Mining News: Northern Neighbors: PEA shows robust economics for Chidliak

Peregrine Diamonds Ltd. July 7 posted results from preliminary economic assessment for phase-one development of the CH-6 and CH-7 kimberlite pipes at its Chidliak diamond project in Nunavut. The PEA, prepared by JDS Energy & Mining Inc., envisions an open-pit diamond mine with a life of roughly 10 years. Production would start at the CH-6, a kimberlite with 4.64 million metric tons of inferred resource averaging 2.45 carats per metric ton (11.39 million carats) diamond to a depth of 260 meters, followed by CH-7, a kimberlite with 5.99 million metric tons of inferred resource averaging 0.85 c/t (4.23 million carats) diamonds to a depth of 240 meters. Both resources remain open at depth. Highlights from the phase-1 PEA base case include: pre-tax net present value (7.5 percent discount) of C$743.7 million and pre-tax internal rate of return of 38.1 percent; after-tax NPV (7.5 percent discount) of C$ 471.2 million and an after-tax IRR of 29.8 percent; after-tax payback period of two years. The mine is projected to produce an average of 1.2 million carats of diamonds per year from kimberlite averaging 1.67 c/t. The capital costs to build this mine are estimated to be C$ 434.9 million, including C$ 56.7 million in contingency. Pre-production capital includes the construction of a 160-kilometer (100 miles) road to Iqaluit, the capital of Nunavut. Peregrine President and CEO Tom Peregoodoff said, “As we develop Chidliak further, we expect to identify further upside to the economics of the project through optimization studies of the phase one mine, including the expansion of the CH-6 resource to depth and through the development of a potential, phase two resource expansion from the numerous other kimberlites on the property of which six currently show economic potential.” Peregrine has full ownership of Chidliak, where 74 kimberlites have been discovered to date, with eight currently considered as potentially economic. The company also owns all of the diamond marketing and sales rights, and there are no non-government royalties or other encumbrances on diamond production.

-Shane Lasley