Wanetsha Mosinyi
18 December 2008
Junior diamond miner, African Diamonds, says it has taken full ownership of its exploration activities in Botswana, buying out the portion of the projects owned by its joint-venture partner De Beers.
In its annual report for the year ending June 30, 2008, released Tuesday, the Botswana Stock Exchange-listed concern reported that it is taking full ownership of the Atlas joint venture with licenses to drill at four sites in the country.
The deal includes the AK08 and AK09 kimberlite discoveries near Orapa, where De Beers has completed analysis of bulk sampling data.
"We will evaluate the existing data on each pipe to see the potential for commercial grades in part of each pipe," John Teeling, African Diamonds' chairman, says in the report.
After smoking a peace pipe with De Beers over a messy dispute regarding AK 6 diamond project earlier this year, African Diamonds are bullish about the future and confident that they will start-up construction of the mine in April next year.
"In these tumultuous times, African Diamonds is making significant progress. We have a Mining Licence to develop one of the very few hard rock high quality diamond discoveries in the world," Teeling says.
In the last quarter of 2008, the diamond industry has almost ground to a halt. There is virtually no liquidity in the system. The buyers of rough diamonds cannot get credit. Diamonds sold at auction have seen prices decline by up to 40 per cent.
However, Teeling is optimistic and says it is very important to see through the haze and to look at the medium and longer-term picture.
"Demand may falter and prices may decline in the short term but the romance surrounding the giving, owning and wearing of a diamond will continue," he reasoned.
The diamond industry differs from most in that there is a well-known supply gap. This gap led to rapidly rising prices until mid 2008. If demand slows or even declines, the gap is unlikely to disappear and may grow as mines close.
Prior to the current malaise, it was believed that only twelve hard rock kimberlite mines would be operational in 2012.
"The fundamentals for diamonds remain very strong. The economic storm will pass and we expect to be well positioned to take advantage of the upturn," Teeling says.
African Diamonds owns a 28 percent share in the AK06 Discovery, in which De Beers has a 71 percent stake and local company, Wati, owns one percent interest.The JV partners received a licence to mine the project from government in October and first sales of rough diamonds are anticipated in early 2011.
The diamonds will be sold to the DTC Botswana. De Beers is to finance the development of AK06 and the diamond giant is currently actively pursuing sources. The total capital expenditure for all phases of the development to 2014, including contingency, is currently expected to be US$329 million but falling rapidly. At full production AK06 will produce up to 1 million carats of diamonds annually, worth, at present prices, in excess of US$150 a carat.
Be the first to Write a Comment!
Copyright © 2008 Mmegi/The Reporter. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
