JOHANNESBURG (miningweekly.com) – The final feasibility study for Aim- and Botswana-listed African Diamonds’ AK6 mine, in Botswana, would be completed by the end of May, with site development to start in September.

Chairperson John Teeling told shareholders in a statement on Thursday that the company was at an advanced stage of completing financing to cover expenditure in 2010 and 2011.

“We are particularly mindful of equity dilution given our low share price. African Diamonds has the right to market [its] percentage of AK6 output - up to 400 000 ct of good quality diamonds at full production. In a market of growing scarcity, this is a valuable asset and is helping in our funding,” he noted.

African Diamonds currently owned 29% of AK6, but could increase this to 40%. De Beers sold the remaining share to Canadian firm Lucara Diamond Corp in November.

The AK6 mine, which was expected to start producing in the last quarter of 2011, was now expected to have a throughput of up to three-million tons a year in the first phase development, instead of the previously anticipated two-million tons a year.

The diamond miner had announced in December that it could cost £30-million to develop the first phase and that it could fund this through debt and equity.

Teeling noted that while the global economic slowdown had hurt many, this was a boon to the AK6 development, as equipment prices had stabilised or dropped, delivery times had shortened and there were skills available.

African Diamonds remained optimistic about the outlook for diamonds, saying that the future looked bright, as there has been a rapid improvement in demand and prices.

The diamond miner would also continue to look at other opportunities.

“We are considering joint-venture proposals on two other Botswana kimberlites in our portfolio. We hope to begin detailed exploration of a third kimberlite and we are developing ideas on how to expand our Botswana presence,” said Teeling.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.