A newly discovered pipe at the Ellendale mine may contain “millions” of fancy-yellow and other gem-quality diamonds, according to the company that owns that part of the site.

India Bore Diamond Holdings (IBDH) has identified a buried drainage system at the Australian mine that is full of rough diamonds, it said Wednesday. The stones had washed into it when nearby diamond-containing rock eroded. The company has already unearthed gem-quality goods in grades of up to 12.7 carats for every 100 tonnes of ore from part of the pipe, it added.

The Ellendale mine is famed for its high-quality fancy-yellow diamonds. Kimberley Diamond Company, a previous owner of the site, once operated a long-term supply agreement with luxury jeweler Tiffany & Co.

“IDBH began to hunt for what it believed was an ancient hidden river system flowing in a southward direction through the Ellendale diamond field,” a company spokesperson told Rapaport News. “Until we discovered the channel, the idea of a south-flowing drainage system ran against many years of collective wisdom that the natural alluvial drainage systems at Ellendale flowed only to the north [or] northwest. In short, we looked where nobody had before.”

The drainage system extends along a 24-kilometer path covering the entire length of India Bore’s lease areas. Bulk sampling and an extensive review of the area show the alluvial diamond-containing gravel is spread through a majority of that path.

“We have [already] recovered the full range of gem-quality colored diamonds, including the famous Ellendale fancy yellow,” the spokesperson explained. “We have high-quality colorless, through to champagne, and of course, fancy yellow. A faint green has also been recovered. Approximately 88% of diamonds recovered so far are gem-quality.”

The company is set to begin production at the site in the third quarter of the year, and hopes to extract around 30,000 carats annually for the first three years. After that, it will increase the rate to around 200,000 per year. Approximately 11% of all annual output will consist of fancy-yellow diamonds, the spokesperson added.

India Bore leased the tenements from the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS) in 2019. Other portions of Ellendale are owned by Burgundy Diamond Mines, which purchased them from Gibb River Diamonds in March.