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Peregrine Yields 502 Commercial-Size Diamonds from Mini-Bulk Sampling at Chidliak Project

Peregrine Diamonds Ltd. (TSX:PGD) has reported that a mini-bulk sample of surface material collected from the CH-7 kimberlite weighing 47.2 dry tonnes returned 49.07 carats of commercial-sized diamonds larger than the 0.85 mm sieve size, for a diamond grade of 1.04 carats per tonne.

The mini-bulk sample yielded 502 commercial-size diamonds, 15 of which weighed 0.50 carat or more, including three diamonds larger than one carat. The four largest diamonds weighed 6.53, 2.18, 1.24 and 0.98 carats.

The CH-7 kimberlite has an estimated surface expression of one hectare and is located on the 9,800 square kilometre Chidliak project ("Chidliak"), Baffin Island, Nunavut, Canada. The sample was processed by dense media separation ("DMS") at the Saskatchewan Research Council Geoanalytical Laboratories ("the SRC").

SUMMARY OF CH-7 MINI-BULK SAMPLE DIAMOND RESULTS

The colours and shapes of the fifteen diamonds 0.50 carat and larger were described by the SRC. One diamond was white/colourless, six were off-white, five were grey and three were brown. Ten of the diamonds were described as octahedrons, three were distorted crystals and two were aggregates. The largest four diamonds were a 6.53 carat grey, translucent distorted crystal, a 2.18 carat white/colorless, transparent octahedron, a 1.24 carat off-white, transparent aggregate and a 0.98 carat off-white, transparent octahedroid.

Eric Friedland, Peregrine's CEO, stated, "We are pleased to see a grade of one carat per tonne and a population of gem quality diamonds in this mini-bulk sample from CH-7, results that certainly justify a large bulk sample of this pipe and are another illustration of the excellent potential for Chidliak to host a diamond mine. We now have five kimberlites with economic potential in Arctic settings at Chidliak, and four of those are clustered within an area that has only an eight kilometre radius: CH-1, CH-6, CH-7 and CH-31. We hope to add to this growing list of potentially economic kimberlites as more microdiamond results from the 34 kimberlites discovered this year are received. As we await all the results from the 2010 exploration programme, including a 14 tonne sample collected from CH-6, we are completing our 2011 exploration strategy which will entail the further evaluation of known kimberlites with economic potential, including the planning for larger bulk samples, as well as the discovery of more diamondiferous pipes starting next March with the drilling of a number of compelling lake-based targets."

SAMPLE COLLECTION, PROCESSING AND DIAMOND RECOVERY

The 47.2 tonne mini-bulk sample of the CH-7 kimberlite was collected by trenching from an outcrop measuring approximately 3.5 by 4.5 metres to a maximum depth of approximately two metres. At the same time, a representative audit sample weighing 467.3 kilograms was also collected from the trench. Both samples consisted entirely of magmatic kimberlite with abundant kimberlite indicator minerals and mantle xenoliths. The sample collection and shipment process was conducted under strict chain of custody protocols and was supervised by senior Peregrine personnel.

At the SRC, the mini-bulk sample was crushed by a jaw crusher with a gap set at approximately 30 mm. The sample was then fed into a five tonne per hour DMS plant where it was subjected to scrubbing and two stages of crushing. DMS concentration was performed on +0.85-12.0 mm feed material. Heavy mineral concentrate from the DMS was treated through a two-stage Flow Sort x-ray sorter and vibrating grease table recovery circuit. The resulting concentrates were then hand-sorted for final diamond recovery using sealed glove boxes.

As an element of Peregrine's Quality Assurance/Quality Control protocols, 111 numerically laser-etched natural diamond tracers ranging in size from 0.2 to 1.5 carats were added to the sample bags in the field, and 100 percent of the tracers were recovered at the SRC. In addition, 120 blue synthetic tracers with a density of 3.53 g/cm3 were added to the sample at the SRC prior to DMS processing, and 100 percent of these tracers were also recovered. To audit the DMS results, the representative 467.3 kilogram audit sample was processed by caustic fusion at the SRC for diamonds larger than the 0.425 mm sieve size.

CAUSTIC FUSION DIAMOND RESULTS FOR THE 467.3 KILOGRAM AUDIT SAMPLE FROM CH-7

The largest stone recovered in the caustic audit sample was a 0.56 carat off-white, translucent fragment. Results from the caustic fusion audit will be used in conjunction with other audits to confirm the efficiency of the processing and diamond recovery circuits at the SRC.

ABOUT CH-7

The discovery of the CH-7 kimberlite was first reported on August 6, 2009. Diamond results for a 221 kilogram sample collected from surface material reported on October 5, 2009 showed a coarse diamond size distribution. The sample yielded 664 diamonds larger than the 0.075 mm sieve size including a 0.64 carat off-white, translucent octahedroid.

As reported on September 16, 2010, six core holes and two reverse circulation holes were drilled into CH-7 in an effort to determine its size potential. CH-7 is a multi-phase body with an estimated surface area of one hectare. Interpretation of the drill data suggests that there are two distinct lobes at CH-7, a north lobe, and a south lobe. The north lobe appears to consist of a single phase of coarse-grained olivine macrocrystic magmatic kimberlite that contains abundant indicator minerals and mantle xenoliths. The mini-bulk sample was collected from a portion of this phase that is exposed at surface. The south lobe is not exposed at surface and consists of volcaniclastic kimberlite with Paleozoic rock fragments, abundant indicator minerals and abundant mantle xenoliths. Samples collected from CH-7 by core and reverse circulation drilling have been sent to the SRC for caustic fusion analyses and results are expected by year-end.

The SRC is an independent laboratory that is accredited by the Standards Council of Canada to the ISO/IEC Guide 25 standard for diamond recovery by caustic fusion.

Mr. Peter Holmes, P. Geo., Peregrine's Vice President, Exploration, is a Qualified Person under NI 43-101 and is responsible for the design and conduct of the programmes carried out by the Company at Chidliak. Dr. Jennifer Pell, Peregrine's Chief Geoscientist, was the Company's Qualified Person for the sample processing and diamond recovery. Howard Coopersmith, an independent consultant to the diamond industry, was Peregrine's external Qualified Person for the sample processing and diamond recovery. Mr. Holmes, Dr. Pell and Mr. Coopersmith have reviewed this release and approve of its contents.

Source: Peregrine Diamonds Ltd.

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