De Beers Group announced yesterday that its Canadian mining business, De Beers Canada, has entered into an agreement to acquire 100 per cent of the outstanding securities of Peregrine Diamonds Ltd which owns the high quality Chidliak diamond resource located in Canada’s Nunavut Territory for a total cash consideration of approximately C$107 million.

The company said that the resource holds significant development potential, and described it as an exciting addition to the De Beers’ portfolio.

The transaction has been unanimously recommended by Peregrine’s Board of Directors to Peregrine security holders, and directors and senior management of Peregrine, who collectively hold about 44% of the company stake, have already entered into agreements with De Beers to vote in favour of the transaction.

The Chidliak property, which was discovered in 2008 has a total of 74 identified kimberlite pipes and a total Inferred Mineral Resource in excess of 22 million carats, De Beers said. According to Peregrine’s recent Preliminary Economic Assessment, the high-quality CH-6 deposit (which along with CH-7 is the focus of current development at the site) has an estimated grade of 2.41 carats per tonne and a diamond valuation of US$151 per carat (equating to approximately US$360 per tonne). This makes CH-6 one of the most attractive undeveloped diamond resources in Canada, De Beers said.

Additionally, Peregrine also has exploration properties elsewhere in Nunavut and the Northwest Territories.

Bruce Cleaver, CEO, De Beers Group, said: “With a strong outlook for consumer demand, we are seeking new opportunities to invest in our future supply potential and look forward to growing our portfolio in Canada and working with community partners in the Nunavut Territory as we further develop the project.”

Kim Truter, CEO, De Beers Canada, said: “This investment reinforces De Beers Group’s long-term commitment to Canada, following our investment in the Gahcho Kué diamond mine, which entered commercial production last year. Chidliak is a high value prospect and the Peregrine team has done great work to bring it to this advanced stage. With the transformation of our company in Canada over the past two years, our focused investment in new and innovative mining methods, and our expertise in Canada’s arctic environments, we believe we are very well positioned to now develop the resource further.”

Eric Friedland, Founder and Executive Chairman of Peregrine Diamonds, stated: “The transaction we are jointly announcing today is the next step in the development of the Chidliak diamond project. The team at Peregrine has done an outstanding job advancing Chidliak to this stage and it is particularly gratifying that the quality of the diamond resource we have defined is recognized by the world’s premier integrated diamond company. All stakeholders will benefit from this transaction and the involvement of De Beers as Chidliak advances toward development.”

In a separate statement, Peregrine also appealed to other shareholders to vote in favour of the transaction, saying that there are many immediate benefits from doing so, particularly as it offers a 50% appreciation on the current spot price of the share and is an all cash deal that is not subject to any financing condition, thus securing an immediate value appreciation.

Tom Peregoodoff, Peregrine’s President and CEO, added; “It is very gratifying to see that the work accomplished by the team at Peregrine is being recognised by De Beers. We have consistently stated that Chidliak holds significant diamond mine development potential and this transaction is an excellent outcome for the Company’s stakeholders, including shareholders, community members and the territory of Nunavut. The transaction ensures the next steps in mine development are taken by a world-class operator with recognized arctic mine development and operational experience, and ensures stakeholders will benefit from responsible development of this rare and unique diamond resource.”

Completion of the Plan of Arrangement, which is expected to occur in September, is conditional upon Peregrine security holders adopting a special resolution approving the Plan of Arrangement and the Supreme Court of British Columbia issuing a final order approving the Plan of Arrangement, as well as satisfaction of other customary closing conditions.

The Board has obtained a fairness opinion from RBC Capital Markets that, as of the date of the opinion, and subject to the assumptions, limitations and qualifications on which such opinion is based, the consideration to be received by the Company’s shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Company’s shareholders.