Irish-listed exploration group African Diamonds today confirmed that it had brokered a deal to buy-out De Beers' 71 per cent stake in the Botswana AK6 project.
As revealed in The Irish Timesearlier today, De Beers' stake in the diamond discovery will be transferred to Lucara, a Toronto listed company controlled by the Lundin group.
The joint venture agreement was brokered by African Diamonds, who have a 120 day option to increase their stake in AK6 from 29 per cent to 40 per cent for £4.8million.
African Diamonds said it intends to take up the option to increase its stake in AK6 to 40 per cent.
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. The agreement with De Beers is subject to Botswana government approval.
Studies commissioned by African Diamonds show that it will cost US$63million to establish the mine at 2 million tonnes a year output, producing over 400,000 carats at a modelled grade of 22 carats per hundred tonnes (cpht).
“There are only positives resulting from this development. We believe that AK6 is a world class diamond deposit. It needed to be developed as quickly and efficiently as possible to benefit all stakeholders. This will now happen," said African Diamonds chief executive John Teeling.
"The AK6 mine, with its high value diamonds, including the big, rare and beautiful Type II nitrogen free stones, will come on stream at the right time. The economics are compelling. Prices are rising, demand in the Far East is growing, while supply is at best flat. By 2012, there will be only a few kimberlite diamond mines in the world," he added.
Lucara is part of the Lundin Group of natural resource companies, which in two decades, has been built into a multinational US$10 billion group of 12 oil and mining companies, including Red Back Mining, Lundin Mining, Lundin Petroleum and Africa Oil.