De Beers Canada has reached an agreement to acquire all of the outstanding securities of Peregrine Diamonds for around C$107m ($80.87m) through a plan of arrangement.
Under the terms of the deal, De Beers will pay C$0.24 per share for the acquisition.
Peregrine owns the Chidliak diamond resource located in Canada’s Nunavut Territory, around 120km northeast of Iqaluit on Baffin Island.
Discovered in 2008, the Chidliak resource hosts at least 74 kimberlite pipes, including the CH-6 and CH-7 pipes, with a total inferred mineral resource of more than 22 million carats.
Peregrine’s Chidliak phase one diamond development programme (CP1D) is currently focused on these pipes.
A recent preliminary economic assessment (PEA) determined that the CH-6 deposit is of high quality with an estimated grade of 2.41 carats per tonne and a diamond valuation of $151 per carat.
CP1D is expected to generate more than C$2.04bn ($1.54bn) in pre-tax net cash flow, pre-tax net present value (NPV) of C$1.06bn ($0.8bn) and pre-tax internal rate of return (IRR) of 38.6%.
The project requires estimated pre-production capital costs of around C$455m ($344m).
Peregrine also owns other exploration properties in Nunavut and the Northwest Territories.
De Beers Group CEO Bruce Cleaver said: “The Chidliak resource holds significant development potential and will be an exciting addition to our portfolio.
“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.”
Peregrine executive chairman Eric Friedland noted that the transaction represents the next step in the development of the Chidliak diamond project.
The transaction is subject to certain closing conditions, including shareholder and court approvals.
De Beers Canada CEO Kim Truter said: “With the transformation of our company in Canada over the past two years, our focused investment in new and innovative mining methods, and our expertise in Canada’s arctic environments, we believe we are very well positioned to now develop the resource further.”