Tuesday, February 20, 2018

Upside Down

Upside Down

What is known #1:

Quote from Neil Buxton on CH-6. Neil is an independent expert with WWW International Diamond Consultants Ltd.

"It is also important to understand that the high modelled price does not represent a maximum price and that the ultimate average diamond price in a mine production scenario could be higher than US$236 per carat. Given the number of large stones in this parcel, and their relatively high value, even the high modelled price may be considered conservative."

What is known #2:

Drilling in 2017 delineated the high-grade CH-6 kimberlite pipe to a depth of 540 metres below surface (mbs) and the kimberlite remains open below that depth.

What is known #3:

17.96 million carats inferred from surface down to 525 mbs (metres below surface).

What is known #4:

CH-6 is a steeply dipping pipe.

What is known #5:

Quote from Tom Peregoodoff, CEO of Peregrine Diamonds Ltd.

"Simply put, there is no other Canadian development-stage diamond project that compares with Peregrine's flagship project in terms of resource value or upside potential."



The current pipe down to 525 mbs has around 18 million carats that could be worth north of US$236 per carat in a production setting and this project has a lot of upside left into it...not withstanding the open below depth stigma is still attached and no indications that the pipe won't just continue deep into the earth as uncovered to date.

So...the answer then is that the upside potential is really down. Deep down into the earth where the rock value will continue until it doesn't.

If this pipe goes down to 1500 metres with the steeply dipping pipe walls, it could generate 50 million carats of diamonds potentially worth more than US$236 per carat.

That number is around US$12 billion or CAD$15 billion.

The stock is currently trading at US$45 million or CAD$60 million.

This truly indicates that not only is the upside potential down...the valuation argument for Chidliak and Peregrine Diamonds is truly upside down.


  1. "The rock value will continue until it doesn't" - What a bizarre way to sum up your blog - not a clue. U/G development in the north won't continue below permafrost without extreme cost; 1,500m is complete bollocks, there is no value at that depth.

    1. It is mostly a cost of distance and haulage to surface without doing a shaft...which is obviously not going to happen at Chidliak. The deeper you get, the cost will go from $150 per tonne to $300 per tonne, then it will go $500 per tonne. At which point in elevation underground will it hit $1000 per tonne? Because capital ramp is incremental it is mostly about haulage costs and the distance to surface and how many trucks you need. So....the question you need to ask is how deep will generate an operating cost per tonne that equates to CAD$1000 per tonne. A lot deeper than 500 metres. Probably not 1500 metres. Somewhere in between. Don't forget Renard is trying to go 1000 metres below surface. That maybe complete bullocks...but we will find out in the next few years. Permafrost is important for both ventilation and water inflow. Every mine will have different problems with respect to these. Bullocks or not. They need to finance a mine first.