James Campbell, the managing director of African Diamonds, said his organization is upping the scales by applying for a mining licence as they wait for the tests of the last samples of diamond in September this year.
Campbell, who last week paid a visit to the AK 6 project with his chairman, John Teeling, said they are not blinking about the mining licence despite some disappointing test results from the June sample.
“We are moving ahead with the mining licence for AK6 despite some disappointing results from the last test. The test should be taken as an interim though very weak,” he said, adding that “the mining licence will be formally presented to the Department of Mines before September.”
“There is another test next month which will be done by De Beers,” he added.
The last test results showed a problem of high diamond breakerage which was largely blamed on the drilling methods which were used.
“I think the breakarage is something to do with the drilling process and we are carrying-out some drilling,” he said.
AK6 is a joint venture project between the world diamond mining giant De Beers and African Diamonds. De Beers holds 51 percent in the partnership while the rest is held by African Diamonds but De Beers’ shareholding is expected to increase to 70 percent after a successful bankable feasibility study.
African Diamonds is being embolden by the perceived diamond shortage starting from next year and according to James AllanÔÇöa South African diamond analyst ÔÇô the world will need a mine of the size of Orapa to close the demand and supply gap.
“Our confidence is being boosted by shortage of supply because existing mines are maturing. And the feel for romance, hope and sex, which is what all what diamonds are about, drives the market with 650 million Chinese women saying ‘if you love me, then buy me a diamond’,” Teeling, the Irishman who chairs the company, said.
“De Beers is predicting a demand increase of 50 percent over the next decade which is equivalent to the total production of Botswana, Russia and Angola,” he said, adding that the existing mines can not cope with the demand leading to a spike in rough diamond prices which has shot-up by six percent since the beginning of the year.
The resource was discovered by De Beers’s geologists in the 1970s but by then it was considered to be economically not viable. But with time and the development of technology, it is thought that its value will be as big as that of Letlhakane mine. It is estimated to produce 1 million carats per annum with 80 percent gem quality while the rest being industrial diamonds.
The exploration exercise carried out by De Beers following the joint venture through the use of its new technology found out that the kimberliteÔÇöthe volcanic rock deposit containing diamonds ÔÇô was much larger than originally thought. It also contained the rare nitrogen free gemstone deposits found in 45-carat Hope diamond in the Smithsonian in New York and Cullinan diamonds which are part of the Crown Jewels.
The discovery of stones is expected to raise the overall value of the AK6 proposed mine to at least US $ 180 per carat with an annual production of 1.5 million carats per annum, the company said.
Under the previous predictions the mine was expected to produce revenue of around US $ 3.6 billion.
African Diamond is also involved in some exploration work in Sierra Leone and Guinea which will operate under West African Diamonds flagship. West African Diamonds is expected to be listed on the London Stock Exchange to raise cash for its western African operations.