Recovery of high-value green diamonds has the potential to rerate MED

Published at Mar 15, 2017, in Small Caps

Merlin Diamonds (ASX:MED) announced on Tuesday that it had recovered five green diamonds from the Kaye pit, amongst them ‘intense greens’. The largest green diamond recovered as seen below was 1.4 carats.

Pure green diamonds are extremely rare and highly valued, ranging from light mint green to vivid grass greens. These can contain a yellowish, bluish or greyish modifying colour.

Only a handful of natural green diamonds are introduced into the market each year, making them some of the most sought-after of all natural coloured diamonds. Green diamonds are predominantly found in regions of Africa and South America.

Consequently, for MED to have discovered green diamonds at its Merlin mine is not only significant in terms of the standalone value of the stones, but also the profile of the mine as its potential to yield green diamonds (and blue) is taken into account in terms of asset valuation and investor attraction.

However, it should be noted that MED is a speculative mining stock, and investors considering this stock for their portfolio should seek professional financial advice before making an investment decision.

Strength of colour an important price determinant

MED’s reference to an ‘intense green’ colour is particularly encouraging as this places it near the top of the value chain in terms of overall green diamonds. This is demonstrated below.

Management said yesterday that more green diamonds have been recovered from the ongoing operations at Merlin, and are being validated by independent experts. The results of these valuations could represent a potential share price catalyst.

As mentioned the recovery of these green diamonds comes on the back of the previous discovery of a rare blue diamond in December 2016, demonstrating the mine’s potential for producing valuable coloured diamonds.

MED also announced that it is currently raising $5.5 million via an entitlement issue which is fully underwritten by Triple C stockbrokers.

Merlin boasts a stellar history

Merlin Diamonds is the owner of the Merlin diamond mine in the Northern Territory, Australia, which is famous for producing large, high clarity, super white and high value diamonds.

Australia’s largest diamond, a 104.73 carats stone, was discovered at Merlin. MED also holds extensive exploration ground in and around the Merlin diamond mine, and the group is actively working to extending exploration for additional sources of diamonds.

Ashton Mining and Rio Tinto completed five years of mining at Merlin diamond mine between 1999 and 2003, processing over 2.2 million tonnes of ore to produce more than 500,000 carats.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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