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BAFFIN ISLAND
Peregrine Diamonds Ltd. is taking the next step toward determining whether its Chidliak diamond joint-venture with BHP Billiton Ltd. will be the first diamond mine on Baffin Island.

A helicopter lifts a sample bag from the 33.5 tonne mini-bulk sample of the CH-28 kimberlite earlier this year at Peregrine Diamonds' Chidliak project on Baffin Island. - photo courtesy of Peregrine Diamonds Ltd.

The completion of the project's most recent exploration program last week has set the stage for the beginning of bulk sampling of diamond parcels next winter, which Peregrine president Brooke Clements has called a "defining moment" for the project.

"If the results are spectacular, it will give us comfort that we might have something we can mine," Clements said. "It doesn't mean the future of the project is dependent on the results, but it will allow us to asses what to do next. No matter what, there's going to be exploration for a few more years."

Since the company's first kimberlite discovery at Chidliak in 2008, 59 known diamond-hosting formations have been discovered at the site, including nine new kimberlite discoveries during this year's exploration program.

"We discovered nine new kimberlites which is a pretty good accomplishment being our fourth year in the field," Clements said. "That we're still making a reasonable number of kimberlite discoveries four years into exploration is encouraging and suggests we'll probably discover more next year."

Diamond analyses conducted at the Saskatchewan Research Council Laboratories in Saskatoon of seven of the kimberlites discovered so far, has determined that those formations have the economic potential to be part of a diamond mine, Clements said.

Roughly 200-carat diamond parcels will be taken from high-priority kimberlites for bulk sampling, for independent diamond valuations.

"(The 2012 bulk sampling program) will allow Peregrine to continue to unlock the value at this exciting diamond project," CEO Eric Friedland said in a news release. "Our goal is to deliver the first diamond mine on Baffin Island."

About $18 million was spent on this year's exploration season and Clements predicts the exploration budget will continue to increase next year.

"Everyone (in the diamond industry) is watching (the Chidliak project) because it has the potential to be a diamond mine and there's just not that many projects in that category," Clements said, noting Canada's rise past South Africa to become the third-largest producer of diamonds in the world, following Botswana and Russia. "We think that a diamond mine on Baffin could be a benefit to a lot of people, if we're fortunate.

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