ASX-listed Kimberley Diamonds has suspended operations at its Australia-based Ellendale diamond mine – which delivers almost 50% of the world’s rare, fancy yellow diamonds.
It has also placed its subsidiary, Kimberley Diamond Company (KDC), the holder of the Ellendale mining licence, into voluntary administration.
Kimberley Diamonds (Goodrich Resources at the time) acquired the Ellendale mine from Gem Diamonds in December 2012. It had been placed on care and maintenance in 2009 and according to Gem, offered a very short lifespan – to 2015 (on the E9 pipe). It was well known that Gem considered Ellendale a ‘struggling asset’ with deteriorating quality carats prior to its sale
Despite strong processing results at Ellendale in recent months and the initiation of a number of successful cost cutting initiatives, KDC’s revenues have been negatively impacted by lower recovered grades and lower size distributions and, as a result, lower prices have been realised.
In particular, prices achieved at its last auction held in Antwerp were significantly lower than those forecast, resulting from a sharp, unexpected decline in the rough diamond market. As a result, KDC is unable to continue trading solvently and the KDC board has been left with no option but to place KDC into external administration.
The voluntary administration does not apply to Kimberley Diamonds or its other subsidiaries which hold the interests in the Lerala diamond mine in Botswana or the Lomero-Poyatos project in Spain.
It has in fact recently secured debt finance which allows it to commence the re-commissioning of the Lerala diamond mine, which, once re-opened, will provide KDL with significant revenue streams for the life of mine of approximately seven years with significant potential for extension.