De Beers, Mountain Province go after Kennady Diamonds to expand joint Canadian mine
Anglo American’s De Beers, the world’s largest rough diamond producer by value, and its partner in Gahcho Kué mine, Mountain Province, are seeking to acquire a Canadian explorer and so expand their jointed operation in Canada’s far north.
Toronto-based Kennady Diamonds (TSX-V:KDI) owns the Kennady North project, located immediately adjacent to the De Beers/Mountain Province mine.
If the proposed acquisition is approved, the two diamond miners will incorporate properties owned by Kennady into their Gahcho Kué joint venture, De Beers said in a statement.
“[The planned purchase] opens up some potential new options for the operation’s future, and while further work would be required on the resource and there would need to be agreement on commercial terms, the signing of this non-binding MoU makes sense for both parties as we consider how our partnership might develop,” Kim Truter, chief executive of De Beers Canada said.
Last month, the diamond giant announced it intended to dig up as many as 36 million carats this year, , up from 33.5 million in 2017, thanks mainly to the participation of Gahcho Kué, which began operations in late 2016.
Shares in Kennady Diamonds climbed about 1.7% on the news and were exchanging hands at Cdn$3.05 by 9:30AM.
Situated almost 300 kilometres east of Yellowknife, in the country’s Northwest Territories, Gahcho Kué was discovered in 1995 and took more than $1 billion to develop. It is comprised of three open pits, which are accessible only by air, except for a few months in winter when trucks can travel across ice roads.
What makes Gahcho Kué particularly important is the fact that two of Canada’s major diamond mines — Diavik and Ekati — are approaching the end of their productive lives, and —although smaller— Gahcho Kué is expected to offset the production drop-off.
The mine is forecast to produce about 4.5 million carats a year over its estimated 12-year life span. It’s also expected to help Canada keep its position as the world’s third largest diamond producer by value and the fifth largest by volume.