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KENNADY DIAMONDS INC V.KDI

"Kennady Diamonds Inc. is a Canada-based diamond exploration company. It is engaged in the exploration, discovery, and development of diamond properties in Canada's Northwest Territories."


TSXV:KDI - Post by User

Post by loonietuneson Nov 17, 2017 10:47am
500 Views
Post# 26983756

Will Purcell-His Take

Will Purcell-His Take

Dermot Desmond and Dr. Rory Moore's Kennady Diamonds Inc. (KDI) lost nine cents to $2.70 on 7,000 shares. Kennady's stock, launched at 50 cents in mid-2012 as a spinoff from Mountain Province Diamonds Inc. (MPVD: $3.58), got as high as $8.74 late in 2013. Kennady and its sibling have been lagging this year on disappointing diamond prices achieved at Mountain Province's Gahcho Kue mine. Nevertheless, Kennady is planning another busy year at Kennady North, 10 kilometres northeast of Gahcho Kue, in the hope of adding more carats and finding new kimberlite pipes.

Dr. Moore, president and chief executive officer, says that Kennady is planning a winter exploration program that will include further delineation of the Faraday kimberlites to expand the resource potential of the project. (Apparently the nearby Kelvin pipe has already had all its potential converted into an inferred resource.) As well, Dr. Moore and his crew intend to drill a selection of the best untested targets along the Kelvin-Faraday corridor in the hope of discovering "new high-potential kimberlites."

Kennady Diamonds recently declared a maiden resource for Faraday 2 and Faraday 3, listing 1.39 million tonnes inferred averaging 2.24 carats per tonne at Faraday 2 and another 1.87 million tonnes at Faraday 3 averaging 1.01 carats per tonne, for a total of just over five million carats. The company had declared a resource at Kelvin, 2.5 kilometres to the southwest of the Faraday pipes, late last year, listing 8.5 million tonnes inferred at an average of 1.6 carats per tonne, or about 13.62 million carats.

The three pipes give the company 11.76 million tonnes averaging 1.59 carats per tonne, or about 18.65 million carats. That is short of the once-touted range of 13 million to 16 million tonnes, but the difference is partly contained within the Faraday 1 pipe, where the company lists a target tonnage of between 600,000 and 1.2 million tonnes that might reasonably be expected to add up to one million more tonnes and over two million carats to the tally. Dr. Moore believes there is additional potential within the existing pipes. He says that the additional strike added to Faraday 2 this summer was not included in the resource update. That rock, and the kimberlite in Faraday 1, he says, has the potential to materially increase the overall Faraday resource.

Dr. Moore is especially enthused about Faraday 1, given the "robust modelled diamond values" obtained this year. He points to the base-case value of $164 (U.S.) per carat and better yet, to the high-case estimate of $267 (U.S.) per carat. Unfortunately, rosy diamond valuations based on tiny parcels often go poof when larger parcels are obtained. The value of the Kelvin diamonds was last pegged at $63 (U.S.) per carat, based on a few thousand carats. At Faraday 3 the value was $75 (U.S.) per carat and at Faraday 2 it was a hefty $112 (U.S.) per carat, but those parcels weighed less than 460 and 730 carats respectively. (The rosy Faraday 1 valuation was based on just 76 carats.) In any case, Dr. Moore, with the financial backing of Mr. Desmond, will keep drilling next year to boost the scale of Kennady North.

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