Sunday, September 20, 2020

Mercury says AK6 stones attractive to diamond buyers

Share price of developers of AK6 mine African Diamonds went up this week after the news of recent valuation of the stone that shows if mined, the mine would produce very attractive diamonds.

In its latest market update, the exploration company stated a valuation conducted in Geneva that revealed the diamonds from the mine are of a high quality.

The diamond parcel included 1,175.7 carats of diamond recovered from large diameter drill samples that were processed to recover diamonds greater than 1 mm, and 584.5 carats of diamond recovered from trench samples that were processed to recover diamonds both at a 1mm and 2 mm bottom cut off.

“Overall, the diamonds from AK6 are deemed to be of very good quality and very attractive to diamond buyers,” said Mercury.

It was discovered from the valuation that colours are generally very white and the samples showed numerous examples of ‘blocky’ makeable and strong crystal forms that tend to lead to strong polished yields and demand a premium.

“There was a significant presence of Type IIA stones, including 12+ carat stones that had been broken into 8 or more fragments,” it added.

Mercury noted that 34 percent of the value of the sample was made-up of nine large stones greater than 5 carats and that ‘this figure (the valuation) understates the true value proportion of the largest stones’.

During the valuation, Mercury stated that diamond breakage was a significant problem in the samples, chiefly caused by the drilling and diamond recovery process adding that ‘there is much upside valuation potential if breakage were to be reduced and/or eliminated’.

“In Mercury’s opinion, it is reasonable to expect that full scale production could produce a value in the US$200 per carat range,” it said. The modelled valuation of the sample was US$162 a carat.

John Teeling, Chairman of African Diamonds said the US$162 a carat value on AK6 diamonds is excellent and substantially higher than previous valuations.

Teeling added that the plant has been redesigned to minimise breakage and, far more importantly, to allow diamonds up to 350 carats to pass through.

“Typically, diamond values rise exponentially with diamond size: in our sample, a 10 ct stone is worth four times, not just twice a 5 ct diamond. We therefore anticipate that the diamond value could be over US$200 a carat,” he said.

African Diamonds believes the project is still on target for a late 2011 start-up date adding that changes are being made to the processing plant to minimise diamond breakage and allowing the recovery of diamonds up to 350 carats in size.

The plant is being refigured to increase start-up capacity from 2 million tons to 2.5 ÔÇô 3.0 million tons of ore a year.

Teeling last month praised the company of being “lucky” for having a concession within Orapa region ÔÇô a region he terms the best diamond address in the world — said the proposed mine has the potential to produce 1 million carats at revenue levels of US $ 200 million (over P1.3 billion).

AK6 is 15 kilometers south-west of Letlhakane Village and it is closer to Orapa mineÔÇöthe world’s biggest diamond mine, Letlhakane and Damtshaa mines all operated by Debswana.

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Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.