Peregrine Closes Option Agreement and $2.5-Million Private Placement With De Beers

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/11/12 -- Peregrine Diamonds Ltd. ("Peregrine" or "the Company") (TSX: PGD) is pleased to announce the closing of the option and subscription agreement ("the Option") between the Company and De Beers Canada Inc. ("De Beers") as announced on September 5, 2012. As part of the closing, De Beers has completed the $2.5-million private placement with Peregrine priced at $0.75 per unit, for an aggregate of 3,333,333 units. Each unit consists of one common share and one-half share purchase warrant with each whole warrant entitling De Beers to buy a common share in Peregrine for $2.00 per share for a period of 24 months. In addition, De Beers is required to make the January 31, 2013, $2.5-million payment due to BHP Billiton Canada Inc. ("BHP Billiton") pursuant to Peregrine's agreement to purchase BHP Billiton's 51 percent interest in the Chidliak diamond project ("Chidliak" or "the Project") as announced on December 20, 2011.

De Beers now has the exclusive right until December 31, 2013 to enter into an earn-in and joint venture agreement ("the Joint Venture") with Peregrine on a 50.1 percent De Beers / 49.9 percent Peregrine ownership basis, with De Beers being the operator of Chidliak, which is located on Baffin Island, Nunavut, Canada.

Under the terms of the Joint Venture, De Beers will be required to invest $58.5-million into Chidliak within five years of entering into the Joint Venture to earn its 50.1 percent interest in the Project (the "Earn in Point"), with a minimum expenditure requirement of $37-million. De Beers will also be required to sole finance all work at Chidliak from the Earn in Point until the completion of a National Instrument 43-101 compliant bankable feasibility study ("BFS"), inclusive of appropriate environmental impact studies necessary for evaluating the feasibility of commercial diamond production. Peregrine will reimburse De Beers 49.9 percent of all Chidliak costs in excess of $58.5-million, the point at which De Beers has earned its 50.1 percent interest, to completion of the BFS. Reimbursement will consist of an aggregate of $25-million payable in four escalating staged payments at certain milestones beginning with the approval by the participants of the completed BFS and ending with the completion of mine construction, with the balance payable from 66 percent of Peregrine's attributable aftertax cash flow from a diamond mine at Chidliak.

Mr. Eric Friedland, Peregrine's CEO, said, "The closing of the Option with De Beers is an important step on the road to what we believe will be Baffin Island's first diamond mine. We are confident that Chidliak is the world's premier advanced stage diamond exploration project and De Beers' commitment of $5-million for their Option is a serious expression of their belief in Chidliak and Peregrine's management. De Beers has already completed technical due diligence on Chidliak and the current focus is on developing the strategy to advance the Project. The agreed material terms of the Joint Venture provide a clear financial and technical path that could lead to successfully proving up, financing, building and operating a diamond mine in Canada's North. We are pleased to welcome De Beers as our new partner along with their 124 years of unrivaled diamond exploration, development, mining and marketing experience."

Mr. Tom Peregoodoff, Peregrine's Executive Vice President, Business Development, said, "Within 24 hours of signing the Option, De Beers had a 5 member team of senior people visiting Chidliak, Iqaluit and Pagnirtung, a sign of their commitment to the Project. Our respective technical teams are engaged, and planning for future programs is underway. Under the potential Joint Venture we will ensure that the design and execution of all work programs take full advantage of the extensive diamond experience De Beers brings to the partnership and Peregrine's many years of successful diamond exploration in Canada."

About Peregrine Diamonds

Peregrine Diamonds is a diamond exploration and development company focussed on Canada's North. Peregrine has discovered two new diamond districts in Nunavut, Nanuq in 2007 and Chidliak in 2008. At its 72 percent owned, nine hectare DO-27 kimberlite in the Northwest Territories, located only 27 kilometres from the Diavik Diamond Mine, a NI 43-101 compliant mineral resource of 18.2 million carats of diamonds in 19.5 million tonnes of kimberlite at a grade of 0.94 carats per tonne, which is open at depth, was confirmed in 2008. At its 100 percent-owned Chidliak project, located 120 kilometres from Iqaluit, the capital of Nunavut, the Company has discovered 61 kimberlites to date, and is preparing to collect the first bulk samples from up to 6 kimberlites that exhibit economic diamond mining potential. Peregrine also continues to evaluate earlier stage diamond exploration projects it controls in Nunavut and the Northwest Territories.

Forward-Looking Statements: This news release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements relating to exercise of the option to joint venture by De Beers, the proposed exploration programme, funding availability, anticipated exploration results, resource estimates and future exploration and operating plans are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements and, even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, uncertainties relating to the exercise of the option to joint venture by De Beers, availability and cost of funds, timing and content of work programmes, results of exploration activities, interpretation of drilling results and other geological data, world diamond markets, future diamond prices, reliability of mineral property titles, changes to regulations affecting the Company's activities, delays in obtaining or failure to obtain required project approvals, operational and infrastructure risk and other risks involved in the diamond exploration business. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to their inherent uncertainty.

Contacts:

Peregrine Diamonds Ltd.

Mr. Eric Friedland

CEO

604-408-8880


Peregrine Diamonds Ltd.

Mr. Brooke Clements

President

604-408-8880


Peregrine Diamonds Ltd.

Mr. Tom Peregoodoff

Executive VP, Business Development

604-408-8880


Peregrine Diamonds Ltd.

Investor Relations

604-408-8880
investorrelations@pdiam.com
www.pdiam.com