Mountain Province Diamonds Buys Kennady Diamonds
Mountain Province owns a 49% interest in the Gahcho Kué diamond mine about 280 kilometers (km) northeast of Yellowknife in Canada’s Northwest Territories. De Beers Canada is the majority owner with 51% and is the operator. The mine reached commercial production in early March 2017 and will produce an estimated 54 million carats of rough diamonds over a mine life of 12 years.
Kennady Diamonds owns a 100% interest in the Kennady North diamond project, located immediately adjacent to the Gahcho Kué property. Kennady North hosts the Kelvin kimberlite, with indicated diamond resources of 13.62 million carats at an average grade of 1.6 carats/ mt and average value of $63/carat as estimated by a 2016 bulk sample, and the Faraday kimberlite cluster, with inferred resources of 5.02 million carats at an average grade of 1.54 carats/mt and average value of $98/carat as estimated by a 2017 bulk sample.
“The Kennady assets are a strong complement to Mountain Province’s interest in the Gahcho Kué project, significantly adding to our attributed resource base,” said Mountain Province Interim President and CEO David E. Whittle. “Kennady’s exploration efforts have been very successful, and we have high confidence in our ability to continue that success, not only through expanding the existing resources at Kelvin and Faraday but through the potential for further discoveries, not just in the Kelvin-Faraday corridor but elsewhere across the property.”
Kennady President and CEO Dr. Rory O. Moore said, “We are excited that our shareholders have the opportunity to benefit from the near-term cash flow of the world-class Gahcho Kué mine, while retaining exposure to the significant exploration upside on the current Kennady assets.”
The combined company will benefit by having free cash flow from Mountain Province to fund exploration on the Kennady assets. The boards of directors of both companies have approved the transaction and will recommend that their shareholders vote in favor of the transaction. The transaction is expected to close in April and is subject to customary deal protections, with a mutual break fee of C$6 million payable under certain circumstances.