AfDiamonds raises stake in AK6

Brian Benza
Staff Writer | Tuesday April 27, 2010 00:00

In a statement released last Friday, the company says it has exercised its option to increase its stake to 40 percent from 28 percent in the AK6 diamond deposit for a total cash consideration of US$8 million.

The remainder of the equity in AK6 is held by Lucara Diamond Corporation, the company notified an update on the AK6 resource on 30 March 2010. Commented the Chairman, John Teeling:

'This is another significant step on the road to becoming a significant diamond miner. By the end of 2011, African Diamonds should begin to see a flow of up to 400 000 carats per year with a value of up to US$200 per carat once full production is reached.'

The company announced to shareholders at the beginning of the month that it had undertaken a conditional placing of about 24 million shares at £0,40 a share.

African Diamonds directors were to invest $1.5 million (GBP1 million) for the share placement. The company also has full ownership of the AK8, AK9 and BK5 kimberlite projects in the area.

Lucara Diamond, which acquired a majority stake in the AK6 project from Boteti Exploration, recently announced an update on the project's feasibility study.

In a statement, the company said it estimated the project had an indicated resource of just over 51 million tons at an average grade of 22 carats per hundred tons (cpht) and an average modelled diamond value of $194 per carat. The update also reported an inferred resource of approximately 20 million tons at an average grade of 19 cpht and an average modelled diamond value of $183 per carat.

Lucara's diamond value estimates were based on a recent valuation carried out by Mercury Diamond and reported by Lucara in February 2010. The company is in the process of upgrading a conceptual mining study to a full feasibility study of the project, work which is expected to be completed in May 2010.

African Diamonds said development of its AK6 diamond mine is scheduled to start in September after completion of feasibility studies.