African Diamonds PLC (AIM: AFD) said the government of Botswana has approved the sale of De Beers' 70.27% stake in the AK6 diamond discovery in Orapa, Botswana, to Lucara Diamond Corp (TSX-V: LUC), an associate of the Lundin Group, a US$10 billion group of 12 oil and mining companies, including African gold producer Red Back Mining (TSX: RBI) and base metals miner Lundin Mining Corp (TSX: LUN).
The deal was brokered by African Diamonds and announced in November.
Construction of the mine is expected to begin in mid 2010, with start up in late 2011 at 400,000 carats a year, rising to an expected 1 million carats in 2013/2014. Updating the feasibility study will continue during the holiday period. A valuation of the AK6 diamonds recovered during exploration will be undertaken during the third week of January 2010.
African Diamonds currently holds 28.381 percent of AK6, and under the De Beers/Lucara agreement has an option to acquire an additional 10.268 percent for US$7 million. If African Diamonds exercises the call option, Lucara will retain a 60 percent stake, with African Diamonds holding 38.65 percent and Wati Ventures 1.35 percent.
African Diamonds can take its stake in AK6 to 40 percent by exercising an option to acquire the Wati Ventures’s stake for US$0.7 million.
Under the agreement, the company will have the right to market its percentage of the diamonds, a valuable right likely to be central to any fundraising by African Diamonds.