JOHANNESBURG (miningweekly.com) – Aim- and Botswana-listed African Diamonds wants to see "rapid" development of the controversial AK6 diamond project in Botswana after brokering a deal in which its new "like-minded" partner has bought out the 71% stake held by its former partner, De Beers.

African Diamonds, which at one stage threatened legal action against De Beers, said on Wednesday that it intended exercising its 120-day option to increase from 29% to 40% its share of the AK6 project, by acquiring a stake from the the TSX-listed Lucara, which it said was backed by the Lundin group.

African Diamonds would thereafter proceed to engage in the development of AK6, which chairperson John Teeling said had high-value diamonds, "including the big, rare and beautiful Type II nitrogen-free stones".

Mine development would start in mid-2010, and first production would take place in 2011.

AK6, in the Orapa region, had the potential, African Diamonds said, to become a mine capable of producing one million carats a year and African Diamonds would have the right to market its share of the diamonds produced.

Studies showed that it would cost $63-million to establish a two-million-ton-a-year operation capable of producing more than 400 000 carats at a modelled grade of 22 carats per hundred tons (cpht). A further $25-million in capital expenditure would double the output of tons and carats.

African Diamonds management believed that the grade would be 25 cpht, providing million-carat output.

The current life of mine from the opencast was 12 years, and the deposit contained a further seven million carats at depths of from 372m to 758 m.

"It 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," Teeling said.

African Diamonds partnered De Beers for six years: "Together we found a diamond mine but, over time, the needs and aims of African Diamonds diverted from those of De Beers. It was a genuine pleasure and privilege to work with De Beers. An amicable separation is a good outcome," Teeling said.

The Lundin family, who control Lucara, have built a group of oil and mining companies: "Having John Gurney and Eira Thomas involved will provide expert guidance and credibility," Teeling said.

At one stage, construction of the mine was to expected to start in 2009, and production by the end of 2010, a lead role having been played by Boteti Exploration, a joint venture (JV) between De Beers Prospecting Botswana with 71%, African Diamonds with 28% and Wati Ventures with 1%.

The revised plan was developed after the JV partners struggled to secure finance for what was said to be a $260-million mine development plan.

In October 2008, the Boteti JV received a 15-year mining licence from the Botswana government for the project, the licence being issued with effect from October 10, 2008, to October 9, 2023.

All Boteti's production was, at that stage, to be sold through the De Beers-linked Diamond Trading Company Botswana.

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