Kennady Diamonds close to $48 million goal
Company has been raising funds from private investors to cover its Kennady project costs until 2017
James Goldie
Northern News Services
Friday, September 25, 2015
NORTHWEST TERRITORIES
One company exploring for diamonds in the NWT is well on its way to raising almost all its project's operating costs for the next two years.
Patrick Evans, CEO of Kennady Diamonds, said positive results of bulk samples from his company's kimberlite pipes near the Gahcho Kue mine site were a critical turning point in the search for private investment in the project. - photo courtesy of Mountain Province Diamonds
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Kennady Diamonds recently announced it has undertaken a private placement to raise the $48 million needed to take its project through to the end of 2017, which means it is raising these funds solely through the contribution of private investors.
"For a small company, the time and the expense involved in doing a full public offering is crazy," said Patrick Evans, president and chief executive officer of Kennady Diamonds.
A public offering would have meant getting clearance from regulators, the territorial government and the Toronto Stock Exchange; sending mail-outs to all shareholders and involved "substantial" legal fees.
"For a company that's going ... directly to investors through private placement it saves us tens of thousands of dollars doing it this way," Evans said.
The $48 million will cover the costs of a preliminary economic assessment, feasibility study, further bulk sampling, drilling, processing, permitting and more.
Evans was able to confirm that the company's major shareholder, Dermot Desmond, will contribute 24 per cent of these funds and another investor has expressed an interest in contributing $13 million.
"We're almost done. I can't give you an exact number but we're almost done. We've almost placed all of it already," he said.
While the project is not a big source of employment in the territory at this stage, there is still some growth projected over the next two years.
"From our current roughly 50 people involved up to about 70 before we make a decision to build," said Evans. "Of course, when we make a decision to build, the numbers climb up quite rapidly."
Industry, Tourism and Investment Minister David Ramsay echoed Evans sentiment about the project's potential employment benefit.
"Potentially, we might be looking at somewhere around 1,000 jobs in construction, maybe 400 to 500 ongoing jobs at the mine site itself, and potentially there might be some synergies there with Gahcho Kue," he said, adding that these numbers have yet to be determined.
Ramsay described the project as a positive story, one that "comes at a time when we need to find another mine" in the NWT and that he has a good feeling about.
"I've been following this closely for a number of years and certainly the results have been good," he said.
According to Ramsay, the Kennady project has not received any funding from the GNWT. He said that the territory's Mining Incentive Program, which provides some junior mine projects with comparably smaller amounts of funding, is one thing the government is doing to help mining companies during the current slump in the market price of metals.
"We're not immune. Global commodity prices are what they are, and we're feeling the pain just like anyone else," he said. "(We're) trying to focus on what's working, continuing to look at developing our infrastructure here in the NWT. And spending money on infrastructure development are things we can do as a government to ensure that when those commodity prices come back we're going to be ready."
Evans said that investors in the Kennady project are "not focused on anything relating to the Northwest Territories. They're focused on the fundamentals of the project." He said that investors like those contributing to his company are interested in "high-quality" exploration projects, and that has been the key to this private placement's success.
"A critical milestone for us was when we reported the grade on the bulk sample that came in at just over two carats per tonne," he said. "That brought investors to us quite strongly."
Still, Evans said there is certainly more the GNWT could be doing to attract investment to the territory such as improving infrastructure and streamlining the permitting process.
"Whether or not the government does these things we're going to push ahead with Kennady, but if the government doesn't do these things they're not going to see new investment coming to do grassroots exploration in any meaningful way," he said.
-- with files from Karen K. Ho
