Kennady Diamonds finds 6th kimberlite pipe at site near Gahcho Kue mine

Kennady Diamonds says it has made another promising find at its Kennady North diamond exploration project 280 kilometres northeast of Yellowknife.

The company has found a sixth kimberlite pipe at the site, which borders the soon-to-open Gahcho Kue diamond mine.

Diamonds are typically (though not always) found in kimberlite.

Three pipes previously discovered at Kennady North have yielded commercially viable diamonds, according to early valuations, and the company is already planning several more years of drilling to generate enough tonnage to warrant building a mine.

"We have already purchased a new [exploration] camp," said Patrick Evans, president of Kennady Diamonds.

"The camp is sitting in Yellowknife and our plan subject to continued success [on the project] is to take the camp up the [Tibbitt to Contwoyto] ice road next year.

"We expect that, in about 12 months' time, we'll have the capacity for somewhere on the order of 250 to 300 people."

There are currently 63 people working at the site.

Big spender

Kennady Diamonds is spending $25 million on exploration work this year a quarter of all estimated spending of that type in the N.W.T. this year.

"If you look at the market cap of the company $140 million for a junior, that's pretty indicative of what the market thinks the value of this project is worth," said Paul Zimnisky, a New York-based diamond industry analyst.

"I think there's an expectation that there are going to be more kimberlites discovered in the surrounding area, and what's really going to move the needle is when they start sampling these kimberlites."

Early samplings of previously-discovered pipeshave found diamondsof two to fourcarats per tonne. The company's goal is to mine a resource of 13 million tonnes to 16 million tonnes at 2 to 2.5 carats per tonne.

To put that in perspective, the Diavik diamond mine's remaining proven reserves average three carats per tonne.

Evans says Kennady Diamonds hopes to decide by the end of 2017 whether to build a mine.