Tuesday, November 29, 2016

2017 Field Program

2017 field program (winter/spring - early 2017)

A lot of details have been coming out for the upcoming field program.

The two questions that need to be asked are:

1 - What are the details?

2 - What will this accomplish?

The answer to question 2 is the most important..but that cannot be answered without delving into question 1.

So, what are the details?

CH-6 will be the focus for this program.


1 - Bulk trench sample x 500 tonnes (1000 to 2000 carat parcel). Small number of limited blasts and hauling of material into 1 tonne bags to send down to the SRC for processing and recovery of rough diamonds.

2 - LDD - RC - The Large Diameter Drill will drill deep into CH-6. Probably a few holes. Maybe up to 500 tonnes of material that will be screened to above 1.13 mm. Minor adjustments will be made to hopefully reduce the expected breakage to occur. This should create another 1000 to 2000 carats of rough diamonds that will be shipped in 1 tonne bags down to the SRC for processing.

3 - Geotechnical drilling - Core drilling in the country rock to establish conservative, yet reasonable pit slopes for an open pit mine.

4 - Core drilling at depth. The geotechnical holes in #3 will be aimed toward the kimberlite at 300 metres or lower to establish an extension of the known resource.

5 - Core drilling in kimberlite -- Twin the LDD holes for validation, drill deep to extend depth, drilling around the high grade zone (4cpt+) to better define the zone.

6 - Related surface tasks - 2 airstrips on frozen lakes - 1 long strip (10+ km's away) and 1 small strip (5+ km's away) to bring in people, equipment, etc. Establish winter trail to bring in equipment and supplies and to be used to ship out the bulk sample material to Iqaluit.

This an estimated list of tasks (above) and may differ when a final and detailed program is released. Some of the items above have been taken from permit applications and news articles.

So, what will this accomplish?

Increase the economics and continual de-risk of the project.

In the PEA (preliminary economic assessment), the majority of the NPV was front end loaded with CH-6 and CH-7 provided an extension to the life of mine with positive cash flow.
Heading toward the next step is the PFS (Prelminary Feasibility study). With the focus of CH-6, the indicated resources that can be used in the PFS will only come from CH-6.

Not all carats in the PEA were used in the PEA. Why?  The biggest reason was the strip ratio used in the study due to lack of geotechnical information.
Here is a link that talks about strip ratio -- Strip Ratio
The end result for CH-6 in the PEA was an average of 10 to 1 (waste to ore) and that is just the average. Reality is the upper tonnage is a lot smaller than 10 to 1 and the tonnage near the bottom of the pit is much higher than 10 to 1. Once further geotechnical information is obtained, the pit wall angle can be steepened up to something more reasonable based on real data instead of just defaulting to the most conservative angle. Will this decrease the strip ratio from 10 to 1 to something lower?
Not necessarily. With steeper pit walls, you can go deeper into the ground, so those tonnages even lower will still have larger strip ratios. The aim of the project is also to deepen the existing resource even further as well.

On a resource side, the main goal will be to convert inferred and add even more tonnage to the indicated category to be used in a PFS study.

End result? With the significant rock value of CH-6, adding more tonnage has a very significant effect to the project and NPV. The valuation timeframe for the PEA (february 2016) was done at a dip in the rough diamond price market. The valuation is up over 10% since then and there is a reasonable chance to say that the PFS will be done at a time where rough diamond prices are higher then the PEA timeframe.

What is the end result?

Coming up with a PFS that has a pre-tax NPV (@7.5%) of CAD$1 billion is probably a very reasonable goal. It would be a great accomplishment and outcome from this upcoming winter/spring program.

Other possible tasks?

1 - There is a sub-domain that doesn't have a valuation assigned to it and is considered waste with 0 value now. Possibility of putting an LDD RC drillhole into this to obtain more data.
2- There is a string of pearl (kimberlite pipe) north of CH-6 that the open pit will break into. If they can deepen CH-6, it will grab even more tonnage from this pipe. Possibility of putting an LDD RC drillhole into this to obtain more data.

Monday, November 14, 2016

2017 Trench

Trench sample - 2017 - CH-6

Some detail from the trench bulk sample for early 2017 has slowly trickled out.
There has been some mention of a plan in the 2016 technical report, but only a figure of 400 tonnes and a budget of $2.5 million was mentioned.

As part of the water permit Peregrine Diamonds has in hand, it requires them to get approval for any trench bulk sample program and have at least 90 days before asking for approval and executing the bulk sample.

The target date for the program is March 1st, 2017 during the winter cold when the ground is frozen including all water in the vicinity.

Details: 30m x 15 m trench at depths from 3 metres to 8 metres.
Tonnage expected - 500 tonnes.

What can be expected of those 500 tonnes? How many carats?

The material will be extracted from the wKim-L phase. This basically means the kimberlite 'L' that makes up the majority of CH-6 and the 'w' means weathered. This usually is the material near surface that has had some exposure to the environment over the millions and millions of years.

The question is whether the material will be from the HG or the LG version of Kim-L. HG means the higher grade area whereas LG is the normal grade. It isn't really low grade as the deposit is very high grade for any diamond deposit.  What difference does this make?

LG - 2.12 cpt (carat per tonne) and the wLG has a density of 2.19 m^3 per tonne
HG - 4.16 cpt (carat per tonne) and the wHG has a density of 2.29 m^3 per tonne

HG, being more dense, means that you can blast a bit less (5% less) of material to get the same 500 tonnes of kimberlite.

HG, being much higher grade, means that you can get a lot more carats out of that same area.

At 500 tonnes - LG would produce 1060 carats and the HG would produce 2080 carats.

There is an obvious benefit to targeting the HG zone...if it is accessible.

Is Peregrine Diamonds targeting the HG zone?

Here is an image of the bulk sample area in plan view:

The bulk sample is near the dark blue circle. It is near the far West and toward the south part of the surface expression.

Here is an image showing the HG versus LG zone:

There is no specific co-ordinates on this image, other then the 'looking East', so an estimate of where that same bulk sample area for 2017 has been highlighted in dark blue.

One can see that hitting some tonnage from the HG zone is a possibility and it would make sense for Peregrine Diamonds to target this area to get as many carats as cheaply as possible.
More carats, means the resulting valuation model will be more robust.

Looks like the journey of 500 tonnes for 2017 has started its first chapter. This may be joined by LDD (larger diameter drill) tonnage as well along the way. (TBD)