Merlin Diamonds : to double processing capacity – 23/07/2018

Merlin Diamonds Limited

ABN 86 009 153 119

23 July 2018

Manager Companies Australian Securities Exchange Level 6, 20 Bridge Street Sydney NSW 2000

By E-Lodgement

Merlin to Double Ore Processing Capacity with New Scrubber

Merlin Diamonds Limited ABN 86 009 153 119

Level 1A

42 Moray Street Southbank, VIC, 3006

Australian diamond mining company Merlin Diamonds Limited (ASX: MED) ("Merlin" or "the Company") reports that with the scaling up of mining activities at the Merlin Diamond Mine in the Northern Territory, ore processing capacity will double with the installation of a new scrubber.

Telephone: [phone]

www.merlindiamonds.com.au

Processing will increase from the 50 tonnes per hour to 100 tonnes per hour, thus doubling the production of diamonds. The new scrubber, screen and conveyor belts are being prepared for shipping and are expected to arrive at Merlin in late August. Merlin's team conducted a final inspection last week prior to shipping (see figures 1-4 below).

Directors

Mr Joseph Gutnick Executive Chairman

The scrubber will also significantly reduce the recirculation of oversize material and give Merlin the ability to feed damp ore directly from the pit.

Mr Mordechai Gutnick Managing Director

As well, Merlin has purchased a jaw crusher which will be introduced into the processing circuit to treat the trommel oversize material (see figure 5).

Mr Henry Herzog Non-Executive Director

As previously advised, a Dense Medium Separation (DMS) circuit has also been ordered from South Africa, and once installed, capacity will increase upwards of 150 tonnes per hour.

Dr David S Tyrwhitt Non-Executive Director

Further updates on mining operations will be provided shortly as mining contractor Rusca Bros Services ramps up activities at site.

Senior Management

Mr Peter Lee

-ENDS-

CFO & Company Secretary

Mr Joshua Harper General Manager Operations

JOSEPH GUTNICK Executive Chairman

Merlin Diamonds Limited July 2018 Progress Update

Merlin Diamonds Limited

ABN 86 009 153 119

Figure 1: Trommel scrubber washing plant

Figure 2: High frequency vibrating screen

Merlin Diamonds Limited July 2018 Progress Update

Merlin Diamonds Limited

ABN 86 009 153 119

Figure 3: Conveyor belt

Figure 3: Schematic of second ore processing plant being installed

Merlin Diamonds Limited July 2018 Progress Update

Merlin Diamonds Limited

ABN 86 009 153 119

Figure 4: Jaw crusher to be installed shortly at Merlin Diamond Mine

Merlin Diamonds Limited July 2018 Progress Update