Winter 2017 work plan

In the recent technical report there is a section (page 7) on what the proposed next steps should be for the project to advance it even further.

It comes with a steep price tag of CAD$15 million, but also with ambitious goals.
The program is designed by Peregrine's mgmt team, but reviewed by the 3rd party technical expert confirming that it is basically a good idea.

Stated goal -- Advance CH-6 resource to an indicated category and to improve confidence levels for the CH-7 resource.

The detailed budget is broken up into two categories. One is specific to core drilling and the other is specific to the bulk sample program.

Timeline - The execution of this program is aligned with a winter 2017 core drilling. This terminology sometimes is interpreted incorrectly, but basically means Jan/Feb/March/April of the first part of 2017. There is some preliminary work that is usually done in December before that (Dec. 2016).

Permits - All the various tasks in the program have been done in one way or the other in previous programs, so the work should be covered under existing permits or any new permits should be exempt from any further processing and approved.

Details:

Bulk sampling activity

Large Diameter RC Drilling - 2 x 22" holes @ 260 metres depth through KIM-L of CH-6.
 --> This will collect about 125 tonnes per hole x 2 = 250 tonnes of CH-6 kimberlite

Bulk sample by Trench - at surface trenching of about 400 tonnes of wKim-L from CH-6

DMS Processing of about 650 tonnes of material.

Resulting parcel --> 650 tonnes x 2.5 cpt --> 1625 carats

Previous parcel --> 1124 carats.

Total parcel for valuation and modelling --> ~ 2750 carats

Core drilling activity

Task #1 --  Pierce point and geotechnical drilling at CH-6 (1,500m HQ)

Interpretation - 4 drillholes from North, South, East, West side of kimberlite body that is drilled through the country rock at a steep angle to the depth of the kimberlite. ~375m per hole. Current TFFE goes down to a depth of 380 metres below surface. These geotechnical holes will help determine the steepest pit wall angle that is tolerable (within a factor of safety) and will have a direct impact on strip ratio. They will be targeted to the deep part of the TFFE (300 to 380 metres) to try and establish some kimberlite pipe boundaries at depth. This will help determine tonnage/volume at depth.  A small amount of kimberlite intersection material can be used for caustic testing.

Task #2 - Drill holes for CH-6 caustic samples -- 1,200m HQ.

Interpretation - Deep drilling. Either 3 holes x 400 metres deep or 4 holes x 300 metres deep. May also help with further constraining the irregular high grade cylindrical zone within CH-6. Deep drilling is a relative term as Renard pipe in Quebec goes down to about 1 km down. With the success of this program, further deep drilling beyond 400 metres might be considered if the walls continue to dip steeply at depth.

Task #3 - Pierce point and geotechnical drilling at CH-7 (1,200m HQ)

Intepretation - Similar to above, 4 drillholes done at each side of the ore body at ~300 metres per hole. Similar goal.

Task #4 -  Drillholes for CH-7 caustic samples -- 1,000m HQ

Interpretation -- Similar to above. 3 or 4 holes at depth at 250 metres to 330 metres in length.

End goal interpretation:

For CH-6, collecting enough stones to have a reasonable valuation model that can extend into a maiden indicated resource. With the deep drilling, new (high margin) resource, can be obtained and possibly directly put into the indicated resource and skipping the inferred resource altogether as the valuation exercise can apply to the whole pipe. This indicated resource can then be used in a PFS (pre-feasibility study) or an FS (feasibility study) and the resource can be turned into a reserve. Once a PFS and reserve is corrected, further work can start to be capitalized from an accounting point of view.

For CH-7, the goal is to deepen the existing inferred resource a bit more and also constrain the strip ratio to being a bit more aggressive on the pit wall stope angle based on new geotechnical information and hence, more economic. More resource would be added to the inferred category and future work would need more parcel collection done. This parcel collection is not in the scope of this program budget as it stands.

Further studies:

With the indicated resource CH-6, that can be put into a PFS, but without CH-7 as a PFS cannot use an inferred resource.

With the indicated resource at CH-6 and the inferred update at CH-7, a new PEA (preliminary economic study) could be completed.

Technically both studies above could be completed and issued to the public. This was not the case a few years ago, but NI-43-101 made an amendment to allow multiple studies as long as their is a significant difference between the two studies.

The delta deepening of CH-6 in this process could still be worth more (NPV) than the CH-7 open pit because the margin on CH-6 is extremely high.

Real end result???

The deepening of CH-6 could add 3 million tonnes to the resource. @ 2.5 cpt @ US$200 per carat.

That is clearly in the CAD$2 billion in-situ value.  That is spending $1 to add $130+ in value.