North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Mountain Province Diamonds Inc. Jan. 29 announced a definitive agreement to acquire Kennady Diamonds Inc. under a friendly all-share deal worth roughly C$176 million.

Kennady Diamonds owns Kennady North, a rapidly advancing diamond project about seven kilometers (4.5 miles) northeast of Gahcho Kué – a mine owned by Mountain Province (49 percent) and De Beers Canada (51 percent).

Since being spun out of Mountain Province in 2012, Kennady has identified a series of diamond-rich kimberlites along a corridor that trends northeast from the Gahcho Kué property 3,000 meters onto the Kennady North property.

Kelvin, the most advanced kimberlite on the Kennady North property, hosts an indicated resource of 13.62 million carats of diamonds contained in 8.5 million metric tons of kimberlite averaging 1.6 carats per metric ton, according to a resource calculated at the end of 2016.

In October, Kennady reported a maiden inferred resource for the Faraday kimberlites, which are about 2,000 meters northeast of Kelvin, of 5.02 million carats of diamonds in 3.27 million metric tons of kimberlite averaging 1.54 carats per metric ton.

"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 David Whittle, interim president and CEO, Mountain Province. "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 Diamonds Inc.

A 7.8-carat diamond recovered from a sample collected from the Faraday 3 Kimberlite at the Kennady North project.

Under the terms of the court-approved transaction, Kennady shareholders will receive 0.975 Mountain Province shares for each Kennady share held, representing the equivalent of C$3.46 per Kennady share as of the closing of markets on Jan. 26. This represents a premium of 26 percent to Kennady's closing price on that day. The implied equity value for Kennady based on the ration is roughly C$176 million.

In connection with the buy-out offer, Mountain Province will provide financing to Kennady of up to C$10 million via an equity private placement at C$2.50 per share in multiple tranches designed to coincide with Kennady's budget for the current work program. The completion of the financing is not conditional upon the closing of the transaction.

"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," said Kennady President and CEO Rory Moore.

The transaction is expected to close in April.

-SHANE LASLEY