A 15 year mining licence has been awarded for the AK6 diamond project in Botswana, and production is due to begin there in April 2011. All of Boteti’s production will be sold through the Diamond Trading Company Botswana. The Botswana government, which will take no equity in the project, has undertaken to supply power to the mine from the national grid.
The mine will be developed in two phases at a cost of about US$420 million, and it will produce an estimated 600,000 carats of diamonds annually in the first three years increasing to 880,000 carats a year over the remaining seven year life of mine. This equates to about 8.1 million carats over the life of mine, and AK6 is expected to generate an average US$138 per carat.
Boteti, the owner of the project, is a joint venture between De Beers Prospecting Botswana (70.2%), African Diamonds (28.4%) and Wati Ventures (1.4%). The joint venture was formed in 2004. The AK6 discovery was made in October of that year.
Earlier in 2008 African Diamonds had declared a dispute with De Beers over the latter’s decision to delay development of the mine for two years citing potential power shortages. De Beers applied for a retention licence to put the project on hold for two to three years, but this was rejected by the Botswana government. Pressure from the Botswana government, which wanted to see the development of the mine, strongly encouraged the parties to complete the mining licence negotiations this year.
African Diamonds is also examining further prospective ground in Botswana. Other interests include a diamond joint venture with De Beers in the DRC and a 12.5% stake in West African Diamonds which has developments and prospects in Sierra Leone and Guinea.