Friday, April 10, 2020

Investec takes a big stake in African Diamonds

Investec Botswana, the fund management outfit, recently acquired a big stake in African Diamonds Plc, making Batswana to be the proud owners of 15 percent stake all told,” the mining company said in a statement.

In a statement released from Dublin, Ireland, the chairman of African Diamonds, John Teeling said: “I am delighted with this particular purchase by Investec Botswana on behalf of their investors. Over 10 percent of African Diamonds is significant commitment and is very positive news for our shareholders insofar as knowledgeable investors on the ground in Botswana see value in our shares.”

Investec bought 7,682,715 shares representing 10.9 percent of the company while the rest is being owned by other local shareholders- boating the figure to 15 percent.

African Diamonds is dually listed on the Botswana Stock Exchange and the Alternative Investment Market (AIM) of London.

African Diamonds expects to start production at the AK6 project near Orapa in late 2009, but right now it is awaiting the approval of the mining licence that was filed in late September.

“AK6 is a done deal. It will happen,” Teeling said earlier in the year.
AK6 is one of 30 known kimberlites ÔÇö rock formation where diamonds can be found ÔÇö forming part of the Boteti joint venture with the world’s biggest diamond producer, De Beers.

Ak6 is a joint venture with De Beers, a company which is owned 45 percent by the world’s third largest mining group Anglo American Plc.

Botswana is the world’s largest diamond producer in value terms. It boasts the Orapa mine, the second biggest diamond mine producing 17 million carats a year and Jwaneng, the richest mine of any type globally with a profit margin of over 90 percent.

“Botswana is the best diamond address in the world, and the street name is Orapa,” Teeling added.

The industry’s fundamentals were very strong, he said, citing at best flat supply and strong demand from the Western world and the United States in particular.

“It’s mainly American ladies with lots of disposable income buying big stones for their right hand,” he said.
Diamond discoveries are few, with only 50 hard rock diamond mines so far, and just 20 of those deemed significant.
Teeling said capital costs for AK6 were low at $120-140 million.
“There’s no overburden so we’re in the ore very quickly, which leads to quite cheap capital costs,” he said.

AK6 has an average grade of 24 carats per hundred tonnes. Teeling said a significant number of high-value Type II diamonds from AK6 would be valued in late 2007.

Type II diamonds are free of readily detectable nitrogen, which is considered an impurity, and account for just two percent of the world’s diamonds.

By mid year, African Diamonds announced diamonds recovered from partial Phase II drilling were smaller than Phase I.
“It’s not abnormal in exploration for big stones to get broken…We do not want big stones broken and it’s being looked at…expensively.”

AK 6 is expected to produce about 1 million carats per annum at its full production which is similar to Letlhane mine.
“We are looking at something as big as Letlhakane mine and there nothing much to do, only to dig a quarry,” he added.
Letlhakane mine is the second richest mine in the country after Jwaneng.

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