Diamond Prices Ellendale 4&9

Key Points

  • An independent appraisal of diamonds (ASX Report 3 March 2020) from the Gibb River Diamonds Ellendale 9 East lobe reports a value of US$750 per carat (A$1,120 per carat), a 20% increase since 2008. This price was enhanced by the high number of Fancy Yellows
  • The Company’s Ellendale 9 deposit (average) reports a value of US$559 per carat (A$835 per carat), an 18% increase since 2008
  • An updated valuation for Ellendale 4 diamonds was US$135 per carat (A$201 per carat) which is a 5% increase from 2008
  • A diamond valuation for the unmined Ellendale 4 Satellite Pipe was US$137 per carat (A$204 per carat)
  • The 11 year low Australian vs US dollar exchange rate significantly improves local currency pricing compared to previous years mining at Ellendale

Ellendale E9 Diamonds

Figure 1: Ellendale Project, including diamond valuation areas in this report – E4 and E9 mines

1.0 Updated Ellendale Diamond Valuation

Gibb River Diamonds Limited have reported updated diamond valuations for the hard rock (lamproite) pipes E4 and E9 at the Ellendale Project. This review is important as it helps GIB to make commercial decisions regarding mine planning and development priorities at Ellendale.

This diamond valuation was commissioned and paid for by GIB and was conducted by Independent Diamond Valuers International (‘IDVI’) to provide diamond valuation services to the Company. IDVI was responsible for sorting, grading, valuing and selling diamonds from the Ellendale Diamond Mine (now closed) and the Blina Project from 2002 to 2015. IDVI’s pricing system was used throughout this period and is utilised to provide this valuation. GIB considers IDVI to be a reputable, experienced, independent and qualified expert for the purposes of this valuation.

Previous operators of the Ellendale mine had a contract to sell the Fancy Yellow component of their production to Laurelton Diamonds (the jeweler Tiffany & Co), this agreement was based on a percentage premium above the IDVI price book. It is uncertain if similar premium prices can be achieved with any future Fancy Yellow goods. However, there is a potential opportunity to capitalise on the uniqueness of these Fancy Yellow goods to sell at above market prices as demonstrated by KDC’s arrangement with Tiffany’s.

The full diamond valuation report by IDVI is available in the GIB ASX Release dated 3 March 2020.

2.0       Diamond Valuation Results

Table 1 summarises the most recent valuations based on a February 2020 price estimate of diamonds recovered from hard rock mining of various lamproite pipe bodies at Ellendale including E9 (average), E9 East Lobe, E9 West Lobe, E4 and E4 Satellite (E4S), with the weight of stones in the valuation as indicated.

The appraisals show a significant rise in valuation for E9 diamonds to US$559/carat, an increase of 18% from 2008 to February 2020. This price increase is mainly driven by the growth in prices for the Fancy Yellow diamonds6 for which Ellendale is famous. Of particular interest is the current Australian dollar price of the E9 diamond valuation which is A$835/carat. This result is considerably enhanced by the Australian dollar trading at 11-year lows to the US dollar.

The E9 East area (Figure 2) diamond valuation prices have fared especially well with a 20% increase since 2008. This increase is in-part due the higher percentages of Fancy Yellow stones in the east lobe which runs at 16% Fancy Yellow (Ellendale West has 9% Fancy Yellows). The E9 East diamond valuation is the highest for the Ellendale field at US$750/carat (A$1,120).

Table 1: Ellendale 2020 Hard Rock Diamond Valuations comparative to 2008

Diamonds recovered in the 1.5-16mm range.
Diamonds were collated into parcels for sale under commercial mining circumstances, not exploration (‘Lots’ in the attached IDVI report), resultantly the ‘number of stones’ data was not collated, only total weights in carats.
Diamond breakage data is not available.
Exchange Rates Feb 2020 1US$=A$0.67

Figure 2: Diamond valuation areas – E9 West and East lobes

3.0       E4 & E9 Diamond Valuation Summary

The increases in the valuations of Ellendale diamonds since 2008 indicates the uniqueness and value of the Fancy Yellows in particular, which is the main component which is driving these price increases. For this reason, the Company is placing more emphasis on the Ellendale 9 area as this is the source of the best fancy yellow stones within the Ellendale field.

The Ellendale Project has been one of the world’s largest diamond producers in the past. The Company continues to evaluate the enormous potential of our 100% owned Ellendale leases to deliver a profitable diamond mining operation. The increased and updated diamond valuations in this report provide an excellent basis for assessing the hard rock potential of our Ellendale leases in addition to the alluvial prospects.

References:

1Further detailed information including the Table 1 (JORC Code, 2012 Edition) and references are available on the POZ ASX Release dated 2 October 2015 click here and 23 December 2019 click here

2Blina Diamond Project, Gamechanger GPR Survey; POZ ASX Release dated 18 October 2017 click here

3Trenching Discovers New Gravel Targets at Blina; POZ ASX Release dated 6 August 2018 click here

4POZ to Bid For the Ellendale Diamond Mine; POZ ASX Release dated 4 September 2018 click here

5Record 2018/8 Geology, Resources and Exploration Potential of the Ellendale Diamond Project, West Kimberley, Western Australia (Geological Survey of Western Australia); by G. Boxer and G. Rocket. 2018 click here

6Blina Diamond Project, Fancy Yellows Value Increases by 131% to US 3,391 per carat; POZ ASX Release dated 6 November 2017 click here

Bulletin 132 (Geological Survey of Western Australia); The kimberlites and lamproites of Western Australia by A.L. Jaques, J.D. Lewis and C.B. Smith. 1986.

Competent Persons Statements

The information in this report that relates to previously reported exploration results is based on information compiled by Mr. Jim Richards who is a Member of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists.  Mr. Richards is a Director of Gibb River Diamonds Limited. Mr. Richards has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.  Mr. Richards consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

The information in this report that relates to diamond valuations was compiled by Mr Rod Criddle, a Director of Independent Diamond Valuers International (‘IDVI’). IDVI has been responsible for sorting, grading, valuing and selling diamonds from the Ellendale Diamond Mine (now closed) and the Blina Project, including Terrace 5 goods, from 2002 to 2015. IDVI’s pricing system was used throughout this period and is utilised to provide this valuation. POZ considers IDVI to be a reputable, independent, experienced and qualified expert for the purposes of this valuation. The valuation is an independent valuation. Mr Criddle consents to the diamond valuation information contained in his report in Appendix A being included in this report.