VANCOUVER, BRITISH COLUMBIA, Jun 03 (MARKET WIRE) --
Peregrine Diamonds Ltd. ("Diamonds") (TSX: PGD) and Peregrine Metals
Ltd. ("Metals") are pleased to announce that they have entered into a
letter of intent for the purpose of effecting a business combination
whereby the two companies will merge to form a new multi-commodity
resource company to be called Peregrine Resources Ltd. ("Peregrine
Resources"). Both companies are currently working to establish
independently calculated, NI 43-101 compliant resources; a copper
resource at the Altar porphyry deposit in San Juan Province, Argentina
for Metals and a diamond resource at the nine hectare DO-27 kimberlite
pipe in the Northwest Territories, Canada for Diamonds. In addition to
these two advanced projects, Peregrine Resources will have a portfolio of
quality base and precious metal, iron ore, diamond and uranium projects
in Chile, Argentina, Peru and Canada.
There are compelling reasons for this business combination including the
following:
- Diamonds shareholders will acquire exposure to the Altar copper
resource in a time of strong copper prices.
- Metals shareholders will acquire exposure to the DO-27 diamond
resource, located only 27 kilometres from the Diavik Diamond Mine.
- Peregrine Resources will have exposure to numerous excellent
exploration projects in diamonds, copper, iron and other precious and
base metals, thus spreading commodity risk and assuring news flow
throughout the year.
- The merger will capitalize on managerial and technical team synergies
between Diamonds and Metals and increase administration efficiencies.
- Peregrine Resources will have a significantly larger market
capitalization than Diamonds and still maintain a solid and diverse
shareholder base.
- Metals will gain a Toronto Stock Exchange public listing through the
merger, creating more liquidity opportunities for shareholders.
Senior Management of Peregrine Resources will consist of: Eric Friedland,
Chairman and CEO; Brooke Clements, President; Rod Davey, Chief Operating
Officer; Greg Shenton, Chief Financial Officer; Jeff Toohey, Vice
President Exploration-Metals; Peter Holmes, Vice President
Exploration-Diamonds; Wendy Mathison, Vice President Operations; and
Jennifer Pell, Chief Geoscientist. Several directors from the current
Diamonds and Metals Boards are expected to join the Board of Directors of
Peregrine Resources.
Throughout the merger process, Diamonds and Metals will continue to
advance their respective projects.
About Peregrine Metals
Peregrine Metals Ltd. is a private, Canadian metals exploration company
formed in 2005 with 86.9 million shares outstanding. The most recent
financing of $7.9 million was completed in April, 2008 at a price of
$0.50 per share and current working capital is $4.5 million. To date,
Metals has spent $16.5 million on exploration including $9.5 million on
the Altar project. Brief descriptions of the main projects of Metals
follow.
Altar Porphyry Copper Project, Argentina
The primary focus for Metals has been the advancement of the Altar
porphyry copper-gold-molybdenum deposit in San Juan Province, Argentina.
An independent resource estimation based on a cumulative 28,850 metres of
core drilling in 64 holes is expected to be completed in August 2008. A
24-hole, 12,300 metre, diamond drilling campaign was completed on
schedule in April 2008. Following receipt of the resource estimate,
Metals will initiate a preliminary economic assessment of the deposit.
The first drilling at Altar was in 2003. Some of the better drill
intercepts to date include:
- 542 metres @ 0.67% Cu, including 82.00 metres @ 0.97% Cu and 149.90
metres @ 0.93% Cu;
- 408 metres @ 0.63% Cu, including 100.00 metres @ 0.98% Cu;
- 444 metres @ 0.45% Cu, including 116.00 metres @ 0.70% Cu;
- 346 metres @ 0.56% Cu, including 106 metres @ 0.79% Cu;
- 430 metres @ 0.55% Cu, including 46 metres @ 1.32% Cu;
- 518 metres @ 0.72% Cu and 0.14 g/t Au, including 194 metres @ 0.93% Cu
and 0.19 g/t Au;
- 394 metres @ 0.49% Cu including 60 metres @ 0.65% Cu.
The copper mineralization at Altar includes both supergene chalcocite and
hypogene chalcocite-covellite-bornite replacing earlier chalcopyrite in
the upper 300 metres of the deposit. The average depth of the leached
capping is 70 metres. Preliminary metallurgical test-work on the
chalcocite enrichment zone suggests that this material would be amenable
to relatively low cost heap leaching and solvent
extraction/electrowinning (SX/EW). The alteration zone at Altar
encompasses an area measuring three by two kilometres with a strong,
coincident induced polarization (IP) geophysical anomaly of approximately
the same size; approximately half of this anomaly has yet to be
drill-tested.
The deposit is located at relatively low elevations of 3,000 to 3,700
metres adjacent to the Chile-Argentina border and is accessible
seasonally by an existing road. Ample water sources exist on the property
and potential power sources are located 25 kilometers away.
Additional technical information on Altar is available in Appendix A as
required by Canadian NI 43-101 Reporting Guidelines.
Caballo Blanco and La Higuera IOCG Projects, Chile
Caballo Blanco and La Higuera are Iron-Oxide Copper-Gold (IOCG) projects
adjacent to one another in the coastal iron belt of northern Chile,
approximately 50 kilometres north of the city of La Serena on the
Pan-American Highway.
Caballo Blanco has coincident strong magnetic and IP anomalies measuring
approximately 3.5 kilometres by 2.0 kilometres. A program of five diamond
drill holes totalling 1,356 metres was completed in late 2007. Assays
from the drill program are pending.
La Higuera was discovered by Metals in 2005 by drilling coincident
magnetic and IP anomalies measuring approximately 1,200 metres by 800
metres. Twelve holes have been completed to date and the better
intersections include:
- 283 metres @ 23.6% Fe, 0.41% Cu and 0.027% Co
- 394 metres @ 23.3% Fe, 0.12% Cu and 0.019% Co
- 148 metres @ 30.1% Fe, 0.35% Cu and 0.029% Co
- 146 metres @ 23.0% Fe, 0.30% Cu and 0.017% Co
Additional drilling is contemplated for Caballo Blanco and La Higuera
after the merger is completed.
Japuoco Polymetallic Project, Peru
Japuoco is a polymetallic epithermal
copper-gold-silver-lead-zinc-molybdenum system situated in Puno Province,
southern Peru. A surface geochemical sampling program where 880 samples
were collected over an area of 9 km by 8 km identified two broad,
multi-element anomalies returning up to 4.39% Cu, 1.87 g/t Au, 135 g/t
Ag, 12% Pb, 3.3% Zn and 0.03% Mo. Additional sampling and ground
geophysics is scheduled for the project this year.
About Peregrine Diamonds
Peregrine Diamonds Ltd. is a public company that was formed in 2003 and
is listed on the Toronto Stock Exchange with 64.7 million shares
outstanding. The most recent financing was completed in April, 2008 and
consisted of flow-through shares priced at $0.44 per share and
non-flow-through units, consisting of one share and one-half share
purchase warrant, priced at $0.40 per unit. Current working capital is
$4.5 million. Brief descriptions of the main projects of Diamonds follow.
DO-27 Kimberlite
The DO-27 kimberlite pipe is located approximately 11 kilometres from the
Ice Road used to supply the Diavik and Ekati diamond mines. In 2005, 2006
and 2007, Diamonds completed a large bulk sample and core drilling
program at DO-27 resulting in the extraction of 2270 carats. A parcel of
2,075 carats was independently valued in late 2007 and a modelled diamond
value with a range of US$43-$70 per carat was determined. The average
grade for the main phase of DO-27 was calculated by Diamonds to be 0.9
carats per tonne. An independently calculated resource estimation for the
pipe is being completed by AMEC Americas Ltd. ("AMEC") with results
expected by the end of June, 2008. Concurrent with the resource
estimation, AMEC is also completing a preliminary technical assessment of
DO-27 whereby possible mining and processing scenarios and potential
project economics are being investigated.
Nanuq Property
Diamonds was successful in discovering a new diamond district in 2007 on
its wholly owned, 201,000 hectare Nanuq property in the eastern Arctic
region of Canada. In 2007, Diamonds drilled only three geophysical
anomalies resulting in the discovery of three kimberlites, each with
encouraging initial diamond results. Two of the kimberlites are over five
hectares in size. The entire Nanuq property has been covered with high
resolution airborne magnetic surveys and over 1,300 heavy mineral samples
have been collected on the property and surrounding area. Over 100
geophysical anomalies, some with associated kimberlitic indicator mineral
trains, have been selected for detailed follow-up on the ground.
Five geophysical anomalies are currently ready for drilling. 2008 field
operations have commenced at Nanuq and scheduled work includes ground
geophysical surveys over priority anomalies and additional heavy mineral
sampling. Upon completion of this work, the data will be analyzed to
select further drill targets. Priority targets are scheduled to be
drilled in the summer of 2009.
Baffin Island
Diamonds holds 2.7 milllion hectares of mineral permits on Baffin Island,
Nunavut in the following six properties: Chidliak, Kimmirut, Flint Lake,
Mirage Bay, Foxe Basin and Timijuuq. The Chidliak property hosts high
priority kimberlite indicator mineral anomalies with many of these
minerals having geochemical compositions that imply that their kimberlite
source contains diamonds. The Chidliak property also hosts strong
platinum and base metal anomalies. The Flint Lake and Kimmirut properties
host strong and large scale uranium anomalies and copper and gold
anomalies have also been identified at Flint Lake.
The Baffin Island properties were acquired through an alliance with BHP
Billiton. The properties are 100 percent owned by Peregrine, subject to
certain back-in rights held by BHP Billiton. Work planned for 2008 on the Baffin
Island properties includes geologic mapping, prospecting, ground
scintollometer surveys and geochemical and indicator mineral sampling.
Preparations are underway for a heli-borne magnetic/electromagnetic
survey for the Chidliak property.
More information regarding DO-27, Nanuq, Baffin Island and other Diamonds
projects can be found at: www.peregrinediamonds.com.
The Merger Process
Various structures are being examined to complete the merger in the most
efficient and tax advantageous manner. It is contemplated that Peregrine
Resources will assume the Diamonds public listing and that an equity
financing will be undertaken concurrent with completion of the business
combination.
Prior to this press release, the respective boards of Diamonds and Metals
were comprised of the same seven members. The boards of Diamonds and
Metals will now form special committees for the purpose of negotiating a
mutually acceptable share exchange ratio and making recommendations to
their respective boards. The Diamonds special committee will consist of
Gordon Keep, Jonathan Challis and a new, independent director to be
appointed. Messrs Keep and Challis have resigned from the Metals board
with immediate effect. The Metals special committee will consist of Myron
Goldstein, Richard Cohen and a new, independent director to be appointed.
As a result, Messrs. Goldstein and Cohen have resigned from the Diamonds
board with immediate effect.
The Metals and Diamonds special committees will each retain independent
legal counsel.
The merger ratio will be negotiated after the completion of both the
Altar and DO-27 independent resource estimations. In addition, it is
anticipated that both Diamonds and Metals may seek an independent
fairness opinion to evaluate the merger ratio. Completion of the merger,
which is currently anticipated to occur early in the fall of 2008, will
be subject to Diamonds and Metals shareholder and regulatory approval.
Mr. Jeff Toohey, M.Sc., P Eng., Vice President Exploration for Peregrine
Metals Ltd. is a Qualified Person as defined by NI 43-101 and is
responsible for the design and conduct of all of the work carried out by
Metals in South America. Mr. Peter Holmes, P. Geo., Vice President
Exploration for Peregrine Diamonds Ltd., is a Qualified Person under NI
43-101 and is responsible for the design and conduct of the programs
carried out by Diamonds on the Nanuq Property and on Baffin Island. Ms.
Jennifer Pell, Ph.D., Chief Geoscientist for Peregrine Diamonds Ltd., is
the Qualified Person under NI 43-101 for the work conducted by Diamonds
on the DO-27 kimberlite.
Forward-Looking Statements: This document includes forward-looking
statements. Forward-looking statements include, but are not limited to
statements concerning Peregrine's projects and other statements that are
not historical facts. When used in this document, the words such as
"could", "commonly", "confident", "plan", "encouraging", "estimate",
"expect", "anticipated", "intend", "imply", "likely", "may", "potential",
"should", "scheduled", "significant", "suggest", and similar expressions
are forward-looking statements. Although Peregrine Diamonds Ltd. believes
that its expectations reflected in these forward-looking statements are
reasonable, such statements involve risk and uncertainties and no
assurance can be given that actual results will be consistent with these
forward-looking statements. Important factors that could cause actual
results to differ from these forward-looking statements are disclosed in
the corporation's periodic filings with Canadian regulators.
Appendix A
Technical Information Relating to the Altar Project, Argentina
Altar is a large Miocene-aged (approximately 10 million years old)
porphyry copper-gold-molybdenum deposit located in the Central Andes of
western Argentina close to the border with Chile. It is situated
approximately 250 kilometres northwest of Mendoza and about 25 kilometres
north of the El Pachon and Los Pelambres porphyry Cu deposits. The
geologic setting and style of mineralization are typical of large
porphyry Cu systems in the Andes.
Dacitic to andesitic flows and ignimbrites of the Permo-Triassic Choiyoi
Group are overlain unconformably by the Cretaceous Pachon Andesite. This
stratigraphic sequence is intruded by Miocene quartz diorite porphyries.
The Altar deposit is exposed at the transition between intense pervasive
sericitic alteration (which overprints earlier potassic alteration) and
the overlying advanced argillic lithocap. A deep zone of early potassic
alteration is clearly exhibited in some of the deeper drill holes where
it is unaffected by the overprinting sericitic alteration.
The broad sericitic alteration zone affects all lithologies on the
property and is related to moderate to intense quartz veinlet stockworks
within the quartz diorite porphyries and to a lesser degree within the
intruded volcanics. At surface the alteration zone encompasses an area
measuring 3 kilometres by 2 kilometres, within which a strong induced
polarization (IP) geophysical anomaly with dimensions of 2.8 kilometres
by 1.7 kilometres has been identified.
The deposit sits beneath a leached capping of variable thickness with an
average thickness of approximately 70 metres. Oxide-Cu mineralization
within the leached capping is very scarce and the copper mineralization
comprises essentially all sulphides. There is an approximately 50- to
150-metre thick chalcocite enrichment zone within the upper part of a
large body of chalcopyrite-dominant mineralization, which extends to
depths beneath that of the deepest vertical drill hole (928.90 metres).
Hypogene Cu mineralization occurs as a high-sulphidation
chalcocite-covellite-bornite assemblage related to strong sericitic
alteration and moderate to intense D-vein development, overprinting an
earlier low-sulphidation chalcopyrite-bornite assemblage related to A-
and B-veins preserved in the underlying potassic alteration zone. Most of
the hypogene Cu-sulphide mineralization occurs as disseminations and as
fracture and vein fillings. Molybdenite occurs in fine quartz-molybdenite
veinlets occasionally together with traces of chalcopyrite. Supergene
chalcocite occurs in the upper part of the sulphide deposit and is most
abundant near the contact with the overlying leached capping. Within the
higher-level enrichment zone, supergene chalcocite makes a significant
contribution to the copper grade but accounts for less of the copper
enrichment than does hypogene chalcocite.
The higher-level chalcocite enrichment zone is generally of higher
average grade than the underlying chalcopyrite-dominant mineralization,
though deeper intersections of chalcopyrite mineralization without
enrichment have also returned comparably high grades.
All drilling carried out at Altar to date has been diamond drilling,
currently conducted at a nominal 200-metre drill hole spacing for
step-out holes and at a 100-metre spacing for in-fill and resource
definition holes. Approximately 50% of the area of the IP anomaly has
been tested by the drilling completed to date. Of the 64 holes now
completed, 13 are angle holes inclined at -58 degrees to -80 degrees and
the rest are vertical. The drill holes are collared with HQ core size and
extended as deep as possible before reducing to NQ core size. None of the
holes have been reduced to less than NQ core size and many have been
drilled completely with HQ core size. The average hole depth is 457.69
metres, the deepest hole is 928.90 metres, and the shallowest is 209.50
metres. Drilling conditions and core recoveries are generally good
throughout the holes and there are no drilling, sampling, recovery or
other factors that could materially affect the accuracy or reliability of
the analytical results.
All drill holes are sampled in their entirety in a continuous fashion at
a constant 2.00-metre sample interval from the beginning of core recovery
to the bottom of the hole. The core is split in half with industry
standard circular rotary rock saws with diamond saw blades, and using a
constant flow of fresh clean water to cool and lubricate the saw blades.
One half of the core is submitted for analysis and one half is archived.
The Primary Laboratory is Acme Analytical Laboratories (South America)
who operate a sample preparation laboratory in Mendoza, Argentina and a
full analytical laboratory in Santiago, Chile. The Altar core samples are
submitted to Acme in Mendoza where the sample preparation is carried out.
In Santiago, Acme performs the following analyses on all drill core
samples currently being received from the Altar Project:
1. 32-element ICP-ES using an Aqua Regia digestion
2. Au by Fire Assay using a 30 gram sample with an AAS finish
3. For all ICP analyses for Cu that exceed 5,000 ppm, the sample is
repeat-assayed for Cu by AAS using an Aqua Regia digestion.
The results for all ICP analyses are reported in ppb or ppm units as
appropriate, or percent to 3 decimal places. The results for all Au and
Cu assays are reported to one decimal of uncertainty- for Au in g/t, to 2
decimals; for Cu in %, to 3 decimals.
A formal comprehensive quality assurance-quality control (QA/QC) program
was set up in 2007 under the direction of Dr. Barry Smee, who is a
quality control consultant to Peregrine Metals. The QA/QC program, which
includes the routine placement and monitoring of certified standards,
blanks and duplicates in the sample stream for all samples submitted for
analysis, is supervised by Jeff Toohey, M.Sc., P.Eng., a Qualified Person
as defined by NI-43-101. Dr. Smee provides periodic monitoring of the
quality control database as well as regular laboratory audits.
Contacts:
Peregrine Diamonds Ltd.
Eric Friedland
President and CEO of Metals and CEO of Diamonds
(604) 669-8800
Peregrine Diamonds Ltd.
Brooke Clements
President of Diamonds and Senior Vice President of Metals
(604) 408-8880
Website: www.peregrinediamonds.com
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