African Diamonds, the development partners at AK6, were this week optimistic that government will approve the change of the lease of area before Christmas break that will enable them to increase their shareholding in the company to 40 percent.
African Diamonds’ deputy chairman, James Campbell, told Sunday Standard that:”We hope that authorization from the Department of Mines will be received before the Christmas break. In the meantime, the new shareholders of Boteti, Lucara and African Diamonds have already commenced updating the Feasibility Study.
“The kick-off meeting for the revised Feasibility Study was also 20 November and work will continue on this over the Christmas break. A key aspect of this will be the revaluation of the diamonds and this will take place shortly after the Department of Mines have authorized the transaction. Lucara and AFD are committed to bringing a ‘fit for purpose’ mining operation into production, as soon as practically possible,” he said in response to a questionnaire from Sunday Standard.
Lucara became an instant interested party in AK 6 last month after De Beers pulled-out of a rancorous relationship with African Diamonds and Wati over how to mine one of the richest diamond deposits.
“De Beers will sell its effective 70% share in the AK06 diamond deposit to Lucara Diamond Corporation, a Canadian junior diamond mining company, for US$ 49 million in cash. The sale, which is subject to a number of conditions, including the consent of the Government of Botswana, became an option once the global economic crisis constrained the project to a smaller mining plan,” De Beers has said in a statement.
Under the existing arrangement, African Diamonds has 120 days to exercise its option of increasing its shareholding in the company and it is expected to follow the long held view of its chairman, John Teeling, of involving “citizens” of Botswana in the ownership of the company.
“AFD has 120-days to exercise this option following formal approval from the Department of Mines. AFD expects to exercise this option early in 2010. AFD will, of course, be approaching Botswana financial institutions as part of this capital raising exercise,” he said, adding that they will be “issuing some shares”.
Further, he pointed out that the new partners in the mine intend to operate it as a stand-alone mine and its produce is expected to be channeled through the still to be set-up Diamond Exchange.
“The sale of De Beers shares in Boteti to Lucara was ‘voestoots’ and all previous agreements (including the diamond marketing) have been cancelled. Each shareholder has the right to market their own share of production and exploratory discussions with the Department of Mines and Dr Tombale has already started with a view to putting forward a diamond marketing proposal,” he said.
AK 6 is expected to cost about US$63 million to establish at 2 million tonnes a year output, which will produce over 400,000 carats at a modelled grade of 22 carats per hundred tonnes (cpht).
A further US$25 million in capital expenditure will double the output of tonnes and carats. African Diamonds management believe that the grade will be at least 25 cpht, giving an output of over 1 million carats. Mine development is expected in mid 2010, with production in late 2011.
The current lifespan of the Mine from the opencast is 12 years, but the deposit contains a further 7 million carats between 372 and 758 metres.