Dr. Rory Moore reports

KENNADY REPORTS SAMPLE GRADES OF 3.14 CARATS PER TONNE AT FARADAY 1 AND 3.22 CARATS PER TONNE AT FARADAY 2

Kennady Diamonds Inc. has released diamond recovery results from the Faraday 1 and 2 kimberlites at the company's 100-per-cent-controlled Kennady North project. The samples were recovered by core drilling during 2016 and processed by caustic fusion at the Geoanalytical Laboratories Diamond Services of the Saskatchewan Research Council (SRC).

Kennady Diamonds president and chief executive officer Dr. Rory Moore noted: "We are very pleased with the consistently high diamond recoveries emerging from the Faraday kimberlites. The sample grades of 3.14 carats per tonne for Faraday 1 and 3.22 carats per tonne for Faraday 2 build on our previous results reported in 2016, and provide further confidence for a positive outcome to the 2017 winter bulk sampling of these kimberlites."

The associated table summarizes the caustic fusion diamond-recovery results for the Faraday 1 kimberlite from 2016 drilling.

                                        2016 FARADAY 1 DIAMOND-RECOVERY RESULTS 
  
Sample                      Number and weight of diamonds according to sieve-size fraction (mm)             
weight           +0.106  +0.150  +0.212  +0.300  +0.425  +0.600  +0.850  +1.180  +1.700  +2.360    Total Total carats
(dry tonnes)     -0.150  -0.212  -0.300  -0.425  -0.600  -0.850  -1.180  -1.700  -2.360  -3.350 diamonds   (+0.85 mm)

0.8615            1,139     708     374     255     130      86      39      23       7       5    2,766       2.7043

*Sample grade of diamonds greater than 0.85 millimetre: 3.14 carats per tonne.

The three largest diamonds recovered from the Faraday 1 sample are described as follows:

• 0.44-carat off-white transparent aggregate with inclusions;
• 0.42-carat brown transparent resorbed octahedron with no inclusions;
• 0.28-carat brown transparent fragment with inclusions.

The associated table summarizes the caustic fusion diamond recovery results for the Faraday 2 kimberlite from 2016 drilling.

 
                              2016 FARADAY 2 DIAMOND RECOVERY RESULTS 
  
Sample                  Number and weight of diamonds according to sieve-size fraction (mm)               Total 
weight       +0.106   +0.150   +0.212   +0.300   +0.425   +0.600   +0.850   +1.180   +1.700    Total     carats
(dry tonnes) -0.150   -0.212   -0.300   -0.425   -0.600   -0.850   -1.180   -1.700   -2.360 diamonds (+0.85 mm)

0.4249          683      482      302      158       83       46       26       17        6    1,803      1.369
  
* Sample grade of diamonds greater than 0.85 mm: 3.22 carats per tonne.

The three largest diamonds recovered from the Faraday 2 sample are described as follows:

• 0.11-carat brown translucent fragment with inclusions;
• 0.11-carat off-white transparent aggregate with minor inclusions;
• 0.10-carat brown, transparent dodecahedron with inclusions.

Dr. Moore concluded: "Considering the relatively small size of the sample from Faraday 1, it is encouraging that two diamonds weighing just under half a carat each were recovered. It is also worth noting that the largest stones recovered from the Faraday 2 sample are consistent with expectations based on sample size."

Winter bulk sampling program

Kennady Diamonds is also pleased to announce that large-diameter reverse circulation drilling commenced on Friday last week, and the first drill hole on Faraday 2 has been successfully completed. The aim of the program is to recover approximately 250 tonnes from each of Faraday 2 and 3, and to obtain a small (about 20 tonnes) representative sample from Faraday 1. This will advance the Faraday 2 and 3 kimberlites toward an inferred mineral resource, and provide diamond grade and quality potential data from Faraday 1 for correlation with Faraday 3 results. The program is expected to be completed in early second quarter of 2017.

Qualified persons

This news release has been prepared by Dr. Moore, PGeo, president and chief executive officer of Kennady Diamonds. The technical contents of this news release have been reviewed and approved by Dr. Tom McCandless, PGeo, an independent director of Kennady Diamonds and qualified person under National Instrument 43-101.

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