JOHANNESBURG (miningweekly.com) - TSX-listed Mountain Province Diamonds has signed a nonbinding memorandum of understanding (MoU) with De Beers Canada, its partner in the Gahcho Kué mine, to potentially incorporate properties owned by Kennady Diamonds into the Gahcho Kué joint venture (JV).

Mountain Province is acquiring Kennady, which owns the Kennady North diamond project adjacent to the Gahcho Kué mine, in an all-scrip deal worth about C$176-million.

Mountain Province and De Beers will now work towards a definitive agreement based on the MoU.

"We have been very pleased with the progress of our partnership with Mountain Province in the Gahcho Kué mine. Their proposed acquisition of Kennady Diamonds opens up some potential new options for the operation's future and, while further work will be required on the resource and there will need to be agreement on commercial terms; the signing of this nonbinding MoU makes sense for both parties as we consider how our partnership might develop," De Beers Canada CE Kim Truter said in a statement on Monday.

Mountain Province interim president and CEO David Whittle said the start-up of the Gahcho Kué mine under De Beers' operatorship has been a clear success and that the positive working relationship that exists between the JV partners is a key component of that success.

"Mountain Province firmly believes that the proposed Kennady transaction can add significant project value through the potential to access Kennady's kimberlite resources.  We look forward to working with De Beers to develop a plan to integrate the Kennady resources into the Gahcho Kué project," he noted.

Mountain Province owns 49% of the Gahcho Kué diamond mine, located in Canada's Northwest Territories, with De Beers Canada owning the balance.

Gahcho Kué is the world's largest new diamond mine, comprising a cluster of four diamondiferous kimberlites, three of which are being developed and mined under the initial 12-year mine plan.