Lerala Diamond mine was placed on care and maintenance in July 2012 by its former owner Mantle Diamonds.
The operations at the mine would commence in the first half of 2015 and the mine is expected to produce 400,000 carats of diamonds per year.
The transaction will be financed through cash flow from ongoing operations, equity or debt raising.
As of 31 March 2014, KDL had A$13.1m ($12.12m) cash and no debt.
Located 34km from the Martin’s Drift Border Post with South Africa, Lerala comprises five diamondiferous kimberlite pipes and has a 15-year mining license covering an area of 21.86km².
KDL board has withdrawn the company’s A$14.3m ($13.2m) funding commitment to develop the Ellendale E4 mine.
