January 18, 2006 

                      Core drilling Commences on Tli Kwi Cho (DO27)

DO-27 Kimberlite 

Kettle River has been informed by operator Peregrine Diamonds Ltd. that core drilling has commenced at the DO-27 kimberlite pipe and quotes their report as follows:

“The DO-27 pipe is part of the WO Diamond Project and is located 23 kilometres south-east of the Diavik™ diamond mine, N.W.T., Canada. The first of two core drill rigs, operated by Connors Drilling, began drilling on January 12^th, 2006 with the objective of collecting geological and geotechnical information in advance of large diameter, bulk sample drilling, which is scheduled to commence late January / early February, 2006.  

The WO Diamond Project comprises a total of 15,107 hectares and currently contains nine known kimberlite pipes, the largest of which is DO-27 which covers an area in excess of 9 hectares. A 151 tonne, mini-bulk sampling program conducted by Peregrine at DO-27 during 2005, revealed an average grade of 0.98 carats per tonne from five of six holes drilled (sample PDL-1). A sixth hole returned an average grade of 0.70 carats per tonne (sample PDL-2).  

As reported on August 29^th, 2005, these grades compare favorably with published data for kimberlite pipes at BHP Billiton's Ekati^TM Diamond Mine. The Annual Information Form of Dia Met Minerals, dated June 14, 2000, reported, as part of the feasibility study, an average grade for five of the Ekati^TM pipes of 1.09 carats per tonne. The average value was reported as US$84 per carat. 

Three independent valuations on the diamonds collected from the 2005 mini-bulk sample returned values of US$59 to $78 per carat for sample PDL-1. The average values combining both PDL-1 and PDL-2 ranged from US$53 to $67 per carat with the highest value diamond being a 1.85 carat, clean, white octahedron, valued at US$1,591 to $2,063. The valuations were actual primary producer sales values on the day of the valuation, not modelled valuations.  As bulk sample sizes increase, there may be a correlation with higher average diamond values as a proportionally larger population of larger, higher value diamonds may be recovered.  Modelling of the diamond size distribution and diamond values attempts to predict average diamond value in a larger sample. 

The bulk sample that Peregrine will collect this winter will be extracted from DO-27 using two, 24” diameter, reverse circulation (RC) drill rigs operated by Encore Drilling of Edmonton. The sample will be processed at BHP Billiton’s Ekati™ Diamond Mine Test Plant starting the second quarter of 2006. 

DO-18 Kimberlite 

In addition to the bulk sampling program which has commenced on DO-27, Peregrine is awaiting micro-diamond results from seven core holes drilled during the summer of 2005 on the nearby DO-18 kimberlite. DO-18 is in excess of 3 hectares in size, and located approximately 700 metres north of DO-27. Previous drilling at DO-18 returned encouraging micro-diamond results as high as 1.41 carats per tonne over 242 metres. The micro-diamond analyses from the holes drilled in 2005 are being performed by Saskatchewan Research Council Geo-analytical Laboratories in Saskatoon, and results are expected in February, 2006. In the event that results are encouraging, a mini-bulk sampling program will be conducted at DO-18 during the summer of 2006. 

Previous drilling and the results of a Falcon™ Gravity Survey previously flown by BHP Billiton in 2001 over DO-27 and DO-18 suggest that a third pipe may be located between the DO-18 and DO-27 kimberlites. Further core drilling is planned this year in the area between the DO-27 and DO-18 kimberlites to test this hypothesis.  Drilling is also planned on a number of other high-priority targets within the WO Diamond Project area that have coincident geophysical and geochemical anomalies. 

Peregrine holds a 54.475% interest in the WO Diamond Project, which includes both the DO-27 and DO-18 kimberlites, is the Project Operator, and holds 92.65% of the Diamond Marketing Rights. 

Pellatt Lake Project

Peregrine’s Pellatt Lake Project (”Pellatt”) comprises 29,262 hectares and is located immediately to the north-east of the Ekati™ mine block, and immediately north of the Hardy Lake leases of De Beers / Majescor where De Beers discovered 25 kimberlites, 17 of which are diamondiferous. Peregrine has completed a 3,878 line kilometre Falcon™ Airborne Gravity Gradiometer survey on Pellatt and conducted a number of follow-up ground geophysical and geochemical surveys that have confirmed the presence of several high priority targets which will be drill-tested starting in March 2006.  One diamondiferous kimberlite is known to exist on Pellatt which was discovered in 1997 and there has been no drilling on Pellatt since that time.

The Pellatt project is in part the subject of two option agreements with Dentonia Resources Ltd. and DHK Diamonds Inc. which allows Peregrine the option to earn up to a 75% interest in the properties under certain conditions.” 

Peregrine Diamonds Ltd. commenced trading on the TSX Venture Exchange today under the symbol PGD.

Kettle River owns one third of DHK Diamonds Inc. a private company.  This ownership represents a 6.67% contributing interest in the WO Project and a one third carried interest in the Pellatt Lake Project.  Further updates on the bulk sample and drilling will be released as results are available.  Kettle River currently has 10,785,611 shares issued.  Granted but not yet exercised are options for 450,000 exercisable at $0.50, subject to the vesting period and warrants to purchase 1,576,000 common shares at $0.75 and 75,000 at $0.25 resulting in fully diluted position of 12,811,611.