Merlin Diamond Mine

The Merlin diamond mine is located approximately 100km-south of Borroloola and  in 2014 was the only diamond mine in Australia’s Northern territory.

Merlin  contained the second biggest diamond resources and reserve base in Australia and was once the third diamond producing mine in Australia. In 2022, Merlin Mine is Australia’s sole diamond mine following the closing of Rio Tinto’s Argyle diamond mine in 2020.

Merlin Diamonds purchased the Merlin property from Rio Tinto in 2004. The mine was initially expected to have a life of more than 15 years.

Diamond production at the Merlin mine commenced in September 2013 with the processing of the historic stockpiles. Borehole extraction of diamond ore from the Ywain kimberlite pit was also commenced simultaneously. The trial production was conducted in 2010 recovering 10,600ct of diamonds. The diamonds sale generated approximately $1.86m.

Merlin diamond mine location, geology, and mineralisation

The Merlin diamond mine is located within the Merlin property, which was developed and initially operated by Ashton Mining and later taken over by Rio Tinto. In 2014, the property comprised of the diamond mine and the surrounding exploration tenements (Merlin Orbit) extended in approximately 2,286km².

The Merlin property was initially made up of 14 kimberlite pipes divided into four clusters in which nine deposits were subject to bore hole mining from 1998 to 2003. Only 8 of the 14 kimberlite pipes were used, and the predicted initial production rate of 500,000ct of diamonds by its second year was not met as this rate was achieved in 2003, the year the operations ceased at an average value of $108 (A$151.07) per carat.

The property was known for top quality white diamond and large specials; in 2002, the biggest diamond the mine produced remains to be Australia’s biggest diamond, weighing at 104.73ct.

The property’s  diamond-bearing kimberlite pipes were believed to have intruded the sedimentary rocks of the southern McArthur Basin and northern Georgina Basin. Much of the diamond mineralisation is disseminated in volcanic rocks. The mineralisation occurs as Cratier-facies sequences comprising of country rock with minor juvenile material.

Merlin diamond mine reserves and resources

In 2004,  ore reserves were estimated to be 11.1million tonnes containing 2.9million carats of diamonds. The contained measured and indicated resources were estimated to be 4.31million carats.

Diamond mining and processing at Merlin mine

Borehole open pit mining was conducted at the Ywain kimberlite pit in the central cluster, which  was followed by Gawain, Excalibur and Palsac pits. Borehole method reduced the need for drill and blast, hauling and re-handling of ore which minimised the usage of mining fleet, and labour and capital costs.

The borehole method involved the usage of high-pressure hydraulic water jetting tool to cut and break the kimberlite rock formations within the pit. The resultant slurry was pumped to the surface via a hydraulic lifting system. The ore was then directly delivered to a 75tph capacity processing plant.

Processing methods such as HPGR and optical sorting were applied for diamond liberation and recovery during the pre-production trials.

Contractors involved with the development of Australian diamond mine

Jet Mining was awarded the contract to provide engineering and project management services, as well as borehold mining equipment for the diamond mine. The contract for operating the borehole mining rig, which provides access for the downhole mining tool, was awarded to Gorey and Cole Drillers.

DRA Group was engaged to upgrade and recommission the processing plant. AMC Consultants and Consulmet conducted the pre-feasibility study for the mine, and in August 2011, Ivanhoe Australia Limited (now Inova Resources Limited) conducted the definitive feasibility study, which unlocked two specialist metals, particularly rhenium. Merlin’s production of rhenium was a first for Australia.

Cater Care Group  provided catering and camp management services for the diamond mine. Merlin Diamonds teamed up with Kinley Exploration for conducting the borehole mining.

Post-2011 developments

Following owner Joseph Gutnik’s declaration of bankcruptcy in 2016, Merlin Diamonds almost went into liquidation, with the result of the company being suspended from the Australian Stock Exchange in 2018 and the Federal Court declaring the company insolvent in 2020.

In May 2021, Lucapa Diamonds bought the project for $6.08m (A$8.5m), saving it from liquidation. The scoping study they conducted in December of that year predicted a production target of 2.1 million carats, $1.1bn (A$1.6bn) in revenues and substantial earnings and cashflows to Lucapa over a 14-year life.

Mining is set to recommence in 2023.