Peregrine increases ownership in Chidliak diamond project to 100%

Peregrine Diamonds Ltd. (“Peregrine” or “the Company”) is pleased to report that it has entered into a binding agreement with BHP Billiton to purchase BHP Billiton’s 51 percent participating interest in the 8,580 square kilometre Chidliak diamond project (“Chidliak” or “the Project”), Baffin Island, Nunavut, Canada.

The purchase gives Peregrine 100 percent ownership of Chidliak, exposing its shareholders to all the benefits from the diamond discoveries to date and the Project’s exploration potential. Under the terms of the agreement, Peregrine will pay a total of CAD$9,000,000 over a period of three years, and grant BHP Billiton a two percent royalty on any future mineral production from Chidliak. Peregrine has the right to match any offer by a third party to purchase any of the royalty, should BHP Billiton decide to sell. In addition, as part of the transaction, Peregrine has acquired BHP Billiton’s Canadian regional diamond exploration database and BHP Billiton has agreed to extinguish Peregrine’s royalty obligations and BHP Billiton’s diamond marketing rights on certain Canadian mineral properties in which Peregrine has an interest.

Mr. Eric Friedland, CEO of Peregrine, commented, “BHP Billiton’s decision to review its diamonds business has presented Peregrine with an excellent growth opportunity. A 100 percent stake in Chidliak, one of the world’s leading diamond exploration projects, at a time when diamond supply shortfalls are on the horizon and world-wide demand for diamonds continues to grow, offers us complete flexibility on how this project will be developed in order to maximize shareholder value. I believe that BHP Billiton’s acceptance of a royalty speaks volumes about Chidliak’s potential to become a significant royalty-generating diamond mine.”

“In addition, the acquisition of BHP Billiton’s Canadian regional diamond exploration database could significantly increase our chances of discovering the next new Canadian diamond district. All of us at Peregrine would like to thank BHP Billiton for their substantial investment in Chidliak and for their technical and operational input and faith in Peregrine as operator. We view Chidliak as a shining example of how a major and junior company can work together to add real value to a mineral project. We now look forward to advancing Chidliak to become Baffin Island’s first diamond mine.”

To view a copy of the press release issued by BHP Billiton today please select the following link: http://www.bhpbilliton.com/home/investors/news/Pages/Articles/Sale-Of-Interest-In-Chidliak-Exploration-Project.aspx.

TERMS OF THE PURCHASE AGREEMENT

• 100 Percent Ownership. BHP Billiton will transfer its entire 51 percent participating interest in Chidliak to Peregrine, giving the Company 100 percent ownership of the Project complete with 100 percent of the diamond marketing rights.
• Closing. Peregrine and BHP Billiton agree to close the transaction on or before January 31, 2012.
• Payments. CAD$9 million dollars as follows: $1.5 million at closing and $2.5 million on each of January 31, 2013, January 31, 2014 and January 31, 2015.
• Royalty. Peregrine will grant BHP Billiton a two percent royalty on mineral production from Chidliak. Peregrine has the right to match any offer by a third party to purchase any of the royalty, should BHP Billiton decide to sell.
• Regional Diamond Exploration Database. Peregrine acquires exploration data and archived heavy mineral concentrates for sediment samples that were collected by BHP Billiton during regional diamond exploration programs inCanada.
• Termination of Royalties and Diamond Marketing Rights. The following Peregrine obligations to BHP Billiton will be terminated:
• 2 percent royalty and certain diamond marketing rights on 62% of claims on the Nanuq property,Nunavut
• 2 percent royalty on the TW property, NWT
• 0.7 percent royalty on certain portions of the WO and Lac de Gras East properties, NWT
• 1 percent royalty and certain diamond marketing rights on thePellattLakeproperty, NWT

2012 CHIDLIAK PROGRAM

As a result of Peregrine’s significant strategic move to increase its interest in Chidliak to 100 percent, the Company will now undertake a comprehensive analysis of the 2012 program to determine how to most efficiently advance the Project considering the best interests of Peregrine shareholders. At this time, continuing preparations for the 2012 bulk sampling program will be put on hold until a final decision on the path forward is made in January, 2012.

For further information, please contact Mr. Eric Friedland, CEO, Mr. Brooke Clements, President, Mr. Mike Westerlund, Vice President, Investor Relations and Corporate Communications or Peregrine Diamonds Investor Relations, at  604-408-8880 or at investorrelations@pdiam.com.

Images of exploration at the Chidliak diamond project, by Peregrine Diamonds Ltd.