AfDiamonds re-negotiates mining Licence

MBONGENI MGUNI
Staff Writer | Thursday March 4, 2010 00:00

Under the provisions of the original mining licence, issued in 2008, all production from AK06 was to be marketed through the Diamond Trading Company, while commercial operations were set to begin by April 9, 2011.

Between 2008 and today, AfDiamonds has acrimoniously parted ways with its former joint venture partner in AK06, De Beers, and welcomed new equity partner, Lucara. In addition, the global recession played havoc with diamond prices and the new mine development costs.

On Tuesday, AfDiamonds' Managing Director, James Campbell revealed that discussions were ongoing with government for the amendment of the mining licence issued to Boteti, the joint venture company owned by AfDiamonds and Lucara.

'Following De Beers' exit from the Boteti JV, the marketing of diamonds through the DTCB falls away. Discussions have already begun with the GRB on possible amendments to the diamond marketing and the start of production clause,' Campbell said.

Presently, the UK junior miner is conducting a feasibility study, due for completion by May. Initial diamond production is expected to start towards the end of 2011, necessitating the a Campbell said production would be in the form of two phases over the mine's estimated 12 year lifespan. During Phase 1, which will stretch between 2012 and 2016, annual production will be set at two million tonnes of kimberlite. Phase 2 will see production ramped up to four million tonnes per annum mined between 2017 to 2023.

In total, AK06 would process 35 million tonnes of kimberlite, down to a depth of 288 and lead to the recovery of 7.2 million carats, said Campbell. While the overall carat production during AK06 life will be lower than other local diamond mines, its shareholders are banking on quality.

A valuation of 1,760 carats of diamonds from AK6 by Geneva based Mercury Diamonds indicated that: 'Overall the diamonds from AK6 are deemed to be of very good quality and very attractive to diamond buyers.  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.'

In addition, AfDiamonds' Chairman, John Teeling recently said research had indicated that AK06 could possibly produce stones worth over US$200 a carat.