North Australian Diamonds
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For personal use only October 2013 Forward Looking Statement This presentation contains “forward looking statements”. Such “forward looking statements” may include without limitation (1) estimates of future earnings, the sensitivity of such earnings to diamond values and foreign exchange rate movements (2) estimates of future diamond production (3) estimates of future cash costs (4) estimates of future cash flow, the sensitivity of such flows to diamond values and foreign exchange rate movements (5) statements regarding future debt payments (6) estimates of future capital expenditure (7) estimates of reserves, resources and statements regarding future exploration results. Where the Company expresses or implies an expectation or belief as to future events or results such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, “forward looking statements” are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such “forward looking statements”. Such risks include but are not limited to diamond values, currency fluctuations, increased production costs and variances in grades or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries and states in which the Company operates or sells product and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, expect as may be required under applicable securities laws. Competent Persons Statement The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr DS Tyrwhitt who is a member of the Australasian Institute of Mining and Metallurgy. Dr DS Tyrwhitt is an independent consultant to the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr DS Tyrwhitt consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. For personal use only 2 Only 1% of discovered kimberlites are economically viable For personal use only 3 For personal use only 4 Over the past 24 months Merlin Diamonds has focused on pre-feasibility production trials and feasibility studies aimed at re-establishing operation at the Merlin Mine in the Northern Territory, Australia. Merlin Diamonds is also active in its other tenement holdings in the North Kimberley, and Arnhem Land, holding approximately 22,000km² in total under title. BORROLOOLA Arnhem Land North Kimberley MERLIN OTHER PROJECT AREAS 1.5Mcts* Borroloola Southern Cluster: Merlin PalSac, Launfal, North Kimberley 7.2Mcts* Excalibur, Tristram Seppelt 1 & 2 Ashmore Central Cluster: Gawain, Ywain Arnhem Land Ellendale (Gem Diamonds) Argyle Northern Cluster: (Rio Tinto) Gareth, Kaye, Ector, Bedevere Perth Melbourne MERLIN ORBIT Exploration For personal use only Head Office Office Tintagel Lancelot North Australian Craton *Includes material classified as reserves and resources 5 Ywain is open at depth PALSAC PIPE Ore Reserve 0m Open pits 47 metres 50,000 carats 80m Resource 120 metres JORC 100,000 carats Probable Ore Reserve 8.1Mt 2,410,000 Gawain is open carats at depth 438m Ore Reserve JORC 69 metres Inferred 210,000 Resource carats 6.59Mt 1,960,000 carats For personal use only Resource 868m 240 metres 450,000 carats 14.69Mt 4.,370,000 Carats 6 . Merlin Diamonds Limited ( “Merlin Diamonds" or “the Company") is focused on developing its flagship Merlin Diamond Mine Project in the Northern Territory, Australia and is engaged in extensive exploration for additional sources of diamonds in and around Merlin . Merlin Diamonds has previously undertaken resource definition drilling resulting in the identification of sufficient resources to potentially underpin a 15 year plus mining project . Merlin is renowned for producing large, high clarity, super white, high value stones . Successful pre-feasibility production trials recovered 10,600cts of diamonds , which were valued at USD$351 per carat in June 2011 by Independent Diamond Valuers Pty Ltd , highlighting the viability of proceeding to a commercial mining operation . Merlin has commissioned the diamond recovery plant and processing of historic ROM stockpiles has begun. Borehole mining rig setup on the Ywain pit is complete and production from the first borehole will commence in October 2013. Merlin is the only diamond mine in the Northern Territory and will be the third producer in Australia. For personal use only The largest diamond found in Australia Some of the diamonds produced from Merlin production assortment the Merlin 104.73ct stone 7 . Refurbishment and commissioning of the diamond recovery plant is now complete. Construction of the gabion wharf for loading of the drill rig onto the floating platform (barge) and construction and emplacement of the barge is also complete. The borehole rig has mobilised onto the barge and drilling of the pilot hole has commenced. First production from the borehole is expected in October 2013. Previously unprocessed kimberlite material that was stockpiled from previous mining (and was too large to process) is now weathered enough to reprocess after being exposed for over 15 years. Between 180,000 – 200,000 tonnes of this material is estimated to be available and has been used for commissioning of the plant and can be used as supplementary feed to the borehole mining ore. The ROM stockpiles, apart from being bonus ore material that can be processed at a low cost, also have the potential to host large diamonds due to the fact that the previous plant could only process stones up to For personal use only 20mm in diameter (approx. 100 cts). These larger stones, being more dense than the host rock, will likely be at the base of the stockpiles and if present, represent a significant windfall opportunity. 8 For personal use only 9 For personal use only 10 . Total Merlin JORC compliant combined Indicated and Inferred Mineral Resource is 19.02 million tonnes for a contained 4.31 million carats . Total Merlin JORC compliant Probable Ore Reserve is estimated at 11.1 million tonnes for a contained 2.9 million carats . Total Merlin Diamond Mineral Resource and Ore Reserve is now the second largest in Australia . 10,600 carats of diamonds recovered in the pre-feasibility production trials, with the largest diamond recovered being a 24.12 carat gem quality diamond . 2,590 carats were greater than 1ct, representing 24% of production . Of the +1ct diamonds, in excess of 75% were assessed as ‘gem’ or ‘near gem’ quality . Diamonds recovered in the 2010 production trial which were valued at USD$351 per carat in June 2011 by Independent Diamond Valuers Pty Ltd . Merlin Diamonds has delineated further drill ready kimberlite targets on the Merlin Mine Lease. Ore Average Grade Carats Ore Classification (tonnes) (ct per tonne) (Million carats) Probable Ore Reserves 11.07 0.26 2.89 IndicatedFor personal use only & Inferred 19.02 0.23 4.31 Mineral Resources TOTAL 30.09 0.24 7.20 Merlin cut & polished diamonds, 2011 *Modifying factors for borehole mining have not been applied to this Ore Reserve estimate 11 Probable Indicated Inferred Total (Mt) Grade Carats Carats Ore Reserve Grade (c/t) Mineral Mineral (c/t) (Mcts) (Mcts) (Mt) Resource Resource (Mt) (Mt) Southern Cluster Southern Cluster PalSac2 8.1 0.30 2.41 PalSac2 6.59 6.59 0.30 1.96 Launfal2 1.58 1.70 3.28 0.25 0.82 Central Cluster Excalibur1 0.46 0.31 0.77 0.34 0.26 Gawain2 0.5 0.39 0.21 Tristram2 0.74 0.74 0.06 0.04 Ywain2 0.1 0.81 0.05 Central Cluster Northern Cluster Gawain2 0.53 0.61 1.14 0.39 0.45 Kaye2 0.9 0.12 0.10 Ywain2 0.02 0.10 0.12 0.81 0.09 Ector1 1.5 0.07 0.11 Northern Cluster TOTAL 11.1 0.26 2.89 Gareth1 0.13 0.14 0.27 0.22 0.06 2 The above Ore Reserves are additional to the Mineral Resources and are estimated on Kaye 2.14 2.14 0.12 0.26 open pit and underground mining assumptions. A Reserve for alternative mining For personal use only methods has not yet been estimated. Ector1 3.47 3.47 0.07 0.26 Bedevere2 0.37 0.14 0.50 0.21 0.11 1Resource grade based on previous mining operation recovery using a +0.95 mm slotted bottom screen and a +0.95mm cut-off. 2Resource grade based on bulk sample test work using a +0.8 TOTAL 3.09 15.93 19.02 0.24 4.31 mm slotted bottom screen and a +0.95mm cut-off. 12 Depth of Kimberlite Pipes and Total carats for each Reserve classification shown on Indicated Known Mineralisation chart (Mct) at Merlin Inferred Pipe Total Carats (Mct) 0.21 0.21 0.24 Gawain 0.66Mct 0.05 0.01 0.08 Ywain 0.14Mct 2.41 1.96 PalSac 4.37Mct 0.11 0.26 Ector 0.37Mct 0.1 0.26 Kaye 0.36Mct 0.16 0.10 Excalibur 0.26Mct 0.40 0.43 Launfal 0.82Mct 0.03 0.03 Gareth 0.06Mct 0.08 0.03 Bedevere 0.11Mct 0.04 Tristram 0.04Mct For personal use only 0 100 200 300 400 500 600 700 800 900 1000 Depth Below Each Pit Base (metres) 2.20Mct 2.36Mct 2.64Mct 13 .