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RAPAPORT... Peregrine Diamonds Ltd. entered into an agreement to acquire all of the shares of Diamexstrat Botswana (DES Botswana), a private diamond exploration and development company, from Diamond Exploration Strategies (DES UK) Ltd. DES Botswana's primary assets include eight prospective diamond prospecting licenses, which cover 5,746 square kilometers and where modern diamond exploration techniques could result in kimberlite discoveries that were overlooked by previous techniques, Peregrine stated. In addition, three other areas have unresolved geophysical and kimberlitic indicator mineral anomalies with very good mineral chemistry. Many of the targets require only limited ground geophysical surveys in order to be drill ready. The purchase agreement transfers DES Botswana to Peregrine in consideration for a 1 percent gross overriding royalty to DES UK on all precious-stone mineral interests held at the time of closing and those which may be acquired in specific target areas. In addition, Peregrine will assume a $450,000 loan, which it advanced to DES Botswana. The agreement allows Peregrine to buy out the royalty provisions at various milestones. Peregrine can pay $2 million if within 60 days of the discovery of a diamondiferous kimberlite, as defined by confirmation of the presence of microdiamonds or recovery of macrodiamonds in drill core/percussion chips; or $5 million if within 60 days of delivery of pre-feasibility study; or $7.5 million if within 60 days of positive construction decision. If Peregrine decides to not pursue exploration on any of the licenses, the title for those licenses revert to DES UK and Peregrine shall be granted a 1 percent gross overriding royalty with the same buy-out provisions. As part of the transaction, DES UK will enter into a services agreement with Peregrine under which it will provide Botswana-based operational management. The transaction is expected to close on April 15. Tom Peregoodoff, the president and CEO of Peregrine, said, "This transaction is a significant milestone in the strategic development of the company. With this single transaction, we have become a significant diamond exploration player in Botswana. The principals of DES Botswana have over 60 years of combined diamond exploration experience in the country, most of that time with the De Beers Group. Using their extensive experience, they have compiled a county-wide data set that is unparalleled in its scope and depth. They have assembled, what we believe is, the most prospective land package for new diamond discoveries in Botswana. This is one of the most compelling diamond exploration opportunities that I have seen in many years. Exploration work is ongoing and we expect to be drilling kimberlite targets in 2015." Eric Friedland, Peregrine's executive chairman, said, "This transaction immediately gives Peregrine access to some of the world's most prospective diamond hunting ground. Botswana is the largest producer of diamonds in the world by value. It is true tier 1 diamond mine country as shown by such world class diamond mines as Orapa and Jwaneng. We believe there is tremendous diamond discovery potential in Botswana and the unique combination of the DES team with the Peregrine team gives us a real competitive advantage."
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