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Tracker 2009-07
September 21, 2009
Peregrine Diamonds Ltd (PGD-T: $0.89)
Peregrine's CH-6 micro diamond results rival Diavik's A154-South
Synopsis: Peregrine Diamonds Ltd (PGD-T: $0.89) has announced spectacular micro diamond results for the CH-6 kimberlite discovered this summer which add to a growing body of evidence that the Chidliak kimberlite field on south Baffin Island is shaping up to be the most important diamond discovery in Canada since Dia Met discovered Ekati in late 1991. The Peregrine Sept 21, 2009 news release speaks for itself. Peregrine has reported micro diamond results for three holes labeled CH-6A and CH-6B which yielded 62 diamonds greater than a 0.85 mm sieve size weighing 2.5 carats from a 398.8 kg for an indicated grade of 630 cpht. The CH-6A sample (199.8 kg), which yielded 49 diamonds greater than 0.85 mm weighing 2.09 carats with the largest diamond a 0.62 carat white transparent aggregate for an indicated grade of 1050 cpht, was characterized as "uniform primary volcaniclastic kimberlite" with abundant mantle xenoliths. The CH-6B sample (199 kg), which yielded 13 diamonds greater than 0.85 mm weighing 0.41 carats with the largest diamond a 0.15 carat white transparent fragment for an indicated grade of 210 cpht, was characterized as "texturally variable volcaniclastic kimberlite" with varying concentrations of mantle xenoliths and olivine macrocrysts. A 200 kg sample of magmatic kimberlite intersected in hole 5 has been submitted for caustic fusion, as has a 100 kg sample of similar magmatic material from CH-10 just to the north of CH-6. The current interpretation is that this "string of pearls" is a dyke with at least one associated pipe. Photos of the diamonds and mantile xenoliths in core have been published in the Chidliak983 Presentation.
The micro diamond size distribution chart above contains three benchmark curves, the King extension of Snap Lake with a grade about 200 cpht, which is the best sieve based micro diamond data set published to date by Canadian companies, and the data sets for Stornoway's AV1 kimberlite and Peregrine's DO27 kimberlite, both of which yielded bulk sample grades in the 80-100 cpht range. The CH-6A curve tops the "Snap Lake" curve, which is supported by the large number and weight of diamonds recovered. The CH-6 kimberlite, along with the CH-1 kimberlite from which a 50 tonne mini bulk sample is awaiting processing, offer very strong evidence that Chidliak hosts exceptionally high grade kimberlites comparable to the Diavik cluster discovered by Rio Tinto and Aber in 1994. During the 2009 field season 13 new kimberlites were discovered of which results have been so far reported only for CH-6 whose "visual" characteristics pegged it as the highest potential kimberlite. CH-6 will obviously proceed to delineation drilling and mini bulk sampling. We have both bottom-fish and spec value hunter recommendations open for Peregrine Diamonds Ltd based on our assessment that Chidliak will be the next Ekati which yielded two major diamond mines valued at $2 billion (Dia Met) and $4 billion (Aber) when they commenced production. With 100.3 million shares fully diluted and a net interest of 42% Peregrine's Chidliak would have an implied project value of early $500 million at a $2 stock price. The market is currently trying to establish a new level in light of the CH-6 results. We recommend that Spec Value Hunters buy Peregrine below $2 and hold for additional micro diamond results and the CH-1 mini bulk sample results expected in the last quarter of 2009. Peregrine should be held as a core diamond position in anticipation that Chidliak will prove to be a world class diamond field, confirmation of which would translate into a $10-$20 price range for Peregrine.
*JK owns shares of Peregrine
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