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PANNIQTUUQ/PANGNIRTUNG - A junior exploration company looking for diamonds on Baffin Island has reported a significant discovery on its main project in the North.

Peregrine Diamonds, formed in late 2004, found a two-carat diamond in a very small bulk-sample collected on the surface of its Chidliak diamond district this past summer, the company revealed last week.

Peter Holmes, Peregrine's vice president of exploration, said the current economy will not mean the company will downsize its plans for Chidliak next summer. Peregrine plans to spend $10 million next summer - $9 million more than last year. - Guy Quenneville/NNSL photo

While nowhere near the size of the 24-carat diamond recovered at the Gahcho Kue joint-venture project this year, the Chidliak diamond is significant for having been found in a one-tonne bulk sample. The Gahcho Kue diamond was pulled from the drilling of hundreds of tonnes of ore.

"It's pretty exceptional to see a two-carat stone come out of a one one-tonne sample of kimberlite," said Peter Holmes, vice-president of exploration. "That's a very small sample. It would even be considered smaller than a mini-bulk sample."

Bulk samples range in many sizes. A mini-bulk sample measures anywhere from 50 to 500 tonnes, while larger bulk samples run into the thousands of tonnes.

Chidliak is one of six properties measuring 2.7 million hectares Peregrine holds on Baffin Island, and the discovery of the diamond - in addition to the discovery of three diamond-bearing kimberlites at Chidliak this summer - makes it Peregrine's foremost project, said Holmes.

Despite an uncertain market for junior exploration companies, the company is significantly increasing its spending on the project, by nearly $9 million, next year. Plans include more testing of glacial sediments to examine what indicator minerals might point to diamonds and drilling. A previous airborne survey identified 174 kimberlite-like targets, of which 100 are high priority.

"Probably the biggest activity next year will be getting a drill there to test some of these anomalies that are under lakes, that aren't exposed, that are still under sediments," said Holmes.

The main priority will be confirming the tonnage level of Chidliak. Holmes said just one of the bodies discovered at Chidliak could be mined for more than 10 years.

"If you add three or four additional bodies, you have a significant resource there," said Holmes.

"I think it's pretty exciting," said Mike Vaydik, president of the NWT & Nunavut Chamber of Mines. "Any time you get a large diamond in such a small sample, it wakes up the industry and I sure hope it wakes up investors, too."

Investors in Peregrine are already plenty awake by Holmes' account.

He said the company's success at Chidliak has allowed it to bypass the difficulty in raising money that similar junior exploration companies with no revenue stream are feeling.

"Just looking at the markets. Our share price has actually held its own and been rising," said Holmes. On Thursday, Peregrine's share price stood at 39 cents.

Two people from Pangnirtung, one working as a wildlife monitor and one doing camp maintenance work, contributed to the Chidliak project last summer.

"As the project expands, we'll end up drawing more people from both Pangnirtung and Iqaluit," said Holmes.