Blumont has entered into a subscription application letter with Merlin Diamonds to acquire 26 million shares in the company at a placement price of A$0.075 ($0.04) per share.

Merlin mine is located some 100km south of the settlement of Borroloola in the Northern Territory, and is currently being developed by Merlin Diamonds.

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According to Blumont, the company will subscribe for 26 million shares in the diamond producer, marking about 10.92% of Merlin Diamonds’ enlarged share capital.

"It affirms our commitment to forge ahead with new deals that we think have good growth potential and fit in with our overall strategy."

The mine, which is said to be the only diamond mine in Australia’s Northern Territory, has a probable ore reserve of 11.1 million tonnes with an average grade of 26ct per hundred tonnes, which represents a contained 2.89 million carats.

For an average grade of 24ct per hundred tonnes, indicated and inferred mineral resource is estimated to be 19.02 million tonnes, representing a total contained 4.31 million carats.

With this, the project will have a combined mineral resource and ore reserve of 30.1 million tonnes, representing a total contained 7.2 million carats.

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Blumont chairman-designate Alex Molyneux said that the investment in Merlin Diamonds has provided the company with access to the second-largest combined diamond resource and reserve in Australia.

"Precious stones was identified as one of our targeted business segments when we first embarked on our strategy to become Asia’s major diversified natural resources company," Molyneux said.

"This is our second investment this year in the mineral and energy resources sector and it affirms our commitment to forge ahead with new deals that we think have good growth potential and fit in with our overall strategy."

The subscription proceeds will be used for the further development of the project.

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