Mountain Province Diamonds and Kennady Diamonds have entered into a friendly and definitive agreement whereby Mountain Province will acquire all the issued and outstanding shares of Kennady, at a premium. Kennady shareholders will receive 0.975 of a Mountain Province share from each Kennady share they hold. That represents a value of $3.46 per Kennady share, and a premium of 26% to Kennady’s closing price and a premium of 15% based on the 20-day volume- weighted-average-price of Mountain Province Shares on the TSX and Kennady Shares on the TSX-V, both as of close on January 26, 2018. The implied equity value for Kennady based on the Exchange Ratio is approximately C$176 million. Upon completion of the Transaction, the combined company will be owned approximately 76% by Mountain Province shareholders and 24% by Kennady shareholders.
Mountain Province is the 49% owner of the Gahcho Kue diamond mine (with De Beers Canada) in the Northwest Territories. By adding Kennady’s Kelvin kimberlite and the Faraday kimberlite cluster to its portfolio, Mountain Province is adding growth opportunities to its future. The maiden Kelvin resource estimate is for 13.62 million carats. The Faraday cluster contains perhaps another 5.02 million carats. Both areas have been bulk sampled. There is additional potential at Kennady’s Doyle and MZ kimberlites, as well as more than 67,000 hectares of highly prospective ground adjacent to the Gahcho Kue mine. All-share deal allows Kennady’s current shareholders to retain ongoing exposure to Kennady’s assets as well as gain exposure to Mountain Province’s 49% interest in the operating Gahcho Kué mine. They gain access to free cash flow from Mountain Province to fund exploration at Kennady’s assets, as well as an immediate premium on the Kennady Shares.
David E. Whittle, Interim President and CEO of Mountain Province, stated: “The Kennady assets are a strong complement to Mountain Province’s interest in the Gahcho Kué project, significantly adding to our attributed resource base. Kennady’s exploration efforts have been very successful and we have high confidence in our ability to continue that success, not only through expanding the existing resources at Kelvin and Faraday but through the potential for further discoveries, not just in the Kelvin-Faraday corridor but elsewhere across the property.”
Dr. Rory O. Moore, President and CEO of Kennady, stated: “We are excited that our shareholders have the opportunity to benefit from the near-term cash flow of the world-class Gahcho Kué mine while retaining exposure to the significant exploration upside on the current Kennady assets.”