African Diamonds’ newly appointed Managing Director, James Campbell, leapt to the defence of his talkative chairman, John Teeling, and ruled out doubts over the prospects of the opening of AK6 gem-diamond mine saying they were according to plan and would open by 2009.
“We are looking at applying for the mining lease before the end of the year,” he said. “At the moment, both De Beers and African Diamonds are busy working on their separate pre-feasibility studies.”
“We are looking at something as big as Letlhakane Mine and this one is very positive since it will be one of the deepest four in the world,” he added.
According to the drilling results made so far, traces of kimberlites containing diamonds have been found at a depth of 702 meters over an area the size of 8 square kilometers, just 15 kilometres south-west of Letlhakane Village.
If the things go according to plan, it will be the fourth mine around Letlhakane Village in addition to Damtshaa, Letlhakane and Orapa minesÔÇöthe last three being operated by Debswana.
The mine is expected to start at a low key of 600,000 carats per annum and jump to about 1.2 million carats or just above 4 million tones of ore per annum. The average carat price is currently valued at US $ 150, with a provision of going up before the mine commences its production.
The mine sits on one pipe which is divided into the central and the southern loop. The central loop will produce the small diamonds while the southern loop will produce the well sought after type II larger diamonds,” Campbell told The Sunday Standard and some local fund managers at the site on Thursday.
“So far, we have passed the stage of inferred resources and what we are working on is the pre-feasibility study which will be followed by a bankable study. The geometry and sampling is similar to that of Letlhakane. And we believe that the life-span of the mine will be 15 years of open cast, which will be followed by another 10 years of underground mining.
“We are looking at US $ 40 per tonne. If someone says that it is not economically viable then I guess all the geologists should go do something else,” he said, pointing out that on average, the break even point is just less than US $ 9.00.
AK 6 is a joint project between African Diamonds and De Beers, the South African-based diamond giant, which owns 51 percent of the project and can acquire up to 70 percent equity by funding the exploration work and bankable study.
The resource was discovered by a young De Beers geologist, Mark Scowcroft but who left the former employer after failing to convince them about their “incorrect” geological model to pursue the project commonly known as AK6.
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.
“These will be very good quality diamonds and according to our valuation we are talking of diamonds of US $ 150 per carat,” Teeling said a fortnight ago.
“This is a huge resource and we expected it to last at least a generation,” Teeling added.
Further, he said AK8 ÔÇô a five hactres pipe ÔÇô is on the right track but needs to be supported by satellites mine but he is pinning his hope on PL 36 which has some confirmed resource.
“At AK8, we are looking at a mine which will be supported by satellite operations,” he said. “We have drilled at Serowe and found nothing.”
“We are only pinning our hopes on PL 36 which is 22 hectares squared in Orapa and it has ten confirmed carats at the time of De Beers’ exploration,” Teeling said.
As part of the moves to develop potential resources which are still under exploration such as BK6, BK3 and BK7, which have the same geological make-up as AK6 and AK 8, the Botswana Stock Exchange and London Stock Exchange listed company said it is looking up to raise money from Botswana.
On Thursday, both De Beers and African Diamond confirmed that there were some resource at AK8ÔÇösome six kilometers south of Orapa Mine but stated that it can not operate as a stand alone mine compared to AK6.
“African Diamond is looking at raising loans in Botswana which will have to be converted into shares. This is not because I am nice to Botswana, it makes a lot of commercial sense.
“All over the world, Botswana is known for diamonds and they understand diamond mining much better. I would expect a lot of finance would be raised in Botswana and I would prefer to have locals,” Teeling added.
He said he expected all of African Diamonds produce to be sold through DTC Botswana. (For more, read Botswana mining supplement next week.)