African Diamonds readies new drill campaign in Botswana

African Diamonds (LON:AFD) said it is ready to begin a reverse circulation (RC) drilling programme on the AK8, AK9 and BK5 kimberlite exploration projects which are located in Orapa, Botswana. Additionally, the company said it expects board approval for the final AK6 feasibility studies at the end of June.

AK6 is the company’s key development project, and through a joint venture with Lucara Diamonds (TSX-V:LUC), an associate company of the Lundin Group, it is scheduled to start diamond production in Q3 2011.

Whilst progressing AK6, African Diamonds said it also plans to ramp up exploration of its 100%-owned Botswana exploration licences. With the initial focus on AK8, AK9 and BK5, the company believes that they each have the potential to be stand-alone or feeder mines to the AK6.
"The focus of the past two years has been on AK6.  It is now time to evaluate our other assets in the Orapa region.  African Diamonds holds 100% of some of the very best diamond ground in Botswana, containing over 20 known kimberlites”, African Diamonds chairman John Teeling commented.

"We have spent the past three months re-assessing the prospecting and drilling data on AK8, AK9 and BK5.  We will shortly begin a drilling programme of up to 800 reverse circulation drill holes to clarify the size, grade and value per carat of each of the three pipes."

The AK8 prospect is a two lobe, 5 hectare kimberlite. The pipe is estimated to contain 20m tonnes of kimberlite to a depth of 300m, with grades estimated between 5-10 carats per hundred tonnes (cpht). AK9 is a 3 hectare kimberlite pipe, which is estimated to contain 11m tonnes to a depth of 250m. According to African Diamonds, the AK9 diamond grade is estimated to be between 5-10cpht, with upside potential. BK5 has a surface extent of 2.7 hectares, however the complete believe that the anomaly is at least seven hectares in size, at BK5 historical records of the surface kimberlite suggest a grade of approximately 7cpht.

According to African Diamonds, the drilling may reveal that grades could be higher in AK8 and AK9 and that the size of BK5 may triple, based on a thorough review of data from six years of drilling and prospecting. The extensive 800 hole RC drilling programme is expected to cost approximately $1m, and it will get underway the coming weeks. 

One of the program’s key aims is to accurately delineate the size of each kimberlite and to estimate microdiamond and heavy mineral grades. The company believe that the results will enable it to move the prospects to engineering and financial studies, to explore whether or not the kimberlites can be developed as open pit mines on a stand alone basis or as feeder mines to the AK6 mine.

At the AK8 and AK9 kimberlites, the company’s principal targets are the close to surface/outcropping areas where extensive data already exists. African Diamonds noted that whilst BK5 is at an earlier stage of exploration, it also has significant potential.

At the AK6 mine development, in March, Lucara submitted a revised resource estimate for the AK6, reporting 51m tonnes at an average grade of 22 carats per hundred tonnes (cpht) - 11.2 million carats - and a further inferred resource of 20 million tonnes at 19 cpht. Notably, the average modelled diamond value jumped from US$151 per carat to US$194 per carat in Lucara’s resource statement, giving an in situ value of the indicated resource of US$2.2 billion. The update was conducted as part of the ongoing feasibility study.

AK6 – located in the Orapa kimberlite field some 25 kilometres south of the massive Orapa diamond mine - was discovered in the 1970s, but like many of the other small pipes prospected by De Beers, was considered unworthy of further attention at that time.

African Diamonds listed on AIM in 2003, and exploration began in earnest with the company amassing a large area to the north and east of the giant Orapa diamond Mine.

Subsequently, the company established the Boteti exploration and development JV with De Beers Exploration, with each party consolidating prospective ground to the pot - African Diamonds’ 21 kimberlites joining nine from De Beers, including AK6.

All the exploration work was funded by De Beers. Initially, the JV was 49-51% in favour of De Beers, with their share rising to 70% on completion of the first feasibility study. AK6 was one of the first kimberlites to be bulk sampled by the new JV.

AK6 returned particularly encouraging results from a 100 tonne sample. With 165 macro diamonds retrieved, totalling over 22 carats and the largest stone weighing in at 1.32 carats. The modelled grade for the sample was 25 carats per hundred tonnes (cpht).  The JV continued its exploration work spending $35m.Diamond drilling, large diameter drilling, trenching and bulk sampling firmed up the size and shape of the multi-lobed AK6 pipe.

The JV identified that AK6 comprises three distinct lobes – North, South and Central – of which the South lobe, some 750m in depth, is far the greatest, containing some 72% of the resource tonnage in its top 400 metres at an average grade of 21 cpht.

In 2009, the De Beers JV came to an end as the South African diamond miner sold its interest in the partnership to Toronto–listed Lucara. “For six years, we partnered with De Beers on AK6 and other projects in Botswana.  Together we found a diamond mine but, over time, the needs and aims of African Diamonds diverged from those of De Beers”, Teeling said of the De Beers JV.

When Lucara took over De Beers' 70% stake in the AK6 project for US$49 million, it agreed a new partnership with African Diamonds. As part of the new agreement, the AIM listed company gained the right to increase its interest from 29% to 40%.

"This is another significant step on the road to becoming a significant diamond miner ... By the end of 2011 African Diamonds should begin to see a flow of up to 400,000 carats per year with a value of up to US$200 per carat once full production is reached", Teeling commented in May.