Kennady Diamonds Announces $7M Non-Brokered Private Placement and $4M Bought-Deal Private Placement

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Shares Issued and Outstanding: 19,693,609
TSX-V: KDI

TORONTO, Oct. 9, 2013 /CNW/ - Kennady Diamonds Inc. ("Kennady Diamonds", the "Company") (TSX-V: KDI) is pleased to announce the terms of a non-brokered private placement ("Non-brokered Placement") whereby the Company plans to raise approximately C$7M through the issuance of a combination of common shares and flow-through common shares. The common shares to be issued under the Non-brokered Placement have been priced at $4.75 per share and the flow-through common shares have been priced at C$5.50 per share. The Non-brokered Placement is expected to close on or about October 17, 2013, and is subject to regulatory approval.

Concurrent with the Non-brokered Placement, the Company has entered into a letter of engagement with Dundee Securities Ltd. (the "Lead Underwriter") on behalf of a syndicate including Salman Partners Inc. (together, the "Underwriters") under which the Underwriters have agreed to purchase 728,000 flow-through common shares of the Company (the "Flow-Through Shares"), by way of a private placement on a "bought deal" basis, subject to all required regulatory approvals, at a price per Flow-Through Share of $5.50, for total gross proceeds of $4,004,000 (the "Offering").

The Underwriters have been granted the option to purchase up to an additional 182,000 Flow-Through Shares of the Offering, for additional gross proceeds of $1,001,000, exercisable in whole or in part at any time up to 48 hours prior to the Closing Date (the "Option"). In connection with the Offering, the Underwriters will receive a cash commission equal to 5.0% of the gross proceeds raised under the Offering, inclusive of the Option. The Closing Date of the Offering is scheduled on or about October 25, 2013.  The Offering is subject to a number of conditions, including receipt of all regulatory approvals.

The Company intends to use the gross proceeds from the Offering and flow-through common shares issued under the Non-brokered Placement for Canadian Exploration Expenses within the meaning of the Income Tax Act (Canada). The Company shall use its best efforts to ensure that an amount equal to such proceeds will be used to incur Canadian Exploration Expenses, for purposes of the Income Tax Act (Canada), related to the Company's exploration projects. The Company will renounce such Canadian Exploration Expenses with an effective date of no later than December 31, 2013.

The proceeds from the common shares issued under the Non-brokered Placement will be used to fund the Company's 2014 winter exploration program (10,000 meters of drilling), the 2014 summer exploration program (5,000 meters of drilling), and general corporate purposes.

All securities issued in the Non-brokered Placement and Offering will be subject to a four month hold period.

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About Kennady Diamonds

Kennady Diamonds Inc. controls 100 percent of the Kennady North project which comprises thirteen leases and claims located immediately to the north and west of the four leases controlled by the Gahcho Kué Joint Venture between De Beers Canada (51%) and Mountain Province (49%) located in Canada's Northwest Territories.

Kennady Diamonds aims to identify a resource along the Kelvin - Faraday kimberlite corridor of between a 5 and 8 million tonnes and also to identify new kimberlites outside of the corridor. This tonnage estimate is based on the drilling completed to date. The potential quantity is conceptual in nature as there has been insufficient drilling to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

A 5,000 meter drill program conducted during the winter of 2013 returned an exceptional sample grade of 8.44 carats per tonne. The largest three diamonds recovered were a 2.48 carat off-white transparent octahedral, a 0.90 carat off-white transparent irregular, and a 0.75 carat off-white transparent octahedral. The recovery of diamonds of this size and quality from a 1.1 tonne sample is very encouraging.

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FORWARD LOOKING INFORMATION

This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the Company's strategic plans, future operations, future work programs and objectives. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE: Kennady Diamonds Inc.

Kennady Diamonds Inc.
Patrick Evans, President and CEO
[phone]

[email protected]