Tiffany's Ellendale mine in the Kimberley strikes yellow diamond gold!

FROM the air, a sight that evokes Tolkien's Middle Earth looms out of the scrub - a vast gouge in the earth, striated with yellow and grey rock.

This is Ellendale Diamond Mine in the remote reaches of the Kimberley in northwest Australia, and arriving there is a bit like landing on another planet - but one fit for giants rather than dwarfs.

On the ground, though, among the mud and muddle of a mine site, we find an atmosphere that seduces-a friendly and excited "family" that is building a life around bringing the sunshine back to the yellow diamond business.

Times have been rocky in the diamond industry since the global financial crisis, but a new executive team from South Africa has crossed the Indian Ocean to be part of a new vision for Ellendale, one that sees it as a unique platform to satisfy the quickening thirst for high-calibre yellow diamonds in China and India.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

FROM the air, a sight that evokes Tolkien's Middle Earth looms out of the scrub - a vast gouge in the earth, striated with yellow and grey rock.

This is Ellendale Diamond Mine in the remote reaches of the Kimberley in northwest Australia, and arriving there is a bit like landing on another planet - but one fit for giants rather than dwarfs.

On the ground, though, among the mud and muddle of a mine site, we find an atmosphere that seduces-a friendly and excited "family" that is building a life around bringing the sunshine back to the yellow diamond business.

Times have been rocky in the diamond industry since the global financial crisis, but a new executive team from South Africa has crossed the Indian Ocean to be part of a new vision for Ellendale, one that sees it as a unique platform to satisfy the quickening thirst for high-calibre yellow diamonds in China and India.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

Tiffany's Ellendale mine in the Kimberley strikes yellow diamond gold!

FROM the air, a sight that evokes Tolkien's Middle Earth looms out of the scrub - a vast gouge in the earth, striated with yellow and grey rock.


This is Ellendale Diamond Mine in the remote reaches of the Kimberley in northwest Australia, and arriving there is a bit like landing on another planet - but one fit for giants rather than dwarfs.
On the ground, though, among the mud and muddle of a mine site, we find an atmosphere that seduces-a friendly and excited "family" that is building a life around bringing the sunshine back to the yellow diamond business.
Times have been rocky in the diamond industry since the global financial crisis, but a new executive team from South Africa has crossed the Indian Ocean to be part of a new vision for Ellendale, one that sees it as a unique platform to satisfy the quickening thirst for high-calibre yellow diamonds in China and India.
 

This relatively small Kimberley open-cut mine - a fraction of the size of Argyle to the east - has a special claim to fame. While Argyle produces the supremely rare pink diamonds, the vast bulk of its production is of low-grade industrial-quality diamonds. Ellendale, by contrast, is the world's leading producer of fancy yellow diamonds-accounting for 50 per cent of global supply - which explains why in 2010 the world's leading jeweller Tiffany & Co negotiated exclusive rights to them for the full economic life of the mine. This is the glamour end of Australia's mining boom.


Only one in 10,000 of all diamonds are yellow, and less than 1 per cent of these radiate the inner fire that makes them "fancy" - their rarity commanding prices two or three times that of a white diamond. The best diamonds that come out of Ellendale have a wonderful buttery sheen and are so beautiful as they come out of the ground- uncut and unpolished - that you can almost see the jewel in your hand. While only 12 per cent of Ellendale's stones are radiant and charismatic enough to meet Tiffany's exacting standards, they account for about 80 per cent of the mine's total revenue.


Always prized by connoisseurs, yellow diamonds have recently surged in popularity among the style-conscious, in keeping with the fashion for all brightly coloured gems; celebrities Heidi Klum and Jennifer Lopez have recently sported yellow diamond rings and Rihanna has sung of "Yellow diamonds in the light". Tiffany & Co has stoked this appetite for yellow diamonds in a variety of modern jewellery using a cushion cut its stonecutters have tailored to maximise their striking colour and inner fire, such as its popular Soleste collection, which uses a double halo of yellow and white diamonds.

"The rough stone was cut into a cushion-shape brilliant weighing 128.54 carats with an unprecedented 82 facets and was named the Tiffany Diamond." This colossal stone, which was cut for brilliance rather than size so that it sparkles as if lit by an internal flame, mesmerised the public at world fairs from the 1890s to the 1930s. Audrey Hepburn was one of only two women to wear the Jean Schlumberger setting of the Tiffany Diamond, donning it for publicity shots for Breakfast at Tiffany's in 1961. Last year, the stone was set into a new necklace for the jeweller's 175th anniversary and sent to showcases in Tokyo, Dubai and Beijing. Today this new setting is on permanent display at Tiffany & Co's flagship store on Fifth Avenue, where it continues to spur the growing appetite for canary-coloured diamonds packed up in robin's egg blue boxes.

Far from the glitter of Fifth Avenue, among the elemental forces of nature, Ellendale has its own beauty, close to spectacular landforms such as Windjana Gorge and Tunnel Creek, which cut through rugged limestone ranges that formed Western Australia's famous Devonian Reef.

But what brings a sparkle to the eye of exuberant Russian-born investor Alex Alexander are the potential riches beneath this red earth. Alexander, KDL's executive chairman and its largest shareholder, is a key member of the new team taking a shrewd gamble on Ellendale.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

The irony is that demand for Tiffany's most prestigious gem is growing apace at a time when its security of supply has been under a cloud. Ellendale's primary producing pit is almost mined out, and the secondary pit has been suspended since 2009. Substantial investment is needed to prolong the mine's productive life, something the previous owners, Britain's Gem Diamonds, considered uneconomic during the dramatic price slump on the rough diamond market during the GFC, which saw it bleed millions of dollars in losses in 2008.

While prices have since rebounded strongly, thanks partly to Tiffany's merchandising of yellow diamonds, Gem Diamonds had been making plans for closure before it sold the business to ASX-listed Goodrich Resources in February at a bargain basement price.

But under the new owner, which changed its name to Kimberley Diamond Limited in April, it's a new era of opportunity and commitment. A new strategy and depth of experience in mining techniques have been brought in to extend the life of the mine at a viable cost, and an aggressive exploration program is planned. This new mine plan is clearly a relief for Tiffany, which had drawn up contingency plans "to ensure the seamless acquisition of diamonds from Ellendale", says Glen Schlehuber, managing director of Tiffany & Co Australia.

In August, Tiffany & Co hosted a group of Chinese, Japanese and Australian journalists on a visit to Ellendale to see how these rare and sought-after symbols of enduring love begin their journey to the display cases of the top jeweller in the world.

Yellow diamonds have been the jewel closest to the Tiffany identity since 1878, when founder Charles Lewis Tiffany bought a 287.42-carat fancy yellow rough stone. "This stone's acquisition solidified Mr Tiffany's reputation as the 'King of Diamonds' and made Tiffany & Co the world's diamond authority," says Schlehuber.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

"We believe in the story of diamonds," says Alexander, explaining why he bucked negative sentiment towards the diamond sector among major resource companies.

BHP recently exited the diamond industry, selling its EKATI mine in Canada, to concentrate on its core business. Rio Tinto, which owns the massive Argyle mine, tried to divest its diamond interests to reduce debt but shelved those plans in June. Gem Diamonds, which paid $300 million for Ellendale in 2007, waited for a buyer for a year before it accepted a price of just $14.3 million.

"The price was low; the cashflow projections were good. We thought we would make our money back in six months and we did it in two," says Alexander. "If you buy low, the sky is the limit to where it can go ... I thought it was worth the risk. On a personal level, diamonds are cool.

They are shiny and everyone wants to have them. It is a squirrel mentality which I can relate to."

The risk looks set to pay off, with independent investment house MineLife backing KDL to "reap huge rewards" from its "confidence and courage in pursuing the Ellendale opportunity (against a backdrop of ignorance and misunderstanding with respect to diamonds and the diamond industry generally)".

Lee-Anne de Bruin, KDL's young and vibrant managing director, also believes in the story of diamonds.

As a chartered accountant, she is excited by the recovery in diamond prices and predictions that demand will outstrip supply over the next decade, making it viable to plan for the reopening of Ellendale's secondary pit. Figures from broker Bain & Co estimate demand to grow by 5.9 per cent a year until 2020, as the emerging middle classes in China and India adopt the Western practice of giving diamonds as celebratory gifts. Meanwhile, with no major diamond discovery since 1997, global supply is expected to inch up by a mere 2.7 per cent, forcing producers to look at alternative mining techniques and reprocessing of tailings stockpiles to extend the life of existing mines.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

"We believe in the story of diamonds," says Alexander, explaining why he bucked negative sentiment towards the diamond sector among major resource companies.

BHP recently exited the diamond industry, selling its EKATI mine in Canada, to concentrate on its core business. Rio Tinto, which owns the massive Argyle mine, tried to divest its diamond interests to reduce debt but shelved those plans in June. Gem Diamonds, which paid $300 million for Ellendale in 2007, waited for a buyer for a year before it accepted a price of just $14.3 million.

"The price was low; the cashflow projections were good. We thought we would make our money back in six months and we did it in two," says Alexander. "If you buy low, the sky is the limit to where it can go ... I thought it was worth the risk. On a personal level, diamonds are cool.

They are shiny and everyone wants to have them. It is a squirrel mentality which I can relate to."

The risk looks set to pay off, with independent investment house MineLife backing KDL to "reap huge rewards" from its "confidence and courage in pursuing the Ellendale opportunity (against a backdrop of ignorance and misunderstanding with respect to diamonds and the diamond industry generally)".

Lee-Anne de Bruin, KDL's young and vibrant managing director, also believes in the story of diamonds.

As a chartered accountant, she is excited by the recovery in diamond prices and predictions that demand will outstrip supply over the next decade, making it viable to plan for the reopening of Ellendale's secondary pit. Figures from broker Bain & Co estimate demand to grow by 5.9 per cent a year until 2020, as the emerging middle classes in China and India adopt the Western practice of giving diamonds as celebratory gifts. Meanwhile, with no major diamond discovery since 1997, global supply is expected to inch up by a mere 2.7 per cent, forcing producers to look at alternative mining techniques and reprocessing of tailings stockpiles to extend the life of existing mines.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

"We believe in the story of diamonds," says Alexander, explaining why he bucked negative sentiment towards the diamond sector among major resource companies.

BHP recently exited the diamond industry, selling its EKATI mine in Canada, to concentrate on its core business. Rio Tinto, which owns the massive Argyle mine, tried to divest its diamond interests to reduce debt but shelved those plans in June. Gem Diamonds, which paid $300 million for Ellendale in 2007, waited for a buyer for a year before it accepted a price of just $14.3 million.

"The price was low; the cashflow projections were good. We thought we would make our money back in six months and we did it in two," says Alexander. "If you buy low, the sky is the limit to where it can go ... I thought it was worth the risk. On a personal level, diamonds are cool.

They are shiny and everyone wants to have them. It is a squirrel mentality which I can relate to."

The risk looks set to pay off, with independent investment house MineLife backing KDL to "reap huge rewards" from its "confidence and courage in pursuing the Ellendale opportunity (against a backdrop of ignorance and misunderstanding with respect to diamonds and the diamond industry generally)".

Lee-Anne de Bruin, KDL's young and vibrant managing director, also believes in the story of diamonds.

As a chartered accountant, she is excited by the recovery in diamond prices and predictions that demand will outstrip supply over the next decade, making it viable to plan for the reopening of Ellendale's secondary pit. Figures from broker Bain & Co estimate demand to grow by 5.9 per cent a year until 2020, as the emerging middle classes in China and India adopt the Western practice of giving diamonds as celebratory gifts. Meanwhile, with no major diamond discovery since 1997, global supply is expected to inch up by a mere 2.7 per cent, forcing producers to look at alternative mining techniques and reprocessing of tailings stockpiles to extend the life of existing mines.

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf

KDL's chief financial officer and head of sales and marketing, Stephen Wetherall, another recent immigrant from South Africa, explains that the consistency of colour from Ellendale is useful for making collections of jewellery.

"If you are sourcing from other mines around the world or the open market it's harder to make a 'suite' because they produce different or inconsistent shades of yellow-some would be greener, more orange or browner."

Two veteran sorters crowned with magnifying spectacles crouch over benches, sifting and assessing the stones; both feel privileged to spend their days with such beauty. "Every day is a new adventure," says Gavin Begbie, who has been sorting diamonds for 40 years.

"Every day is a surprise because you don't know what you are going to see. You could find a triangular-shaped stone that shines like a rainbow because it has a crack in it. You see everything from a beautiful, shining octahedron of the best quality down to a low-quality stone that is dead."

On the day of our visit, Begbie is excited because he has found a yellow gem of a hue deeper and richer than the deepest stone in the four samples used to assess Tiffany-quality yellow diamonds. "It has a rich orangey glow. Every day as you pour out your diamonds you find something new," he enthuses. "In King Solomon's Mines, Rider Haggard describes the adventurers' reaction when they see the diamonds for the first time. They are taken aback by the shine. That's what we see every day. We are so lucky."

- See more at: http://www.theaustralian.com.au/executive-living/luxury/tiffanys-ellendale-mine-in-the-kimberley-strikes-yellow-diamond-gold/story-e6frg8io-1226754287190#sthash.rrmzoI0e.dpuf