London, England — MININGREVIEW.COM — 01 April 2009 – African Diamonds Plc – a diamond exploration company listed on the London and Botswana stock exchanges, and with an exciting portfolio of projects in Botswana and the DRC – has come up with an innovative alternative plan to develop its AK6 joint venture with De Beers in Botswana more quickly and cheaply than the current plan.
A statement released here by African Diamonds revealed that under the terms of the mining licence, awarded to the joint venture company, production on AK6 must commence prior to April 2011. The partners in the joint venture company – De Beers (71%), African Diamonds (28%) and Wati (1%) – have sought finance for a US$260 million (R2.5 billion) mine development, but this has proved difficult, so an alternative has been developed by African Diamonds and presented to the Group.
The African Diamonds study shows that a 2 Mtpa mine, scalable to 4 million tonnes, costing less than US$40 million (R380 million), and with operating costs of under US$10 a tonne is viable in the present hostile climate. In the early years, annual output would be over 450 000 carats of quality diamonds. This plan envisages construction start up in 2009 with production by the end of 2010.
Commenting on the situation, African Diamonds chairman John Teeling pointed out that the diamond industry was in a state of flux. Credit considerations had seriously restricted the auction process, and the loss of credit facilities was hitting hard. There was little money to buy rough diamonds, and forced sales had seen significant drops in reported prices.
“The diamond pipeline is congested and is likely to remain so in 2009, and possibly 2010,” said Teeling. “By 2011, according to most commentators, the price of diamonds should begin to rise as fundamental forces once more exert themselves,” he added.
African Diamonds is involved in exploration in Botswana, West Africa and the Democratic Republic of the Congo (DRC).