Canada's Kennady Diamonds says has pick of investors in tough market
By Allison Martell
TORONTO (Reuters) - In a year when many mineral explorers found it nearly impossible to raise significant funds, Canada's Kennady Diamonds Inc KDI.V actually turned some investors away, according to Chief Executive Patrick Evans.
Kennady's shares are more than triple what they were a year ago, thanks to strong exploratory drilling results at its Kennady North project in Canada's Northwest Territories. Meanwhile, some other explorers are down more than 90 percent.
Kennady has not yet filed a resource estimate, the first major milestone for mineral projects. It would need to clear economic feasibility studies as well as permitting and raise much more money to become a mine. And like all early-stage projects, it may never get there.
Evans, who believes his company has found some of the highest grades ever recorded in diamond exploration, seems more worried than encouraged by the investor interest.
"What we want to try and avoid is sort of irrational buying of the stock," he said on the sidelines of the Prospectors and Developers Association of Canada convention in Toronto, the biggest annual mining industry gathering.
"I'd rather see a steady appreciation of the share price as we deliver solid results, rather than have speculators drive it up and then face the inevitable."
Successful small explorers, or juniors, tend to rise sharply during early exploration, and perform worse once they are completing feasibility studies and the full cost of building a mine becomes clear.
For more than two years, investors have shunned most juniors. Many complain that the market is no longer giving them credit for discoveries: shares rise on drill results, only to be hammered down the next day. Kennady proves some high quality results can still capture and hold investors' interest. Continued...