De Beers Group is purchasing Peregrine Diamonds, owner of the Chidliak diamond resource located in Canada’s Nunavut Territory.
The company’s De Beers Canada subsidiary will buy all the company’s shares at 0.24 Canadian dollars per share, for a total of CA$107 million (about $81 million). The figure represents a 50 percent premium to Peregrine’s July 18 share price of CA$0.16.
The Chidliak resource is located on Baffin Island and was discovered in 2008. It holds 74 kimberlite pipes, eight of which are believed to be economic. Its possible production has been estimated at over 22 million carats.
Peregrine previously said it planned to begin production at Chidliak by 2021.
The miner also has other exploration properties in Nunavut and the Northwest Territories.
De Beers has been involved in Canada since the ’90s “diamond rush,” but its luck has been mixed. It currently operates two mines in Canada, Victor and Gahcho Kué. Gahcho Kué is a joint venture that began production last March. Victor, located in Northern Ontario, has been operating since 2008.
However, Snap Lake, De Beers’ first Canadian mine (as well as its first mine outside Africa), seemed beset with problems after it opened in 2007, with one executive terming it “no dripping roast.” Considered unprofitable, De Beers closed it in 2015, then tried unsuccessfully to sell it. When no takers came forward, it began formally closing it last year.
“The Chidliak resource holds significant development potential and will be an exciting addition to our portfolio,” said Bruce Cleaver, CEO, De Beers Group, in a statement. “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.”
The transaction has been unanimously recommended by Peregrine’s board. It still needs approval from the Supreme Court of British Columbia and Peregrine security holders.
Top photo: The Chidliak resource courtesy of De BeersFollow JCK on Instagram: @jckmagazine
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine