Kennady North yields promising results

Kennady Diamonds Inc. is wrapping up what its management describes as a very successful 2013 exploration season at its Kennady North Project located immediately north and west of the Gahcho Kué Joint Venture where De Beers Canada (51 percent) and Mountain Province Diamonds Inc. (49 percent) in Northwest Territories about 280 kilometers (174 miles) east-northeast of Yellowknife.

The Gahcho Kué JV is currently working to develop the world's largest and richest diamond mine.

The 13 leases and claims covering about 12,356 hectares (30,532 acres) next door at Kennady North could provide another important source of Canadian diamonds.

Considered highly prospective, the Kennady North project hosts three known kimberlites -Kelvin, Faraday and Hobbes (two of which are diamond-bearing), discovered between 2000 and 2003.

A 2011 airborne gravity survey flown by Fugro Airborne Surveys identified 106 geophysical anomalies, of which 39 are considered high-priority targets as they resemble the signatures of known kimberlite bodies in the Kennady Lake region.

Mountain Province spun out the Kennady North project in a separate company, Kennady Diamonds, in July 2012 to follow up on the anomalies.

Aggressive 2013 program

After encouraging 2012 exploration highlighted by the recovery of 444 diamonds from the Kelvin kimberlite and 70 diamonds from the Faraday kimberlite, the explorer completed a round of ground geophysics in February, including ground gravity and horizontal‐loop electromagnetic surveys over the Kelvin‐Faraday kimberlite corridor and then undertook a 5,000‐meter winter drill program in March using results of the ground geophysics work.

During the winter drill program, kimberlite was intersected in 24 out of 26 infill drill holes, with intersects of up to 100 meters. Interpretation of the drill results suggests that the Kelvin and Faraday kimberlites should be treated separately. Both kimberlites appear to have a strike length of more than 1 kilometer (0.62 mile) trending southwest to northeast.

A 1.1 metric-ton sample collected during the winter drilling returned an exceptional sample grade of 8.44 carats per metric ton. The largest three diamonds recovered were a 2.48 carat off-white transparent octahedral, a 0.90 carat off-white transparent irregular, and a 0.75 carat off-white transparent octahedral.

Kennady Diamonds Sept. 18 said in further analysis, 110 Kelvin diamonds larger than 0.85 millimeters were recovered from 16 different drill holes across roughly a 1-kilometer (0.62 mile) strike of the Kelvin kimberlite. Also, 26 Faraday diamonds larger than 0.85mm were recovered from five different drill holes in separate locations at the Faraday kimberlite. The three largest diamonds described above were also recovered from three different drill holes at the Kelvin kimberlite. The commercial-size diamonds from the Kelvin kimberlite had a sample grade of 7.24 cpt, while the commercial-size Faraday diamonds graded 9.93 cpt.

"Based on these results, it is apparent that both the Kelvin and Faraday kimberlites host 'commercial' size diamonds across the length, breadth and depth of the kimberlites rather than being concentrated in particular areas of the kimberlites, the company observed.

Management also said recovery of diamonds of this size and quality from a 1.1-metric-ton sample was "very encouraging."

But one diamonds industry analyst, posting his reaction online, called the results, "HUGE!"

"I know it sounds like 'old news,' but these grades are for the most marketable diamonds, and the high grades were still maintained! What is particularly important for Kelvin is that the diamonds above 0.85mm were from16 borings located over the full 'length and breadth' of the 1 kilometer strike length of Kelvin! Faraday's five borings were also spread out on the strike length of this second dyke. This information gives me more confidence that the high grades have the very real possibility of being maintained with the summer 2013 samples," the analyst added

Encouraging drill results

This summer, the company's drill program focused mainly on infill drilling along the Kelvin‐Faraday kimberlite corridor to further define the Kelvin and Faraday kimberlites to a level sufficient to prepare the first resource statements for Kennady North, as well as drill testing newly identified geophysical targets within the corridor.

Fourteen out of the 15 Kelvin infill and step-out drill holes intersected kimberlite during the current 2,500-meter summer drill program enabled the company to recover more than three metric tons of kimberlite from about 3,000 meters of drilling.

Drill holes KDI-13-044 and KDI-13- 045 were drilled some 100 meters from Kelvin Lake and more than 300 meters from the main Kelvin kimberlite. Based on the lengths of the kimberlite intersects, it is believed that these holes define the north-west limit of the Kelvin kimberlite emplacement.

When the company's 3,848-meter summer drill program concluded, drill testing of three geophysical targets commenced at the south end of Faraday Lake. Drilling of these targets was expected to be completed within 10 days.

The company reported Sept. 18 that it dispatched 3,454 kilograms of kimberlite to Geoanalytical Laboratories Diamond Services at the Saskatchewan Research Council for recovery of diamonds by caustic fusion.

The first results are expected early in the fourth quarter, with final results anticipated before the end of November.

Kennady Diamonds hopes to identify a resource on the Kennady North property along the Kelvin - Faraday kimberlite corridor of between 5 million and 8 million metric tons and to identify new kimberlites outside of the corridor.

The tonnage estimate is based on drilling completed at Kennady North to date, but the potential quantity is conceptual in nature as there has been insufficient drilling to define a mineral resource, and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Still, the company's management is optimistic.

"We are very pleased with the high success rate we've achieved during the current Kelvin drill program, Kennady Diamonds President and CEO Patrick Evans said in a statement Sept. 3. "Fourteen out of 15 drill holes intersected kimberlite, enabling us to recover more than three tonnes of kimberlite from approximately 3,000 meters of drilling. We are particularly encouraged that the step-out drilling continued to intersect kimberlite more than 300 meters to the northwest of the main Kelvin kimberlite."

The company is reportedly already planning a winter 2014 drilling program with 10,000 meters of sampling from the Kelvin and Faraday kimberlites, a 25-metric-ton mini-bulk sample from Kelvin, and a number of exploration borings in the area of Kelvin and Faraday in hopes of finding more kimberlite in Kelvin and Faraday, expanding the sizes of the dykes and its conceptual resource estimate.