AfDiamonds licensed to sell AK6 production on open market

Brian Benza
Staff Writer | Wednesday June 30, 2010 00:00

 

Speaking at the Botswana Resource Conference that started in Gaborone yesterday, Managing Director James Campbell said Boteti Mine, which is 40 percent owned by African Diamonds and 60 percent by Lucara, has been awarded a licence by the Government of Botswana for its mine which has an 11-year initial lifespan.

Under provisions of the original mining licence issued in 2008, all production from AK6 was to be marketed through the Diamond Trading Company.

'We have been awarded a 15-year mining licence and the diamond marketing terms in the licence have been agreed, allowing Boteti to sell its entire production of diamonds through an open tender process and/or negotiated exclusivity contract, subject to valuation by the Government Diamond Valuer,' said Campbell.

AK6 is set to start production at the end of 2011 with an initial throughput of 2.5 million tonnes per annum increasing to 4 million tonnes per annum after four years.

The company will be the second to sell its production outside the DTC channel after DiamonEx's catastrophic sale last year.

Government is also renegotiating its sales agreement with De Beers because the current one expires in December. Reports say the government wants to market and sell 10 percent of Debswana production outside the DTC arrangement.

African Diamonds says a number of proposals from diamantaires have already been received and are currently being evaluated. Campbell added that the phased production approach, combined with contract mining, reduces the up-front capital requirement.

'The revised mining plan calls for a smaller number of carats being produced at a higher diamond value,' he said. 'The indicated resource at a 1.5mm bottom cut-off has an average grade of 16cpht and average diamond price of US$243 per carat. The bottom of the opencast pit is 324 metres and will be mined over an 11-year life.'

The first phase requires a capital investment of US$120 million, which includes the process plant, all mine site and off-site infrastructure, as well as a 13-percent contingency.

This is a significant increase over the conceptual level with the major variances being a 25-percent increase in throughput, foreign exchange movement and escalation.

Operating costs over the life of mine are estimated to be US$17.20 per tonne of ore treated. The most significant increases in the operating costs are the factoring in of higher electricity supply costs and foreign exchange movements.

Project engineering has been awarded to DRA Africa and work will commence immediately. African Diamonds says it is also looking at opening operations in Zimbabwe and Cameroon. Meanwhile, Campbell says they have appointed Ribson Gabonowe, currently CEO of Kukama Diamonds--- the wholly-owned Botswana subsidiary of AFD --- CEO of Boteti. 'We are very pleased to have Ribson leading the Boteti management team,' Campbell said.