Charlotte Mathews
14 January 2009
Johannesburg — ARCHANGEL Diamond Corporation, 58% owned by De Beers Group, has terminated an agreement to invest in partnership with Lukoil in the Grib diamond pipe in Russia, citing changed conditions.
But this is not necessarily the end of Archangel's and De Beers' interest in the deposit, discovered by Archangel and Russian company AGD -- now part of Lukoil -- in 1996.
Archangel said it was considering other options, including "financing" and resuming suspended litigation. Archangel executives could not be reached yesterday for clarification of what was meant by "financing".
The Grib pipe, thought to contain about 67-million carats, is the biggest known undeveloped kimberlite. For 10 years Archangel has fought through Russian and foreign courts for its rights to a share in the development.
After an out of court settlement, Archangel signed an agreement with Lukoil in April that would give Archangel a 49,99% stake in the Verkhotina project to develop the Grib pipe into a mine.
Once the agreement was executed, all litigation and arbitration proceedings about the ownership of the pipe would be terminated, the two parties agreed.
Last month Archangel said it had set a deadline of December 31, under its agreement with Lukoil, which enabled either partner to withdraw from the agreement if certain conditions, including government approvals, were not met.
It said this week two conditions had not been met by the cutoff date and there had been a material adverse change in circumstances since the agreement was signed. Archangel said last month that adverse economic events had affected global exploration and current projects.
Demand for diamonds has fallen sharply in recent months.
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