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Burgundy Diamond Mines has acquired the Ellendale site from Gibb River Diamonds.
Burgundy Diamond Mines has acquired the Ellendale site from Gibb River Diamonds.

New owner for historic Australian diamond mine

Burgundy Diamond Mines (BDM) has acquired the dormant Ellendale Mine from Gibb River Diamonds (GRD), 16 months after GRD was granted exclusive mining and exploration leases by the West Australian government.

The $6.7 million, two-year option deal includes “Ellendale remnant stockpiles, unworked alluvial deposits, unexplored pit-rim deposits, and potentially remnant material from the… open pits” as well as rights to the adjacent Blina alluvial diamond deposit, which GRD – formerly known as POZ Minerals – has owned since 2017.

GRD will also receive 16 million BDM shares, as well as 1.5 per cent gross revenue royalty.

Peter Ravenscroft, CEO and managing director Burgundy Diamond Mines
Peter Ravenscroft, CEO and managing director Burgundy Diamond Mines
"We are delighted to have been able to successfully secure this transaction... We look forward to working with Gibb River through an orderly transition period"
Peter Ravenscroft, Burgundy Diamond Mines

Opened in 1976, Ellendale – which is located 135km east of Derby in the West Kimberley – was at one point the world’s largest producer of fancy yellow diamonds and had an exclusive supply agreement with Tiffany & Co.

However, it ceased production in 2015 when previous owner Kimberley Diamond Company went into liquidation.

The West Australian government subsequently undertook a $230,000 ‘rehabilitation’ process to return the mine to viability. GRD and another Australian company, India Bore Diamond Holdings (IBDH), were granted leases to separate parts of the Ellendale site in December 2019.

Last year, IBDH announced the discovery of yellow diamonds with rare purple fluorescence in its section of the diamond field.

Following the closure of the Argyle Mine in November 2020, Australia has no operational diamond mines.

The fancy yellow diamonds – unearthed by India Bore Diamond Holdings – display a rare purple fluorescence.
The fancy yellow diamonds – unearthed by India Bore Diamond Holdings – display a rare purple fluorescence.

In a statement to the Australian Securities Exchange (ASX), BDM expressed its intention to “extract maximum value from the natural beauty of the Ellendale stones via its own marketing initiatives, and re-establish Western Australia as a supplier of unique high-value diamonds to luxury goods markets worldwide”.

BDM has already made a first instalment payment of $1.7 million and 4 million shares to GRD; should it elect not to pay the two future instalments, ownership of Ellendale will revert to GRD.

Jim Richards, executive chairman GRD, said, “The Ellendale Diamond Project requires significant capital to progress and [GRD] believes the involvement of [BDM] will provide greater certainty and upside for [GRD] shareholders in this regard, whilst also providing significant additional benefits for all stakeholders in the region.”

A sample of fancy colour diamonds from the Ellendale Mine
A sample of fancy colour diamonds from the Ellendale Mine

Based in Western Australia, BDM is described on its website as a “diamond exploration company focused on developing the world’s best diamond projects that have either been overlooked, or severely underfunded”.

In addition to Ellendale-Blina, the company has diamond interests in Canada and Botswana.

Peter Ravenscroft, managing director and CEO BDM, said in the ASX statement, “We are delighted to have been able to successfully secure this transaction, which ticks many of our strategic boxes as we build out Burgundy as the world’s leading mid-cap diamond company. It is one of our focus jurisdictions of low-risk diamond countries.”

He added, “We look forward to working with Gibb River through an orderly transition period.”

Ravenscroft emphasised that BDM would operate “in close concert with the local traditional owners, respecting the heritage and fragile environment of this important region of the country”.

Future of Merlin Mine

Perth-headquartered Lucapa Diamond Company (Lucapa), which operates the Lulo and Mothae mines in Angola and Lesotho, respectively, has confirmed its intention to acquire Australia’s only other remaining diamond mine, the Merlin Diamond Mine in the Northern Territory, from the liquidators of previous owner Merlin Diamonds Ltd.

Stephen Wetherall, Lucapa chief executive
Stephen Wetherall, Lucapa chief executive
"Following the finalisation of due diligence in a competitive bid process, Lucapa is advancing to final stage negotiations which includes finalisation of transaction structure and drafting of legal documentation"
Stephen Wetherall, Lucapa Diamond Company

In a statement on the Lucapa website dated 24 December 2020, managing director Stephen Wetherall said, “Merlin is a multi-pit mine development opportunity with underground mining potential and is home to Australia’s largest recovered diamond of 104 carats.

"Lucapa is of the view that the tenements also have considerable exploration potential with a significant number of unresolved exploration targets.”

He added, “Following the finalisation of due diligence in a competitive bid process, Lucapa is advancing to final stage negotiations which includes finalisation of transaction structure and drafting of legal documentation.

“Until such time as the legal documentation is in agreed form and executed, there can be no assurance that the acquisition of Merlin will be completed.”

The Federal Court ordered Merlin Diamonds Ltd into liquidation in October 2019 following an ASIC investigation.

Lucapa has also undertaken diamond exploration at the Brooking site in Western Australia, which is approximately 50km from Ellendale.

Other companies currently undertaking diamond exploration in the Kimberley include Astro Resources, Jindalee Resources, and GeoCrystal.

 

More reading:
Australian company acquires Ellendale Diamond Mine lease
Rare colour diamonds found at Ellendale site
Liquidators appointed to Australian diamond mine
Australian mine yields ‘rare’ green diamonds
 











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