Gibb River Diamonds gains new lease for life at Ellendale

WA’s Kimberley region is a destination hotspot for diamond collectors across the globe, but the region has been in a production vacuum since the Kimberley Diamond Company entered administration in 2015 and pink diamond dazzler Argyle shut its doors five years later. 

But now there’s hope for a flush diamond future in Northern Australian on news Gibb River Diamonds has received three key WA Government mining leases at the heart of the old Ellendale Diamond Mine. 

Gibb’s aim is to re-establish diamond mining at its Ellendale project. 

About Ellendale mine

The decommissioned Ellendale diamond hub 140km east of the port town of Derby and once supplied half the world’s Fancy Yellow diamonds to Tiffany’s before the mine’s 2015 closure. 

Ellendale spanned 124-square-kilometre of prospective territory but a new outlook for the decommissioned former mine site is focused on a smaller, suitably prospective area where Gibb hopes to build a new diamond operation. 

While mining-related infrastructure was demolished and rehabilitation works were undertaken at the old Ellendale mine, the allure of diamonds at Ellendale’s stockpile has never gone away. 

Gibb’s Ellendale vision

Western Australian company Gibb River Diamonds has leaned into a dream of developing a slice of ready-to-mine Ellendale over the past few years.

The company took up full ownership of the current project from Burgundy Diamonds in March 2023. 

Its contractor Animal Plant Mineral wrapped a fauna and flora survey of the Ellendale 9 area in April 2024, assisted by the local Bunuba people. 

Last week, it wrapped a heritage survey with in partnership with the Bunuba people, with whom the would-be developer inked a mining benefits agreement through Bunuba Dawangarri Aboriginal Corporation late last year.

Gibb sees heritage clearance obtained in tandem with traditional owners, the Bunuba people, as paving the way for a restart to mining over the main area known as E9.

Ellendale 9-lives

The Ellendale 9 area is the site of the ground’s former mine and is known as E9. It is at the heart of ground where Gibb hopes to see a production restart. 

Gibb is collecting evidence for a mining proposal that it plans to outline for the WA state government in permitting applications, and in its dealings with financiers. 

The company wants to develop the site’s historic workings out at the project’s E9 and E4 pipes, along with extensively bulk-sampled E12 alluvials and access areas. 

Ellendale’s mining lease approvals were unveiled late last month.

The project’s M04/475, M04/476 and M04/477 leases are at the core of the company’s development plans for the Ellendale areas E4, E9, E4 and E12. 

Gibb wants to position its production plant out at the decommissioned former Ellendale 9 mine, near a key asset on-ground known as Main Lights Stockpile. 

In the Lights

Main Lights is home to a 5.2 million tonnes resource featuring 1.26 carats for each hundred tonnes, as defined in November 2023.

Gibb is undertaking further efforts to update the resource and increase its value on-market and in real-dollar terms.

Diamonds have been trading in the vicinity of US$1,200 a carat ($1,620/ct), so a back-of-the-envelope valuation puts Main Lights’ value at US$7.9 billion ($10.6 billion). 

The informal value is a notable premium to Gibb’s $9.7 million market cap on Wednesday. 

While previous Ellendale operators reported combined market capitalisations of beyond $690 million on Gibb’s leases in 2006, the new Ellendale operation will need to travel an established development track to hit similar values. 

Gibb expects to receive its heritage survey final report in the first week of July as it follows the resource definition track and plans an update to the JORC resource for E9 area. 

An historic vision

Gibb is following an established historical path, pinning its hopes on a restart to mining at E9 first.

The Australian company has a particular focus on the partially mined, extensively sampled shallow alluvials area north of E9 pit, which have the highest historic grades. 

The West Perth-headquartered company hopes to build a new production plant at E9 between the main stockpile, Main Lights, a smaller area known as Sound Barrier Lights, and the E9 Open Pit tailings disposal area. 

Gibb has a number of financing options in mind, including debt, equity, earn-in partnering, joint-venturing, a North Australian Infrastructure Fund partnership, other government funding schemes, or a combination. 

It’s on the record as saying a start to production on the E9 Lights resource would be scalable and start as a simple initial mining operation that could potentially use a twin Flowsort X-ray diamond recovery machine the company already owns. 

Funding a new E9 operation is in the future for now, but for investors buying into the dream of green Lights for Yellow at Ellendale, financing is nonetheless a keen hope

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