Peregrine Diamonds Ltd. Vancouver, B.C. TSX : PGD; is primarily focused on diamond exploration and development in Canada.

Since 2007, the Company has discovered two new Canadian diamond districts, Chidliak and Qilaq on southern Baffin Island and Nanuq in the eastern Arctic region.

In addition, Peregrine has established an independent, NI 43-101 qualified, indicated mineral resource of 18.2 million carats in the DO-27 kimberlite in the Northwest Territories and has early stage exploration projects in the Northwest Territories, Nunavut and Manitoba.

In its search for diamonds, the Company has a secondary focus on exploration for metals deposits.

Industry experts predict that without significant new discoveries in the coming years, the global demand for diamonds will soon outstrip supply.

• 100 Percent Ownership. BHP Billiton will transfer its entire 51 percent participating interest in Chidliak to the Company, giving the Company 100 percent ownership of the project complete with 100 percent of the diamond marketing rights.
• Closing. The Company and BHP Billiton agree to close the transaction on or before January 31, 2012.
• Payments. $9.0 million as follows: $1.5 million at closing and $2.5 million on each of January 31, 2013, January 31, 2014 and January 31, 2015.
• Royalty. The Company will grant BHP Billiton a two percent royalty on mineral production from Chidliak. The Company has the right to match any offer by a third party to purchase any of the royalty, should BHP Billiton decide to sell.
• Regional diamond exploration database. The Company will acquire exploration data and archived heavy mineral concentrates for sediment samples that were collected by BHP Billiton during regional diamond exploration programs in Canada.
• Termination of Royalties and Diamond Marketing Rights. The following obligations of the Company to BHP Billiton will be terminated: o 2 percent royalty and certain diamond marketing rights on 57% of claims on the Nanuq property
• 2 percent royalty on the TW property
• 0.7 percent royalty on certain portions of the WO and Lac de Gras properties
• 1 percent royalty and certain diamond marketing rights on the Pellatt Lake property

For 2011, exploration expenditures of $8.8 million were spent at Chidliak, $2.1 million at Nanuq and Nanuq North, $2.2 million at Qilaq and Cumberland, the balance was incurred on Lac de Gras and other exploration initiatives.

Chidliak expenditures increased in 2011 as the Company was required to contribute its 49% share of expenditures for the full fiscal period following BHP Billiton’s earn-in on this project and formation of a joint venture in September 2010.

The Company will provide regular updates on these activities throughout the year.In its search for diamonds, Peregrine has a secondary focus on exploration for metals deposits.

♦ Chidliak property, Baffin Island, Nunavut

In July, August and September of 2008, Peregrine established a new Canadian diamond district with the discovery of the estimated six-hectare CH-1 kimberlite, the estimated three-hectare CH-2 kimberlite outcroppings and the estimated two hectare CH-3 kimberlite on the Chidliak property, Baffin Island, Nunavut, Canada.

Since 2008, 50 kimberlites have been discovered on the Project, with seven of these having characteristics consistent with economic potential in Arctic settings.

2012 Exploration Program

Peregrine is preparing plans for an aggressive program for 2012 that will feature bulk sampling of several kimberlites with economic potential and continued exploration for new kimberlites at Chidliak.

The goal of the bulk sample program will be the collection of 200 carats per kimberlite sampled, considered a sufficient diamond parcel for a preliminary diamond valuation.

The preliminary diamond valuation is an important step forward as it gives the first insights into potential economics and viability. A bulk sample of CH-6 and 7 is planned for 2012, and additional samples from CH-31, CH-44 and CH-45 are under consideration. More details on the plans for 2012 will be available in the coming months.

Unresolved indicator mineral trains and the presence of kimberlite float at multiple localities not currently linked to sources give us confidence that more kimberlites will be discovered next season.

2011 Exploration Program

The $17.7 million 2011 Chidliak program, operated by Peregrine, is now complete. Nine kimberlites were discovered, bringing the total on the project to 59. Additionally, significant drilling and sampling was conducted on six kimberlites with economic potential in preparation for the 2012 bulk sampling program. Diamond results are expected throughout Q4 2011 and Q1 2012. The following is a summary of work completed, for further details please refer to the September 12, 2011 press release.

• A total of 1,776 metres was drilled into CH-6 in four vertical and seven angle core holes
• A total of 1,186 metres was drilled into CH-7 in six angle and one vertical core hole
• A 33.5 tonne mini-bulk sample of surface material was collected from CH-28 for diamond Analysis
• Two vertical core holes and six angle holes totalling 1,153 metres were drilled into the CH-31 kimberlite yielding a sample of approximately 3.9 tonnes
• Five core holes totalling 1,123 metres were drilled into the CH-44 kimberlite and four core holes totalling 311 metres were drilled into the CH-45 kimberlite
• In preparation for 2012 bulk sampling, site layouts were designed and access trails were mapped to the CH-6, CH-7, CH-31, CH-44 and CH-45 kimberlites. In addition, substantial equipment, supplies and fuel have been shipped to Iqaluit by sealift
• Nine new kimberlites were discovered bringing the total discovered to date to 59
• A total of 8,468 metres of core drilling with two drills: 5,583 metres of drilling on six kimberlites with economic potential, drill-testing of six new targets that led to the discovery of six new kimberlites, and the drilling of CH-17
• 11,105 line kilometre helicopter-borne magnetic/electromagnetic geophysical survey over the northern portions of Chidliak
• Evaluation of 22 targets by 1,530 metres of RC drilling resulting in the discovery of three kimberlites.
• 2,055 line kilometres of ground geophysical surveys.
• Collection of 443 heavy mineral samples
• Evaluation of over 80 anomalies by prospecting, kimberlite float not yet definitively linked to an anomaly was discovered at two of these localities
• Quaternary mapping and environmental and archaeological surveys
• Prospecting, ground geophysics and RC drilling determined that 17 targets greater than 2 hectares in size, that were assessed based on geophysical characteristics similar to CH-31, were not kimberlite.

♦ Qilaq project, Baffin Island, Nunavut

Peregrine is exploring for diamonds on the 437,000 hectare Qilaq project, which is 100% owned by Peregrine and adjoins Chidliak to the north, east and south. A map outlining Qilaq is available at (Click here to view the location map).

2011 Exploration Programme

The 2011 Qilaq exploration programme will begin in the spring with a 4,000 line kilometre airborne geophysical survey centred on two areas defined by anomalous KIM samples, one of which hosts the Q1 and Q2 kimberlites. The airborne survey will be followed by ground geophysical surveying, KIM sampling and a drill programme that will focus on the drilling of the Q1 and Q2 kimberlites as well as any new priority kimberlite targets generated from the geophysical surveys. The KIM sampling will be conducted within the areas targeted for airborne geophysics as well as within other anomalous areas that were confirmed in 2010.

At least five metals anomalies identified in 2009 and confirmed in 2010 will be targeted for follow-up work in the summer of 2011. The follow-up work will include detailed prospecting, mapping and rock and sediment sampling. The estimated 2011 budget for Qilaq is $500,000 to $1,000,000.

Q1 and Q2 Kimberlites

The Q1 kimberlite is characterized by a magnetic high anomaly with an estimated diameter of 150 metres, associated with a topographic depression that measures approximately 60 metres by 50 metres. The 62.7 kilogram sample announced on October 6, 2010, represented all the competent kimberlite that could be readily located on the surface within the anomaly and yielded 38 diamonds larger than 0.106 mm sieve size including one diamond larger than the 0.600 mm sieve size.

The Q2 kimberlite is located approximately four kilometres south of Q1 and outside of the limits of the 2010 airborne geophysical survey. Two kimberlite outcrops, and numerous cobbles and boulders, were discovered within a surface depression that is more than 80 metres in diameter. A 241.5 kilogram sample from Q2 yielded 253 diamonds larger than 0.106 mm, including three diamonds larger than 0.600 mm. A 0.05 carat diamond from this sample larger than the 1.180 mm sieve size has been classified by the SRC as a white/colourless, transparent distorted crystal.

Metals Anomalies

The 2010 programme included successful metals follow-up work related to a site where a 2009 till sample contained 350 gold grains, with 80 percent of those grains described by the Overburden Drilling Management laboratory, responsible for processing the samples, as being "pristine", suggesting they have been transported only a short distance.

A rock sample collected less than 50 metres north of this site returned 0.58 grams per tonne gold and an altered rock sample associated with a gossan approximately three kilometres to the north returned 3.1 grams per tonne silver and 112 ppb palladium. Three soil samples in this area returned the following values: (1) 183 ppb gold, 2,196 ppb silver and 2.47 ppm tellurium, (2) 7,079 ppb silver and 162 ppb palladium, and (3) 3,046 ppb silver and 123 ppb palladium. In another target area, a till sample collected in 2009 returned 45 gold grains, 40 grains of sperrylite (a platinum mineral, PtAs₂) and 2,060 grains of hercynite (an iron spinel).

Eleven of the gold grains were classified as pristine. Additionally, the till geochemistry from a soil sample collected in 2010 one kilometre from the till sample with the sperrylite and gold grains returned 91 ppb palladium.

♦ Cumberland Peninsula of Baffin Island

Cumberlandis located on the Cumberland Peninsula of Baffin Island, approximately 250 kilometres north of Iqaluit and just east of the community of Pangnirtung. It covers approximately 527,000 hectares (5,270 square kilometres) 200 kilometres north of Chidliak, and is 100%-owned by Peregrine. A map outlining Cumberland is available at (Click here to view the location map).

The Cumberland permit group has geologic characteristics that are considered by the Company to be similar to those at Qilaq and Chidliak. The centre of Cumberland is located approximately 200 kilometres north of Chidliak and east of the community of Pangnirtung.

In February, 2010, Peregrine acquired 119 Prospecting Permits on the Cumberland Peninsula totalling approximately 1,500,000 hectares (15,000 square kilometres). During July and August, 2010, the Company conducted a reconnaissance sediment sampling programme to evaluate Cumberland’s diamond and metals potential. A total of 341 heavy mineral samples was collected during the programme. No kimberlite indicator minerals were recovered from any of these samples, but samples from 35 sites returned anomalous concentrations of magmatic or sulphide indicator minerals and/or anomalous geochemical signatures.

In early 2011, the Cumberland project was reduced to 40 prospecting permits totalling approximately 527,000 hectares. Follow-up work was completed in 18 target areas that selected after interpretation of the 2010 sample data indicated metals potential. Totals of 281 rock and 597 sediment samples were collected during July and August. Total 2011 programme costs at Cumberland were approximately $725,000.

The scope of a 2012 metals exploration programme at Cumberland will be determined upon the final interpretation of all results from the 2011 programme. The preliminary estimated budget for the 2012 programme at Cumberland is $500,000.

♦ Nanuq property, Nunavut

In 2011, field work on the Nanuq Project was conducted in the months of June, July and August. A total of 49 heavy mineral samples was collected to further define unresolved indicator mineral dispersion trains.

Six ground magnetic surveys totalling 111 line-kilometres and five ground resistivity surveys totalling seven line kilometres were conducted over geophysical targets selected from existing airborne data sets. Four of these anomalies were subsequently drilled for a combined length of 585 meters.

No kimberlite was intersected by drilling.

Total 2011 programme costs at Nanuq were approximately $1.9 million. In September 2011, the Company adjusted the carrying value of the Nanuq property to reflect the reduction in the size of the property through the net relinquishment of a number of mineral property claims.

In 2011, field exploration consisted of one 17 line-kilometre ground magnetic survey completed over an airborne magnetic anomaly. One magnetic anomaly was diamond drill tested to a depth of 214 meters, no kimberlite was intersected.

♦ Nanuq North

The Nanuq North Project is located at the head of a well defined kimberlite indicator mineral train. Diamond bearing kimberlites have been discovered on the adjacent Nanuq project and it is believed that this field extends on to the property. 

Total 2011 programme costs at Nanuq North were approximately $63,000, of which the Company’s share is $33,000.

The Company has downgraded the priority of the Nanuq North property due to exploration results and has limited plans for further exploration activities.

Accordingly, in September 2011 the Company wrote-off the carrying cost of Nanuq North in the amount of $275,000.

The Company is currently evaluating all exploration data from Nanuq. Work being contemplated for 2012 could include ground and airborne geophysics, target drilling and heavy mineral sampling. Preliminary budget estimates for 2012 are approximately $100,000.

WO property

A field exploration programme was undertaken in 2011 on the WO property in order to review and fully evaluate kimberlite exploration potential.

Activities in 2011 included ground geophysics, a legal survey of mineral claims in order to bring them to lease and a site reclamation assessment and other ongoing care and maintenance work at DO-27. Costs for the 2011 programme were approximately $180,000 of which the Company’s share is $129,000.

The Company is currently planning a winter ground geophysics and drilling program in 2012 in an effort to evaluate new targets on the WO property. The estimated budget for work contemplated in 2012 is $450,000, of which approximately 72% is the Company’s share.