Diamond Prices Ellendale Alluvials

Key Points

  • An independent pricing appraisal of alluvial diamonds (ASX Report 12 March 2020) from the 100% owned Ellendale Project supports exciting potential of near-mine alluvial channels (following previous hard rock diamond evaluations, see ASX GIB report dated 3 March 2020)
  • Excellent E9 East Channel diamond values of US$518 per carat (A$773 per carat), indicating a high number of the more valuable Fancy Yellow diamonds
  • E12 Channel alluvial diamonds report a value of US$498 per carat (A$743 per carat)
  • E9 West Channel alluvial diamonds report a value of US$157 per carat (A$234 per carat)
  • The 11 year low Australian vs US dollar exchange rate significantly improves local currency pricing compared to previous years mining at Ellendale
  • These updated valuations provide an excellent basis for advancing the considerable potential Ellendale’s various alluvial channel prospects

Ellendale E9 East Alluvial Diamonds

Figure 1: Ellendale Project – alluvial diamond valuation areas in this report -
E9 West Channel, E9 East Channel and E12 Channel alluvials

1.0       Updated Ellendale Alluvial Diamond Valuation

Gibb River Diamonds Limited have reported updated diamond valuations for the Ellendale Project alluvials at the E9 East and E9 West Channels and the E12 Channel, estimated as at February 2020. 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’). IDVI was responsible for sorting, grading, valuing and selling diamonds from the previously operating Ellendale Diamond Mine and also the alluvial diamonds from the E9 West Channel, E9 East Channel, E12 Channel and Blina Prospect alluvials.

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 jeweller 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, the potential opportunity to capitalise on the uniqueness of these Fancy Yellow goods to sell at above market prices was demonstrated by KDC’s arrangement with Tiffany.

Prices are in US dollars as marked, Australian dollar equivalents are as indicated (rate US$0.67=A$1.00). The full diamond valuation report by IDVI is available in the GIB ASX Release dated 12 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 alluvial mining of E9 West Channel, E9 East Channel and E12 Channel at Ellendale by a previous operator. The weight of stones in the valuation is as indicated.

Of particular interest is the current Australian dollar price of the diamond valuations (Table 1) which is considerably enhanced by the Australian dollar trading at 11-year lows to the US dollar.

2.1       E9 East Channel

The excellent valuation of US$518/carat (A$773) for diamonds from the E9 East Channel is most likely due to the higher percentage of Fancy Yellow stones in the east lamproite lobe7, from where the E9 East alluvials appear to be derived (Figure 2), and which runs at 16% Fancy Yellow diamonds.

2.2       E9 West Channel

The E9 West Channel valuation of US$157 is lower than E9 East Channel probably due to the diamonds being sourced from the E9 West lamproite lobe, which has a lower percentage of Fancy Yellow stones (9%)7 and also some of the source material being lamproite magmatics which have a lower grade than the mined lamproite tuffs.

2.3       E12 Channel

Further information regarding the E12 Channel sampling program from which the 428 carat parcel of diamonds was derived is currently being compiled and will be reported once complete. The location of the E12 channel is indicated in Figures 1 and 2.

Table 1: Ellendale 2020 Alluvial Diamond Valuations:
E9 West Channel, E9 East Channel & E12 Channel

Diamonds recovered in the 1.5-16mm range.
Diamonds were collated into parcels for sale under commercial mining circumstances, not exploration, resultantly the ‘number of stones’ data was not collated, only total weights in carats.
Diamond breakage data is not available.
Exchange Rate US$0.67=A$1.00

In summary, the high valuation of US$518/carat (A$773) for diamonds from the E9 East Channel, upgrades this area as a target for extensions to the previously mined alluvials and also for eluvials from the E9 East lamproite pipe. More information is currently being compiled on this area.

Figure 2: Ellendale Project alluvial diamond valuation areas in this report -
E9 West Channel, E9 East Channel and E12 Channel alluvials

3.0       Ellendale Alluvial Diamond Valuation Summary

This updated valuation data for alluvial diamonds at the Ellendale Project provides an excellent basis for assessing and advancing the potential of the various alluvial channel prospects held by the Company.

The Ellendale Project has been one of the world’s largest diamond producers, with previous operators reporting a combined market capitalization of over A$690 million in 2006 on leases now held by GIB. The Company continues to evaluate the enormous potential of our 100% owned Ellendale leases to deliver a profitable diamond mining operation.

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

7Ellendale 9 East Diamond Values Increase 20% to US$750/carat; GIB ASX Release dated 3 March 2019 click here

8Further Excellent Ellendale Diamond Valuations Up to US$518 per carat (A$773 per carat) from Alluvial Targets dated 12 March 2019 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 Statement

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.