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BAFFIN ISLAND
Junior exploration company Peregrine Diamonds Ltd. has bought BHP Billiton out of its majority interest in the Chidliak diamond exploration project in Nunavut.

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 purchase of the mining giant's 51 per cent stake in the Baffin Island exploration project, gives Peregrine 100 per cent ownership of Chidliak.

“We are pleased to sell our interest in Chidliak to its natural owner," said Tim Cutt, BHP diamonds and speciality products president. "Peregrine has been a good partner and we believe they are a strong operator that is well positioned to advance this promising exploration opportunity.”

Peregrine will pay BHP $9 million over three years under the terms of the binding agreement, and grant BHP a two per cent royalty on future production from Chidliak.

As part of the transaction, Peregrine has also acquired BHP's Canadian regional diamond exploration database, a collection of samples collected from exploration work across Canada, in the period following the discovery of Ekati -- Canada's first diamond mine and now BHP's only diamonds asset in the world.

On Nov. 29, BHP announced it was beginning a strategic review of its diamonds business, to determine whether a continued presence in the diamond industry is consistent with its overall group strategy, with the potential sale of all or some of its diamonds assets -- comprised of Ekati and Chidliak at the time -- among the possible outcomes.

BHP hoped to have the review complete by the end of January 2012, but Peregrine, taking the review as an indication that BHP would be open to an offer on their interest in Chidliak, jumped at the opportunity, Peregrine president Brooke Clements said.

"The fact that they're doing a review means that they're open to offers," Clements said. "That's really what that was, it was, 'Okay, we're open, anybody that wants to make an offer on Ekati or Chidliak, we're open to that,' so we wanted to make sure we were the first ones. We didn't want somebody else getting (Chidliak). And we're happy that we got it."

The Childliak diamond exploration project, located about 140 kilometres northeast of Iqaluit, has been operated by Peregrine since 2006.

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