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African Diamonds says Lucara JV project AK6 progressing on track

Published: 15:51 02 Nov 2010 EDT

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African Diamonds (LON:AFD) told investors in a project update this afternoon that the AK6 project in Botswana is progressing on track with long lead items ordered and senior staff engaged.

African Diamonds and Lucara Diamonds Corp (TSX-V:LUC) are currently joint venture partners in the AK6 diamond development project, after Lucara bought De Beers' stake in the project earlier this year. African Diamonds owns 40% of AK6, as well as a portfolio of exploration projects in Botswana.

The company recently recommended a £51 million takeover bid from its joint venture partner and today chairman John Teeling said he is confident that shareholders will vote in favour of the takeover at a meeting later this month.

"I am delighted at the progress being made on the development of AK6,” Teeling said. 

“The target of Q4 2011 commissioning is in sight with a ramp up of production during 2012.”

“The demand for quality diamonds remains strong while the supply is at best flat ... When AK6 comes on stream it will be one of a limited number of kimberlite diamond mines in production.”

Initial development activities began earlier this year after the completion of the AK6 feasibility study in June.

The partner contractor, Dowding Reynard and Associates (DRA), has so far focused on the ‘critical schedule’ activities to meet the Q1 2012 target date to start production. To meet this deadline the mine commissioning will start in Q4 2011.  

Last month African Diamonds recommended the Lucara bid that values the company at C$82 million, approximately £51 million.

Lucara will take full ownership of AK6, and African Diamonds’ other exploration assets will be spun-out into a new and separate entity - Botswana Exploration.

African Diamonds shareholders will receive 0.8 Lucara shares and 1 Botswana Exploration shares for each share held.

The logic of this deal is compelling,” Teeling said in October.

Marrying AFD and Lucara will create a C$240 million emerging diamond producer controlling two new kimberlite diamond mines,” Teeling said.  

“AFD shareholders win in three ways, they will hold an indirect stake in AK6 ... they get 26.57% of the Lucara interest in the high diamond value Mothae mine ... and they will get 100% of Botswana Exploration.”

On completion Botswana Exploration will join AIM and the Botswana Stock Exchange.

African Diamond shareholder will vote on the proposal on 24 November 2010.

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