Security holders documents - English

WARRANT INDENTURE

THIS WARRANT INDENTURE dated as of February 19, 2009,

BETWEEN:

PEREGRINE DIAMONDS LTD., a company existing under the laws of Canada, having its registered office at #201 - 1250 Homer Street, Vancouver, British Columbia, V6B 1C6 (the “Corporation”)

AND:

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company existing under the laws of Canada, having an office at 510 Burrard Street, 3rd Floor, Vancouver, British Columbia, V6C 3B9 (the “Warrant Agent”)

WITNESSES THAT WHEREAS:

A. the Corporation proposes to create and issue up to 5,019,391 Warrants exercisable by the holders thereof on the terms hereinafter set forth for the acquisition of Shares;

B. the Corporation is duly authorized to create and issue the Warrants to be issued as herein provided;

2. ISSUE OF WARRANTS

2.1 Creation and Issue of Warrants

A total of up to 5,019,391 Warrants, each entitling the holder thereof to acquire from the Corporation on exercise thereof and payment of the Exercise Price, subject to adjustment as provided for in section 2.2 and Article 5, that number of Shares equal to the Exercise Number, are hereby authorized to be created and issued by the Corporation upon the written order of the Corporation and shall be executed by the Corporation and certified by or on behalf of the Warrant Agent, or by such other person as the Corporation may from time to time appoint with the approval of the Warrant Agent (hereinafter referred to as the “Co-transfer Agent”), and delivered by the Warrant Agent in accordance with subsection

2.3.

2.2 Terms of Warrants

(a) Subject to the provisions of Article 5, each of the Warrants issued under section 2.1 shall entitle the holder thereof to acquire from the Corporation during the Exercise Period, that number of Shares equal to the Exercise Number, at an exercise price of Cdn.$1.00 per Share if the Warrant is exercised during the First Year Period, or at an exercise price of Cdn.$1.50 per Share if the Warrant is exercised during the Second Year Period (each applicable exercise price, the “Exercise Price”).

(b) Fractional Warrants shall not be issued or otherwise provided for.

(c) Each Warrant shall entitle the holder thereof to such other rights and privileges

as are set forth in this Indenture.

2.3 Warrant Certificates

(a) Warrants shall be issued in registered form only and shall be evidenced only by Warrant Certificates, which shall be substantially in the form attached as Schedule “A” hereto, with such additions, variations or omissions as may be permitted by the provisions of this Indenture or may from time to time be agreed upon between the Corporation and the Warrant Agent, shall be dated as of the date issued, shall bear such legends and distinguishing letters and numbers as the Corporation shall, with the approval of the Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions.

(b) Warrants shall not be issued to, or for the account or benefit of, U.S. Persons or persons within the United States.

(c) The Warrant Agent understands and acknowledges that the Warrants and the Shares issuable upon the exercise of the Warrants have not been and will not be registered under the U.S. Securities Act, provided, however, that such understanding and cknowledgement shall not detract from or in any way lessen or diminish the obligations of the Warrantholders, and the transferors

and transferees of Warrants, to comply with all applicable laws with respect to the transfer, trade, disposition, sale or acquisition of the Warrants.

(d) The Warrant Agent shall maintain a list of all registered holders of Warrants.

(e) The Warrant Agent shall maintain and make available to the Corporation lists of all persons who are entitled to Warrant Certificates, and the Warrant Agent shall mail or deliver Warrant Certificates evidencing whole Warrants to those persons or as directed by the Corporation.

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