29/06/2004 - 22:00

Locals lead the diamond revival

29/06/2004 - 22:00


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With Argyle’s future at the crossroads new players are providing some junior sparkle to WA’s third biggest royalty generating sector, diamond production. Alison Birrane and Jim Hawtin report.

Locals lead the diamond revival

With Argyle’s future at the crossroads new players are providing some junior sparkle to WA’s third biggest royalty generating sector, diamond production. Alison Birrane and Jim Hawtin report.


Diamonds aren’t forever. This might contrast with the advertising slogan but that is the view of those most closely associated with diamond production.

Diamond supply has flattened in recent years, with most of the world’s largest diamond mines heading into their last years of production. And the lack of any major diamond discoveries in recent times means there are no substantial diamond mines on the horizon.

Supply is tight, diamond prices have gone up and demand, particularly for expensive, high-quality gems is on the rise – a trend that is expected to continue.

However, this is all good news for Western Australia’s diamond industry.

As a host of new explorers ramp-up efforts on the hunt for the next major discovery, producers Argyle Diamond Mines and Kimberley Diamond Company are examining their options.

Wholly-owned Rio Tinto company Argyle is investigating expanding its current mine underground life by around 13 years following a $A70 million feasibility study into an underground mine beneath its existing open-cut diamond mine in the Kimberley.

Kimberley Diamonds is also expanding its mining operations and has spun off an exploration company, Blina Diamonds, so it can focus on producing the premium quality stones from its Ellendale mine.

The fortunes of Kimberley and Argyle have provided much-needed fodder for the hopes of other WA-based explorers, which until recently have had little luck with discoveries.

Striker Resources is one company that has stuck it out at home and is set to reap the rewards.

It is just about to finalise a deal to purchase the Merlin diamond mine in the Northern Territory from Rio Tinto and has advanced its smaller, high grade Seppelt 2 and Seppelt 5 projects to a trial mining stage.

Striker believes it can get Merlin back into production in two years, with the trial mining at its Seppelt pipes to be completed in about 10 weeks, ahead of a decision whether to go ahead with a two-year open pit operation.

However, several other WA-based diamond explorers have shifted their attention offshore.

Junior miner Elkedra Diamonds has bought Brazilian diamond mine, Chapada Diamonds, and the Chapada alluvial diamond projects, to support exploration of its Northern Territory tenements.

Elkedra, one of Australia’s newest diamond explorers, hopes to uncover a significant diamond find in the 52,000 square kilometres of tenements in the NT’s relatively under-explored cratons in the Aljawarra.

Elkedra company secretary Max Cozijn said the potential of the area was first revealed in an aeromagnetic and radiometric survey undertaken by the Northern Territory government.

Elkedra floated in late 2001 after raising $3.5 million via its initial public offering.

On June 10 this year Elkedra announced that it would proceed with a listing on London’s AIM market, and proposed a $A12.5 million placement to the UK-based institutions after receiving shareholder approval for its scrip-based acquisitions of the Chapada Diamond Project in Brazil.

The company said the AIM listing would underpin the development of the $US6.4 million Chapada Project, securing Elkedra’s transition to diamond producer status within 12 months from completion of fund raising.

Perth-based Paramount Mining Limited, which listed on the Australian Stock Exchange on February 13 2004, has also been counting its exploration blessings after uncovering a 3.69 carat diamond during the commissioning of its bulk sampling operation at Willows Farm – part of its South African Vaal River project – in late May.

This find followed the discovery of two white diamonds totalling 1.8 carats the same week.

The unearthing of these diamonds heralds a significant milestone for the company in establishing the commercial viability of the project and lifted the share price 4.5 cents, about 28 per cent, to 20.5 cents.

“Results are encouraging, with commercial sized diamonds continuing to turn up,” Paramount CEO Maureen Muggeridge said.

“The object of a bulk sampling exercise is not only to prove up grade and value of the deposit, but to test the characteristics of the deposit from a potential mining perspective to assess the most cost effective avenues for future operation.

“We are currently still in this assessment and development stage as far as the deposits at Willows are concerned.”

Paramount also has two diamond projects in the Kimberley region (Ellendale and Napier projects) and three diamond projects in the Pilbara region (Ullawarra, Yangibana, Lionel).

Subiaco-based explorer Crown Diamonds is set to become a significant diamond producer following the recent announcement of its acquisition of South African Helan Diamond Mine for $US8.75 million.

Crown Diamonds chairman Denis Worral said the acquisition represented a major milestone for the company and it was expected to boost Crown’s annual production to 300,000 carats by 2006.

“The combined production of Helan, Star and Messina mines provides us with critical mass in terms of turnover and market capitalisiation. An added profitable operation also decreases the overall risk of the company,” Dr Worral said.

“Completion of this acquisition will re-rate Crown a major diamond producer and we look forward to continue growing the financial performance of the company.”

Another Perth-based company, Namakwa Diamond Company, is also focused on South Africa.

Bulk sampling at its namesake project on the West Coast of South Africa has so far recovered 42,569 diamonds for 4,533 carats.

The company now plans to mine 1.5 million tonnes this year as well as delineate a resource of 10mt containing 1.5 million carats.

Namakwa recently finalised an agreement with Trans Hex Group to explore and mine an extensive coastal trip adjacent to its Namakwa Diamond Project.



  • Argyle Diamond Mines
  • AKD Ltd
  • Blina Diamonds Limited
  • Crown Diamonds
  • Elkedra Diamonds
  • Kimberley Diamond Company
  • Mt Burgess Mining
  • Namakwa Diamond Company
  • Paramount Mining Corporation
  • Striker Resources NL


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