Canadian Mining Journal

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DIAMONDS: PEA puts Chidliak after tax NPV at $471M for Peregrine



NUNAVUT – The preliminary economic assessment is complete for phase one of the Chidliak diamond project on Baffin Island, 120 km northeast of Iqaluit, and owner Peregrine Diamonds of Vancouver is looking at a 10-year open pit project with attractive economics.

Those economic parameters include an after-tax net present value of $471.2 million (7.5% discount) and an after tax internal rate of return of 29.8%. The project is estimated to have a pre-tax, total life of mine free cash flow of $1.31 billion. The payback period is only two years, and the operating margin will probably be 72%.

The Chidliak phase one project covers development of first the CH-6 and then the CH-7 kimberlite pipes. The estimated preproduction capital requirement will be $434.9 million, including a contingency of $56.7 million. These costs include the building of a 160-km all weather road between Iqaluit and the mine site. The annual mining rate over the life of the mine will be 1.2 million carats from a head grade of 1.67 carats per tonne.

Peregrine says the PEA includes the 11.39 million carat inferred resource to a depth of 260 metres at CH-6 plus the maiden 4.23 million carat inferred resource at CH-7 to a depth of 240 metres. The resources at both CH-6 and CH-7 remain open at depth and represent expansion opportunities which have not been included in the current economic study.

The PEA will undoubtedly be posted soon on the Peregrine website. Visit www.PDiam.com.