IRISH LISTED exploration group African Diamonds is set to get a new joint venture partner for its potentially lucrative AK6 diamond mine in Botswana.
The Irish Timeshas learned that mining giant De Beers, which is headquartered in Luxembourg, has agreed to sell its 71 per cent interest in the mine.
It is understood that African Diamonds, which is led by entrepreneur John Teeling, will increase its stake in the project from its current level of 29 per cent with a large Canadian company buying the bulk of De Beers’ stake in the Botswana mine.
African Diamonds, which is listed on the Aim stock market in London, is expected to announce details of the deal later this week.
De Beers invested in AK6 in 2004 but relations with African Diamonds soured in recent times over a dispute about the timeframe for development of the mine, which is situated in the Orapa region of Botswana.
De Beers, which was responsible for financing the capital expenditure at AK6, wanted to push back the start of production at the mine due to financial constraints and the global economic downturn, which has seen demand for diamonds weaken.
African Diamonds, however, was keen to proceed with the original plan to bring the mine into production in 2011.
This stand-off resulted in litigation between the two sides.
It is understood that the companies reached an amicable settlement recently and the change in the structure of the joint venture has been approved in Botswana.
AK6 is now expected to come on stream in 2011 at about 2.7 million tonnes a year throughput. This is expected to rise to about 4.2 million tonnes in 2013.
De Beers had estimated the cost of financing AK6 at $300 million but African Diamonds and its new partner are expected to pursue a lower-cost production option.
African Diamonds plans to market the diamonds itself.
AK6 is regarded as a world class mine. Operating costs are estimated at $13 a tonne with expected revenue of more than $34 a tonne. Shares in African Diamonds rose by 5.7 per cent to 46.5p in London yesterday.
The company has a market capitalisation of £33.5 million.
