After delays prompted by a dispute between two shareholders in Boteti, mine construction at AK6 project is being fast tracked to the second quarter of next year following the granting of a mining license, developers of the diamond mine project have confirmed.
James Campbell, the managing director of African Diamonds, which holds 28 percent in the Boteti JV, told Sunday Standard that after granting of mine license by Department of Mines in Botswana, the project will go ahead.
“This (the granting of the mining license) means that construction of the AK6 project will proceed and the mine will be developed,” Campbell said on Thursday. “Currently the project team and contractors are being re-engaged, with construction beginning Q2 2009.”
A fortnight ago, the Government of Botswana released terms of mining license for AK6 after it rejected a retention license application by De Beers last month. De Beers owns 71 percent of the joint venture with the rest held by Wati.
Under the terms of mine license, a 15-year license from October 10, 2008 has been approved stipulating that production must commence by 2011.
There will be no Government equity in the project, but a normal diamond royalty of 10 percent will be charged, along with a variable profit based tax rate.
All output would be sold through the Diamond Trading Company (DTC) in Botswana. The Government has given an undertaking that power will be supplied from the national grid, resolving one of De Beers’ key concerns about the development.
During the height of the dispute that reached the highest courts in the land, African Diamonds wanted to sell diamonds on the secondary market while De Beers, which controls 40 percent of the world’s rough diamond market said the mine was not economical on the current state.
Campbell says the mining license will act as a catalyst to develop one of the mines that will make the country cement its position of world largest rough diamond producer.
“By the award of the mining license, African Diamonds’ concerns have chiefly been resolved. African Diamonds hopes that there will be no further hitches in the development of AK6,” Campbell added.
Production at the AK6 mine could be around 600, 000 carats a year in the first three years, increasing to 880, 000 carats annually.
Boteti chairman, Tony Guthrie, was quoted in the media saying that his company would continue to do everything to ensure that the full economic value of this deposit is realised for the benefit of the shareholders and the people of Botswana.
“We are excited about this new development and I would like to thank the Botswana government and the joint negotiating team of Boteti who have worked tirelessly to ensure that all matters pertaining to the license were concluded in time and satisfactorily,” Guthrie said.