Dermot Desmond-backed diamond explorer aims to open new Arctic mine ‘within five years’

The financier Dermot Desmond has indicated he will back a $20 million Canadian dollars (€14m) fundraising by Kennady Diamonds, which is searching for the gemstones in the Arctic.

The company, in which he has a stake of about 20 per cent, is Mr Desmond’s second big bet on diamond exploration in the region, following his investment in Mountain Province Diamonds (MPD).

MPD, in which the billionaire has a share of about 23 per cent, owns 49 per cent of the world’s richest new diamond mine, Gahcho Kue, which is almost 60 per cent through its construction phase.

Kennady Diamonds owns 100 per cent of a diamond prospect adjacent to Gahcho Kue called Kennady North.

The fundraising, which closes next week, will go towards a winter drilling programme to evaluate diamond deposits, as well as “the testing of a number of new exploration targets”.

Fundraising

Kennady Diamonds told the stock exchange in

Canada

this week that Bottin (International) Investment, a company owned by Mr Desmond, has said it will take part in the fundraising.

Patrick Evans, a veteran resource executive who runs both MPD and Kennady Diamonds, said yesterday the latter intends to develop the Kennady North project by itself within the next five years.

MPD's Gahcho Kue, which is sitting on diamonds worth potentially up to $20 billion, is 51 per cent owned by the international gemstone giant De Beers, which is building and will operate the mine.

“Exploration is already at an advanced stage [on Kennady North],” said Mr Evans.

“The work that we are doing is preparatory work for an economic assessment. This will tell us if we have an economic asset or not.”

Mr Evans said this process should be completed by the end of the year.

“If it is confirmed [as an economic diamond project], then, subject to regulatory approvals, we would look to open a mine within about five years. Our intention is to develop the asset without a senior partner.”

Kennady North is located directly to the north, west and south of Gahcho Kue, deep in Canadian tundra about 170 miles northeast of Yellowknife. Kennady Diamonds says it is aiming to identify a resource corridor there “of between 9-12 million tonnes at a grade of between 2 and 2.5 carats per tonne”.

Production

Gahcho Kue, to which Mr Desmond can effectively lay claim to close to 11 per cent, is slated to enter production in 2016. It will generate yearly cashflow for MPD in excess of $300 million , and may turn out to be one of the most lucrative investments made by Mr Desmond.