Australia’s Gibb River Diamonds (ASX: GIB) is getting closer to restarting the mothballed Ellendale diamond mine in West Kimberley after being granted three mining leases that are key for the project. Its shares rose on the news.
The permits mark a significant step in reviving production at Ellendale, which was a major diamond producing mine. The operation was particularly known for being a source of fancy yellow diamonds, being responsible for more than 50% of the annual world’s supply until it was shut down in 2015.
The leases cover the main portions of the historic workings at the E4 and E9 pipes, as well as the extensively bulk-sampled E12 alluvials and their access, Gibb River said.
As part as the reopening steps, Gibb River said it is scheduled to conduct a heritage clearance survey in the first week of June. The company is also studying financing options for the project, including debt, equity, earn-in partner, joint venture partner, a North Australian Infrastructure Fund partnership, or other government funding schemes available.
The Ellendale project had been under an agreement with Burgundy Diamonds (ASX: BDM) since 2021, in which the company would have a two-year option with Gibb River to earn full ownership of Ellendale for A$6.7 million in cash, 16-million Burgundy shares and a 1.5% gross revenue royalty to Gibb River.
However, in March last year, Burgundy decided not to exercise the option, and Gibb River retained its ownership.
Shares in the company were up 48% to A3¢ apiece, valuing the company at A$6.5 million ($5.9 million).
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