from Will Purcell
Patrick Evans's Kennady Diamonds Inc. (KDI), down 20 cents to $5.30 on 46,000 shares, has expanded its tonnage estimate at Kelvin, 10 kilometres northeast of Gahcho Kue in the Northwest Territories. The company now offers a "tonnage guidance" of between nine million and 12 million tonnes of kimberlite. It earlier projected Kelvin at between seven million and nine million tonnes. (A "tonnage guidance" is not a resource. It is a "target for further exploration" to the regulators, who insist that a resource estimate requires a sufficient amount of drilling, although in Mr. Evans's hands, the current estimate could easily be deemed a "target for further promotion.") Kennady's stock did not respond to the 20-per-cent increase in the tonnage projection, likely because Mr. Evans telegraphed the bump three weeks ago when several new drill intersections produced lengthy kimberlite hits north of the previously tested zone. Kennady's stock, which had been above $8 this summer, has been subdued since Mr. Evans delivered disappointing news -- if a Gahcho Kue-sized diamond grade can be considered bad -- in early October. (This was the first setback since he created Kennady North as a 50-cent spin-off from his Mountain Province Diamonds Inc. (MPV: $5.25) in 2012.) Kennady's 25-tonne mini-bulk test of Kelvin yielded 44.64 carats of diamonds larger than a 0.85-millimetre sieve, an average of 1.76 carats per tonne and nearly identical with the average at Gahcho Kue, where Mountain Province and De Beers Canada are building a billion-dollar diamond mine based on 35.4 million tonnes of kimberlite. The grade, however, is well below the 4.32 carats per tonne that a 4.3-tonne batch averaged in 2013, a result that included individual batch grades ranging as high as 11 carats per tonne. Mr. Evans avoided direct mention of those gaudy numbers but he said nothing to prevent investors from getting carried away by their own fantasies, a departure from his earlier efforts of ensuring that exploration results topped his predictions. As a result, the lower grade was merely in line with guidance, rather than his usual refrain that Kelvin had delivered results well beyond expectations. Mr. Evans will have a second chance to sound like a doting schoolmarm: Kennady has another 25 tonnes of kimberlite to test, thanks to its big new drill hits.