Striker Makes Advance Sale of Merlin Rough, Adds Investors

Striker Resources, owners and operators of the Australian Merlin diamond mine, will make an advance sale of rough diamonds from the mine and bring in new investors.

Striker announced this morning that it reached an agreement in principle with Knightsbridge Corporate for the advance sale of A$500,000 (US$375,700) of rough diamonds from the recently-commenced Merlin diamond operations in the Northern Territory of Australia.

Striker bought the Merlin mine from Rio Tinto in March 2003, with the intent of reprocessing the tailings, the rejected material from mining and screening operations, often regarded as uneconomic remainders from mining.

Earlier this month it announced that it had recovered the first diamonds from reprocessing of the Merlin sorthouse tailings. It expects to produce a minimum of 250,000 carats from the mine over the next two years.

The Merlin diamond field currently has a combined indicated and inferred resource of 3.3 million carats of diamonds. The average historical value of previous Merlin production has been $108 per carat. However, with the rise of rough diamond prices, Striker is projecting a price of $140 per carat.

The purchase will be at a 16 percent discount to an independently assessed value, and delivery will be made when sufficient suitable stones become available.

Knightsbridge also has the right to purchase any single diamond with an independently assessed value greater than A$580,000 ($435,800) at a similar discount. The advance payment to Striker will also be fully or partly convertible into equity under certain conditions.

Striker also reported a A$620,000 ($466,000) placement of new equity to professional investors and institutions at A3 cents ($0.0225) per share.

The funds will be used for working capital purposes as the company expands operations from the current sort-house tailings retreatment activities using a small MkIII plant, to a hard-rock processing operation based on the fully owned Bateman plant, prior to the sale of the first diamonds produced.

The company also announced that its name change, from Striker Resources NL to North Australian Diamonds Limited, has been registered by the Australian Securities & Investment Commission.

The new ASX code for North Australian Diamonds Limited will be NAD for the ordinary shares and NADOA for the listed options starting tomorrow (Tuesday).