MERLIN DIAMOND PROJECT

The Merlin Diamond Project (“Merlin”) includes two tenements - a 24km2 tenement with a mining lease (“Mining Lease” or “MLN 1154”) and a 283km2 exploration tenement encompassing the Mining Lease (“Orbit Tenement” or “EL 26944”) - located in the Northern Territory of Australia, approximately 720km south-east of Darwin.

The Mining Lease contains 11 previously discovered kimberlite pipes in three general kimberlite clusters - Northern, Central and Southern. Two kimberlites have also been discovered on the Orbit Tenement. All kimberlite discoveries to date on the tenements are diamondiferous.

Of the 11 known kimberlites, eight of the kimberlite pipes were mined by Ashton Diamonds and Rio Tinto between 1999 and 2003, producing over 500,000 carats from 2,2 million tonnes ("Mt") of kimberlite treated, including the largest diamond ever recovered in Australia, a 104 carat, high-value Type IIa white diamond as pictured below.

The Mining Lease contains an existing kimberlite diamond resource containing 27.8Mt at an average grade of ~16 carats per hundred tonnes (“cpht”) for 4.4m contained carats (Table B). Just under half of the Resource (13.4Mt and 2.3m carats) is classified as indicated resource, based on recovered grades and achieved diamond value data from the 1999 – 2003 Ashton/ Rio mining campaign.

The Mining Lease contains a number of pre-existing assets, including a 2.4km airstrip, peripheral other logistics and mine infrastructure, a Tomra XRT sorter and various other used items of equipment.

The Mining Lease and Orbit Tenement also contain more than 70 reported, but as yet unresolved geophysical and geochemical anomalies, giving significant potential for further kimberlite discoveries.

Over the coming months Lucapa plans to complete the acquisition of Merlin and commence geotechnical drilling and exploration programs on the Mining Lease and Orbit Tenement, as well as commence investigations for the completion of a mining feasibility study.