always hope!!, page-9

One large white stone of 17.4 carats was sold attender to Safdico International Ltd for USD$5,000per carat. Following cutting and polishing bySafdico, the white diamond is now a 5 carat Dflawless white diamond. D flawless Whitediamonds are the highest quality white diamonds.The stone will now be sold by Safdico on behalf ofMerlin and the proceeds will be shared on a50/50 basis after the deduction of the price paidby Safdico. This will generate at least a furtherUSD$90,000 for Merlin and once againdemonstrates the high quality of the diamonds atMerlin. Diamond production from May 2018 to current of2,844.118 carats from Ector and stockpiles. Merlin has engaged in discussions with anexternal mining consultant to conduct a study todetermine the best options for mining at Merlinand in particular options to mine underground atPalsac, Ywain, Gwain and Excalibur. The scope ofthe study to be agreed between the parties willdetermine, for each deposit, the practicality andhigh level economics of the potential options. Theoutputs of the study can be used to guide andprioritise future work by determining whichdeposit is likely to be most viably mined first and Merlin Diamonds LimitedABN 86 009 153 119Merlin Diamonds Limited September 2018 Quarterly Reportwhich mining methodology that better suits. ThePalsac and Excalibur deposits consist of a singlediamond pipe with Ywain and Gawain being twodiamond pipes at relative close distance wherebythe possibility of sharing some of theunderground infrastructure may be possible. Thestudy should take 3 months to be completed. Mining of Ector and the processing of stockpileswill be reviewed following the commissioning ofthe new DMS Plant at the end of the wet season.Meanwhile, the plant is being put on care andmaintenance. Diamonds sales in Antwerp to-date of $362,000however not all diamonds have been sold. An anomaly has been identified south of Excaliburand current plans are to drill the anomaly prior tothe wet season (see attached figure).