Tue, 30 Jan 2007
 
 

James Campbell
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» Race hots up for African diamonds

Diamond mine to cut capital cost
David McKay
Posted: Thu, 30 Nov 2006

[miningmx.com] -- LONDON-listed African Diamonds is in discussions with joint venture partner, De Beers, to lower the capital cost of its proposed AK-6 diamond project in Botswana.

“We’re working through a conceptual study,” said African Diamonds MD, James Campbell, formerly GM of De Beers’ global mining and exploration group. “Maybe we could get the capital down by a third,” he said.

Westwind Partners Inc, a stockbroker, estimated a capital cost of $112.5m for the AK-6 kimberlite deposit which is situated in the district of De Beers’ giant Orapa cluster of mines including Orapa itself, which began operations in the early Seventies, and Letlhakane.

“We’d like to take a phased approach to the mine,” said Campbell. This would involve building the mine’s plant on a modular basis and accessing cashflow much earlier than planned by De Beers.

“We’d like to vote half the capital now and half the capital later. The capital can be lowered. I don’t think this is wishful thinking,” said Campbell.

The AK-6 mine, which has an estimated 12 year life of mine, and potential to go underground, is expected to start production in 2008.

The AK6 deposit was originally owned by De Beers, but it was taken over by African Diamonds under the management of former De Beers geologist Mark Scowcroft. De Beers signed a joint venture with African Diamonds in 2004 to explore for further ground.

The discovery of AK-6 eventually led to an agreement in which De Beers will farm in to 70% of the project on completion of a bankable study. Diamonds produced from the mine will be marketed exclusively by De Beers and the diamond giant has first right of refusal to purchase the shares of the existing African Diamond directors.

Interestingly, African Diamonds is another manifestation of ex-De Beers expertise. Apart from Campbell, the company’s technical director is another former De Beers employee, Alex van Zyl, described by Westwind Partners as commanding special respect from De Beers after 40 years in the field.

Commenting on his decision to quit De Beers, which was announced on November 20, Campbell said: “There has been a fundamental change at De Beers. Any new leader [Gareth Penny, De Beers new MD] would wish to do this.
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“He is shaping a very different future from the one I anticipated or would possibly like to see,” said Campbell.

It was widely reported that De Beers was considering a new round of retrenchments over the next few months, including head office. This is part of a drive to make the company more profitable.

Meanwhile, Campbell said he would also join the board of West African Diamonds, a company due to be hived off from African Diamonds in December and consisting of its exploration assets in Sierra Leone. West African Diamonds is currently seeking a new COO after the departure of former Petra Diamonds manager, Kevin Dabinett