More diamonds boost Chidliak PEA

Peregrine Diamonds Ltd. May 23 published an updated preliminary economic assessment at Chidliak that shows a substantial increase in the diamonds recovered and financial returns from an initial phase of development at this project in Nunavut.

In 2016, the company completed a PEA 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 on 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.

Drilling completed last year focused on expanding the CH-6 kimberlite to depth. As a result, the inferred resource was 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.

Incorporating this expanded resource, the updated PEA outlines a robust, high-margin, open-pit mining project with very attractive economics.

Using the same mill throughput rate as the original PEA, the new assessment envisions a phase-1 mine that would produce an average of 1.3 million carats per year over an initial 13-year mine life. This mine is calculated to produce an after-tax net present value (at a 7.5 percent discount) of C$471 million, an after-tax internal rate of return of 31.1 percent, and payback the initial capital investment in 2.2 years.

"The updated PEA clearly establishes Chidliak as Canada's next economic diamond development opportunity," said Peregrine President and CEO Tom Peregoodoff. "This latest assessment validates the decision we took in 2016 when we recognized the resource expansion opportunities at the high-grade CH-6 kimberlite. For a marginal increase in capital, we have materially increased the total carats in the resource and significantly enhanced the economic potential of this robust project."

The resources used as the basis for the PEA consider mining the CH-6 kimberlite to a depth of 300 meters, but drilling has tapped the kimberlite much deeper and Peregrine plans further drilling to establish a resource in this potential expansion area.

"There remains significant phase-1 resource expansion opportunities below 300 mbs (meters below surface), the current bottom of the CH-6 open pit, with 2.64 million carats in inferred resource and between 1.09 million tonnes (metric tons) and 2.35 million tonnes of kimberlite classified as a 'target for further exploration' down to 525 mbs," Peregoodoff said. "This opens up the possibility for underground development as we further define the CH-6 resource beneath the current bottom of the expanded open pit during the future pre-feasibility program."

In addition to CH-6 and CH-7, the company has identified 72 kimberlites on the Chidliak property, with six having been identified as potentially economic through drilling and microdiamond analysis, while other kimberlite pipes require additional work to determine their economic potential.

"Looking forward, we will continue to build the phase-2 resource, which will include evaluating the remaining six pipes that may have economic potential and further sampling additional pipes in the cluster that could be economic," Peregoodoff added.

–SHANE LASLEY