De Beers nixes joint venture on Chidliak project near Iqaluit

Peregrine now sole operator of promising diamond property


Work is resuming at the Chidliak diamond property, 120 kilometres northwest of Iqaluit. (FILE PHOTO)

Work is resuming at the Chidliak diamond property, 120 kilometres northwest of Iqaluit. (FILE PHOTO)

Peregrine Diamonds Ltd. is now the 100 per cent owner and operator of the Chidliak diamond project near Iqaluit, following a decision by De Beers Canada Inc. not to enter a potential joint venture with them.

In a news release Oct. 11, Peregrine said “they have been verbally notified” that De Beers — under the terms of a deal struck between the two companies Sept. 5, 2012 — will not exercise its right to enter into a joint-venture agreement with Peregrine.

Under their September 2012 deal, De Beers bought $2.5 million worth of Peregrine shares and gave Peregrine another $2.5 million that Peregrine owed to BHP Billiton Canada Inc., a former partner.

At the same time, Peregrine gave De Beers the exclusive right to enter a joint-venture with them — a right that they had to exercise before a Dec. 31, 2013 deadline.

Under the potential joint-venture, De Beers would have earned a 50.1 per cent interest in the Chidliak project by spending $58.5 million on the project.

De Beers also agreed— had they accepted the joint venture — to pay for all work at the site, including the cost of environmental impact studies, up to the completion of a bankable feasibility study.

And for any costs incurred by De Beers in addition to the $58.5 million, Peregrine agreed to reimburse 49.9 per cent of De Beers’ costs.

In 2011, Peregrine’s former partner, BHP Billiton, reduced its involvement in the diamond industry and sold its 51 per cent interest in the Chidliak property.

Meanwhile, Peregrine still awaits the results of a big 508-tonne bulk sample taken from a promising kimberlite known as CH-6.

The results of that work, which is being done at the Saskatchewan Research Council, would establish the quality of the ore body and help the company determine the economic viability of the project.

Previous drill core samples at Chidliak have revealed grades of up to 2.84 carats of diamonds per tonne, but a large sample is needed before the company can produce a bankable feasibility study.

The company said Oct. 11 that after the bulk sample results are available in early 2014, they will plug that information into a “preliminary revenue model” and do an initial estimate of the size of the diamond resource at the site.

Peregrine said that they will provide more information on the De Beers decision later, “as it becomes available.”

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