Peregrine shareholders approve takeover

Peregrine Diamonds Ltd. Aug. 31 reported that its shareholders have overwhelmingly approved the arrangement for De Beers Canada Inc. to buy the Nunavut-focused diamond explorer.

In July, De Beers agreed to acquire Peregrine in a cash deal worth roughly C$107 million. Under the terms of the agreement, De Beers is to acquire all of Peregrine's outstanding common shares for C24 cents each, a 50 percent premium to Peregrine's share price of C16 cents on July 18.

Peregrine's primary asset is the Chidliak diamond project on Baffin Island in eastern Nunavut.

A preliminary economic assessment updated for Chidliak project in May envisions a mine that would average 1.3 million carats annually 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.

This PEA was based on 4.64 million metric tons of inferred mineral resource containing 11.39 million carats of diamonds in the CH-6 kimberlite, plus 4.99 million metric tons of inferred mineral resource in the CH-7 kimberlite with 4.23 million carats of diamonds.

The resources used as the basis for the PEA considers mining the CH-6 kimberlite to a depth of 300 meters, but drilling has tapped the kimberlite much deeper.

"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," said Peregrine Diamonds President and CEO Tom Peregoodoff.

De Beers Canada, which holds diamond mines in Northwest Territories and Ontario, will look to advance Chidliak as its first operation in Nunavut.

"The Peregrine team has done outstanding work progressing the Chidliak project, demonstrating its quality and high potential. With our extensive De Beers Group operating experience in similar Canadian arctic environments and employing innovative mining methods, we believe we are very well positioned to develop this resource further," said De Beers Canada CEO Kim Truter. "We are delighted to be extending our business presence in Canada to the Nunavut Territory and look forward to working with all community and government partners as we progress the project."

In addition to Chidliak, Peregrine's portfolio includes Lac de Gras, an earlier staged diamond project about 27 kilometers (17 miles) from the Diavik Mine in Northwest Territories. DO-27, one of the kimberlites on this property, hosts 19.5 million metric tons of indicated mineral resource containing 18.2 million carats of diamonds. Nanuq and Nanuq North are two other Nunavut diamond exploration projects held by Peregrine.

After consulting financial and legal experts, Peregrine's board of directors unanimously determined that the De Beers offer is in the best interests of the company.

"This offer is the result of a comprehensive review process of our options to advance Chidliak towards development," said Friedland. "The board unanimously agrees that this offer represents the best path forward available to Peregrine's shareholders and recommends that shareholders vote in favor of this transaction."

Shareholders agree. At an Aug. 31 special meeting, 98.35 percent of Peregrine securityholders approved the planned buyout by De Beers Canada. Pending final court approvals, the arrangement is expected to close on Sept. 12.

–SHANE LASLEY