Peregrine Closes Option Agreement and $2.5-Million Private

Peregrine Closes Option Agreement and $2.5-Million Private Placement
With De Beers 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/11/12 -- Peregrine
Diamonds Ltd. ("Peregrine" or "the Company") (TSX:PGD) is pleased to
announce the closing of the option and subscription agreement ("the
Option") between the Company and De Beers Canada Inc. ("De Beers") as
announced on September 5, 2012. As part of the closing, De Beers has
completed the $2.5-million private placement with Peregrine priced at
$0.75 per unit, for an aggregate of 3,333,333 units. Each unit
consists of one common share and one-half share purchase warrant with
each whole warrant entitling De Beers to buy a common share in
Peregrine for $2.00 per share for a period of 24 months. In addition,
De Beers is required to make the January 31, 2013, $2.5-million
payment due to BHP Billiton Canada Inc. ("BHP Billiton") pursuant to
Peregrine's agreement to purchase BHP Billiton's 51 percent interest
in the Chidliak diamond project ("Chidliak" or "the Project") as
announced on December 20, 2011.  
De Beers now has the exclusive right until December 31, 2013 to enter
into an earn-in and joint venture agreement ("the Joint Venture")
with Peregrine on a 50.1 percent De Beers / 49.9 percent Peregrine
ownership basis, with De Beers being the operator of Chidliak, which
is located on Baffin Island, Nunavut, Canada.  
Under the terms of the Joint Venture, De Beers will be required to
invest $58.5-million into Chidliak within five years of entering into
the Joint Venture to earn its 50.1 percent interest in the Project
(the "Earn in Point"), with a minimum expenditure requirement of
$37-million. De Beers will also be required to sole finance all work
at Chidliak from the Earn in Point until the completion of a National
Instrument 43-101 compliant bankable feasibility study ("BFS"),
inclusive of appropriate environmental impact studies necessary for
evaluating the feasibility of commercial diamond production.
Peregrine will reimburse De Beers 49.9 percent of all Chidliak costs
in excess of $58.5-million, the point at which De Beers has earned
its 50.1 percent interest, to completion of the BFS. Reimbursement
will consist of an aggregate of $25-million payable in four
escalating staged payments at certain milestones beg
inning with the
approval by the participants of the completed BFS and ending with the
completion of mine construction, with the balance payable from 66
percent of Peregrine's attributable aftertax cash flow from a diamond
mine at Chidliak.  
Mr. Eric Friedland, Peregrine's CEO, said, "The closing of the Option
with De Beers is an important step on the road to what we believe
will be Baffin Island's first diamond mine. We are confident that
Chidliak is the world's premier advanced stage diamond exploration
project and De Beers' commitment of $5-million for their Option is a
serious expression of their belief in Chidliak and Peregrine's
management. De Beers has already completed technical due diligence on
Chidliak and the current focus is on developing the strategy to
advance the Project. The agreed material terms of the Joint Venture
provide a clear financial and technical path that could lead to
successfully proving up, financing, building and operating a diamond
mine in Canada's North. We are pleased to welcome De Beers as our new
partner along with their 124 years of unrivaled diamond exploration,
development, mining and marketing experience." 
Mr. Tom Peregoodoff, Peregrine's Executive Vice President, Business
Development, said, "Within 24 hours of signing the Option, De Beers
had a 5 member team of senior people visiting Chidliak, Iqaluit and
Pagnirtung, a sign of their commitment to the Project. Our respective
technical teams are engaged, and planning for future programs is
underway. Under the potential Joint Venture we will ensure that the
design and execution of all work programs take full advantage of the
extensive diamond experience De Beers brings to the partnership and
Peregrine's many years of successful diamond exploration in Canada." 
About Peregrine Diamonds  
Peregrine Diamonds is a diamond exploration and development company
focussed on Canada's North. Peregrine has discovered two new diamond
districts in Nunavut, Nanuq in 2007 and Chidliak in 2008. At its 72
percent owned, nine hectare DO-27 kimberlite in the Northwest
Territories, located only 27 kilometres from the Diavik Diamond Mine,
a NI 43-101 compliant mineral resource of 18.2 million carats of
diamonds in 19.5 million tonnes of kimberlite at a grade of 0.94
carats per tonne, which is open at depth, was confirmed in 2008. At
its 100 percent-owned Chidliak project, located 120 kilometres from
Iqaluit, the capital of Nunavut, the Company has discovered 61
kimberlites to date, and is preparing to collect the first bulk
samples from up to 6 kimberlites that exhibit economic diamond mining
potential. Peregrine also continues to evaluate earlier stage diamond
exploration projects it controls in Nunavut and the Northwest
Forward-Looking Statements: This news release contains
forward-looking statements. All statements, other than statements of
historical fact, that address activities, events or developments that
the Company believes, expects or anticipates will or may occur in the
future (including, without limitation, statements relating to
exercise of the option to joint venture by De Beers, the proposed
exploration programme, funding availability, anticipated exploration
results, resource estimates and future exploration and operating
plans are forward-looking statements. These forward-looking
statements reflect the current expectations or beliefs of the Company
based on information currently available to the Company.
Forward-looking statements are subject to a number of risks and
uncertainties that may cause the actual results of the Company to
differ materially from those discussed in the forward-looking
statements and, even if such actual results are realized or
substantially realized, there can be no assurance that they will have
the expected consequences to, or effects on, the Company. Factors
that could cause actual results or events to differ materially from
current expectations include, among other things, uncertainties
relating to the exercise of the option to joint venture by De Beers,
availability and cost of funds, timing and content of work
programmes, results of exploration activities, interpretation of
drilling results and other geological data, world diamond markets,
future diamond prices, reliability of mineral property titles,
changes to regulations affecting the Company's activities, delays in
obtaining or failure to obtain required project approvals,
operational and infrastructure risk and other risks involved in the
diamond exploration business. Any forward-looking statement speaks
only as of the date on which it is made and, except as may be
required by applicable securities laws, the Company disclaims any
intent or obligation to update any forward-looking statement, whether
as a result of new information, future events or results or
otherwise. Although the Company believes that the assumptions
inherent in the forward-looking statements are reasonable,
forward-looking statements are not guarantees of future performance
and accordingly undue reliance should not be put on such statements
due to their inherent uncertainty.
Peregrine Diamonds Ltd.
Mr. Eric Friedland
Peregrine Diamonds Ltd.
Mr. Brooke Clements
Diamonds Ltd.
Mr. Tom Peregoodoff
Executive VP, Business Development
Peregrine Diamonds Ltd.
Investor Relations
Press spacebar to pause and continue. Press esc to stop.