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Australian diamond mine revived with new deal

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Australian diamond mine revived with new deal

The Merlin Mine in the Northern Territory – which produced the largest rough diamond in Australian history (pictured) – is to be acquired by Perth’s Lucapa Diamond Company. Image credit: Lucapa Australian diamond mine revived with new deal Posted May 28, 2021 | By Arabella Roden • Editor Lucapa Diamond Company (Lucapa) has begun the process of acquiring the Merlin Mine in the Northern Territory, one of Australia’s two remaining viable diamond mines, from the liquidators of its previous owner.

Valued at $8.5 million, the binding Asset Sale Agreement includes the mining lease and exploration tenement – located approximately 720km southeast of Darwin – as well as equipment and assets.

"Hopefully within the next couple of years, we are going to turn [it] around and put Australian diamonds back on the map"Stephen Wetherall, Lucapa Diamond Company

With an estimated diamond resourced of 4.4 million carats and 11 previously-discovered kimberlite pipes – the ancient volcanic channels in which diamonds are found – the Merlin site represents a promising prospect for re-starting Australia’s diamond-mining industry, which has stalled since the closure of the Argyle Mine in Western Australia late last year.

Headquartered in Perth, Lucapa currently operates the Lulo and Mothae Mines in Angola and Lesotho, respectively, which are known for producing large white diamonds.

Notably, Australia’s largest diamond rough, 104-carat Type IIa stone, was recovered from the Merlin Mine in 2003. Rare green diamonds have also been found at the site.

In a statement to the Australian Securities Exchange (ASX), Stephen Wetherall, managing director Lucapa, said, “This is a strategic acquisition for Lucapa which represents a value-accretive and logical step in Lucapa’s production strategy.

“The project is well known for being Australia’s large stone producer and is a strong complementary fit with the company’s two existing niche productions in Africa that are set to produce solid returns for Lucapa in 2021.”

Speaking to the ABC, Wetherall added, “For Australia to go from [a place] in the top five or six diamond producers in the world when Argyle was in production, to producing no diamonds, is not a good statistic. So, hopefully within the next couple of years, we are going to turn that around and put Australian diamonds back on the map.”

He added, “For us, it's not just the individual sporadic diamonds that we're after, we're also interested in the general production and what else we can recover.”

The acquisition and other associated costs of re-starting the mine will be funded by a two-part capital raising, with Wetherall noting in the ASX statement a “high level of interest received from existing and new institutional investors”.

He added, “We look forward to getting on the ground, completing the work to deliver the various studies and bringing Merlin into production as soon as possible.”

Merlin Diamonds Ltd had operated the mine since 2004, with sporadic production; the Federal Court made orders to wind up the company in April 2020 following an Australian Securities and Investment Commission (ASIC) investigation, appointing joint and several liquidators from Deloitte Financial Advisory.

 


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