International mining giant BHP Billiton is showing interest in a property north of Iqaluit that could possibly become the North's next diamond mine.

BHP Billiton, which already owns an 80 per cent stake in the Ekati diamond mine in the Northwest Territories, confirms it is buying in on an early-stage exploration project by Vancouver-based Peregrine Diamonds Ltd. on its Chidliak property located 150 kilometres northeast of Iqaluit.

"I can confirm that BHP Billiton does have a partnership with Peregrine Diamonds," Deana Twissel, a spokeswoman for BHP Billiton in the N.W.T., told CBC News.

According to a Peregrine Diamonds press release, dated Nov. 24, BHP Billiton can earn up to a 51 per cent share in Peregrine's property by spending about $22 million on further exploration on the Chidliak property, which spans about 9,800 square kilometres on southern Baffin Island.

The company adds that BHP Billiton will pay for 100 per cent of exploration next year.

"We are pleased that BHP Billiton, the principal owner of Canada's Ekati diamond mine, is electing to exercise their earn-in rights so early in Chidliak's exploration cycle," Peregrine CEO Eric Friedland stated in the company's release.

"BHP Billiton's diamond exploration, evaluation and production experience will be put to full use as we jointly and rapidly advance this project starting with the planned 2009 exploration program, fully funded by BHP Billiton, beginning next spring."

The arrangement between Peregrine and BHP Billiton stems from an exploration agreement signed by the two companies in 2005, according to the release.

The past summer has paid off for Peregrine Diamonds, as samples from kimberlite outcrops found on the Chidliak property have revealed hundreds of tiny diamonds.

"I think this is perhaps the most significant diamond discovery in the last 10 years in Canada," said John Kaiser, a U.S.-based resource analyst who specializes in Canadian stock.

"This may be a more prolific field than Ekati," he added. "I think this is why BHP wanted to be the partner right away rather than wait for Peregrine to spend another year."

Kaiser said he recently visited Peregrine Diamonds' office in Vancouver, and said the company's early exploration results look similar to those from the Ekati mine.

Kaiser added that BHP Billiton's investment signals the property's potential, especially as the Ekati mine reaches the middle of its 20-year lifespan.

Ekati, Canada's first diamond mine, opened in 1998. It is located about 300 kilometres northeast of Yellowknife.