African Diamonds, the premier junior miner, is putting its bet on the young Chinese brides over its AK6 as the partners in project are currently burning the mid-night oil to come up with a pre-feasibility study.
?Our confidence is being boosted by the shortage of supply because existing mines are maturing,? said John Teeling, chairman of African Diamonds. ?And the feel for romance, hope and sex, which are what diamonds are all about, drive the market with 650 million Chinese women saying ?if you love me, then buy me a diamond?.?
The Irishman, who has been privately attacked in certain quarters of the diamond mining industry for playing the stock market game rather than looking at the facts on the ground over AK6 finds, was recently supported by leading geologists of African Diamonds and De Beers, pointing out in uncertain terms that construction of the mine should start as early as next year.
?We are looking at applying for the mining lease before the end of the year,? the newly appointed Managing Director of African Diamonds, James Campbell said. ?At the moment, both De Beers and African Diamonds are busy working on their separate pre-feasibility studies.?
Campbell added that they were looking at something as big as Letlhakane Mine and said it was very positive since it would 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 kilometers south-west of Letlhakane village.
Teeling has also praised the project. ?We have been totally lucky and blessed. This was a De Beers project given to a joint venture.?
De Beers has been prospecting around the Orapa area for the last 50 years and started with the discovery of the giant Orapa Mine in 1968.
Clement Rikhotso, a star geologist for De Beers who headed the project, said the vast Boteti area was initially a De Beers concession area but later slipped from its hands to other companies?including the premier junior miner, African Diamonds.
?This area is well known to be having some kimberlite deposit including AK 6. What happened in the past is that De Beers discovered Orapa and Letlhakane mines. And because the two were big a lot of concentration went to them,? he said.
AK 6 was discovered by De Beers?s geologists in 1969, but by then it was considered to be not economically viable.
The exploration exercise carried out by De Beers following the joint venture through the use of its new technology found out that the kimberlite?the volcanic rock deposit containing diamonds ? 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 rare nitrogen free gemstone deposits are concentrated at the southern loop of the earmarked mine and, according to geologists, is expected to yield some larger stones which are presently in short supply due to the aging mines.
?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,? Teeling said, adding that the existing mines can not cope with the demand which will lead to a spike in rough diamond prices.
AK6, which has been praised by both De Beers Chairman, Nicky Oppenheimer and company Managing Director, Gareth Penny, as one of the ? exciting projects? earlier this month is hope to bridge the gap on the supply-side.
The dwindling supply is also attributed to a fall on the supply from Russia following the European Union ruling on issues of anti-competition. Last year its supply slipped by six percent to 51 million carats of rough diamonds.
If AK6 goes according to plan, it will be the fourth mine around Letlhakane village on top of Damtshaa, Letlhakane and Orapa mines?the last three being operated by Debswana.
The mine is expected to start at a low key of 600,000 carats per annum ? with close to 80 percent gem-stone and the rest industrial ? 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 to close to US $ 200 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 local fund managers at the site.
?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.
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.
?This is a huge resource and we expected it to last at least a generation,? Teeling added.
Further, he said AK8 ? a five hectres pipe ? is on the right track but needs to be supported by satellite mines. But, he, however, 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 hecteres squared in Orapa and it has ten confirmed carats at the time of De Beers? exploration.?
?As part of the moves to develop potential resources, which are still under exploration (such as BK6, BK3 and BK7 which they have the same geological make-up as AK6 and AK 8), African Diamond is looking up to raise 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,? said Teeling. ?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.?
The Botswana Stock Exchange and London Stock Exchange listed company expects to sell all of its produce through the to be established DTC Botswana.