Gibb River Diamonds (ASX: GIB) has revealed it has already pegged two exploration licences and will apply for more over the Ellendale diamond mine and project area in Western Australia’s west Kimberley.
The decision to acquire the licences comes after WA’s Minister for Mines Bill Johnston invited the company to apply under the government’s expression of interest process.
Ellendale has been one of largest diamond mines – previously producing 1.3 million carats, including more than 50% of the worlds “fancy yellow” diamonds, which were subject to a special marketing agreement between Tiffany & Co and the mine’s former operator.
According to Gibb, the leases up for grabs encompass the most prospective ground at Ellendale including two previous hard rock mines – E4 and E9, which have now been pegged along with previous alluvial mines, workings and prospects.
“Gibb now owns these leases outright, covering most prospective diamond bearing ground in Australia with no private royalties,” the company stated.
“This magnificent opportunity allows the company to develop this exciting area with its huge potential and move towards our goal of becoming Australia’s next diamond producer,” it added.
Gibb’s lease areas at Ellendale will include three mining leases, two exploration licences, 11 prospecting licences and a miscellaneous permit.
With the exploration permits already pegged, the other licences are expected to be secured within two months.
The first target Gibb plans to advance is Blina.
The Blina alluvials target is part of the Terrace 5 diamondiferous alluvial channel, where diamonds originated in the E9 pipe.
According to Gibb, it has already secured mining leases for the target, which is also fully permitted with a processing plant and sorting equipment already purchased.
The “shovel ready” project is expected to require $2.5 million to mobilise and commission the plant and equipment. The figure also includes the cost of site works, camp installation and working capital for four months of bulk sampling and trial mining.
Gibb noted the project is “ready to go” and just requires the final financing.
Overall, Gibb anticipates there is “enormous potential” at the Ellendale leases to develop a profitable diamond operation.
“There are numerous exciting opportunities available at Ellendale, which Gibb has acquired for simply the cost of pegging the leases, with no legacy liabilities,” the company stated.
The market reacted positively to the news spurring Gibb’s share price up almost 120% to trade at $0.059 mid-morning.