Peregrine and BHP gear-up to resume exploration at Chidliak

While final details of this year’s upcoming diamond exploration program are still being worked out by joint-venture partners Peregrine Diamonds (PGD-T) and BHP Billiton (BHP-N, BLT-L), the 2011 program at Chidliak will be similar in scope to the $15 million spent in 2010.

Covering 8,580 sq. km, the Chid-liak project is 120 km northeast of the town of Iqaluit, Nunavut, on the south end of Baffin Island. The project is held 51% by BHP Billiton and the rest by Peregrine.

The primary objective of the 2011 program is two-fold: the evaluation by drilling and mini-bulk sampling of those kimberlites showing economic potential; and the discovery of new kimberlites.

Field activities have commenced with the building of a third exploration camp, which will be used to access the northern portions of the project, near the CH-17 and CH-28 kimberlites. Core drilling is scheduled to begin mid-March with the drilling of lake-based anomalies. The CH-17 kimberlite is slated to be tested first, followed by anomaly 165, located some 200 metres away, before moving onto other lake-based targets.

During the 2010 winter drilling campaign, Peregrine discovered the CH-17 kimberlite under a lake, but because of poor weather conditions and drilling problems, it only recovered 3 metres of core. “It is a good-looking kimberlite with coarse indicator minerals,” said Peregrine’s president Brook Clements, during a recent presentation at Scotia Capital’s 2010 mining conference. Clements is almost certain anomaly 165, with a surface expression of 1 hectare, will also be a kimberlite. 

To date, 50 kimberlites have been discovered at Chidliak, 24 by prospecting and 26 by drilling, including 34 alone in 2010. Canada’s newest diamond district now extends 70 km in a north-south direction and 40 km east-west. Two additional diamond-bearing kimberlites, Q1 and Q2, were discovered in 2010 on Peregrine’s adjacent 100%-owned Qilaq project, further expanding the potential of this very promising camp. 

Peregrine believes at least seven of the 31 kimberlites tested to date show economic potential in an Arctic setting and include: CH-1, CH-6, CH-7, CH-28, CH-31, CH-44 and CH-45. 

John Kaiser, publisher of the Kaiser Bottom-Fish, believes Peregrine is poised to deliver confirmation during 2011 that its Chidliak project has the critical mass to be the next Ekati.

Last year’s discovery of the CH-31 kimberlite was a big breakthrough for the project as it shows large tonnage potential. Seven of the 50 kimberlites are likely to be greater than 1 hectare in size, based on drill data and ground geophysics.

CH-31 is interpreted to be at least 5 hectares in size, based on geophysical and drill data and the distribution of kimberlite float. According to Kaiser, it has a minimum 25-million-tonne footprint. 

The CH-31 body is characterized by a subtle magnetic low anomaly and an associated strong electromagnetic response, representing a new target type that will be the focus of exploration this year.

“Success in confirming that CH-31 is at least medium-grade and/or finding other similar large pipes would send Peregrine through $10 by the end of 2011,” speculates Kaiser. “The trouble with the Chidliak play is that the pipes have generally been smallish, and so far, based on tonnage footprints and macro grades, the more promising ones do not add up to the 80-million-carat threshold BHP apparently needs to go to the trouble of developing another diamond mine.

“CH-31, however, is a potential game changer for Chidliak because it is a comparatively large pipe at 5 hectares,” writes Kaiser. “During 2011, the market will be watching to see what sort of mini-bulk sample grade CH-31 yields, and how close this puts the overall Chidliak carat count to BHP’s threshold.”

In 2010, mini-bulk samples were taken from the highly promising CH-6 and CH-7 kimberlites. Both showed the potential to carry larger gem-quality diamonds. A 14.1-tonne sample of drill core 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 content of 2.84 carats per tonne.

This implied grade compares well to the kimberlite pipes being mined in similar Arctic conditions at the world-class Diavik and Ekati diamond mines in Canada.

The mini-bulk sample from CH-6 was divided into four sub-samples based on geology. The sub-samples returned diamond grades of between 2.03 and 6.81 carats per tonne. Overall, 523 commercial-size diamonds were recovered, nine of which weighed half-a-carat or more, including 1.29, 1.02 and 0.99-carat stones.

“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.

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. 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, CH-44 and CH-45 kimberlites. CH-28 lies a farther 50 km to the north.  

A 47.2-tonne sample collected from the surface of CH-7 returned 502 commercial-size stones greater than the 0.85-mm sieve size that weighed 49.07 carats, for a grade of 1.04 carats per tonne. Fifteen of these diamonds are over 0.5 carat in weight and include 6.53, 2.18 and 1.24-carat stones.

In an effort to assess its size potential, Peregrine put six core holes and two reverse circulation (RC) holes into the pipe in 2010. Two angled holes across the southern end intersected true horizontal widths of 88 and 95 metres. Interpretation of the drill hole data suggests the CH-7 kimberlite is a multi-phase pipe measuring 1 hectare in size.

It contains a distinct north lobe from where the surface mini-bulk sample was extracted, and a south lobe. The north lobe consists of magmatic kimberlite, while the south lobe comprises three main phases or units, two of which are volcaniclastic and one that is magmatic.

Drill samples were collected from both lobes of CH-7 in order to assess the diamond distribution throughout the pipe and to test the diamond content at depth in the north lobe below the bulk-sample site. A representative 359.5-kg sample from the north lobe held 681 microdiamonds larger than a bottom-size cutoff of 0.106-mm sieve size. The parcel includes 17 commercial-size stones exceeding the 0.85-mm sieve size, which weigh a total of 1.05 carats. This gives an implied diamond content of 2.92 carats per tonne, almost three times the grade of the surface sample.

A total of 569 kg of sample was collected from drilling into the pipe’s south lobe. The overall sample yielded 1,208 microdiamonds, including 24 larger-size stones greater than 0.85-mm that weighed 0.386 carat in total, for an implied diamond content of 0.68 carat per tonne.

The sample from the south lobe is divided into three sub-samples based on the interpreted geology and drilling method. Two samples, a 184.9-kg sample of drill core and a 184.7-kg sample of RC cuttings, represent one of the volcaniclastic phases of the south lobe. The combined sample of 369.6 kg returned a 0.126-carat parcel of diamonds greater than 0.85-mm, giving an implied grade of 0.34 carat.

A 199.4-kg core sample, extracted from the second phase of volcaniclastic kimberlite, yielded a parcel of larger-size diamonds weighing 0.26 carat, for an implied grade of 1.3 carats.  

“These results from CH-7, together with the carat per tonne diamond grade from the 47-tonne surface mini-bulk sample, demonstrate that this kimberlite warrants the collection of a larger bulk sample to acquire a parcel of diamonds for valuation. Future programs for CH-7 are currently being planned,” said Clements in a prepared statement.  

Peregrine recently announced caustic fusion mi
crodiamond results for seven of the new kimberlites discovered during the 2010 exploration program: CH-29, CH-32, CH-33, CH-36, CH-37, CH-41 and CH-45. Microdiamond results have now been reported for 15 of the 34 kimberlites discovered in 2010.

Of the recent results, CH-45 shows the most promise. Based on a coarse diamond size distribution, Peregrine says the CH-45 pipe is the seventh kimberlite at the project to display promising potential.

With an estimated surface expression of 0.5 hectare, CH-45 was discovered by a single RC hole into a magnetic high geophysical anomaly, located 900 metres south of the CH-7 kimberlite. The vertically drilled discovery hole ended in kimberlite at a depth of just 18 metres.

A 173.6-kg sample of RC drill cuttings from CH-45 yielded 158 microdiamonds, including two larger-size stones exceeding a 0.85-mm cutoff that weighed 0.091 of a carat. This early-stage sample shows an implied diamond content of 0.52 carat.

Another of the new discoveries, CH-33, returned 150 microdiamonds from a 437.8-kg surface sample collected from two different kimberlite phases at two separate locations. One single large diamond greater than the 1.18-mm sieve size was described by the Saskatchewan Research Council geoanalytical lab as being an off-white, transparent tetrahexahedron weighing 0.024 of a carat.

The CH-33 kimberlite was found while investigating an airborne magnetic low anomaly having a surface expression of at least 2 hectares in size. Abundant kimberlite boulders and cobbles were found associated with this geophysical feature, which is partially covered by a lake.

Both magmatic and volcaniclastic kimberlite, with limestone xenoliths, are at surface. Peregrine intends to further evaluate the CH-33 kimberlite with more ground geophysics and drilling later this year.

Caustic fusion results from the CH-29, CH-32, CH-36, CH-37 and CH-41 targets show all five kimberlites are weakly diamondiferous.   

“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.”

Exploration work in 2011 will include drilling, prospecting, mini-bulk sampling, ground and airborne geophysical surveys, till sampling and logistical planning for the extraction of larger bulk samples from key kimberlites in 2012. Peregrine expects to have two core rigs and one RC rig turning this year at Chidliak.

“2011 will be an important year for Chidliak because it will determine if the field has the critical mass to justify moving to the considerably more expensive stage of bulk sampling for value in 2012,” concludes Kaiser.

Microdiamond results for another four of the 2010 kimberlite discoveries are expected to be out by late March, as well as results from the 2010 drilling of the following kimberlites discovered in 2008 and 2009: CH-1, CH-9, CH-12 and CH-16.

Peregrine has two other early-stage grassroots projects – Qilaq and Cumberland – on southern Baffin Island. The 100%-owned Qilaq project covers 4,370 sq. km, and borders Chidliak to the north, east and south. Other than a 1-km area around the outer perimeter of Chidliak, Qilaq is not subject to any option or earn-in rights.

Peregrine discovered two diamondiferous kimberlites, Q1 and Q2, in the northeastern portion of Qilaq in 2010. The Q2 discovery shows especially good diamond counts, exhibiting coarse-size distribution. The outcropping kimberlite was discovered while carrying out a helicopter-supported till sampling program on a 1-km grid basis in an area of interest.

“The helicopter set down to take a sample and right where they set down was an outcrop of kimberlite and there was no geophysical survey there or anything,” explained Clements.

A 241.5-kg sample of Q2 kimberlite material yielded 253 microdiamonds greater than the 0.106-mm sieve size, including three diamonds larger than 0.6-mm. A 62.7-kg sample from the Q1 discovery returned 38 microdiamonds, including one diamond exceeding 0.6 mm.

In addition to the diamond potential at Qilaq, Peregrine’s geochemical sampling program and prospecting has unearthed several anomalous gold and base metal targets.

The 2011 exploration program at Qilaq will kick-off in the spring with a 4,000-line-km airborne geophysical survey centred on two areas defined by anomalous kimberlite indicator minerals, one of which hosts the Q1 and Q2 kimberlites.

The airborne program will be followed by ground geophysical surveying, additional till sampling and a drill program that will test the Q1 and Q2 discoveries, as well as any new priority targets generated from the geophysical work. At least five of the metal anomalies will be targeted for prospecting, mapping and sampling during the summer.

Peregrine also controls 100% of the Cumberland project, which cover 5,270 sq. km of the Cumberland peninsula. The project is located roughly 250 km north of Iqaluit and just east of the coastal community of Pangnirtung. While last year’s reconnaissance exploration sampling program didn’t reveal any kimberlite indicator minerals, it did return anomalous concentrations of gold and base metal sulphide minerals.

A sulphide-rich boulder sample collected from an area of extensive gossan development assayed 4.1 grams silver per tonne, 0.3% zinc and anomalous copper.  A follow-up prospecting and sampling program is planned in 2011.