The diamond sector has been ignored for over a decade, following a slew of major diamond discoveries in the last cycle including Ekati and Diavik which made prospectors and investors involved in those finds wildly wealthy.
Today, the landscape is improving for diamond exploration, especially in the Canadian Arctic. However, there are still only a handful willing to risk frostbite to find Canada’s next diamond mine.
The most advanced of these is Kennady Diamonds (KDI:TSXV) whose Kennady North project was spun out of Mountain Province after that company decided to focus on their Gacho Kue development project in 2012.
De Beers is Mountain Province’s partner.
Here’s a video that shows a good perspective on the area:
Kennady holds 61,000ha of land in the Northwest Territories.
After first discovering kimberlites in mid-2013, shares of Kennady soared from $1.50 to nearly $9 per share in just six months.
Kennady recently began their 2014 summer drill program which is intended to focus on the Kelvin and Faraday kimberlites. The originally planned 5,000m program has been expanded to 10,000m after just a few weeks into it. They will also complete some exploration drilling at the MZ and Doyle kimberlites as well as numerous other high-priority targets.
Due to the early success in the program, including hole KDI-14-039 which drilled over 183m of kimberlite, the company has decided to add a third drill rig which was announced this morning.
Kennady Diamonds CEO Patrick Evans noted: “Delineation drilling to the north of the Kelvin kimberlite is exceeding our expectations. The 183-metre kimberlite intersect is the longest to date at Kennady North. Based on the results from the first three Kelvin delineation drill holes, we are currently reviewing our tonnage estimate for the Kelvin-Faraday kimberlite corridor, which we expect to increase beyond the current five- to eight-million-tonne estimate. In addition, we have decided to mobilize a third drill rig to support an expanded summer drill program.”
Mobilizing the third rig will enable delineation drilling of the Kelvin kimberlite dike to commence soon.
To date, roughly 7 tonnes of kimberlite has been recovered from Kelvin and this is in addition to the 25 tonnes recovered from Kelvin during last spring’s drill program. The mini-bulk sample has been shipped to Saskatoon for processing and results are expected in early Q4/2014.
Kennady has the highest valuation of the Canadian diamond explorers with $130 million market capitalization and $7 million in cash giving it an enterprise value of $123 million.
Next down the chain is North Arrow Minerals (NAR:TSXV) which is substantially owned by the Lundin Group and includes Gren Thomas as Chairman and his daughter, Eira, as an advisor. The enterprise value of North Arrow is roughly $30 million ($9 million in working capital).
North Arrow is completing a bulk sample program at Qilalugaq in Nunavut which with any success could see shares soar.
They have also just announced the initiation of a drill campaign on the Redemption project which they are joint venturing from another diamond explorer, Arctic Star (ADD:TSXV).
North Arrow plans to spend $5 million by July 2017 to earn 55% in the project. They began drilling the initial 1,000m program this week.
Arctic Star’s exploration efforts are being led by Buddy Doyle who, along with Gren and Eira Thomas, are credited with discovering the Diavik mine. The enterprise value Arctic Star is $10 million.
Margaret Lake Diamonds (DIA:TSXV) has an enterprise value of $7 million but holds almost all of the land in and around Kennady. They are flying a helicopter gravity gradiometer and magnetic survey this summer which is a tool that has been successful at finding diamondiferous kimberlites.
Also in the area is another diamond legend, Randy Turner whose Canterra Minerals (CTM:TSXV) holds neighboring land to Margaret Lake and Kennady. They are small, with an enterprise value of less than $3.5 million. Randy Turner was part of the team that discovered the Snap Lake mine which is now owned and operated by De Beers.
Disclosure: I own shares in Arctic Star, North Arrow Minerals and Margaret Lake Diamonds. As a result, I am biased. This is not investment advice. Always do your own due diligence.