AF Diamonds' AK6 to come on stream September

Brian Benza
Staff Writer | Monday March 22, 2010 00:00

In an interim results statement, Executive Chairman John Teeling says the company is at an advanced stage of completing financing to cover expenditure in 2010 and 2011.

'The pace of development at AK6 is accelerating,' says Teeling. 'The mine will come on stream in 2011 within the cost parameters that we have previously set.

 'Our new partner, Lucara, has the same objectives as to bring the mine on stream as quickly and efficiently as possible.

'The mine will come on stream at the perfect time; prices and demand are high and the recent valuation report has also vindicated our view that AK6 will produce high quality, beautiful stones.'

Teeling adds that they are particularly mindful of equity dilution given their low share price.  African Diamonds, which is also listed on the London Stock Exchange's AIM, has the right to market its percentage of AK6 output up to 400, 000 carats of diamonds at full production.

'In a market of growing scarcity, this is a valuable asset and is helping in our funding,' he says. African Diamonds currently owns 29 percent of AK6, but may increase this to 40 percent. De Beers sold the remaining share to Canadian firm Lucara Diamond Corp, in November last year after a bitter wrangle with African Diamonds over differences in timeframes for the development of the mine.

AK6, which is expected to start producing in the last quarter of 2011, is now expected to have a throughput of up to three million tons a year in the first phase development instead of the previously anticipated two million tons a year.

The diamond miner announced in December that it could cost £30 million to develop the first phase and that it could fund this through debt and equity.

Teeling notes that while the global economic slowdown has hurt many, it has been a boon to the development of AK6 because equipment prices have stabilised or dropped, delivery times shortened and there are skills available.

But the diamond miner is still looking at other opportunities. 'We are considering joint-venture proposals on two other Botswana kimberlites in our portfolio,' says Teeling.

 'We hope to begin detailed exploration of a third kimberlite, and we are developing ideas on how to expand our Botswana presence.'

A war of words erupted again between African Diamonds and diamond giant De Beers following the disposal of shares by the latter allegedly in an irregular manner.

In a statement to the London Stock Exchange (LSE) where African Diamonds has its primary listing, John Teeling said De Beers had failed to notify it about a transfer of over a million shares the diamond giant held in the smaller company.

According to FSA rules, account holders must inform a company when shareholdings breach percentage points. African Diamonds said the account in question, which held 4,423,293 shares or 5.8 percent, now holds 3,423,293 shares or 4.49 percent.

De Beers' reaction was to demand a full retraction of African Diamonds' allegations.