Kennady Diamonds Releases Diamond Recovery Results for Kelvin

Kennady Diamonds’ (TSXV:KDI) share price rose as high as $3.62 early Wednesday afternoon after the company released diamond recovery results for a 2015 bulk sample from the Kelvin kimberlite, located at its Northwest Territories-based Kennady North project. That’s a 17.5-percent rise from the previous day’s close. 
According to Patrick Evans, CEO of Kennady, the 443-tonne bulk sample was recovered over the course of three years of drilling and sampling at Kelvin. He said that the diamond recovery results “confirm that the Kelvin kimberlite has the potential to host a high-grade diamond resource.”

Bulk sample details

All in all, a total of 16,247 diamonds totaling 892.86 carats were recovered from the bulk sample, with the overall grade coming in at 2.02 carats per tonne. Those figures exclude 14.76 carats recovered from overburden samples and 1.65 carats recovered from granulatory samples. Thirty-five diamonds bigger than 1 carat were recovered from the bulk sample. The five largest are as follows:

• 4.22 carat white/colorless, transparent macle with no inclusions
• 3.95 carat brown, transparent aggregate with inclusions (recovered from overburden samples)
• 2.79 carat light brown, transparent aggregate with minor inclusions
• 2.63 carat white/colorless, transparent octahedral with inclusions
• 2.59 carat white/colorless, transparent dodecahedron with no inclusions

Speaking further about the bulk sample, Evans said that Kennady is “particularly pleased” with its grade as Kelvin’s southeast lobe is “more diluted” — a mini bulk sample taken from Kelvin’s north lobe in 2014 graded slightly higher at 2.59 carats per tonne. In a note put out Wednesday, Haywood Securities also praises the grade of the recent bulk sample. “[W]e emphasize the higher grade nature and large stone distribution of diamonds within Zones A and B,” the firm states. The bulk sample was divided into three zones overall.

Next steps for Kennady Diamonds

The next milestone at Kelvin will be the completion of a valuation for the bulk sample, an important step in determining whether the project is economic. Kennady states in Wednesday’s release that WWW International Diamond Consultants will begin work on the valuation in Antwerp in September; the company will also put together size frequency and distribution and revenues models. That work should wrap up in October.
Dundee Capital Markets said in its own Wednesday note that it “expect[s] modeled values to be in the same range as the nearby (and likely related) Gahcho Kue kimberlites, which are in the $100-$138/ct range.”
The company also plans to release a NI 43-101 resource estimate for Kelvin by the end of 2015, and will use the results of the bulk sample plus “other results collected to date” to put it together. According to Haywood, the company “is aiming to identify a resource of 12 to 15 million tonnes grading 2 and 2.5 carats per tonne along the Kelvin-Faraday kimberlite corridor.” Dundee’s outlook is similar — it sees Kennady “outlin[ing] a resource of 11.4MMt at 2 cpt.”

More drilling is planned for 2015 as well. Kelvin is one of just four known kimberlites located at Kennady North, with the others being Faraday, MZ and Doyle. To date, work has focused heavily on Kelvin and to a lesser extent on Faraday, but during the second half of the year, Kennady plans to drill not only at Kelvin and Faraday, but also at MZ.
At close of day Wednesday, Kennady’s share price was sitting at $3.56, up 12.3 percent. Dundee has a “buy” rating on the stock and a price target of $3.17. Haywood has not given Kennady a rating.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.