the pipes of the renowned Canadian Diavik mine, which grade from 3 to 4.8 carats per tonne,” said Peregrine’s CEO Eric Friedland in a prepared statement.

Covered by only 15 metres of overburden, the land-based CH-6 kimberlite is estimated to have a surface expression of at least 0.8 hectare. It remains open for expansion in several directions, including depth.

“Another important attribute of CH-6 is that it’s covered by shallow glacial till, whereas the Diavik pipes were discovered under a large lake, which required considerable expenditure and creative engineering to allow for mining,” remarked Friedland.

A representative 14.6-tonne sample of CH-6 was collected from eight HQ-sized (6.3-cm-diameter) core holes drilled this summer and from excess NQ-sized (4.7-cm) core drilled in 2009. It was divided into four separate sub-samples based on geologic interpretation. In addition, a representative control sample weighing 465.3 kg was taken from the original 14.6-tonne sample, to be processed separately from the 14.1- tonne mini-bulk sample.

Results from the sub-samples are as follows: a 1-tonne sample of Unit A, comprising weathered volcaniclastic kimberlite recovered from the upper portion of the pipe, returned the highest grade of all at 6.81 carats per tonne; Unit B showed a grade of 2.82 carats in a 3.4-tonne sample of volcaniclastic kimberlite that extends to a depth of 100 metres from surface; Unit C delivered a grade of 3.49 carats per tonne from a sample of 2.1 tonnes, representing mixed massive and volcaniclastic kimberlite between a depth of 100 and 150 metres; and Unit D yielded 2.03 carats per tonne from a 7.6-tonne sample representing massive kimberlite and varying amounts of carbonate xenoliths from the deeper parts of the pipe.

Overall, the 14.1-tonne sample returned 523 commercial-size diamonds, nine of which weighed 0.5 carat or more, including two diamonds larger than one carat. The three largest diamonds are described as a 1.29- carat off-white, transparent macle, a 1.02- carat off-white, transparent octahedron and a 0.99-carat white, or colourless, transparent tetrahexahedron.

The representative 465-kg control sample was processed by caustic fusion analysis for diamonds larger than the 0.425-mm sieve size. A total of 133 diamonds were recovered, including a 2.24-carat parcel exceeding 0.85- mm cutoff, for an implied diamond content of 4.81 carats per tonne. The largest diamond recovered from the control sample was a 0.99- carat white, or colourless, transparent octahedron.

“CH-6 shows an exceptional white diamond population, with high clarity and many superior shapes present. There are indications of fancy yellow stones as well, and very few browns and greys,” reported Howard Coopersmith, an independent diamond consultant.

“We are very pleased with the apparent high quality of the CH-6 diamonds, suggesting that the average diamond value will likely be substantial,” said Friedland. “The combination of high-grade and strong diamond value could make CH-6 the anchor pipe of a possible future diamond mine, as it is clustered with at least four other kimberlites that have economic potential in Arctic settings, including the estimated 5-hectare CH-31 pipe.”

The CH-6 pipe is located in an area with an 8-km radius that includes the highly promising CH-1, CH-7, CH-31 and CH-44 kimberlites. A sixth kimberlite, CH-28, also shows encouraging economic potential and lies a further 50 km to the north.

This year’s discovery of the CH-31 kimberlite pipe was a big breakthrough for the project as it shows large tonnage potential. If the 5-hectare-in-size pipe is projected to a depth of 300 metres, it offers the potential for 37.5 million tonnes of kimberlite in one body.

With 50 kimberlites discovered in the last couple of years, including 34 this year alone, the Chidliak project is held 51% by BHP Billiton (BHP-N, BLT-L) and the rest by Peregrine. This year’s $15.3-million exploration program was funded entirely by BHP as part of its earn-in requirement.

“This is a brand new diamond discovery that was made by Peregrine and our partner, BHP Billiton, as a result of grassroots exploration,” explained Peregrine’s president Brook Clements, during a recent presentation at Scotia Capital’s 2010 mining conference. “I have been in diamond exploration since 1982 and I have never seen a project where so many kimberlites have been discovered so fast.

“This discovery comes at a good time because the world does need more diamonds,” remarked Clements. “Diamond prices have come back to the peaks they reached in 2008 prior to the economic meltdown. Demand is growing throughout the world, most notably in China, where China has just replaced Japan as the second leading consumer of diamonds in the world.”

He added: “Supply is constrained. Major mines throughout the world are maturing and there are no giant discoveries out there waiting to be developed.”

Earlier this month, BHP surprised investors when it chose not to exercise a one-time right to earn an extra 7% by funding the project to completion of a bankable feasibility study.

“BHP Billiton has chosen to maintain its interest in Chidliak at 51% at this time. We look forward to continuing the exploration program and progressing the project in partnership with Peregrine,” announced BHP in a statement.

The project will now advance forward as a joint venture, with each partner responsible for its share of expenditures. Peregrine retains the marketing rights for its share of any future diamond production from day one.

“We are pleased to have BHP Billiton as our partner, recognizing that their experience in building and operating the successful Ekati diamond mine, also in Canada’s north, will benefit Chidliak immensely as we move the project forward together,” stated Friedland.

Covering 9,800 sq. km, the Chidliak project is 120 km northeast of the town of Iqaluit, Nunavut, on the south end of Baffin Island. Microdiamond results have been reported for 24 of the 50 kimberlites discovered to date, with 23 being diamond-bearing. Results for the remaining kimberlites discovered in 2010 are expected by year-end.

“We have excellent access to the project,” boasted Clements. Supplies are currently shipped to Iqaluit by barge and then transported by aircraft to the project. “The terrain between Iqaluit and the project is relatively flat with very few lakes, so it will be ideal for the construction of a permanent road,” said Clements. The project also has tidewater access.

An exploration program planned for 2011 is expected to be similar in scale to that of this year’s, with Peregrine continuing its role as operator. The 2011 field season is planned to begin in March, with the drilling of numerous high-priority, lake-based targets.

During the 2010 winter drilling campaign, Peregrine discovered the CH-17 kimberlite under a lake but because of weather conditions and drilling problems it was only able to recover 3 metres of core. “It is a good looking kimberlite with coarse indicator minerals,” said Clements, who is almost certain anomaly 165, which lies 100 metres south of CH-17 and has a surface expression of 1 hectare, will also be kimberlite.

“We have discovered 50 kimberlites to date and counting. We know we are going to discover more
in 2011,” predicted Clements. “Only 30% of the Chidliak has been flown by airborne geophysics and we have indicator mineral anomalies outside the area that has been flown.”

Peregrine has two other diamond projects — Qilaq and Cumberland — on south Baffin Island. The company has a working capital of about $15 million, with 92.6 million shares outstanding. “That positions us to get comfortably through the end of next year,” said Clements.