Thursday, May 28, 2015

Diamond Bourse of Canada

The Diamond Bourse of Canada was formed 6 years ago.

Mission: Facilitating and Enhancing all Diamond Trading Activities in Canada.

Here is a link to their website -- Diamond Bourse

This week it was announced that Peregrine Diamonds is the first ever Junior Mining Company to become a member of this Bourse in Canada.
There is already a well established single miner that is part of the Bourse and that is De Beers Canada.

Jennifer Pell will be representing Peregrine Diamonds with the Bourse.

There is a lot of information on what the Bourse does offer. Please check out the link above.

The membership form includes a charge of $1500, but also has a lot of detail that needs to be inputted before a membership can be granted.

This includes:

1 - Providing three reputable references from within the diamond industry.
2 - Credit and criminal check

So, the question remains...what advantage does a company like Peregrine Diamonds have in joining this Bourse.

The expanded networking is an obvious. A junior company with drills turning and only a glimmer of a prospect of a mine coming online in the future may not have any need to become a member of this bourse. Chidliak, however, has very strong fundamentals and it isn't a big stretch that this project has a big Green Light on....with the gas pedal down...and until they hit an obstacle of some sort...networking within the diamond industry is an asset.

Will Peregrine Diamonds market Chidliak diamonds under a new 'Canadian' brand name?
This Bourse might go a long way into getting those diamonds into the industry in Canada. That is what they do. Peregrine must think that they will have production diamonds coming out of Chidliak...it is just a question of when.

Interesting to say the least.

Here is a comment from a member of the Bourse:

"We look forward to working with Peregrine and wish them every success in their pursuit of diamonds in Canada,"  said the bourse's president, David Gavin.

Gavin added that many of the Canadian mines that are moving into the production stage in the next few years are located in the Northwest Territories and Peregrine is very well-positioned to contribute to the world's diamond supply in the years to come."


Tuesday, May 26, 2015

Robert and Zijin

Huge deal announced today involving Ivanhoe Mines and Zijin.

Here is the link to the press release -- Deal

Zijin recently acquired a 9.9% stake in Ivanhoe and since then, it appears that Robert Friedland has been working diligently on a huge deal with Zijin to develop the Komoa Copper project.

Very interesting structure to the deal.
Ivanhoe sells 49.5% of their ownership to Zijin, but doesn't keep 50.5% and instead sells a 1% stake to a third party that both parties agree to.
In addition to the financial cash transaction, Zijin is also on the hook for the first major part of the capital investment.
This puts Ivanhoe in a very cashed up position for the next couple of years. It does have other projects and some of those $$'s might end up elsewhere.

Of note, the Komoa project only has  PEA (preliminary economic assessment) completed on it. It was in the midst of getting a PFS (preliminary feasibility study) completed on it.

This tells me that a study is just a study, but the property is still the fundamental asset.

Robert is the majority owner of Chidliak and they will be having the first PEA completed in early 2016.  This PEA will be an initial basecase as there is plenty of options to add more kimberlites throughout the process. Plenty of upside.

Eric and Tom have been actively pursuing financial alternatives to progress Chidliak.
If they can get a 9.9% interest from a foreign entity...that now says a whole more with the Ivanhoe deal. Zijin invested a reasonable 9.9% in Ivanhoe and 2 months later, a whopping Development deal for the whole project is unveiled. So, you can see a 9.9% interest could just be the starting point.

Once Robert takes a step back from what would be heavy negotiations, he may just take a swing of the bat for Eric/Tom to see if Chidliak can be jumpstarted.

Chidliak is progressing toward a 2020 start up mine. With some huge $$'s to support it, this may move up to 2018/19 timeframe...without it, it may get pushed back even further.

The property is the fundamental asset and Chidliak is chock full of near surface, open pittable, $600+/Tonne ore.

The skies the limit.

Wednesday, May 20, 2015

Chidliak Royalty Part II

The issue with the Royalty and South32 is still in the courts.
Currently it is in adjourned status...that means that the ability to deal with the issue has been deferred or delayed to another date. It looks like the South32 demerger from BHP has to happen first and then dealing with the fallout of the royalty will happen.
South32 will become independent of BHP and then there could room to settle the royalty between the 3 entities. With South32 in transition, it is not quite independent...but BHP may still not be at the liberty to make arbitrary decisions..such as the royalty.

This will eventually get worked out and there is a strong possibility that Peregrine Diamonds will retain back the royalty and dissolve it altogether.

The problem is that Peregrine Diamonds is actively looking at raising more money for the Chidliak project. Possible partners would be a consideration.

Whether it is Chai Tai Fook taking a 20% stake in the project or the companies shares or Zijin mining doing an stake similar to the Ivanhoe deal.

Other alternatives would be Dominion diamonds taking over 20%, 49%, 51% of the project up to Feasibility and/or construction. De Beers might still be interested in taking another run at a deal with Chidliak.

Safe to say, there are various alternatives here and some might serious considerations and some might be irrelevant.

Point is, the royalty does play part in any of these negotations. If you were a suitor looking to invest in Chidliak, wouldn't you want a full % and not be tainted with a royalty. If there were a royalty..you may ask for more concessions in the deal.

I don't believe the market will get any word of a financing or partnership at any time up until the royalty issue has been resolved.

The South32 demerger (no matter how irrelevant and far away from Nunavut) may indirectly cause financing/partnership plans from being delayed.

Peregrine Diamonds does have significant money in the bank right now, but it is looking at aggressive longer term plans that involve more money and that time does tend to run faster when you are burning through money and haven't raised any additional money.

These 2 issues (royalty/financing) have now been intertwined and the market and shareholders are strictly in a waiting mode.

Friday, May 15, 2015

NPV Update - Chidliak

Peregrine Diamonds is not allowed to release any economic analysis on Chidliak without the resource being moved into inferred and the analysis being completed by an independent 3rd party that has a qualified person to sign off on diamond deposits. This is due to 43-101 requirements.

Based on the information that is known, there are 3 iterations of NPV Calculations on this blog.

NPV #1 - $750 million - Includes only the CH-6 stand alone pit operation.

NPV #2 - $1.5 billion - Includes CH-6,7,44 open pit operations plus a CH-6 underground operation.

NPV #3 - $900 million - Includes CH6 open pit and CH7 open pit.

The third calculation is the most relevant at this stage as the company will be producing a PEA (preliminary economic assessment) on the NPV #3 scenario and that will be available in early 2016.

The information being obtained this year is the valuation model for CH-7. As you you can see by the comparisons between NPV #1 and NPV #3, the increase in NPV based on those valuations could upwards of $150 to $250 million. If valuations per carat exceed CH-7, you will get even more increase in NPV.

The biggest benefactor to Chidliak is the fact that the high grade near surface rock from CH-6 can easily be put in the front of the Mine Schedule and it will be. Then you will mine the next highest grade rock (CH-7 Domain 5) before moving on. Scheduling and optimizing of the pits at Chidliak is going to be very easy and very NPV friendly.

Thursday, May 14, 2015

Chidliak Royalty

BHP is one of the largest resource companies in the world.
They are consolidating several assets into an entity called South32 and distributing that entity to shareholders at which point South32 will no longer be affiliated with BHP at all.

What does this have to do with Chidliak?

South32 is so named because of the assets that in proximity to 32 south latitude, specifically Africa and Australian assets.

This plan for BHP has passed by shareholders with approval and they are enacting the transaction within a week.

Problem is that that BHP snuck in a very far away asset North 64 latitude (far, far away) called the Chidliak 2% royalty.

Peregrine Diamonds has a first right of refusal with BHP on the asset. BHP is the owner of the asset and if they choose to sell the asset, then Peregrine Diamonds has the option to match the price and purchase the royalty back.

It is Peregrine Diamond's angle that transferring this asset to South32 is a deemed sale of the asset and Peregrine Diamond's should have the right to purchase the asset.

The issue is before the courts in British Columbia, Canada as Peregrine Diamonds has requested a cease of the transfer of the royalty.

Time for BHP to remove this issue from the courts and sell the asset to Peregrine Diamonds and call it a day.

Significant and material to Peregrine Diamonds. Irrelevant to either BHP or South32

LDD Complete CH7

The LDD drilling this year turned out to be solely focused on CH-7 as that was the critical mass objective of the project.

Here are the details from the completion of the program -- Bulk Sample 2015

CH-7 is made up of 5 sub-domains. One of those domains has already had a surface sample taken...so it was the other 4 domains that really needed the Large Drilling program.

That has been completed and a total of 558.5 wet tonnes of material is being sent to the SRC for diamond recovery and grade analysis. Then it is off to Antwerp for a valuation model of  CH-7.
At which point, the PEA on the 2 priority pipes can be finally completed.

The tonnage point of view is interesting. They used a 1.18 mm cut off for the material. The valuation model will only take into account 1.18+ mm stones anyway. However, this does get rid of some rock..which is great for transport costs, etc.

They will be doing some calculations to get true tonnage that can correlate with the stones they do recover.

"Sample weights suitable for use in resource definition will be determined using moisture content, calculated drill hole volume based on caliper data and kimberlite specific gravity data."

They did not have time (weather did not permit) to move all the gear over to CH-44 and get some rocks out of their. CH-44 is smaller in size and the plan is to surface trench next year.
It is possible that, since the gear will be on site (dozers, shovels, blasting gear), they may also include ch-45 in the same program as it is in close proximity.

CH-6 was going to get a hole strictly to convert material from inferred to indicated and has no material impact on the upcoming PEA.

Friday, May 8, 2015

Money in the bank

Weather should not affect a junior miner in most circumstances.
Peregrine Diamonds on the other hand does get affected by weather because of it's far north location.

The current LDD (large diameter drill) bulk sample program requires the drill to operate on ice.

Weather needs to be below 0 for as long as possible.

The above image from today (May 8th) from the Chidliak co-ordinates clearly shows a long term forecast in favour of the program continuing.

A couple of weeks ago, this was not the case and there was worry amongst the company and shareholders alike that the program would need to be closed much, much earlier.

That has turned and now an extraction of 1000 tonnes of kimberlite is feasible.

The company has finished drilling at CH-7 and should now be well into drilling CH-6.
Once that is done, it can move onto CH-44 and completing CH-44 will give a valuation for the third kimberlite in the mine plan.

This is all great news, but the market still has the taste of potential bad news from the last news release..even though that bad news has literally evaporated in the snowy weather of the north.

 There was a groomed trail from site to Iqaluit to haul out bulk sample bags. That was closed for most of the season, but there was significant snowfall over the last 2 weeks in the whole area. There is a possibility that that has re-opened for transport. Another bit of good news possible in this regard.

Thursday, May 7, 2015

Significant Technicals

Lots of action mid month for Peregrine Diamonds.
In addition to the trifecta of News expected on May 15th -- News Trifecta
There is also 2 significant technical events happening almost at the same time.

May 15th - 3 x News equating to fundamental positives
May 15th - 2 x Technical events that could mark a breakout from current levels.


Peregrine Diamonds stock has already had a recent Golden Cross happen (50 DMA passing the 200 DMA). The stock has also maintained above the 200 DMA for quite some time.
There is now 2 technical events. A very long Cup and Handle formation where the stock is currently still in the handle formation before deciding to break to the upside or not.
The second one is a triangle forming that could equate to a significant breakout (upside or downside).

Throw in 3 significant news items and it looks like Peregrine Diamonds is setting up a volatile next 5 to 10 days.

Tuesday, May 5, 2015

Specials and John Kaiser

A Diamond classified as a 'Special' is a rough diamond over 10 carats.

The Lac De Gras field has not produced very many of these. There is significant potential at Chidliak to produce these sizable diamonds.

Here is a recent interview from John Kaiser --  May 5th article - Kaiser
To see other related John Kaiser and Chidliak related articles -- Kaiser and Chidliak

Here is a snippet of the interview:

"JK: The bulk sample extraction will be done by the middle of May, and shipped from Iqaluit in July when the ocean is ice-free. We should start seeing grade results in Q4/15 with valuations in hand by the end of 2015 and new resource estimates and a PEA sometime in Q1/16. The bonus potential is that as Peregrine collects the largest ever bulk sample from Chidliak, we may start seeing those very big "specials" diamonds whose stone value can reach the hundreds of thousands of dollars. Although the Ekati and Diavik diamond mines in Canada produce high value diamonds, they have disappointed in the delivery of gem quality specials. The market is not assigning any premium to Peregrine for the potential of "specials," but if we do see these stones show up in the bulk sample, it should deliver an upside surprise for Peregrine shareholders."

Here is an image from CH-7. The largest diamond is 2.18  carats.




Included in the original 50 tonne bulk sample was a 6.53 carat stone. 

This year's bulk sample is producing 400 to 600 tonnes from CH-7 as well as possibly more from ch-6 and ch-44.

If a 6.53 carat stone pops out of a 50 tonne bulk sample, the chance of a 10+ carat 'special' diamond out of a 400 to 600 tonne sample is great....not guaranteed...and not necessary for great economics as Kaiser has stated...but if they do find 1 or 2 stones in this range..it will put a light on all the 71 kimberlites in the region.


Monday, May 4, 2015

May 15th - Trifecta

Yet another Trifecta of information is happening for Peregrine Diamonds.

@ Chidliak - LDD drilling will continue with the bulk sampling until the spring melt occurs. Based on weather forecast, this may occur between May 15th and May 20th. Later is better as they can also get to CH-44 and CH-6 beyond the already drilled CH-7.

@ Peregrine Diamonds head office - Earnings will be published on or about May 15th. This will show how much is in the treasury (cash) to continue with all the Chidliak work.

@ Africa/London - Peregrine Diamonds closes the deal in Botswana on or about May 15th and can start  a modest drilling program for kimberlite targets this year.

May 15th is setting up to be a trifecta of news information.

Most pertinent of all is the weather conditions at Chidliak. If they can get CH-44 into the fold of bulk sample/valuations, that will make the PEA (preliminary economic assessment) even fuller.