Mr. Patrick Evans reports

KENNADY DIAMONDS ANNOUNCES FARADAY 2 DIAMOND RECOVERY RESULTS

Kennady Diamonds Inc. has provided the diamond recovery results from the Faraday 2 2015 spring core drilling program. Approximately 0.93 tonne of kimberlite from the southeast lobe of Faraday 2 was processed by caustic fusion at the Geoanalytical Laboratories Diamond Services of the Saskatchewan Research Council (SRC) and returned a sample grade of 1.93 carats per tonne for diamonds of commercial size.

Kennady Diamonds chief executive officer Patrick Evans commented: "We are very pleased with these high diamond recovery results, which confirm that the Faraday 2 kimberlite has the potential to host a high-grade diamond resource. We continue to estimate that the Kelvin Faraday kimberlite cluster has the potential to host between 12 million and 15 million tonnes at a grade of between two and 2.5 carats per tonne."

The attached table summarizes the caustic fusion diamond recovery results from the Faraday 2 Southeast Lobe 2015 spring drill program.

                               FARADAY 2 SOUTHEAST LOBE 2015 SPRING CAUSTIC FUSION DIAMOND RECOVERY RESULTS
                       
                       Number and weight of diamonds according to sieve size fraction (mm)
Sample                                                                                                                  
weight         +0.106   +0.150   +0.212   +0.300   +0.425   +0.600   +0.850   +1.180   +1.700   +2.360   +3.350         
(dry tonnes)   -0.150   -0.212   -0.300   -0.425   -0.600   -0.850   -1.180   -1.700   -2.360   -3.350   -4.750   +4.750

0.9337          1,275      872      488      283      179       99       48       16        3        3        0        0

  FARADAY 2 SOUTHEAST LOBE 2015 SPRING 
CAUSTIC FUSION DIAMOND RECOVERY RESULTS
                       
Sample                       Carats
weight          Total      (+0.85 mm
(dry tonnes)   diamonds    sieve size)

0.9337          3,266        1.81            

*Sample grade of diamonds greater than 0.85 mm: 1.93 carats per tonne.

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

• 0.22 carat off-white, transparent octahedral with minor inclusions;
• 0.22 carat off-white, transparent aggregate with inclusions;
• 0.21 carat brown, transparent, broken macle with inclusions.

A total of 247 individual diamonds from the above sample were described by the SRC. Ninety-three per cent are described as transparent and white/colourless (37 per cent) or off-white (56 per cent). Ten diamonds are described as yellow, six as brown and just two as grey.

Mr. Evans noted: "We are encouraged by the very high percentage of transparent white and off-white diamonds recovered from the Faraday 2 kimberlite. We expect this to have a positive impact on diamond values."

Processing of the 436-tonne Kelvin bulk sample through the SRC dense-media separation plant is progressing according to plan and the diamond recovery results are expected before the end of third quarter 2015.

In addition, processing of a further 2.6 tonnes of Kelvin South Lobe kimberlite by caustic fusion has commenced at the SRC. The diamond recovery results from this sample are expected by early September, 2015.

Qualified persons

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