January 12, 2016

Peregrine Reports CH-7 Bulk Sample Diamond Grade of 0.88 Carats per Tonne

Peregrine Diamonds Ltd. ("Peregrine" or "the Company") (TSX:PGD) is pleased to report that a 814.0 dry tonne bulk sample from the CH-7 kimberlite pipe on Peregrine's 100 percent owned Chidliak Diamond Project ("Chidliak" or "the Project") in Nunavut, Canada, returned an overall diamond grade of 0.88 carats per tonne ("cpt"). A total of 717.65 carats of commercial-size (+1.18 mm) diamonds was recovered, including 53 diamonds one carat or larger and 183 diamonds over 0.50 carat in size. The largest gem quality diamond recovered was a 5.33 carat white/colourless octahedron with no inclusions. Significant diamond breakage was observed, as more fully described below, including a gem quality diamond that may have originally been larger than six carats. A substantial portion of the parcel is gem quality diamonds and a population of colored stones is present. Processing of the entire bulk sample was performed by the Saskatchewan Research Council ("the SRC"). An independent diamond valuation of the 717.65 carat parcel will be completed this quarter in Antwerp, Belgium by WWW International Diamond Consultants Ltd ("WWW").

Diamonds of special note described by the SRC include the following:

• A 5.33 carat white-colourless transparent octahedron with no inclusions
• A 5.02 carat off-white transparent octahedron with minor inclusions
• A 4.40 carat off-white transparent macle with minor inclusions
• A 2.01 ct white-colourless, transparent octahedron with no inclusions
• Two yellow transparent octahedra, one at 0.52 carat, the other at 0.5 carat

Photos of representative diamonds from the bulk sample are available at http://www.pdiam.com/s/PG_2015-CH-7-bulk.asp.

BULK SAMPLE INFORMATION
The details of the bulk sample collection from CH-7 were reported on April 23 and May 14, 2015. The following table summarizes diamond results to date from the CH-7 kimberlite for diamonds in the plus 1.18 mm size category as is typical in a mining scenario. During diamond recovery and sorting, a high level of diamond breakage was identified. See "Diamond Breakage" below for a detailed explanation.

UnitSample Weight
(dry tonnes)Numbers of Diamonds According to Sieve Size
Classification (mm)TotalCarats
(+1.18 mm)Grade (cpt)
(+1.18 mm)+1.18+1.7+2.36+3.35+4.75+6.7-1.70-2.36-3.35-4.75-6.70

KIM-2	478.5	2200	953	393	118	13	3	3680	363.66	0.76
KIM-3	145.2	741	348	130	45	8	1	1273	135.98	0.94
KIM-4	144.6	1098	473	166	31	6	2	1776	157.93	1.09
KIM-5*	45.7	389	165	62	12	5	0	633	60.08	1.31
TOTAL 2015 Bulk Sample	814.0	4428	1939	751	206	32	6	7362	717.65	0.88
KIM-1**	47.2	170	112	54	16	1	1	354	47.29	1.00

*Includes 10.11 carats from post-grease tails audit, performed by caustic fusion assay
**Result for mini-bulk sample from KIM-1 surface trench. Previously reported on November 22, 2010, and re-stated here at +1.18 mm sieve

Mr. Tom Peregoodoff, Peregrine's President and CEO said "Once again the Peregrine team has delivered an excellent outcome. We are very excited with the results of the 2015 bulk sample from CH-7. These results continue to confirm the outstanding diamond resource potential of the Chidliak project. Transportation of the parcel to Antwerp is underway, and we look forward to the receipt of the diamond valuations, expected later this quarter. Preparation of the maiden CH-7 resource statement and revised CH-6 resource statement has commenced and we expect to complete this work in late March."

The entire bulk sample was processed by Dense Media Separation ("DMS") at the SRC, which is accredited to the ISO/IEC 17025 standard by the Standards Council of Canada as a testing laboratory for diamond analysis. Large-diameter reverse circulation ("RC") drill cuttings were screened during acquisition at Chidliak at a 1.13 mm square-mesh sieve where all material below 1.13 mm reported to the sump on site. The SRC DMS processing facility is rated at five tonnes per hour and was outfitted with a 1.0 x 12 mm slotted feed preparation screen and a back-end high pressure grind roll ("HPGR") recrush circuit. Diamond recovery from concentrates proceeded through a twin stage X-ray sorting machine followed by a grease table finish and double-checked by hand sorting. Diamond recoveries remained within normal parameters, with one notable exception: unusual grease-repellant coatings are present on diamonds from lateritized KIM-5 material therefore causing the diamonds to not stick to grease. Caustic fusion audits completed on KIM-5 grease table tailings returned 10.11 carats of diamond, largely in smaller size categories. Additional audits of the 2015 bulk sample materials are being considered.

As an element of Peregrine's Quality Assurance/Quality Control program, 266 laser-marked natural diamond tracers ranging in size from 0.09 to 1.62 carats were added to the bulk sample bags during sample collection, with 14 additional tracers inserted at the DMS processing facility. All 280 tracers were recovered as whole, unbroken stones during sorting at the SRC, a 100 percent recovery rate.

The size distribution, shape and colour of the 53 diamonds one carat in size or larger from the combined 717.65 carat parcel were described by the SRC as summarized in the following three tables.

SIZE DISTRIBUTIONDIAMOND SHAPEDIAMOND COLOURSize Class (Carats)Number of Stones

Octahedral	45%	White-Colourless	23%
≥ 1 to 2	37	Other Shapes*	55%	Off-White	32%
≥ 2 to 3	9	Unbroken	55%	Yellow	4%
≥ 3	7	Broken or Fragmented	45%	Grey and Brown	41%

*Shapes other than octahedral including macles, cubes, aggregates, fragments and irregular stones.

Mr. Howard Coopersmith, Peregrine's Independent Qualified Person for dense media separation ("DMS") processing and diamond recovery stated, "A mix of diamonds are seen in the current CH-7 diamond assortment, from pristine gems to industrial qualities. White/colourless to off-white clean octahedra are common, often somewhat distorted or modified. Resorption is minor, giving the parcel a significant proportion of high value sawables extending into the largest sizes. A small population of clean gem yellow octahedra may prove important."

DIAMOND BREAKAGE
During diamond recovery and sorting, a high level of diamond breakage was identified. The Company commissioned Dr. Tom McCandless, Peregrine's Independent Qualified Person for diamond breakage studies and a leading world expert in diamond morphology and breakage analysis, to complete a breakage analysis of the diamonds recovered. Breakage assessment of 692 carats of diamond representing all four geological units in the 2015 CH-7 bulk sample reveals that 75% to 90% of the diamonds were damaged, well over double what is typically found for large-diameter RC drill programs. Efforts to reconstruct whole, +0.66 carat diamonds from visually comparable fragments within single process units were partially successful in 43 of 74 attempts, and lead to the conclusion that the breakage observed has resulted in a 10% to 40% loss of carat weight due to minus 1.13 mm diamond fragments reporting to the sump during screening of the bulk sample at Chidliak. The initial data collected indicate that the diamond breakage occurred predominantly during RC drilling. The breakage is observed to have specifically shattered high-quality gem or near-gem stones with few internal flaws and which would have occurred in the two carat and greater size ranges. The largest partially reconstructed stone of gem quality is estimated to have weighed over six carats based on observations of the diamond fragments. A comprehensive review is underway to identify and eliminate the source of the breakage prior to any further use of the large-diameter RC drill which remains on site.

Dr. Tom McCandless stated, "While a certain amount of diamond breakage is to be expected in any large-diameter RC drilling program, the level of breakage observed in this bulk sample is abnormally high. Through the work completed I can conclude that the reported grade of 0.88 carats per tonne is conservative, and a higher grade is to be expected in a mining scenario. Further, it is my belief that a number of gem quality diamonds two carats or larger have been shattered, which will have a negative impact on the valuation of this parcel. However, diamond price modelling that takes this into account should result in an increased model price valuation that would be more realistic in a mining scenario."

Mr. Howard Coopersmith, further stated "It is not unusual to see diamond breakage due to sample collection by reverse-circulation drilling. In this bulk sample many freshly broken diamonds are present; this issue should be eliminated in a mining scenario."

In 2015, five core holes were completed at CH-7 in order to further constrain geological and grade continuity within the kimberlite. Four of the five geologic units were sampled representing over 94% by volume of the CH-7 pipe. The caustic fusion assay results from this program were reported on November 17, 2015. The interpretation of these microdiamond results support an improved diamond content for the entire kimberlite pipe.

The bulk sample results have now confirmed this previous interpretation of improved diamond content for the KIM-2, KIM-3 and KIM-4 geologic units. The correlation between the microdiamond results for KIM-5 previously reported and the bulk sample diamond grade result herein reported are inconsistent. The exact cause of this inconsistency is under review. Volumetrically, KIM-5 represents less than 4% of the CH-7 kimberlite and is a heavily weathered, lateritized unit which is geologically variable and contains on average 40% moisture. As noted above, the diamonds from this unit have an unusual grease repellant coating. These factors, or a combination of them, could account for the inconsistency between microdiamond and bulk sample grades.

Dr. Herman Grütter, Peregrine's Vice President Technical Services said, "I am delighted that CH-7 displays reasonably consistent diamond grades close to 1 carat per tonne that would make for predicable resource extraction scenarios. The superb correlation between previously reported microdiamond results and bulk sample grades reported for KIM-2, KIM-3 and KIM-4 is especially significant because these three units occupy approximately 90%-94% by volume of the known 3.72 to 6.01 million tonne Target for Further Exploration ("TFFE") for the CH-7 kimberlite pipe."

DIAMOND VALUATION
An independent diamond valuation of the current 717.65 carat and previous 47.29 carat diamond parcels will be completed by WWW this quarter in Antwerp, Belgium. WWW performs the Canadian Government's diamond valuations for the four producing diamond mines in Canada. In addition to estimating the spot market value of the diamond parcel, WWW will also complete a diamond price model for a production scenario that corrects for the significant breakage observed in the current parcel and the revenue impact larger stones would have on potential revenue from a mine. These larger stones are typically underrepresented at this scale of bulk sampling and can have a substantial positive impact on mine revenue. Prior to the valuation, the diamonds will be cleaned by deep acid boiling as is customary.

CH-7 KIMBERLITE PIPE
The CH-7 kimberlite is located approximately 15 kilometres southeast of CH-6. The pipe was discovered in 2009 and since then a total of 4,960.2 metres of core drilling, 675.7 metres of small-diameter RC and 1,212.1 metres of large-diameter RC drilling have been completed. The pipe is a steep-sided, southwest-plunging kimberlite body that comprises five geologic units, has a surface expression of approximately one hectare, and is estimated to comprise 3.72 to 6.01 million tonnes of kimberlite down to 290 metres depth (as reported January 26, 2015). The tonnage estimate is considered as a TFFE and is conceptual in nature, as there has currently been insufficient exploration to define a Mineral Resource at CH-7 and it is uncertain if further exploration will result in it being delineated as a Mineral Resource.

In 2010, a 47.2 dry tonne mini-bulk sample was collected from surface in the KIM-1 unit. Results from this sample established a benchmark diamond size frequency distribution curve corresponding to a 1.04 carat per tonne ("cpt") grade (+0.85 mm diamonds) for this kimberlite (reported November 22, 2010).

2016 DIAMOND RESOURCE DEVELOPMENT PROGRAM UPDATE
The development of a revised Inferred Mineral Resource Statement for CH-6, incorporating the 2015 microdiamond results reported on November 17, 2015, is progressing. As reported, the CH-6 microdiamond results support continuity of the 2.58 carat per tonne ("cpt") resource grade and the potential to add an additional 1 million to 1.2 million tonnes, or an additional 2.5 million to 3.1 million carats, to the existing 8.57 million carat Inferred Resource at CH-6 that occurs shallower than 250 metres of depth. This tonnage is currently considered as a TFFE, which is conceptual in nature and it is uncertain whether the 2016 Diamond Resource Development Program will result in this being delineated as a Mineral Resource.

The development of a maiden Inferred Resource statement for CH-7, incorporating the bulk sample result herein reported, together with the 2015 microdiamond results reported on November 17, 2015, has begun with completion expected in late March.

Peregrines' plan for the Phase 1 diamond resource comprises the updated Inferred Resource statement for CH-6, and the maiden Inferred Resource statement for CH-7. The Phase 1 diamond resource statement is expected by March 31, 2016 and will be included in a planned Preliminary Economic Assessment ("PEA"), scheduled for the second quarter of 2016.

Mr. Howard Coopersmith, a Professional Geologist and an independent consultant to the diamond industry, is Peregrine's independent, external Qualified Person for sample processing and diamond recovery. Dr. Tom McCandless, a Professional Geologist and an independent consultant to the diamond industry, is Peregrine's independent, external Qualified Person for diamond breakage analysis. Dr. Herman Grütter, Peregrine's Vice President, Technical Services, is a Qualified Person and is responsible for the design of the Diamond Resource Development Program at Chidliak. Dr. Jennifer Pell, Peregrine's Chief Geoscientist, is a Qualified Person and is responsible for logging Chidliak kimberlite core and collection of representative microdiamond samples. Mr. Alan O'Connor, Peregrine's Program Manager, Chidliak Resource Evaluation, is a Qualified Person and is responsible for the design and conduct of bulk sampling programs at Chidliak. Ms. Catherine Fitzgerald, Project Resource Geologist is a Qualified Person and is responsible for geological modeling of CH-6 and CH-7.

Mr. Coopersmith, Dr. McCandless, Dr. Grütter, Dr. Pell, Mr. O'Connor and Ms. Fitzgerald have reviewed this release and approve of its contents