African Diamonds says position 'greatly improved'

Irish-owned AIM-listed diamond explorer and producer African Diamonds told an annual general meeting today its position had "greatly improved" in recent months, with uncertainty over its Botswana mine development eliminated.

The firm said the estimated capital cost for phase 1 of the AK6 diamond mine in Botswana will be £63 million, with the total estimated capital cost of developing the mine expected to be less than £100 million.

The initial operating cost will be £14.50 per tonne, the company said.

The mine, which is expected to be developed this year and come on stream in the second half of 2011, will produce 1 million carats of high quality diamonds, including the rare Type II diamonds, at full production.

African Diamonds said it expected to increase its stake in AK6 to 40 per cent by mid-April, by taking up its option with new partner Lucara at a cost of £5 million.

"Under the terms of our agreement with Lucara, we can market our percentage of the AK6 diamonds. This is an attractive option for us," chairman John Teeling said in his statement to the AGM today.

He said the full parcel of AK6 diamonds had been collated and delivered to Geneva for valuation.

"The world market for diamonds has greatly improved in recent months," he said. "Substantial price rises have been recorded and shortages have appeared. This augurs well for the valuation. We anticipate values in excess of the $139 a carat used in our 2009 studies."