• Since the Argyle mine closed there’s been a massive diamond supply hole
  • Burgundy has just revealed a 1.51 carat Fancy Yellow stone from its WA mine
  • Last week Lucapa found the sixth stone from its Lolo diamond mine in Africa


Diamonds have been in short supply since the closure of Rio Tinto’s (ASX:RIO) Argyle diamond mine in 2020 which operated for 37 straight years, and produced around 95% of the world’s supply of pink diamonds.

The mine produced close to 140-150 million carats per annum, compared to today where we have a little over 100 million carats. I myself am notably short of the several million I deserve and will have.

Meanwhile, those are some 15 million carats of rough supply boots to fill, and ASX diamond players have been scrambling to claim a slice of the market.

And now, Burgundy Diamond Mines (ASX:BDM) has just recovered its first diamond from the Ellendale Project in WA, mothballed in 2015 and famous for its brilliant yellow stones.

Check out this 1.51 carat octahedral Fancy Yellow stone.


BDM yellow diamond
Fancy! Pic: Supplied. The next step is commercial production of these fancy yellow stones.


Commercial diamond production by Q4

Burgundy also owns the Naujaat project in Canada along with diamond and precious metals exploration projects in Botswana and Peru, and MD Peter Ravenscroft says this find is the first step in building an end-to-end diamond company.

“The first diamond recovered at Blina is an example of the potential quality of product from the Blina alluvials and the wider Ellendale project, and we look forward to building towards commercial production of these exquisite Fancy Yellow diamonds,” he said. 

“This is especially timely as we finalise arrangements for the upcoming Australian launch of our ultra-luxury Maison Mazerea diamond brand later this month, which will be the vehicle to market and sell polished retail stones.” 

The company is now ramping up throughput rates at its plant on site, with first commercial diamond production expected in Q4.


Lucapa finds a 160-carat white diamond

But there’s another player who’s already up and running.

The Lucapa Diamond Company (ASX:LCP) owns stakes in the Mothae and Lulo diamond mines in southern Africa and last year bought the Merlin mine in the Northern Territory which was the producer of some of Australia’s biggest precious stones in its past life.

And just last week the company recovered a 160-carat white Type IIa diamond from Lulo, the sixth-largest stone from the deposit to date.

Diamond recoveries have been strong with over 100 Specials (diamonds weighing more than 10.8 carats) recovered in the last two months – including a massive 170 carat pink diamond.

Like gold, pink diamonds have become a safe haven investment because the physical product is extremely rare and holds its value in times of economic instability.

Added to its African mines, the Merlin project also has some strong production potential, with an updated scoping study highlighting a production target of 2.1 million carats. 

A feasibility study is expected to be completed by Q3 2022. 


LOM pink diamond
Pic: The 170 carat pink diamond compared to an 80 carat white.


Only three diamond players on the ASX

The third diamond company on the ASX is Odessa Minerals (ASX:ODE), who’s exploration efforts are largely focused on the Aries Diamond Project in the Central Kimberley, which hosts what it says is the largest known diamond-bearing kimberlite in WA.

Notably, bulk sampling at Aries in the early 1990s by Triad Minerals (4.8 carats per 100t) and between 2004 and 2006 by United Kimberley Diamonds (181 diamonds for 25.34ct) has uncovered significant diamond occurrences.

A gravity survey is underway with 10,000m drill slim-line RC drilling program planned to kick off in Q3.


Another Argyle unlikely but 2023 is sparkling

The massive supply hole Argyle left wasn’t the only factor that kicked off demand in the sector, with the pandemic causing the closure of major cutting and polishing centres from Israel to Antwerp, New York to India.

Mined diamond supply could be in deficit for as long as a decade because it’s not that easy to just add new production.

For mined supply to recover to the 139Mct produced before the pandemic hit in 2019, it would take a major new and unforeseen discovery – and the likelihood of finding another Argyle is pretty slim.

Not to mention there’s a limited number of new projects, with it taking an averaged 10-15 years from the point of detection to actual commercial production.

And further supply stress is anticipated from the impact of sanctions on Russian diamonds that currently produce 30% of global supply.

But it’s certainly looking like an opportunity for ASX diamond players.

The annual report on the state of the industry from consultants Bain and Co., in February this year predicted a continuing rise in remand, especially in the upcoming quarter.

Bain and Co are anticipating that a strong holiday season and limited rough supply will likely “return to historic growth pace by 2023-24.”


BDM, LOM, and ODE share prices today: