HomeDiamonds & GemstonesAfrican Diamonds cuts cost of AK6 mine

African Diamonds cuts cost of AK6 mine

Bulk sampling on
AK6 in Botswana
London, England — MININGREVIEW.COM — 15 December 2009 – African Diamonds Plc “’ a diamond exploration company with a portfolio of projects in Botswana and the Democratic Republic of Congo (DRC) “’  has cut the cost of the first phase of its new AK6 mine in Botswana to US$48.86 million (R366 million).

Listed on the London and Botswana Stock Exchanges, the company currently owns 29% of the AK6 project which is due to launch production in 2011, and has an option to increase that stake to 40%.

In a statement issued here, African Diamonds said it might fund the project about 60% from debt and 40% through equity. The cost of building the mine has fallen since 11 November, when the company pegged the cost of the first phase “’ which will allow output of 400 000 carats pa “’ at US$63 million (R472 million).

“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,” said chairman John Teeling.

The AK6 mine is due to expand production to 1 million carats pa at a later stage.

De Beers was the previous partner in the AK6 mine but sold its 71% stake to Canada’s Lucara Diamond Corporation last month.

African Diamonds and Lucara are currently looking at how to finance the mine and have several options, the company says.

“Early stage indicative offers of project finance have been received by African Diamonds," Teeling said. “Assuming 60% debt finance and 40% equity, African Diamonds may have to subscribe for about 5 million pounds (R62 million) in equity in mid to late 2010,” he added.