Ellendale

Gem Diamonds acquired 100% of the Ellendale mine, in the Kimberley region of Western Australia, when it acquired Kimberley Diamond Company, a listed Australian company, in December 2007 for US$249 million.

The Ellendale mine consists of a number of lamproitic pipes of which, the E9 pipe is currently being mined. Lamproites are geological formations of a similar composition but different in structure to kimberlites. The E4 pipe at Ellendale was previously mined, however in light of recent market conditions, a decision was taken in February 2009 to place the E4 pipe on care and maintenance with immediate effect.

Ellendale is renowned for its remarkable production of fancy and vivid yellow diamonds that are produced as a result of high levels of nitrogen at the time of the diamonds formation and are greatly sought after for their rarity. Approximately 50% of the global supply of fancy and vivid yellow diamonds are mined from the Ellendale mine.

Since Gem Diamonds’ acquisition of Kimberley Diamond Company, processing capacity has been enhanced and production has been ramped up substantially. In 2008 Ellendale was able to process some 8.3 million tonnes (Mt) (6.3Mt in 2007) to recover 588 645 carats (475 306 carats in 2007) at a grade of 7.08cpht.

Current resource statements for Ellendale show a resource of 98 million tonnes at an average grade of 5.1 cpht. Sampling and exploration programmes are ongoing at Ellendale. There are numerous additional lamproites within the Ellendale mining lease area that have been targeted for sampling and that may be developed in the future.