AIM-listed diamond explorer, African Diamonds, expects to start production at the AK6 project in Botswana in late 2009, the company has said.
“AK6 is a done deal. It will happen,” John Teeling, the company’s executive chairman, told delegates at the Numis Metals and Mining Conference in London.
AK6 is one of 30 known kimberlites ÔÇö rock formation where diamonds can be found ÔÇö forming part of the Boteti joint venture with the world’s biggest diamond producer, De Beers.
De Beers is 45 percent owned by the world’s third largest mining group, Anglo American Plc.
Botswana is the world’s largest diamond producer in value terms. It boasts the Orapa mine, the second biggest diamond mine producing 17 million carats a year and Jwaneng, the richest mine of any type globally with a profit margin of over 90 percent.
“Botswana is the best diamond address in the world,” Teeling said.
The industry’s fundamentals were very strong, he said, citing at best flat supply and strong demand from the Western world and the United States in particular.
“It’s mainly American ladies with lots of disposable income buying big stones for their right hand,” he said.
Diamond discoveries are few, with only 50 hard rock diamond mines so far, and just 20 of those deemed significant.
Teeling said capital costs for AK6 were low at $120-140 million.
“There’s no overburden so we’re in the ore very quickly, which leads to quite cheap capital costs,” he said.
AK6 has an average grade of 24 carats per hundred tonnes. Teeling said a significant number of high-value Type II diamonds from AK6 would be valued in late 2007.
Type II diamonds are free of readily detectable nitrogen, which is considered an impurity, and account for just two percent of the world’s diamonds.
Last month, African Diamonds announced diamonds recovered from partial Phase II drilling were smaller than Phase I.
“It’s not abnormal in exploration for big stones to get broken…We do not want big stones broken and it’s being looked at…expensively.”