Study into old Merlin diamond mine could lead to hundreds of jobs, millions in royalties

Hundreds of jobs and millions of dollars in royalties could be on offer following study findings at an old NT diamond mine.

NEW life breathed into the old Merlin diamond mine could mean hundreds of jobs and millions in royalties for the Northern Territory.

Scoping study results posted with the Australian Stock Exchange Friday point to strong prospects for the revived diamond prospect, about 720km south east of Darwin.

Australian miner and explorer Lucapa Diamonds, which paid $8.5m for Merlin, posted results of its scoping study with the Australian Stock Exchange on Friday.

Key findings include a predicted revenue forecast of $1.6bn, a 2.1m carat production target and 14-year life-of-mine.

Merlin was previously owned by Rio Tinto and Ashton between 1999 and 2003 following which a Melbourne-based magnate Joe Gutnick took over the site in 2008. Mr Gutnick declared bankruptcy in 2016 and Lucapa bought the prospect when the Federal Court appointed liquidators in May 2020.

Lucapa managing director Stephen Wetherall said interest in Merlin began during the pandemic while the company’s mines in Angola and Lesotho were mothballed.

“Obviously very torrid times for mines in the pandemic,” he said. “While our mines were in care and maintenance sitting out a very horrible time we continued to evaluate project opportunities around the world.

“We became involved in Merlin in September last year, assessed it quite thoroughly during our due diligence and we closed the deal in May.”

His statement to the ASX pointed to extending the mine life beyond 14 years.

“The results of the Scoping Study confirm the great potential identified by Lucapa using an innovative hybrid open pit and vertical pit mining methodology to establish a mining operation at Merlin,” the statement said.

“The scoping study sets out strong economics for a long-life mine with a production target of 2.1 million carats, A$1.6bn in revenues and substantial earnings and cashflows to Lucapa over a 14-year life.

“There is potential to deliver further significant value through the operational opportunities and from mineral resource extensions, underground development and exploration as the kimberlites continue at depth and there are a significant number of anomalies that have the potential to deliver new source discoveries.

Based on the scoping study, Lucapa has commenced a feasibility study and will look to structure a hybrid debt equity financial solution and evaluate interest from potential joint venture partners.