De Beers, the world’s leading diamond miner, bolstered the industry’s confidence Friday when it committed itself to the development of AK6 which is hoped to be one of the world’s leading mines under its stable.
Gareth Penny, De Beers’ Managing Director, told a press conference in London during the company’s half year results announcement that partners for AK6 will soon be presenting their mining licence to the Botswana government.
During the last six months to June, De Beers total sales slipped by 7 percent to US $ 3.4 billion but underlying profits were better at US $ 3.2 billion or five percent up compared to the same period last year.
The announcement followed James Campel, Managing Director of African Diamonds, at a Resource Sector Conference in Gaborone earlier in the week who said “AK6 is a done deal, but what is next?”
“The diamond retail market is growing at 6-to-7 percent and the diamond prices are increasing and there are very few discoveries,” Campel said.
The proposed mine, which lies 15 kilometers south-east of the Letlhakane village, is expected to produce its first gem diamonds by 2009.
“We are looking at something as big as Letlhakane mine both in terms of production per carat and the quality.
“And what we are going to do is not complicated; it is a question of building a quarry,” Chairman of African Diamonds, John Teeling, has said.
African Diamonds said the mine should be operational by 2009- thus taking into account the 14 months period needed for mine construction.
It is hoped that it will produce 600, 000 (gem quality ) carats in the first year, and thereafter production will pickup to the range of 1.2 million ÔÇôto- 1.5 million carats per annum.
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 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,” he added.
The mine will initially be an openÔÇôcast with a life-span of between 12 and 15 years at the depth of about 200 meters. It also has a provision for an underground which will stretch its life-span to possibly 30 years.
“This is a huge resource and we expected it to last at least a generation,” Teeling added.
Further, he said AK8 ÔÇô a five hectares 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, adding that “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,” Teeling said.