De Beers, Botswana Govt Close to Conclusion AK06 Negotiations

De Beers, African Diamonds, and Wati Ventures, the shareholders of Boteti, are in the final stage of discussions with the Botswana government concerning the development of the AK06 project, the mining giant said in a statement.

The discussions mainly focused on mitigating the impact of the regional power shortage which poses a challenge to the timely development of the AK06 project.

“The talks have been constructive and have aimed to find a way to provide the project with a secure and cost effective power supply, while avoiding undue delay,” De Beers said.  “De Beers is confident that the successful conclusion of these discussions will result in AK06 joining Botswana’s world-class stable of diamond mines in 2011.”

De Beers also said it had reached an agreement in principle with the government to sell diamonds mined at AK06 through Diamond Trading Company Botswana (DTCB), an equally owned joint venture between De Beers and the government that would support its beneficiation objectives. Current Debswana production is also marketed through DTCB.

“Government has acknowledged the gravity of the power supply issue and is investigating solutions to address the challenge and ensure the project has a sustainable supply of power,” Gareth Penny, De Beers Group managing director said in the statement. “As Botswana’s largest private investor, De Beers is excited to further our commitment to Botswana’s diamond future with the development of the multi-billion Pula AK06 project.”

De Beers holds a 71 percent stake in AK06 while African Diamonds holds 28.38 percent of the mine’s shares.

A conflict transpired between De Beers and African Diamonds in July concerning AK06 when De Beers noted that potential power issues made the mine less viable and suggested it be delayed by two years.  The two were also at odds concerning the marketing of diamonds from the mine.

Negotiations for the AK06 mining license are expected to be concluded in the coming week.