De Beers, the world’s largest diamond miner “accepted an unsolicited offer” for US $ 49 million (about P 3 billion) for its controlling stake in AK6 proposed mine project near Letlhakane Village, the company said this week.
The company said in a statement it will effectively sell its interest in the diamond deposit to the Canadian mid-tier miner, Lucara Diamond CorporationÔÇöall in cash ÔÇô if the deal is approved by the Department of Mines.
By Friday this week, the deal was almost complete save for the concession licence waiting to be transferred from Boteti to an entity representing the new partners.
“De Beers will sell its effective 70% share in the AK06 diamond deposit to Lucara Diamond Corporation, a Canadian junior diamond mining company, for US$ 49 million in cash. The sale, which is subject to a number of conditions, including the consent of the Government of Botswana, became an option once the global economic crisis constrained the project to a smaller mining plan,” De Beers said in a statement.
In Gaborone, head of De Beers Botswana, Sheila Khama, said the Canadian company approached De Beers with an offer which they ‘thought is a win-win” because, in terms of returns on investment, they have always thought that AK 6 was marginal.
“We have always maintained as De Beers that the mines and projects we develop must fit strategically with our policies and policies that drive our leadership position. Secondly, the volumes from this investment must be significant enough to argument that leadership position. AK6, though viable by deposit in general, its economic profile was always marginal and we have always said that,” Khama stressed in an interview with The Sunday Standard on Friday.
On Tuesday night, the shareholders agreement being the cornerstone of a joint venture between African Diamonds, De Beers and Wati came to an abrupt end as the parties entered into an agreement that will lead to De Beers disinventure into the project.
The move meant that even the diamond marketing agreement that obliged Boteti to market its diamonds through DTC Botswana was cancelled opening up the possibility of the produce going to the yet to be established Diamond bourse.
African Diamonds, which technically is currently the biggest shareholder at 24 percent, said it would cost about US$63 million to establish the mine at 2 million tonnes a year output, which will produce over 400,000 carats at a modelled grade of 22 carats per hundred tonnes (cpht). A further US$25 million in capital expenditure will double the output of tonnes and carats. African Diamonds management believe that the grade will be at least 25 cpht, giving an output of over 1 million carats. Mine development is expected in mid 2010, with production in late 2011.
The current Life of Mine from the opencast is 12 years, but the deposit contains a further 7 million carats between 372 and 758 metres.
“There are only positives resulting from this development. We believe that AK6 is a world class diamond deposit. It needed to be developed as quickly and efficiently as possible to benefit all stakeholders. This will now happen,” chairman of African Diamonds, John Teeling, said.
“For six years, we partnered with De Beers on AK6 and other projects in Botswana. Together we found a diamond mine but, over time, the needs and aims of African Diamonds diverted from those of De Beers. It was a genuine pleasure and privilege to work with De Beers. An amicable separation is a good outcome,” he added.