De Beers' Boteti Signs AK06 Agreement

Agreement setting out the terms and conditions for the granting of a mining license for the AK06 deposit in Botswana.

The terms and conditions of the Heads of Agreement are that:

•  The license will be issued with effect from October 10, 2008 for 15 years up to October 9, 2023,

•  Production will commence within 30 months of October 10, i.e. from April 9, 2011,

•  All of Boteti’s production will be sold through Diamond Trading Company Botswana (DTCB),

•  Government has undertaken that power will be supplied from the national grid. In the event of any need for the mine to generate additional power, Government undertakes to waive the Road Levy on imported diesel fuel until 2013,

• Government will not take equity in the project,

•  The tax rates applicable to the project will be the variable income tax rate specified in the Twelfth Schedule of the Botswana Income Tax Act plus the normal royalty specified in the Botswana Mines and Minerals Act,

Developing the mine will entail a two phase process requiring a total investment of approximately Pula 2.76 billion ($421 million) by Boteti over a five year period.

The mine will produce an estimated 600,000 carats of diamonds annually in the first 3 years increasing to 880,000 carats over the remainder seven years of the life of the mine. This equates to approximately 8.1 million carats by the end of the 10 year life of mine generating an average $138 per carat to Boteti, the company said.

AK06 will be Boteti's first diamond deposit it mines.

"I would like to thank the Government of Botswana and the joint negotiating team of Boteti who have worked tirelessly to ensure that all matters pertaining to the license were concluded in time and satisfactorily," Boteti Chairman Tony Guthrie, said.

Boteti is a joint venture between De Beers Prospecting Botswana (Pty) Ltd (70.2%), African Diamonds Plc (28.4%) and Wati Ventures (Pty) Ltd (1.4%).