Gibb River Diamonds granted mining leases for restart of Ellendale project
Gibb River Diamonds (ASX: GIB) has been granted three mining leases it sees as key to restarting the mothballed Ellendale project in Western Australia’s Kimberley region.
The leases cover the main portion of the historic workings at the E4 and E9 pipes, together with the extensively bulk-sampled E12 alluvials and their access.
The company stated that the granting of the leases was an important milestone in re-establishing diamond production at Ellendale and would pave the way for mining permit applications.
“These leases represent an outstanding opportunity for us to develop this exciting area with its unique potential,” it said.
Production restart
Gibb River is aiming for a production restart at Ellendale, using historic data as the basis for new studies and permitting applications.
A heritage clearance survey scheduled for next month at the M04/477 lease application (formerly the Ellendale 9 mine) is considered to be a “major step” towards achieving the company’s plans.
Various financing options are also being considered with a view to procuring equipment for the construction of an initial mining operation at E9.
Historic mine
Ellendale is believed to be one of the world’s largest historic diamond mines and has been absent of any exploration or development since 2015.
The project has been a significant historical diamond producer, with past production of approximately 1.3 million carats.
Previous operators reported a combined market capitalisation of over $690 million in 2006 on leases now held by Gibb River.
Historically, Ellendale produced over 50% of the world’s annual fancy yellow diamonds, which were the subject of a special marketing agreement between the former owners and high-end jeweller Tiffany & Co.
That agreement was based on a percentage premium above diamond market prices at the time.
Full ownership
Gibb River acquired full ownership of Ellendale from Burgundy Diamond Mines (ASX: BDM) in March last year when Burgundy decided to focus its attention on acquiring the Ekati diamond mine in Canada’s Northwest Territories.
The Ellendale leases cover the most prospective diamond-bearing ground in Australia and have no private royalties.
Gibb River stated that the project had “excellent potential” to become a company-making standalone diamond development.