Chidliak work to go ahead despite BHP review

Peregrine Diamonds Ltd., the operator of the Chidliak project near Iqaluit, said Nov. 30 that its majority partner, BHP Billiton, is committed to doing a major bulk sample progam at the site in 2012.

“BHP Billiton continues to view Chidliak as a highly promising diamond exploration project and has committed to their share of up to $1.9 million for the mobilization of equipment and materials that will be utilized for the 2012 bulk sample program,” Peregrine said Nov. 30 in a news release.

BHP, which owns 51 per cent of the Chidliak diamond property near Iqaluit, will review its investments in diamonds, a BHP news release said Nov. 29.

The review, to be done by the end of January 2012, could result in the sale of BHP’s interests in Chidliak and in the Ekati Diamond Mine in the Northwest Territories.

But Peregrine said that strategic review does not affect next year’s program at Chidliak.

The company has discovered 59 kimberlites at Chidliak, some yielding what the company has described as “world-class” grades.

The company said, however, that it seeks “large, long life, upstream and expandable assets” and that years of exploration have produced “few options for new diamond mines.”

But also on Nov. 30, some stock analysts said BHP’s review, and the possible sale of BHP’s Canadian diamond assets, may be bad news for Peregrine.

An article published on stockhouse.com speculated the move may be a signal that BHP does not believe Chidliak holds the potential to become another Ekati, the highly succesful diamond mine that re-shaped the economy of the Northwest Territories in the 1990s.

But Peregrine insists that BHP will agree by year’s end to a budget that would cover a 2012 exploration program at Chidliak.

Peregrine also said it holds a right of first refusal to any sale of BHP’s 51 per cent interest in the property.