The big mover today was Eric Friedland and Tom Peregoodoff's Peregrine Diamonds Ltd. (PGD), which jumped up 5.5 cents to 29 cents on 3.72 million shares. Peregrine's jump came on the heels of its preliminary economic assessment of its Chidliak project, on southeastern Baffin Island. The study contained no surprises, as its major parameters were in line with the earlier projections of analysts and loyal shareholders alike. The market nevertheless took the news as reassuring, in part because its provides support for recent rumors of interest by a diamond major.

Peregrine's study is based on a 2,000-tonne-per-day mine projected to recover 11.6 million carats from just under seven million tonnes of kimberlite in two pipes, CH-6 and CH-7, over a 10-year period. The result is a discounted net present value of $471-million after taxes and a pleasing rate of return of 30 per cent. The mine is projected to cost just $435-million to build, which includes a 160-kilometre-long all-weather road to Iqaluit that would cut the risks and operating costs significantly over the cheaper option of a winter road.

Peregrine's cheerful bottom line is partly the result of the company escalating its projected rough diamond prices by 2.5 per cent above inflation year after year, but its starting point was encouragingly low: just $149 (U.S.) per carat at CH-6 and $114 (U.S.) per carat at CH-7. Those values were based on Peregrine's March estimate. Two years ago the CH-6 diamonds were modelled at $188 (U.S.) per carat, a value higher than the average escalated value used in the study.

Mr. Peregoodoff points out that the study is just the start for Chidliak. "We did not call it phase one just to come up with the language and words," he said, pointing out that the project has several other potentially economic kimberlites that would most likely be mined in subsequent phases. It is unclear if those pipes would be tacked on to Chidliak after the first two were mined out, or if Peregrine might consider expanding the mine at some point.

Mr. Peregoodoff also did nothing to dispel the notion of a possible takeover by, or a joint venture with, a diamond major. (The most likely names bandied about are Dominion Diamond Corp. (DDC: $11.30), which recently confessed to be in a buying mood, and De Beers Canada, which once had a chance to work Chidliak but dropped its option a few years ago.) He says that in mining, every asset is potentially for sale if the price is right, although he hastily adds that, since Mr. Friedland and his older brother, Robert Friedland, own nearly half the company, the "price would have to be right."

In the absence of a quick deal, Peregrine will carry on alone. Recent news reports say the company will spend $15-million this winter at Chidliak, but Mr. Peregoodoff says that number was just a recommendation pulled from the company's technical report, not an actual plan. He says those recommendations are reasonable suggestions, but Peregrine's priority will be advancing Chidliak as quickly and efficiently as possible. That would presumably point toward a more advanced study, which will require more work to upgrade the company's resource to at least an indicated status. "You do not have to be a rocket scientist to determine that," says Mr. Peregoodoff.