The historic Ellendale diamond mine is famed for its yellow diamonds, producing more than half of the world’s fancy yellow diamonds since operations started in 2002.

Burgundy intends to extract maximum value from the Ellendale stones in the global luxury goods markets.

The company is paying Gibb River Diamonds $6.7 million in cash, 16 million Burgundy shares (valued at $6.2 million at the time of writing) and a 1.5 per cent revenue royalty.

Burgundy managing director Peter Ravenscroft said the transaction ticked many of its strategic boxes as it built out into the world’s leading mid-cap diamond company.

“It is in one of our focus jurisdictions of low-risk diamond countries; it provides us potential for early cashflow to underpin our expansive growth strategy; and it focusses on the production of high-value coloured stones in the same way as our Naujaat diamond project in Canada,” Ravenscroft said.

The Naujaat project is one of the three diamond projects Burgundy has acquired an interest in since late 2019. The project contains a population of uniquely coloured and rare high value stones, according to Burgundy.

Burgundy has also formed an exploration alliance with Diamond Exploration Strategies in Botswana, Africa.

Gibb River Diamonds chairman Jim Richards said the Ellendale diamond project required significant capital to progress.

“(Gibb River) believes the involvement of Burgundy will provide greater certainty and upside for (Gibb River) shareholders in this regard, whilst also providing significant additional benefits for all stakeholders in the region,” he said.

The Ellendale acquisition includes the Blina project areas and alluvial diamond deposit to the north-west of the Ellendale properties.

Burgundy will focus on the Blina alluvial deposits and assess the sources of diamond-bearing material on the old Ellendale mine tenements.

The company plans to carry out bulk sampling of targets once the plant is commissioned.