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Lucara, Botswana Form Marketing Arrangement

The AK6 partners appoint Gabonowe to head Boteti joint venture.
Jun 29, 2010 2:40 PM   By Jeff Miller
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RAPAPORT... Lucara Diamond and its partner African Diamonds completed a marketing arrangement with Botswana through their joint-venture company, Boteti, wherein production from the AK6 project may be sold through either open tender or exclusive contract. Lucara, the AK6 project operator, holds a 60 percent interest in Boteti, while African Diamonds holds 40 percent.

An updated feasibility study of AK6 noted indicated resources of 51 million tons  containing 8.2 million carats of diamonds and the mine design delineated a probable reserve of 36.2 million tons of ore containing 6.3 million carats of diamonds in an open pit extending to a depth of 324 meters. These reserves are mined during an 11-year life span.

The study indicated that the first phase would require a capital investment, including contingency, of $120 million, which pertains to the process plant and all on-site and off-site mine infrastructure. On an all-equity basis, utilizing June 2010 costs, the project's financial model generates a free cash flow  of $164 million. Work will commence there in July 2010 and diamond production is expected to ramp up to full capacity during 2012.

The junior mining companies also appointed Ribson Gabonowe to head Boteti.  Earlier in his career, Gabonowe served as the director of mines in Botswana, where he was responsible for the administration of mineral licenses and involved in the negotiation of major mineral agreements for diamonds, copper/nickel, soda ash and coal. More recently, he served as the deputy permanent secretary in the ministry of local government before joining African Diamonds over two years ago.

William Lamb, the president of Lucara, said, "We are very pleased that Ribson has joined the Boteti team. His experience will add significant value to the development of the AK6 mine."

LH

Tags: African Diamonds, Government, Jeff Miller, Lucara Diamond, Mining Companies, Production
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