merlin-diamonds-find – The Diamond Certification Laboratory of Australia (DCLA)

Lucapa Diamond Company Enters Voluntary Administration Amid Market Pressures

Lucapa Diamond Company has entered voluntary administration following a major cost-cutting initiative and a significant reduction in its corporate workforce. The decision comes in the wake of mounting financial pressure and weakening global diamond demand, attributed in part to US President Donald Trump’s trade tariffs, which have disrupted pricing and buyer confidence.

KordaMentha Appointed as Administrators

Leading corporate recovery firm KordaMentha Restructuring has been appointed to oversee Lucapa’s administration, with Richard Tucker and Paul Pracilio named as voluntary administrators. Their immediate focus is an urgent operational and financial assessment of Lucapa, followed by a dual-track recapitalisation and potential sale process.

Lucapa’s Key Assets: Lulo and Merlin Projects

Lucapa holds a 40% interest in the high-value Lulo alluvial diamond mine in Angola. The site is known for producing large, premium-quality Type IIa diamonds, including stones exceeding 100 carats.

In Australia, Lucapa’s flagship asset is the Merlin Diamond Project in the Northern Territory. The project includes a 24 km² mining lease and a 210 km² exploration licence. Historically, eight of the 11 known kimberlite pipes at Merlin were mined by Rio Tinto (ASX: RIO) and Ashton Mining between 1999 and 2003, yielding approximately 500,000 carats from 2.2 million tonnes of processed kimberlite.

Financial Challenges in Q1 2025

Lucapa’s March quarter report highlights a sharp downturn in financial performance. Diamond inventories dropped 44% to 1,685 carats, and cash and receivables fell 41% to $2 million. Additionally, the company took on $600,000 in interest-bearing debt during the period. In response, Lucapa implemented a thorough review of its corporate expenditure, resulting in reduced overheads and workforce downsizing.

The company noted that the full impact of US trade tariffs on diamond sales has yet to be determined. However, uncertainty among buyers throughout April has led to softened demand and reduced prices across the industry.

Path Forward Through DOCA

Despite the challenges, there is optimism that Lucapa may recover through a Deed of Company Arrangement (DOCA). KordaMentha’s Richard Tucker previously stated that approximately 99% of mining companies the firm assists successfully emerge from administration via DOCA, which aims to preserve operations and secure better outcomes for creditors than liquidation.

Lucapa Diamond Company’s move into administration reflects broader challenges in the diamond sector, including geopolitical trade tensions and market uncertainty. The success of the upcoming recapitalisation or sale process, under the guidance of KordaMentha, will be critical in determining the company’s future and protecting the value of its premium diamond assets.

Lucapa acquires Merlin diamond project in Australia

*Merlin diamond mine in Australia’s Northern Territory.*

Lucapa Diamond announced that it has entered into a binding asset sale agreement for the acquisition of a 24km2 mining lease and a 283km2 exploration tenement encompassing the mining lease and associated equipment and assets the Merlin Assets from Merlin Operations Pty.

Merlin Operations is a wholly-owned subsidiary of Merlin Diamonds Limited, which is in liquidation. The Merlin Tenements are located in the Northern Territory of Australia, approximately 720km southeast of Darwin.

Merlin is home to Australia’s largest mined rough diamond on record and has the potential to be the
only producing diamond mine in Australia, following the closure of Rio Tinto’s iconic Argyle mine in 2020, after 37 years in production.

The strategic acquisition is supported by a A$20 million ($15.5m) private placement plus a share purchase plan to raise up to A$3 million ($2.3m).

The acquisition price of A$8.5m cash represents a ~A$2/ carat multiple on Merlin’s existing 4.4m
carat JORC compliant resource and complements Lucapa’s existing portfolio, the company said, adding a near-term development opportunity with an existing 4.4m carat mineral resource estimate in Australia to Lucapa’s two existing producing assets in Angola and Lesotho.

The ~300km2 tenement package also comes with significant exploration upside, Lucapa said, through over 70 unresolved anomalies in areas where all kimberlite discoveries have been diamondiferous.

Source: Mining.com

ASIC liquidator push turns up the heat on Diamond Joe Gutnick

Australia’s corporate watchdog has sought Federal Court approval to wind up Joseph Gutnick’s publicly-listed company, Merlin Diamonds, and flagged an inquiry into whether the colourful Melbourne businessman has breached his director’s duties.

The Australian Securities and Investments Commission’s (ASIC) move against the man known as “Diamond Joe” due to his appetite for outback diamond and gold deposits confirms the worst fears of Merlin Diamonds’ shareholders, who have already endured a seven-month trading ban on the company’s stock.

Court filings released to The Age and Sydney Morning Herald on Tuesday show ASIC is seeking an order to appoint Deloitte as liquidators of Merlin Diamonds, which had a market capitalisation of just $20 million when its stock was banned from trading last October.

ASIC has for months been probing how Merlin Diamonds has loaned $13 million of investor money to a private company, AXIS Consultants, which has long been associated with Mr Gutnick.

“The loans have been used to fund private companies associated with Joseph Gutnick and provide no discernible benefit to Merlin Diamonds,” ASIC said in a statement on Tuesday evening.

In one example cited by ASIC, it alleges Merlin Diamonds in October 2016 received $900,000 from a Mr Gutnick-linked company, Chabad Properties, for convertible notes and options issued to Chabad.

“The ultimate source of the $900,000 paid by Chabad, through a series of transactions involving related companies, was Merlin Diamonds. Mr Gutnick is a former director of Chabad,” ASIC’s media statement revealed.

Mr Gutnick, who resumed the chairmanship of Merlin Diamonds after emerging from a self-imposed bankruptcy last year, and his wife, Stera Gutnick, are also named in the ASIC’s court filing to wind up Merlin Diamonds. Mrs Gutnick is not a director of Merlin Diamonds and is not understood to be personally under investigation.

ASIC has asked the liquidators to examine and provide an opinion on whether Mr Gutnick and other past and present Merlin Diamonds directors and officers, have breached the Corporations Act.

It wants this opinion, as well as advice on the company’s assets, solvency and likely return to creditors, within 42 days of the liquidators being appointed.

Mr Gutnick is one of Australia’s best-known business figures, was once a regular on the BRW richest 200 list and a benefactor to many Jewish charities.

As president of a stricken Melbourne Football Club during the 1990s, the ordained Rabbi’s financial support kept the club alive.

Mr Gutnick said on Tuesday that Merlin Diamonds was reviewing ASIC’s filings.

“It’s been handed to lawyers to examine and defend,” he said.

ASIC has sought an order to release to Deloitte documents it has amassed relevant to Merlin Diamonds, Mr and Mrs Gutnick and a host of Gutnick-controlled or associated private companies.

Among the named private companies is AXIS Consultants, which The Age and Sydney Morning Herald revealed in February was at the heart of ASIC’s investigation into Merlin Diamonds.

AXIS, which shares the same Moray Street Southbank office as Merlin Diamonds, has received about $18 million dollars in unsecured loans from publicly-traded companies led by Mr Gutnick, including Merlin Diamonds and the company formerly known as Top End Minerals.

Unfortunately for shareholders, AXIS has been unwilling or unable to repay bulk of the loans, which have had to be written off by the public companies as impairments and are, most likely, unrecoverable.

“The terms of the Loans appear to be unreasonable, uncommercial and non-arm’s length,” ASIC’s media statement said.

Merlin detailed the terms of these AXIS loans in its 2015 annual report stating: “No fixed terms for repayment of loans between the parties, no security has been provided and no interest charged.”

When the Australian Securities Exchange started asking questions about the loans to AXIS in October last year, Merlin Diamonds reported that it “does not have access to the financial information of AXIS”.

This was despite Mr Gutnick, his son Mordechai Gutnick and long-time business associates, Peter Lee and David Tyrwhitt, all having served as directors of Merlin Diamonds and AXIS at some stage in relevant years when money was loaned.

At the same time as Merlin Diamonds was transferring money to AXIS- which would then often makes loans to other Gutnick-associated entities – staff and consultants at the company’s Northern Territory mine complained they had gone months without pay.

Mr Gutnick earlier this year said nearly all outstanding claims had been resolved.

In February Mr Gutnick appeared unconcerned by ASIC’s investigation into Merlin Diamonds and his network of private companies saying: “I’ve had ASIC look at transactions I’ve done for 30 years.”

But with ASIC’s new leadership team of chairman James Shipton and prosecutor Daniel Crennan QC promising a more aggressive approach in the wake of the banking royal commission, Mr Gutnick may face a more rigorous examination.

The Federal Court has yet to schedule a hearing for ASIC’s action against Merlin Diamonds, with the corporate watchdog filing its documentation last Thursday.

Source: The Sydney Morning Herald