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NEWS

July 26, 2012 - Kennady Diamonds Intersects Kimberlite at Second Faraday Drill Hole

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Toronto, Ontario, July 26, 2012 – Kennady Diamonds Inc. ("Kennady Diamonds", the "Company") (TSX- V: KDI) is pleased to announce that a second drill hole at Faraday Lake has intersected kimberlite in the same vicinity as a hole drilled in the early 2000's that also intersected kimberlite. The inclined hole drilled from land intersected sections of kimberlite at depths between approximately 154m and 158m. The final depth of the hole was 200m.

This is the second kimberlite intersection that Kennady Diamonds has made at Faraday Lake where the Company is conducting definition drilling to better understand the kimberlite structures along the Kelvin – Faraday kimberlite corridor. An earlier hole intersected kimberlite at intervals between approximately 47m and 155m, with the final hole depth being 200m. The drill rig has now moved to Kelvin Lake, approximately 3 kilometers to the south-southwest of Faraday Lake, where further definition and exploration holes will be drilled.

Kennady Diamonds is also pleased to announce that the Company has entered into an Exploration Agreement with the Lutsel K'e Dene First Nation ("Lutsel K'e"). The Exploration Agreement establishes the basis for Kennady Diamonds and Lutsel K'e to work collaboratively to advance the current exploration program at the Kennady North project in a constructive fashion.

The Chief and Elders of Lutsel K'e paid a site visit to Kennady North yesterday, July 25, 2012, to gain an insight into the current work program and future prospects for the Kennady North project. Commenting, Kennady Diamonds President and CEO, Patrick Evans said: "Our success at Kennady North is dependent upon a mutually beneficial and respectful relationship. We are committed to working in partnership with the Lutsel K'e."

Finally, Kennady Diamonds is pleased to announce that the Company's website has been launched at www.kennadydiamonds.com.

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About Kennady Diamonds

Kennady Diamonds controls 100 percent of the Kennady North project which comprises thirteen leases and claims located to the west and north 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.

Exploration at Kennady North commenced in the late 1990’s and resulted in the discovery of the diamond-bearing Kelvin, Faraday and Hobbes kimberlites. The number of diamonds recovered from these kimberlites and the size-frequency distribution indicate that they may be of comparable grade to the 5034 (1.77 carats per tonne) and Hearne (2.10 carats per tonne) kimberlites at the Gahcho Kué JV. Exploration samples from Kelvin and Faraday returned a relatively large number of macro diamonds with the two largest being a 0.4 carat diamond from Faraday and a 0.09 carat diamond from Kelvin.

The known kimberlites at Kennady North do not explain all the kimberlitic indicators previously recovered from glacial till sampling. Exploration at Kennady North was suspended in 2004 when Mountain Province focused its attention on the Gahcho Kué pre-feasibility and feasibility studies.

Exploration at Kennady North recommenced during 2011 with a 50-meter line-spacing airborne gravity gradiometry (AGG) survey over the entire 123.6 square kilometer project area. The survey identified 106 geophysical targets. Mountain Province recently completed a 560-line-kilometre total magnetic field (MAG) ground survey over all 106 geophysical targets identified by the AGG survey. The 39 high priority targets identified through the AGG and MAG surveys will be drilled as part of the current summer drill program (approximately 20 drill targets) and 2013 winter drill program (approximately 20 drill targets).

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Qualified Person

This news release has been prepared under the supervision of Carl G. Verley, P.Geo., who serves as the qualified person under National Instrument 43-101.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this release.

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.

For further information, please contact:

Kennady Diamonds Inc.
Patrick Evans, President and CEO (416) 640-1111
investor@kennadydiamonds.com

The Kennady North Project