African Diamonds joined by Lundin as new partner on AK6 mine in Botswana
11 November 2009
African Diamonds, one of John Teeling’s portfolio of natural resources companies, has reported that DeBeers has sold it share in the AK6 diamond project in Botswana, where African Diamonds holds a 29% stake.
DeBeers has sold its holding to Lucara, a Toronto listed diamond company backed by the Lundin Group for $48 million, in a deal which is still subject to Botswana government approval.
As part of the arrangement, African Diamonds has got the option to increase its share in AK6 to 40% by acquiring a stake from Lucara. It said it intended to exercise that option within the 120-day option period.
The deal comes after a protracted period of delays to the mine development at AK6. According to African Diamonds, mine development will now start in 2010 with production due to come on stream in 2011. It reckons AK6 has the potential to become a 1 million carat a year mine.
Studies commissioned by the company show that it will cost US$63 million to establish the mine at two 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.
John Teeling, the chairman of African Diamonds, said: “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.”
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