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SOMBA K'E/YELLOWKNIFE
More than two decades after news leaked out that diamonds had been discovered in the Lac de Gras region - spawning Canada's first diamond mine Ekati, and the Diavik Diamond Mine - junior exploration company Peregrine Diamonds Ltd. is returning to the renowned diamond district, launching a modest exploration program.

A selection of diamonds from the DO-27 kimberlite, currently being explored by Peregrine Diamonds Ltd., in the prolific Lac de Gras diamond district. The largest diamond is 4.35 carats, the company reports. - photo courtesy of Peregrine Diamonds Ltd.

The company announced it is spending $1.5 million on drilling up to eight targets around its nine-hectare DO-27 kimberlite, located about 300 kilometres northeast of Yellowknife, reported to host a diamond resource in excess of 18 million carats.

"We are going to go back and start working on our exploration ground, doing some drilling, and hopefully discovering some new kimberlites," said Peregrine president Brooke Clements.

"Lac de Gras is the number one hotspot in the world for new diamond discoveries over the last 20 years, so there is still potential to make a dramatic new discovery and we're hoping that we're going to do it."

The reported 18.2-million-carat resource is open at depth and 71.9 per cent-owned by Peregrine, operator of the joint venture.

Partners include Vancouver-based Archon Minerals Ltd., which is headed by CEO Stewart Blusson - the multi-millionaire who co-discovered Lac de Gras - Vancouver-based Thelon Capital Ltd., and exploration company DHK Diamonds Inc.

While the level of exploration activity at Lac de Gras has dropped since the mining rush prompted by the discovery of diamonds in the early 1990s, a handful of companies continue to explore in the region, including 40 per cent owner of the Diavik diamond mine, Harry Winston Diamond Mines Ltd., which is conducting exploration on sites east and southwest of Diavik, with joint venture partners.

Peregrine's property is about 27 kilometres from Diavik, and 56 kilometres from Ekati.

Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said the chamber is welcoming Peregrine's program with open arms.

"I think that we should be very happy when we see anybody come in here to explore," Hoefer said. "(Peregrine is) a quality company that does good work.

"They've decided to put some money into the NWT and the NWT definitely needs it, so we welcome people like that with open arms."

Peregrine spent more than $50 million developing its resource at Lac de Gras before turning its focus to Chidliak, an advanced exploration project on Baffin Island.

Factors that might affect whether Peregrine's Lac de Gras project will be considered for development include the discovery of more kimberlites, and diamond demand, which is projected to grow in the next 10 years as supply slows with fewer diamond discoveries around the world, Clements said.

Shares of Vancouver-based Peregrine Diamonds Ltd. closed at $0.74 on Friday on the Toronto Stock Exchange.

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