Merlin Diamonds Limited provided this update to shareholders on diamond production and pending sales, as well as mine development and exploration progress at Northern Territory, Australia. PRODUCTION AND MINING OPERATIONS UPDATE: 86,407 tonnes for 4,605.764 carats produced since mining operations commenced. 22,000 diamonds. 37 diamonds above 5 carats with the large diamond being 35.74 carats have been recovered. Current production a standout in proportion of larger stones. 26 high quality diamonds chosen to be polished large cut and polished reached over 8 carats. A high proportion of large diamonds have been recovered in the current production. A high proportion of large high quality diamonds was also evident in historical production. No non-fluorescent ore and not all oversized material has been processed to-date. The company is pleased to confirm that its production inventory of polished and rough diamonds are to be sold in Antwerp by tender in late August 2017, after the Northern Hemisphere summer holidays, by Koin International DMCC. Koin provides specialist rough and polished diamond expertise and services, specifically diamond tenders and auctions, to select clients globally. Koin develops innovative sales and marketing strategies to extract maximum value and revenues for clients, particularly rough producers. Staffed with an experienced multi-disciplinary team including seasoned diamond experts, marketing and client service personnel, Koin uses a sophisticated IT platform to conduct global tenders, auctions and trading. Koin management and staff have broad exposure to the field of rough diamond tenders/auctions. The company will update shareholders on the outcome of the tender in September. Following consultation and engagement with diamond industry experts the installation of a Tomra XRT machine has been strongly recommended. Following a meeting between Merlins executives' and the manufacturers of the Tomra XRT machine, an agreement for the purchase of a XRT machine has been signed. Installation and commissioning is expected towards the end of September. The Company is considering the purchase of additional XRT sorters as they become required. Tomra Sorting diamond recovery solutions replace the conventional concentration and recovery stages such as Dense Media Separation (DMS) and X-Ray Luminescence (XRL) sorting in a diamond recovery process. Advanced X-Ray transmission technology (XRT) reliably detects all diamonds including coated, low- luminescent and Type II diamonds. Being integrated at the earliest stage of the recovery process, TOMRA Sorting´s advanced XRT equipment considerably simplifies the flow sheet thereby reducing the risk of diamond damage. Advantages of Tomra's sorters include: Compact footprint, Low operating costs, High diamond recovery rates and Extremely low concentrate yields. The integration of automated sorting allows the overall complexity of recovery plants to be reduced, resulting in lower capital and operating costs. There is no need to further process a sorter's concentrate before final hand sorting. The large Tomra XRT machine is the latest sorting machine and has been used by Lucara Diamond Corp. to find large diamonds (the large diamond recovered is 1,100 carats which is the second large diamond ever recovered). Rationale for Tomra XRT machine The company diamond mine is famous for its large high quality diamonds. Australia's large diamond, 104 carats, was found at Merlin as well as a 43 carat, 32 carat, and 28 carat diamond. See picture. In addition up to 2,000 diamonds larger than five carats were found at Merlin. In recent production, 37 diamonds above five carats were produced from only 86,407 tonnes of ore, of which 15 diamonds are above 10 carats with the largest diamond being 35.74 carats. This will be beneficial to the Company given the number of high quality large stones at Merlin. The high distribution and amount of larger diamonds are found in the northern cluster more so then the other eleven kimberlite pipes at Merlin. The Ector kimberlite pipe at Merlin has the high proportion of larger stones than any other of the pipes. The 104 carat diamond (likely half a stone) was found in the Northern Cluster of which Ector is one of them. Ector is at a depth of only 30 metres. Current open pits depths range between 30-100 metres. Core drill holes has found kimberlite as deep as 718 metres at Palsac. Currently there is 4.35 million carats of JORC code resource at Merlin with the potential for this to increase significantly within existing kimberlite pipes with further drilling delineation. With the recent outstanding successes at Lucara following the implementation of the large XRT sorting machines to recover very large diamonds it is blatantly obvious that the Company will benefit from the purchase and use of Tomra XRT machines for production at Merlin. The amount of large diamonds in proportion to the tonnage processed makes Merlin a perfect fit to recover very large diamonds. The Tomra XRT machine allows larger diamonds to be captured before the crushing process (which may reduce the size of diamonds recovered as they are crushed) or sorting process which may result in diamonds being transferred to non-fluoro or oversized material stockpiles. Very few mines in the world have the proportion of high quality large diamonds like Merlin. Therefore, the use of the Tomra XRT machine should prove Merlin to be a world class deposit. A major overhaul of the scrubber is required after constant failure. This has temporarily halted production, with recommencement expected when the Tomra XRT is installed.