April 11 2010: African Diamonds plc, the AIM and Botswana Stock Exchange (BSE) listed company focusing on diamond mine development at AK6, is to raise nearly P100 million through share placement, mainly to increase its stake in the joint venture to 40 percent.
In a statement issued out this week, the company stated that it was raising 9.6 million pounds “before expenses” and the money will be used in various ways, including shoring up the stake of African Diamonds to 40 percent.
The proceeds of the placing will be used in three ways. Firstly, to increase African Diamonds’ share in AK6 to 40 percent; secondly, to fund African Diamonds’ portion of the early works budget on AK6; and thirdly, for general working capital and exploration. The early works programme includes orders for long-lead time capital equipment and mine site development.
“I am delighted by the support African Diamonds has received from a significant number of institutional investors. The funds raised will be used to increase our stake in the AK6 diamond project to 40 percent , to fund an early works programme on the mine, and to explore promising diamond targets on our Botswana acreage,” Chairman of African Diamonds, John Teeling, said.
Under the current cash raising exercise, African Diamonds will be able to increase its shareholding from 29 percent to 40 percent while the rest will be held by Lucara.
African Diamonds has entered into a joint venture agreement with the Canadian listed company Lucara– Lundin GroupÔÇöafter the latter bought out De Beers. The move was hailed by African Diamonds who were in an uneasy relation with De Beers over the development and the marketing of AK6 resource.
The AK6 resource is estimated to have a lifespan of 12 years; however, there is further 7 million carats between the depth of 372- 758 meters that will need underground mining exercise.
“For six years, we partnered with De Beers on AK6 and other projects in Botswana. Together we found a diamond mine but, over time, the needs and aims of African Diamonds diverted from those of De Beers,” Teeling said.
African Diamonds believes the project is still on target for a late 2011 start-up date adding that changes are being made to the processing plant to minimise diamond breakage and allowing the recovery of diamonds up to 350 carats in size. The plant is being refigured to increase start-up capacity from 2 million tons to 2.5 ÔÇô 3.0 million tons of ore a year.
Teeling has praised the company of being “lucky” for having a concession within Orapa region ÔÇô a region he terms the best diamond address in the world — said the proposed mine has the potential to produce 1 million carats at revenue levels of US $ 200 million (over P1.3 billion).
AK6 is 15 kilometers south-west of Letlhakane village and it is closer to Orapa mineÔÇöthe world’s biggest diamond mine, Letlhakane and Damtshaa mines all operated by Debswana.
As the final studies on AK6 are nearing completion, the fundamentals of the mine continue to improve. The mine is expected to come on stream in late 2011.
During the struggle to commercialise the AK6 discovery, our top quality exploration ground was ignored. Targets such as AK8 and AK9 are known to shareholders, but we have other prospective kimberlites, in particular, BK5. We now have the time and money to focus on these targets. There are more diamond mines to be discovered in Botswana,” Teeling said.