African Copper’s AK6 mine was given a boost this week with the news that the government of Botswana has approved the sale of De Beers’ stake in the project.
The move will now see the BSE listed outfit fast tracking the development of the mine near Letlhakane Village in the Central District as the world gears for a rebound in diamond industry following the bad economic recession.
Under the deal, De Beers will sell its 70% share in the AK06 diamond deposit to Lucara Diamond Corporation, a Canadian junior diamond mining company, for US$ 49 million (over P3 billion) in cash.
John Teeling, Chairman of African Diamonds, punched the air saying the company would take a significant stride in 2010 when development commences on the AK6 diamond deposit in Botswana.
“Negotiations initiated by African Diamonds led to the sale of the De Beers’ stake to the Lundin Group,” said Teeling, adding that his company has the right to increase their stake to 40% and the right to market their share of the diamonds.
Pundits say that due to low operating costs in Botswana, a scaled down capital cost, a distribution of large stones, and the presence of the rare and valuable Type II diamonds, AK6 has the potential to generate significant profits.
“AK6 will be developed as quickly and efficiently as possible, to the benefit of all stakeholders, at a time when there is recovering confidence and growing demand,” Teeling added.
The marriage between the two diamond houses has been an acrimonious one as, at some stage, there was a clash after De Beers reneged from the terms of mining licence that provide that diamonds from AK6 should be sold on a secondary market to develop Botswana as an international diamond centre.
Construction of the mine is expected to begin in mid 2010, with start up in late 2011 at 400,000 carats a year, rising to an expected 1 million carats in 2013/2014.
Updating the feasibility study will continue during the holiday period. A valuation of the AK6 diamonds recovered during exploration will be undertaken during the third week of January 2010.
“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,” Teeling is quoted as saying.
African Diamonds revealed it has the right to market their share of the diamond output adding that there are further excellent exploration targets to be progressed in 2010.