The company also placed its subsidiary, Kimberley Diamond Company (KDC), which operates the mine, into voluntary administration.
Lower recovered grades and lower size distribution had negatively impacted on the revenues of KDC.
The company said in a statement: "While KDC has seen strong processing results at Ellendale in recent months and has initiated a
number of successful cost cutting initiatives, KDC revenues have been negatively impacted by lower recovered grades and lower size distributions and, as a result, lower prices have been realised.
"In particular, prices achieved at the auction held last week in Antwerp were significantly lower than those forecasted, resulting from a sharp, unexpected decline in the rough diamond market."
"As a result, KDC is unable to continue trading solvently and the KDC board has been left with no option but to place KDC into external administration."
The voluntary administration will not apply to KDL or its other subsidiaries, which hold interest in the Lerala diamond mine in Botswana and the Lomero-Poyatos project in Spain.
Kimberley Diamonds has recently secured a A$10m loan from China-based Zhejiang Huitong Auction to restart the Lerala project.
The Ellendale Mining Lease, covering 123.9km² is located about 120km east of Derby in the West Kimberly Region of Western Australia.
The Ellendale field, which hosts rare fancy yellow diamonds, is one of only three hard-rock diamond mine locations in Australia.
Diamonds were first discovered at Ellendale in an olivine lamproite pipe in November 1976.
