AK6 recovers higher value diamonds

BRAIN BENZA
Staff Writer | Friday February 26, 2010 00:00

A statement released by Lucara this week says that a valuation of 1,760 carat diamonds from AK6 was undertaken in Geneva by Shlomo Tidhar of Mercury Diamonds. Lucara and its joint venture partner, African Diamonds Limited, are in the process of upgrading a conceptual mine plan to feasibility level for the Boteti project and this work is expected to be completed by May 2010, with the aim to commence commercial production in late 2011.

'Overall, the diamonds from AK6 are deemed to be of very good quality and very attractive to diamond buyers,' Tidhar said. 'Colours are generally very white and the samples showed numerous examples of 'blocky' makeable and strong crystal forms that tend to lead to strong polished yields and demand a premium.

'There was a significant presence of Type IIA stones including 12+ carat stones that had been broken into eight or more fragments.'  He found significant breakage in the parcel, which is believed to be caused by drilling and the diamond recovery process. 'There is much upside valuation potential if breakage were to be reduced and/or eliminated,' he added. About one third of the value of the sample included nine large stones greater than five carats.

Said the president of Lucara, William Lamb: 'We are pleased that this valuation is consistent with the preliminary valuation conducted by Lucara in its due diligence work prior to acquisition of a majority interest in Boteti'.

However, Lamb warned that the current market for rough diamonds was still volatile though prices have increased 'substantially' during the past year. The Chairman of African Diamonds John Teeling also said the US$162 a carat value for AK6 diamonds is excellent and substantially higher than previous valuations. 'It is not certain if this trend will continue or if the current pricing levels can be sustained,' he said. 

'The plant has been redesigned to minimise breakage and, far more importantly, to allow diamonds up to 350 carats to pass through. We therefore anticipate that the diamond value could be over US$200 a carat. Our decision to commence production at 2.5 - 3.0 million tons a year with a larger screen size will have a very significant impact on revenue, cash flow and present value.'

Apart from AK06, the company has two other prospecting licences in the same area, AK8 and AK9. AK8 is a five-hectare kimberlite containing an estimated 20 million tonnes of ore to a depth of 300 metres below surface, grades of 3 to 7 carats per hundred tonnes (cpht) and a modelled diamond value between US$35 to US$190/ct. 

AK9 is a three-hectare pipe containing an estimated 11 million tonnes of ore to a depth of 250 metres below surface, grades of 2.5 to 3.5 cpht, but insufficient carats have been recovered to provide a fair diamond valuation.