North Australian Diamonds Limited

Merlin Diamond Project

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North Australian Diamonds Ltd acquired 100% of Mining Lease 1154 covering the former Merlin Diamond Mine operations in the Northern Territory from Ashton Mining Limited (a wholly owned subsidiary of the Rio Tinto Group) in 2004. This acquisition built on the Merlin Orbit exploration tenements, which had been previously acquired from Rio Tinto.

The project is situated approximately 75km SSE by road from McArthur River, 80km due south by air from the town of Borroloola and 720km SE of Darwin in the Gulf Region of the Northern Territory.

The Merlin diamond field comprises 14 kimberlite pipes, grouped into four clusters. Twelve of the pipes, all subject to either open pit mining or testing, are located within the mineral lease MLN1154, which was granted on 15th June 1998.

Merlin diamonds are known for the brilliant white colour and large size. The largest diamond ever found in Australia, a 104.73 carat white gem quality stone, was recovered from Merlin and was valued at approximately US$525,000 in 2002.

Since July 2009, North Australian Diamonds has been focused on pre-production trials and feasibility studies, aimed at advancing its flagship Merlin Project in the Northern Territory, Australia. The successful completion of the trials in September 2010 resulted in the recovery of 10,600cts of diamonds of which 2,590 carats were greater than 1 carat, representing 24.4% of production. Of the +1ct diamonds, in excess of 75% were assessed as 'gem' or 'near' gem quality.  

A 24.12ct gem quality diamond, the largest recovered by NADL since acquiring the Merlin mine, was recovered from Kaye pipe in March 2010.   

The pre-production trials highlighted the potential to proceed to a commercial mining operation and the Company is advancing studies to confirm the scale and commercial viability of the mining project, which are being undertaken by Australian Mining Consultants (AMC). 

In addition to the AMC study, engineering firm Consulmet have been awarded the contract for a Definitive Feasibility Study for a 1.5Mtpa+ (approx. 300,000 carats per annum) diamond operation at Merlin. Consulmet were chosen as the project manager for the Merlin DFS due to their extensive experience in designing, fabricating, constructing, commissioning and operating of diamond processing plants in Africa.

The awarding of the DFS contract is a significant milestone for North Australian Diamonds Ltd and is the culmination of many years of resource definition, pre-feasibility studies, trial mining and production, diamond liberation improvements and many other important contributing technical studies. This detailed previous work has enabled North Australian Diamonds to embark on this final encompassing study which will allow for construction and development of the mine in 2012.

In October 2010, the Company reported that initial assessment of the run of mine (ROM) rough diamond parcel value was US$180 - US$200 per carat. The Company has recently had Independent Diamond Valuers Pty Ltd complete valuations of the ROM rough diamond parcel, with the price now being assessed in excess of US$330 per carat.

The strength in price reflects the continuing strength of the international diamond market and premium quality of the Merlin diamonds. As shown in figure 1 below, the supply and demand fundamentals of the diamond market will continue to place upwards pressure on diamond prices into the future as demand will far outstrip forecast supply. According to the IDEX Online Polished Diamond Price Index prices of polished diamonds increased by 5.6% in July compared to June, soaring by a dramatic 25% year-over-year. 

 Click image to enlarge.

The Company believes that the high quality and size of the diamonds produced by Merlin will enable 'branding' and boutique marketing opportunities, which will be important in redeveloping Merlin and successfully establish NADL as an integrated long term diamond producer.    

• 7 February 2012 Appendix 3B - Issue of Shares > Read more

• 31 January 2012 Quarterly Activities Report for the period ended 31 December 2011 > Read more

• 25 January 2012 Appendix 3B - Issue of Shares > Read more

• 16 December 2011 Appendix 3X - Dr D S Tyrwhitt > Read more

• 16 December 2011 Appointment of Dr David Tyrwhitt as a Director > Read more

• 25 November 2011 Annual General Meeting November 2011 > Read more

• 25 November 2011 Results of Annual General Meeting 2011 > Read more

• 31 October 2011 Quarterly Activities Report for the period ended 30 September 2011 > Read more

• 25 October 2011 NADL Annual Report 2011 > Read more

• 24 October 2011 Notice of 2011 Annual General Meeting > Read more