2007-05-08 16:51 ET - Street Wire

by Will Purcell

Dentonia Resources Ltd. and Kettle River Resources Ltd. will have a free ride drilling at Pellatt Lake this year, as Eric Friedland's Peregrine Diamonds Ltd. embarks on a busy exploration program. The property has a favourable address and it contains one diamondiferous kimberlite, but the partners think at least a few more bodies remain undiscovered, based on preliminary exploration near the heads of some unexplained mineral trains.

The plan

Dentonia originally held a 100-per-cent interest in seven of the Pellatt Lake claims and a 36-per-cent share in three others through DHK Diamonds Inc. Kettle River held a 36-per-cent interest in the latter three claims as well, with Horseshoe Gold Mining Inc. holding the remaining 28 per cent. Peregrine says it completed the spending requirements to earn a 51-per-cent share of the project and it can add a further 14 per cent by completing a 100-tonne test of any find.

Peregrine now has an array of targets worthy of drilling and it plans to test the features this spring and summer. The tentative schedule calls for the Pellatt partners to test at least 10 targets with a least one hole, in a program likely to cost about $1-million. Peregrine will foot the bill at Pellatt. That is fortunate, as the companies share the DO-27 project as well, and Mr. Friedland's expensive bulk sample is chewing up the treasuries of his lesser partners.

A modest drill program in 2006 turned up one new kimberlite about 150 metres west of the diamondiferous PL-01 body. That find is likely to get a second look, as will the surrounding area. Peregrine and its partners now think the new find may be a part of a dike with a considerable strike length.

The DHK partners acquired the Pellatt ground several years ago but accomplished little. Peregrine has been busier since it arrived in 2004, spending just over $1-million on the project so far. During the 1990, Kennecott Canada Exploration Inc. spent well over $1-million on exploration, which resulted in the discovery of the PL-01 body.

The encouragement

The Pellatt Lake property has a favourable address, lying just northeast of Lac de Gras, about 40 kilometres northeast of the Ekati mine and about 50 kilometres northeast of Diavik. The property lies on the northeastern fringe of the huge cluster of pipes that surrounds Lac de Gras and contains at least a dozen potentially economic pipes. Several finds by De Beers Canada Inc. near Hardy Lake extended the pipe cluster right to Pellatt's southern border.

The PL-01 body is diamondiferous, although the initial diamond counts were insufficient to interest Kennecott. The exploration arm of Rio Tinto PLC drilled three holes into the complex body and pulled 63 diamonds from about 142 kilograms of kimberlite. Nine of the diamonds were longer than 0.5 millimetre in one dimension.

The small size of the body was also deemed discouraging, although Kennecott did manage a 34-metre intersection in one of its three holes. Peregrine's subsequent find adds new intrigue to the story and if the Pellatt partners can extend the strike length of the bodies, larger tests could be warranted.

The Pellatt Lake property arguably lies along the line of pipes containing the four rich Diavik kimberlites and at least four higher-grade pipes on the Ekati property. The PL-01 find is just 30 kilometres north-northeast of Ekati's Jay and Cardinal kimberlites, which lie at the northeasternmost end of the Diavik line of pipes. Those bodies have grades between one and two carats per tonne and the Jay pipe is one of the largest kimberlites in the North.

Dentonia closed up 2.5 cents to 13.5 cents Monday on 367,000 shares. Kettle River closed unchanged at 21 cents on 10,000 shares.