POZ Minerals to Bid for Ellendale Mine

RAPAPORT... Only a year ago, very few in the diamond industry would haveheard of POZ Minerals. But the company, better known as a phosphates producer,is trying to build a portfolio of projects in Western Australia that could makeit a niche supplier of fancy-yellow diamonds. POZ announced Tuesday that it was bidding for the Ellendalemine after the state government's call for investors in the asset last week.While POZ already owns the adjacent Blina mine, it hopes to combine the twoassets and solidify its position in the fancy-yellow category, Jim Richards,POZ chairman, explained in an interview with Rapaport News Monday. Owning both "would result in economies of scale andefficiencies in exploration and development and would be a major step towardsbuilding a branded diamond-mining company producing the fancy yellows for whichBlina and Ellendale are justifiably famous," the company added in a statementit released Tuesday. Richards believes the company is a front-runner in theEllendale bid, given that it already has four mining leases at Blina and since POZis the only miner in the area with such a license. It also already has a dealwith Bunuba Group, the native titleholder for both the Blina and Ellendaleland. Ellendale comes with some history, however, after former owner Kimberley Diamondsran up bills and a list of creditors that forced it to close the mine in 2015.That, despite a lucrative supply agreement with luxury jewelry Tiffany &Co. for its fancy-yellow diamonds. Richards is hoping to reestablish that partnership and forgenew ones with other retailers. Ellendale's yellows have a consistency few othermines can achieve, he explains. Meanwhile,POZ is in talks with retailers in Australia and abroad for similar offtakeagreements and branding of yellow diamonds from the Blina mine. POZ is still in a testing phase at Blina and is looking forinvestors, or to partner with "an experienced mining company," beforeproduction can proceed. Testing shows that fancy yellows account for about 7%of Blina's production, while white stones make up 18%, 46% are off-whitediamonds, and 29% brown. Of those, 93% are gem content or near-gem content,Richards noted. A parcel of stones from the mine was valued at an averageprice of $389 per carat, with the fancy-yellow diamonds estimated atapproximately $3,391 per carat. Image: Blina mine yellow diamonds. Credit: POZ Minerals