KENNADY DIAMONDS INC V.KDI

Valuing KDI based on what we know today:

[roughdiamonds]

Points to remember:

• Kelvin is open ended - so the tonnage is expected to grow in size as they track the kimberlite further north west - this should add further value
• Kelvins North Lobe has a higher expected concentration of carats that will bring up the carats per tonne for Kelvin to around 2.4 for the whole of Kelvin.
• This diamond valuation was done against a very pessimistic backdrop at price levels not seen since 2010 and as a matter of fact these valuation are broadly similar to where GK was back in 2010/2011......a great precident
• Even using $70 modelled revenue per carat (which ignore larger stones values) at 2.4 carats per tonne we have revenue (non-escalated from current depressed levels with a great longer term supply/demand backdrop) of circa $170 per tonne versus costs of extraction of around $60 per tonne. There is $110 of margin per tonne to play around with........
• KDI has many moving parts. We know can see that the mine is economical even at this early stage and we have not yet defined the full extent of kimberlites present. The compnay has no yet found the source of the kimberlites...... 
• The company is fully funded for 2 years and complete the work required to fully maximise shareholder value.
  

  Kennady Diamonds
  		Tonnage	Grade Per Tonne	Revenue Per Carat		Number of Shares		Gross Value per Share		Fair Value Mkt Cap (10% of gross in situ value)		Fair Value per share
  Kelvin		10,000,000	2.4	70		46906790		1680000000		168,000,000		3.58
  Cash per share						46906790		48000000		48,000,000		1.02
  Faraday et al		5,000,000	2.4	70		46906790		840000000		84000000		1.79
  Total		15,000,000	2.4	70		46906790		2,568,000,000		256,800,000		6.40