Monday, July 27, 2015

All iced up

The shipping season of Iqlauit should already be in its 3rd week.

Ice has gotten in the way and isn't quickly going away.

Here is a more recent image from July 28th (evening).
You can see the ice is clearing...but there is still a chunk of thick ice blocking the path.
It is breaking down on the edges bit by bit.



Here is an image from July 26th of the ice conditions. Look at the bottom left where where the ocean feeds into Iqaluit.



The above image is from the Canadian Ice Services website -- Canadian Ice Services

This has directly effected the 558 tonnes Chidliak needs to get to the SRC (Saskatchewan Research Centre) for processing. The delay has been about a week and a half...but the ships getting into Iqaluit are still having problems. --> Journey of 558 tonnes

The delay hasn't had a significant effect as the SRC is fully utilized right now processing other kimberlite from other companies.

It is irregular seasons like this that should go directly into contingency planning for the development, construction and production of Chidliak as the use of the sealift will be crucial in all three of those stages.

Friday, July 24, 2015

Risk Reward Part III

Update February 12th, 2016

Peregrine Diamonds have just released earnings and as of Feb. 11th has CAD$7.2 million in working capital.  CAD 9 cents - Enterprise value is CAD$22.7 or US$16 million.

With potential (after tax) cash flow of US$120 million for 10 years the Price to (future) Earnings ratio is an unheard of 0.135. Price to (future) earnings ratios should be multiples of...not fractions of.
 
Update February 11th, 2016

The stock has now traded at CAD 9 cents.

That again would equate to an enterprise value of about US$18 million.
With potential (after tax) cash flow of US$120 million for 10 years the Price to (future) Earnings ratio is an unheard of 0.15. Price to (future) earnings ratios should be multiples of...not fractions of.

This is a huge opportunity for any new investors looking at big returns in the future.

How to invest in Peregrine Diamonds? -- Number of ways to invest in Peregrine Diamonds.

Update February 10th, 2016

Peregrine Diamond's (owner of Chidliak) is now at an all time low share price at CAD 10 cents.



There are currently 339 million shares outstanding and the company just raised CAD5.6 million in the bank.

Market valuation currently sits at CAD$33.9 million. Take away about CAD$5 million (cash on hand) and you end up with an equity value of CAD$28.9 million.

Convert to US currency and you end up with
US$20.8 million

This is the lowest valuation of Chidliak and Peregrine Diamonds in a very long time.
Anticipation of new valuations for CH-7 and more importantly a maiden PEA (preliminary economic study) will be coming up.

What are the assets/costs going into the PEA study?

CH-6 = 3.323 million tonnes @ 2.58 cpt
plus  - 1 to 1.2 million tonnes added before the PEA gets started.
You end up with about 4.5 million tonnes @ 2.58 cpt.
The carat price is around US$200 per carat.
So, you are clearly walking into a PEA with around US$2.3 billion worth of value from CH-6.

On top of that, you will also have the maiden CH-7 inferred resource and valuation (TBD).
That could add anywhere from US$250 million to US$1 billion depending on the valuations, the tonnage and how deep an economic pit would go in a PEA study.

Total assets values would be around US$3 billion.

Capital Cost? Anywhere from CAD$400 million to CAD$800 million depending on trade-off studies, mill size, road type, etc.  Let's assume CAD$600 million. That leaves US$430 million in capital cost.

Operating Cost? Open pit (very little overbruden, no lake on top)...the strip ratio should be good. It should easily be under CAD$100 per tonne and probably closer to CAD$75 per tonne. That leaves about US$55 per tonne. Assume CH-7 comes in at 4.5 million tonnes like CH-6. That leaves a cumulative operating cost of US$495 million.

Total cumulative operating cost and capital cost = US$925 million. Let's round up to US$1 billion.

into this PEA, you get an asset of US$3 billion and a cost of US$1 billion.

Potential cash flow is US$2 billion spread out over a 10 year mine life.

Gives you an annual positive cash flow of US$200 million for 10 years.

You have to pay taxes/government royalties. Crank that up to 40% (which is probably quite high).

You end up with a positive cash flow after tax of US$120 million.

A project that can generate over US$100 million (after tax) of free cash flow each year for 10 years is currently worth US$20 million.

The stock is basically trading at 0.2 x future earnings.

All this will come out of the PEA when it gets released before the end of the first half of 2016.

---------------------------------------------------------------------------------------

Update January 7th.

With 2 circuit breaker's in China happening in one week, there is plenty of opportunity to revisit hte risk/reward for Chidliak.

The news for CH-7 bulk sample will literally be out any day now and the pressure has been mostly negative on the stock..which creates a very huge opportunity.

CAD$ is down to $US 0.71.

The stock hit CAD$0.115 per share which equates to a market cap of US$23 million.
The additional 1 to 1.2 million tonnes added to ch-6 will already add  US half billion to the asset and that doesn't include the impending CH-7 data.


13:01:18T0.115-0.01550,0007 TD Sec7 TD Sec
13:01:18T0.115-0.01530,0007 TD Sec7 TD Sec

The risk/reward is at a huge opportunity right now.


Update Dec 15th.

Pretty close to the eve of CH-7 bulk sample results....some of domain 2 material is still making its way down the diamond recovery process.

15:24:09T0.12-0.024,0002 RBC79 CIBC
15:24:09T0.12-0.021,0001 Anonymous79 CIBC

CAD$ is down to $US 0.7278.

Without the rights being exercised, the market cap sits at  $US24.5 million...with the rights being fully exercised, the market sits at $US30.5 million.

No speculation as the market heads to some significant material news from Chidliak.
 
Update Nov 23th

This now trades at a market cap of $US 29 million.


12:46:10T0.14-0.015007 TD Sec2 RBC
12:46:10T0.14-0.015007 TD Sec36 Latimer
12:30:34T0.14-0.011007 TD Sec36 Latimer
12:30:34T0.14-0.011,00039 Merrill Lynch2 RBC
12:30:34T0.14-0.013,5007 TD Sec2 RBC
12:30:34T0.14-0.0123,0002 RBC2 RBC
12:30:34T0.14-0.0110,0002 RBC2 RBC

With the news flow over the next 3 to 6 weeks being of a material nature, there should be significant speculative investors interested. The company has announced a smaller rights offering and that has put pressure on the stock and in turn the market cap.

Domain 5 from ch-7 has more caustic results confirming its significant grade.
That one pocket of kimberlite near surface in 1 quarter of production could generate US$200 million of revenue. 250,000 tonnes @ 4 cpt @ US$200/carat. The last 2 parameters are exactly what we are going to be confirming in the next little while.

That US$200 million could pay for close to half the capital required for the project before CH-6 takes over and generates US$130 million per quarter for 5+ years.  These are quarterly revenue numbers, not yearly.


Update - August 20th

This trade below represents a market cap of $US 33 million.
Taking out working capital and you end up with an enterprise value of about $US 28 million



13:44:12
T
0.155
-0.015
200
36 Latimer
7 TD Sec


For a project that is heading toward a $US 500 million NPV in the next 6 months and with a very fast payback period..and this will just be the base case with more resources and $$'s added as the project heads toward being a mine.

Pay less than a quarter now and potentially get a quarter in dividend per year for the next 10 years of the project? --> Dividend Scenario

That alone represents huge opportunity.


----------------------------------------------
Update - August 14.

Current market cap is now $US 36 million. The company has CAD$7.1 million in working capital, leaving an enterprise value of  about $US 31 million.
 Approaching CH-7 bulk sample results and a PEA leads a significant risk/reward opportunity.
---------------------------------------------

The $CAD has decreased recently along with the price gold and the strength of the US Dollar.

Current market capitlization of Peregrine Diamonds is sitting at $US 38 million.

Chidliak is getting closer to a PEA and the NPV calculations can be done with a bit more refinement.

The latest NPV calculation -- NPV # 4 shows a present day NPV of around US$400 million.

That is in today's prices and assumes production in 2020 and is discounted at 7%.

You could add 7% each year as the project progresses toward production.

That gives a NPV of:
2016 - US$425 million
2017 - US$455 million
2018 - US$490 million
2019 - US$525 million

The project is progressing toward a half billion US $$ NPV as you get closer to production.

Not bad for a stock valued at a total US$38 million.

The risk/reward is at a very opportunistic level for not only foreign investors..but especially for American investors.

Wednesday, July 22, 2015

Updated NPV Calculation

There have been 2 key events that occurred over the last month that has lead to some adjustments in the current NPV calculation.

Here is the current NPV calculation -- NPV #4 calculation

The result is an NPV of CAD$530 million discounted at 7% to today (year 2015) and assumes production in 2020.

The key bits of updates are included in 2 sources of information.

One is from an interview available to the public by Tom Peregoodoff --- Interview with Tom

Excerpt:

"Based on CH-6 and CH-7, Peregoodoff also believes a Phase 1 mine development at Chidliak has the potential to produce at least 1 million carats per year."

@ 1 million carats, the mine life goes to 20 years...but the revenue and operating costs per year go down as well. The capital cost of a mill of 500K tonnes per year will be cheaper than a 1 million tonne per year mill. There is a strong possibility that Chidliak will start with a smaller mill and scale up the mill as cashflow and available kimberlite tonnage permits.

The second point is from the recent news release on the Chidliak field program -- Summer program

The key point is the TFFE in CH-6 has close to 2 million tonnes in the above 250 metre category. This program update has a target to just convert 1 million of those tonnes to inferred. That updated target is what is included in the NPV calculation.

Those are the 2 key pieces of information.

This PEA in 2016 can be considered a base case.
Options beyond the PEA:

1 - more tonnage at CH-6 gets converted to TFFE.
2 - UG below 250 metres at CH-6 gets targeted and included in inferred at some point.
3 - CH-44 gets a bulk sample value and included in the mine plan.
4 - CH-45/46 and other potentially economic pipe get tested and brought into the Mine plan.
5 - All of the above can lead to a significant scaling of the mill to a 1 million tonne per annum capacity and that will have significant effect on the NPV.

Tuesday, July 21, 2015

Summer Field Program

Chidliak's summer field program has now been announced.

Press release -- July 21st, 2015

As expected, most of the focus (all) is converting as much tonnage into the Inferred category for CH-6 and get the biggest maiden inferred resource for CH-7.

The biggest part of the work includes:

2 x 260 metres core drill holes into the southern part of CH-6

and

3 x 220 metres core drill holes into CH-7. It looks like these 3 holes will be focused mostly on the Domain 2 area. (largest tonnage).

Other work includes revisiting existing core form CH-6 and CH-7 and submit more tests/samples to help further refine the geology.

700 kg's of existing material from CH-6 and 1200 kg's of existing material from CH-7 will be sent away for caustic fusion.

It is possible that these two will be the next results to come to the press.


Monday, July 20, 2015

Shorts Covered

There was, up until recently, just over 1 million shares short on Peregrine Diamond stock.

That has evaporated in the first two weeks of July and have all been covered with the exception of 100 shares.

Details -- TSX Short Positions

Short position - Jun 30th, 2015 -- 1,000,100 shares
Short position - July 15th, 2015 -- 100 shares

The large short position must of thought there was little downside to go and too risky on the upside.

Friday, July 17, 2015

Insider trades

Oct 28th - update

If we assume the TMX insider report is related to Front Street flow through, that would leave 113,524 shares to go.

However, the October 15th, 2015  short position for PGD increased by a very coincidental 113,500 shares. This equates very well to a close out position in the stock

Since Oct 23rd, there have been  no more reports and if this short get's covered inside with the remaining amount of shares...that would leave a total of 24 shares to sell.
There has also been a robot periodically selling 1 share at a time.  This might be related to this remaining oddlot as well.

This current theory stands until we get another tmx insider report and it has an amount that nixes this.
 
New Theory --
Dec 31st, 2013 - Front Street Flow-through 2013 II LP has 1.23 million Peregrine Diamond flow through shares.
June 31st, 2014 - They report they still have this amount.
March 31st, 2015 - Flow through fund dissolved and some speak about share 'b' being offered redeemed to current private owners.
It looks like these funds are set up to get a tax gain for private investors and then dissolved or have all assets sold over a period of time and cash returned to private investors.

Now we have the current issue.
Front Street Flow-through 2014 II LP NC CEE - Ontario - 3,809,524 for Peregrine diamond shares.
June 31st, 2015 financials - Shows they still hold this amount.
March 31st, 2016 is the dissolve date for the fund.

We have seen continuous selling by Anonymous and reported as a daily insider to the TMX since July of 2015 and continuing to today.
If this theory holds true, then there is only 113,524 shares left to get rid of for this entity based on the transactions below.

That means, there may only be a couple more weeks before the pressure comes off at the same time news is approaching.



Another insider trade on Oct 14th....post Kennady financing...so throws another loop into the theory.
Here is a listing of all trades:

Total to date --> 3,696,000 shares sold for a total of $659,415

Oct 23rd - 366,000 shares traded for a total of $72,790 or $0.199 per share
Oct 22nd - 128,000 shares traded for a total of $24,790 or $0.194 per share
Oct 21st - 186,500 shares traded for a total of $43,600 or $0.234 per share
Oct 20th - 39,000 shares traded for a total of $8,645 or $0.222 per share
Oct 16th - 180,000 shares traded for a total of $29,700 or $0.165 per share
Oct 15th - 61,000 shares traded for a total of $10,065 or $0.165 per share
Oct 14th - 42,000 shares traded for a total of $6,930 or $0.165 per share
Oct 6th - 451,500 shares traded for a total of $72,292.50 or  $0.16 per share
Oct 2nd - 200,000 shares traded for a total of $32,000 or  $0.16 per share
Oct 1st - 353,500 shares traded for a total of $56,795.00 or $0.161 per share
Sept 30th - 202,000 shares traded for a total of $32,492.50 or  $0.161 per share
Sept 25th - 307,000 shares traded for a total of $49,882.50 or $0.162 per share
September 21st - 9,000 for a total of $1,620 or  $0.18
September 17th - 59,000 for a total of $10,620 or $0.18
September 14th - 124,000 for a total of $22,362.50 or $0.18 per share
September 10th - 16,500 for a total of $3052.50 or $0.185 per share
August 10th - 82,500 for a total of $15,262.50 or $0.185per share
August 6th - 20,000 for a total of $3,700 or $0.185 per share
August 5th - 20,000 for a total of $3,700 or $0.185 per share
August 4th - 85,000 for a total of $15,725 or  $0.185 per share
July 31st - 74,000 for a total of $13,320 or $0.18 per share
July 29th - 165,500 for $31,445 @ $0.19 per share
July 20th - 205,500 for $36,240 - Average sale price of $0.176 per share
July 17th - 292,500 for $56,795 - Average sale price of $0.194 per share
July 16th - 26,000 for $5,590 - Average sale price of $0.215 per share.
 
The current theory is that the period from Sept 25th those shares are tagged to Dundee from their previous status of being an insider and those are being tagged as insider still.
That money is speculated on being used to take part in the $48 million financing by Kennady Diamonds. Dundee is one of the key analysts for Kennady and is probably playing a significant part in the financing. They also may get a 5% commission on the deal. The final tranche of that deal closes on October 5th, 2015. October 6th now and the tranche hasn't closed yet.

TMX Insider Shares traded September 25th to October 2nd - 1,513,500
TMX Insider Shares traded  July 16th to September 21st - 1,179,500
Total -- 2,693,000

Oct 6th - 451,500 shares traded for a total of $72,292.50 or  $0.16 per share
Oct 2nd - 200,000 shares traded for a total of $32,000 or  $0.16 per share

Oct 1st, new insider shares reported:
353,500 shares traded for a total of $56,795.00 or $0.161 per share

Sept 30th, new insider shares reported:
202,000 shares traded for a total of $32,492.50 or  $0.161 per share

Sept 25th, 2015, the TMX insider trading reported the following:
307,000 shares traded for a total of $49,882.50 or $0.162 per share

The current theory was that Mr. Keep who resigned as director had remaining 10,303 shares left to sell. The current action today of 307K shares put that theory in question.
The trading to date has been pretty solid in the 18 to 18.5 cent range. Today was a break from that and was sold at market to get the price down to 16 cents. It rebounded back up to 17 cents by end of day. The question then is who did the selling today? and were the previous sells Mr. Keep or were they this seller from today.

The previous sells were never reflected in the insider report...this might be.
If there is a shake up at the Board level going on, the shares could come from possibly Cohen or Goldstein. Watch the news to see if there is more action on the board over the next few days.

-------------------------------------------------------------------------------------------

A bit of a break in action, but a few more shares are showing up in the list.

Recent transactions
September 10th - 16,500 for a total of $3052.50 or $0.185 per share
September 14th - 124,000 for a total of $22,362.50 or $0.18 per share
September 17th - 59,000 for a total of $10,620 or $0.18
September 21st - 9,000 for a total of $1,620 or  $0.18

Assuming it was Mr. Keep. That adds up to a total of  987,500
Which leaves potentially 10,303 shares left for sale.


Recent transactions
August 10th - 82,500 for a total of $15,262.50 or $0.185per share
August 6th - 20,000 for a total of $3,700 or $0.185 per share
August 5th - 20,000 for a total of $3,700 or $0.185 per share
August 4th - 85,000 for a total of $15,725 or  $0.185 per share
July 31st - 74,000 for a total of $13,320 or $0.18 per share
July 29th - Another insider transaction @ 165,500 @ $0.19 per share


It is now confirmed that Gordon Keep is no longer on the Board of Director's of Peregrine Diamonds.
The assumption can be made that Gordon Keep has been selling his stake in Peregrine Diamonds for his own personal reasons.

There has been 3 days of recent insider selling for Peregrine Diamonds as reported on the Toronto stock exchange site.

July 16th - 26,000 for $5,590 - Average sale price of $0.215 per share.
July 17th - 292,500 for $56,795 - Average sale price of $0.194 per share
July 20th - 205,500 for $36,240 - Average sale price of $0.176 per share

There was significant pressure on the stock price on July 17th and 60% of the volume was directly related to the insider selling.

Because of the size of the shares total -- 524,000 and assuming it is just 1 seller...the list of choices would be:

68,727,195 - R Friedland (indirect) (related)
47,582,436 - E Friedland (Board and Mgmt)
4,828,401  - Third point LLC (Control or Direction)
1,177,607   - Cohen (Director)
1,189,803  - Keep (Director)
767,857    - Goldstein (Director)
526,750    - Pell (Mgmt)

It has a very low possibility of the top 3 on the list...so it is more likely the bottom 7.

The first question at this point is who did the selling. This will answered over the  next 2 or 3 business days as the official insider report comes to light.

The second question is why would they be selling. The answer may never come and the market is probably left to speculation only.

Daily trades are registered here -- TMX insider - PGD

The site gets updated on a daily basis...so you don't get historic information.

Monday July 20 - Looks like some more anon trades today.

13:58:41T0.175-0.0153,0001 Anonymous1 Anonymous
13:58:25T0.175-0.0155001 Anonymous1 Anonymous
13:58:25T0.175-0.01541,5007 TD Sec1 Anonymous
13:57:53T0.175-0.01521,0007 TD Sec1 Anonymous
13:57:53T0.175-0.01542,0007 TD Sec1 Anonymous
13:57:53T0.175-0.01520,5007 TD Sec1 Anonymous
13:57:53T0.175-0.0155007 TD Sec1 Anonymous
13:57:53T0.175-0.01519,5007 TD Sec1 Anonymous
13:57:53T0.175-0.0151,50014 ITG1 Anonymous
13:57:53T0.18-0.0120,0002 RBC1 Anonymous

Someone is in need of cash infusion.


Thursday, July 16, 2015

Risk Reward part II

The company that owns of Chidliak is called Peregrine Diamonds.
The market price of Peregrine Diamonds, currently sits at US$45 million.

The company sits on a current inferred resource with an estimated insitu value of US$1.7 billion.
 that value is only a near surface 3.3 million tonnes.

It is on the verge of increasing that amount substantially with a bulk sample that will be processed over the next few months and some more core drilling during the summer season.

That could lead to an insitu value of up to US$3.9 billion.

The 3.3 millions of CH-6, could increase to 5.3 million tonnes.
CH-7 is the whole point of the bulk sample program. If it comes up with values of US$200 values, that could add another 6 million tonnes at 1 cpt at US1.2 billion.

Together that adds to a resource of US3.9 billion.

The company has the potential to add  $2.2 billion more value to the project...which is about 50X current market capitalization.

There are a few ways to invest in this company and project -- How to invest in Chidliak?

The risk/reward at this point is staggering.

The company has also added a Botswana project. Not sure what they will find...but it will make the companies brand and name more widespread.



Wednesday, July 15, 2015

Trifecta of information

There has been a trifecta of information out this week for Peregrine Diamonds and Chidliak. Not all Chidliak.

The biggest is the announcement of a $300K kimberlite drilling program in Botswana, Africa.

News Release -- July 14th 2015

Not directly related to Chidliak by any means. Chidliak does depend on seasonal field seasons, so the start of the drilling in Botswana will coincide with the wrapping up of field season drilling for Chidliak. If they can find something promising in Botswana and it does boost up the market value of the company, it will make it easier to finance the development of further resources at Chidliak.

The second is a video with Andrew Bell on commodities that had the following guest:
Monica Ell, Minister of Economic Development and Transportation, Nunavut

There was mention of a possible diamond mine at Chidliak and the demographics of the nunavut population lent toward a strong working force (young adults..not baby boomers).
There was also mention that the workforce could be out of Iqaluit and they could drive to and from site without the costly fly in and fly out scenario that a lot of northern mines employ. This option will be a boon economically for Chidliak.

Here is a link to the video -- BNN Video - July 14th, 2015

The third announcement is the very recent interest rate cut in Canada by a quarter point.
Here is the official information from the government -- Bank of Canada July 15 2015

This puts a negative pressure on the Canadian $$. Chidliak diamonds are valued in American $$'s...so the valuation of those diamonds goes up in CAD $$'s when the pressure on the currency comes to light.  Hitting CAD$1000 per tonne on CH-6 rock value is not out of the question.

Those are 3 recent pieces of information. Waiting on an updated field season program for Chidliak.
Will likely include geotechnical drilling for pit walls for the PEA, resource conversion drilling and some prep work for CH-44 trench blasting for early 2016. Probably include some of the regular prospecting as well.

Saturday, July 11, 2015

8 million tonne drill program?

Chidliak to date has about 3.3 million tonnes in the inferred category resource that can be used for the upcoming PEA.

The question is - how much material can be added to that inferred category?

A tabulated view of the inferred and TFFE material can be shown here -- Resources and TFFE

TFFE - Target for future exploration. This basically means they know kimberlite is there..but are unsure of the boundaries...so maintain a minimum and maximum volume range.

Going into the PEA, the maximum amount of near surface inferred material will have the best outcome.

Priorities:

 CH-6 has about 1.8 to 2 million tonnes of TFFE material above 250 metres that can be converted with more drilling. Part of this is the adjacent kimberlite-C material that did not manage to get an LDD hole this past Bulk sample. The plan will be to get significant core drilling to get the data needed out of this material.

CH-7 has 3.7 to 6 million tonnes to move from TFFE to a maiden inferred resource (down to 290 metres). A signficant amount of work has been done based on the bulk sample work where the valuation model will come from. That is the main sticking point for converting a good chunk of this material. Whatever doesn't enough have enough core drilling to define it should get more core drilling during the summer to convert as much as possible.
Of note, the 3.7 million is above 160 metres and has more information than the 2.3 million tonnes from 160 metres to 290 metres and that is where the range comes from. More drill holes will probably be needed below 160 metres to firm up conversion of that material.

CH-6 has another  1.3 to 2.3 million tonnes of TFFE from 250 metres to 380 metres that can be converted. Converting some of the upper part of that using cole hole drilling would be ideal as the economics of the pit may still go below 250 metres at maximum depth.

The first 2 priorities can lead to an 8 million tonne addition to the existing 3.3 million tonnes of inferred material. Potential of close to 11 million tonnes for the PEA study.

Not sure how feasibility that target is for the PEA...but that should be the upper goal.

Remember, the initial PEA will be a pure Base Case and anything not converted yet, will be added at a later date.  Also, CH-44...which will be missed out of this PEA, has an additional 1.2 to 3.1 million tonnes of TFFE for future studies....Don't forget about all the other kimberlite pipes that have potential in the right navigation bar of the blog.


Thursday, July 9, 2015

5 month blog anniversary

It has been 5 months since this blog started and a big thanks to all those who helped get the blog over 10K page views today.

Feel free to see the potential in Chidliak by scanning through the multitude of kimberlites in the right navigation...and remember these are the confirmed kimberlites. Some of them have yet to be tested for diamonds and there are hundreds of anomalies on the property that haven't been fully explored. Many of these anomalies will turn into kimberlite pipes and some of them will contain diamonds as well.

Chidliak is heading toward a PEA (preliminary economic assessment) on just 2 of those pipes - CH6 and CH7. That is 2 of 71 kimberlites with much more exploration left to do and with just 1 operator/owner at the helm.

The PEA might show a mine life of 10 years and a potential dividend of 10 to 25 cents per year.

Opportunity is there to not only extend that mine life another 20+ years...but also to scale up production when more deposits are confirmed economic. That brings the cash flow and dividend up again.

After a bit of due diligence, the risk/reward presents an amazing opportunity.

Tuesday, July 7, 2015

Chidliak Royalty Part III

BHP has finally responded to the court action by Peregrine Diamonds.

Basically, they include legal reasons that it would have been okay if the Chidliak Royalty would have been spun out of BHP and included in the South 32 company.

Here is an updated timeline of events:

April 17th - BHP Canada transferred the Royalty to BHP Royalty Ltd. (A subsidary).
BHP said this is fine because this is just a subsidary at this point in time.

April 27th - PGD did not accept the transfer of the asset to the subsidary as it was known the subsidary was going to be demerged into South 32.

May 12th - PGD brings to court that first of refusal is being enacted because of the South 32 demerger. - Court date set for May 14th.

May 14th - Court date deferred.

May 14th - BHP Canada transfers back the Chidliak Royalty back to BHP Canada from BHP Royalty and is now excluded from the demerger. BHP still insists that going through with the demerger and the asset did not qualify for a first right of refusal event.

July 2nd - BHP submits facts and responses to the court alleging that the transfer to the subsidary was within it's rights and it ended up transferring it back to purposely avoid it from going with the demerger South 32. It was allowed to do this as it was not considered material to the South 32 demerger...so unaffected by the already shareholder voting.
BHP still insists that it could have been allowed to demerger the Chidliak Royalty to South32 as pertaining to details defined in the first right of refusal document. 
Therefore based on this -- BHP is seeking an order that the action be dismissed with costs.

The Chidliak Royalty is now back into BHP Canada's hands as was the original case and that sounds like it will be there for a long time.

BHP is now seeking that PGD pays for court costs.

So, it is still up to the courts to decide of the South 32 demerger would have triggered the first right of refusal. If the court agrees, BHP may have to pay PGD's costs. If the court disagrees, PGD may have to pay BHP's costs.

The Royalty remains unaffected going forward and remains with BHP Canada.


Friday, July 3, 2015

Yellow Diamonds

It has been an interesting month for the colour yellow within the diamond industry.

Recently (July 1st, 2015), the Ellendale mine has closed doors.

Here is an article -- Mine closure

Excerpt:

"Ellendale Diamond mine, east of Derby, produces about half the world's supply of rare yellow diamonds."

The reason for the closure was a decrease in the quality of the mined gems on top of a decrease in rough diamonds. This compounds the issue. This is a telling statistic that the mine itself is very close to margin and highly sensitive to price volatility.  The mine is no longer able to cover operating costs anymore...let alone sustaining capital or onsite exploration.

On June 9th, North Arrow Minerals produced valuation results for a project that included very deep yellow colours in diamonds to date.

here is the press release -- June 9 2015

Excerpt:

"North Arrow Minerals Inc. (TSXV-NAR) is reporting the results of a valuation exercise completed on a diamond parcel recovered from the Qilalugaq Diamond Project bulk sample. The parcel of 383.55 carats of diamonds greater than +1DTC (~1 mm) was valued at $13,795 or $36 per carat and a modelled range of possible values was also produced with a “possible low” model price of $43 per carat and a “possible high” model price of $92 per carat.  The diamond valuation exercise was conducted by WWW International Diamond Consultants (“WWW”), an international diamond consultancy that specializes in the valuation and modeling of diamond parcels of this type. The valuation and modeling exercises were based on WWW’s proprietary price book as at May 15, 2015 and are priced in US dollars. "

Using a grade of 0.5 cpt, leads a significant negative profit margin outlook. NAR is now focused on another project and this project will wait a larger bulk sample if it ever happens.

Analysis:

Within 1 month, you have a project that could supply significant yellow diamonds to the world get a big setback and you have a mine that produces half of the fancy yellow diamonds close shop.

Where could Chidliak fit in?

On the CH-6 valuation release -- Feb 26 2014

"The parcel contained a number of yellow diamonds. None of these were fancy yellow, but the depth of colour indicates that fancy yellow diamonds may be found in a production scenario."

So, the CH-6 kimberlite has high quality white diamonds to ensure a very, very healthy profit margin per tonne (hundred's of $$'s)...and there is significant chance that a by-product of production are some of these fancy yellow stones.

The 2 news items over the last month are not necessarily a bad thing for the economic's of CH-6...but more likely are a value-add by ensuring any significant yellow stones out of CH-6 will have a few places to choose from for a final destination.

It is of noteworthy, that DO-27 (Peregrine's NWT pipe) already has confirmed high quality yellows..but does not have the associated profit margin buffer of such.



Thursday, July 2, 2015

Interview with Tom

This interview on business review Canada was posted on July 1st, 2015

Here is a link to to the full interview -- a path to power

This is included in the full July edition of Canadian Business Review -- Canadian Business Review July 2015 (see pages 26 to 35)

Article is written by Jennifer White and produced by Andy Turner


Key Excerpts

Excerpt 1:

"The strength of the company is based on the people,” he said. “Led by Dr. Herman Grütter, who is extremely well-known in diamond exploration circles, I’d venture to say that our technical team is second to none."

Analysis:

Here is a listing of the team on this blog -- Team Chidliak

Excerpt 2:

"Although classified as TFFE at this point, the estimate for CH-7 is between 3.72 and 6.01 million tonnes from surface to a depth of 290 meters.

“We’ll be able to tell what the potential economics are of CH-7 once we process the 550 tonne bulk sample in August 2015,” Peregoodoff explained.

To consider CH-7 successful, Peregoodoff is hoping for a combined grade and carat value in excess of $125-$150 per tonne, but believes that the 2015 bulk sample result will show value per tonne to be significantly higher than that."

Analysis:

The NPV #3 on this blog used a $200 to $250 CAD per tonne valuation. Not sure if Tom's analysis is CAD$ or US$. He does indicate that it may go much higher. All these values talked about are well within an operating profit margin. 

Excerpt 3:

"Based on CH-6 and CH-7, Peregoodoff also believes a Phase 1 mine development at Chidliak has the potential to produce at least 1 million carats per year."


Analysis:

Based on the fact that CH-6 will be mined first (based on current information), @ 2.58 cpt, that gives a 387K tonne per year mill. Looks like they are considering a 400K tonne per annum as a phase 1 mill and scale up from there as more kimberlites and tonnage get added to the mix. 400K tonnes per year will put less pressure on capital up front and probably mix well with a seasonal road. If they are blending in ch-7 at the same time as ch-6, it probably could be a 500K tonne per annum mill..but it is definitely not the 1 million tonne per annum mill that has been mentioned by 1 or 2 analysts.

Excerpt 4:

"In May 2015, Peregrine became a member of the Diamond Bourse of Canada (DBC), a diamond and gemstone trading facility and industry association.

“For us, [membership] provides a lot of flexibility as we advance toward the development of Chidliak,” Peregoodoff said.

“We have more and more people interested in seeing our goods, and because we’re members, these interested parties are able to get an early indication of what the goods look like, for example, or do any due diligence, if needed.”

To become a member, Peregoodoff explained, companies must be “sponsored” by a current company – De Beers vouched for Peregrine – and go through a review by the DBC to ensure a corporation’s business practices align with the group’s standards of excellence. Membership also requires an evaluation of key team members.

“The DBC looks for companies with a proven track record; they want to see groups that are leading up to – or are in the line of sight for – becoming a diamond producer.”"

Analysis:

This is the first junior and only second mining entity to join this bourse.
It is very interesting that Peregrine Diamonds still has a very close relationpship with De Beers.
De Beers could still very well old the 3+ million shares in Peregrine Diamonds. Looks like networking is going to be the main payoff for Peregrine Diamonds in the future. The value of this networking is still to be determined. Here is a blog post related to this -- Diamond Bourse - Peregrine Diamonds

Well written interview







Risk reward

Many investors talk about the risk/reward opportunity on many stocks.

Is it a low risk time to buy something that can provide a very large reward in the future?

That is the key driver for many investment decisions.

The CAD$ (Canadian) is declining recently versus the American $$.

This puts pressure on the Canadian stock market as a whole as foreign investors are not only liquidating Canadian bonds, but also Canadian stocks and that is one reason why the Canadian $$ is going down. This money being liquidated and transferred into US $$'s or other currency.

The Canadian market, even though it is part of the G7 committee, is still quite small...so when something like this happens, it can be significant.

Bring in Chidliak and Peregrine Diamonds.

The stock has pressure on during this past couple of weeks. It is basically been declining.
Many stocks (junior and senior alike) are also having this same decline.

Money is slowly leaving Canada at this time for many geopolitical reasons as such.

Where does risk/reward come into the picture?

Peregrine Diamonds is not immune to this and the retracement in the stock adds more purchasing power for the investor in Canada. For foreign investors or US investors, they even have more purchasing power because CAD $$'s are even cheaper. More purchasing power means you can load up more shares for the same amount of $$'s and therefore can expect more reward at the end of the day. Or at least the potential for significant rewards is there and is cheaper to purchase. This also means less risk.

Chidliak has diamonds in the ground. These diamonds are significant above the operating cost to extract them. A huge profit margin exists. These diamonds are valued in US$$'s as are most rough diamonds worldwide. So, when the CAD$ decreases in value, these diamonds in the CAD$ terms actually increase in value. This increases the profit margin and leads to lower risk for the project.

At this point, the risk is lower and the reward (per investmen $) is higher.

This is a very opportune time to utilize risk/reward in an investors favour and make the plunge.

Unlike many other mineral projects out there that may be in the same boat, this project is an active project with drills turning, $$'s being spent directly into the project, etc. That is a must have when deciding on where and when to invest.

Summer doldrums is also a phenomena as a cycle and that means a correction to the upside should occur come end of August/September and this will be the same time summer results from many field programs come to flourish.

Investing in Peregrine Diamonds is the only way to gain a % ownership of the Chidliak diamond district.

Wednesday, July 1, 2015

Happy Canada Day!

Happy Canada all.

July 1st has dual significant for the Chidliak project.

Three actually.

Being a statutory holiday in Canada, the head office for Peregrine Diamonds would be closed for today as they would celebrate Canada day with their families.

2nd - July marks the ending of the june spring melt at the Chidliak site. The snow, slush and puddles of water finally disappear and the field program can get started to a productive level.

3rd - The 10 million flow through warrants from the end of December had a holding period that expire today. It is unknown which hands they sit and if those hands are long and deep in the project....or they just wanted a tax benefit in 2014 and are eager to sell.

More information on the summer field program will be forthcoming from mgmt and contain all the details on the accomplishments they are aiming for.

Converting maximum TFFE (target for future exploration) material to Inferred will be crucial for both CH-6 and CH-7 as that will lead into the PEA (preliminary economic assessment) study that is being worked on for the next 6 to 10 months.

Stay tuned on the news feed over the next week or 2 for that update from the company.

Enjoy the festivities and keep in mind how dry some of the areas of Canada are. No fires eh!