August 15, 2008

Botswana Extends Licence Negotiations With Diamond Mining Firm to 30 September

Text of report by Botswana newspaper Mmegi website on 13 August

[Report by Wanetsha Mosinyi: "Government Extends AK6 Licence Negotiations"]

Government has extended the negotiation period with Boteti Exploration for mining licence terms and conditions for AK 6 Diamond Mine to September 30, 2008.

In a statement e-mailed to Mmegi yesterday afternoon, the Chairman of African Diamonds John Teeling says his company had received a letter from the Ministry of Minerals, Energy and Water Resources about the extension of time and was pleased with the news. But just before the e-mail from African Diamonds, the government had told Business Today that it had yet to make a decision on the matter.

"As of August 11, 2008, the government is considering the request to extend (the deadline) by Boteti Exploration Company," a statement from the ministry had said. "The ministry will make an announcement once a position is determined."

Government had given the JV partners, De Beers and African Diamonds, until yesterday to accept the terms of the mining licence it had offered. The Permanent Secretary in the Ministry of Minerals Gabaake Gabaake said the intricacies of the negotiations were still confidential.

"The ministry cannot, at this point, disclose any information to the public as negotiations have not been concluded, and the matter, materially bearing on this issue, is before court," Gabaake said.

Gabaake also revealed that the ministry has received an application for a retention licence from De Beers.

"The application, like all other applications, will be given due consideration and be evaluated on its merit," he added.

As the dispute over AK 6 continues, media reports this week speculated that the ownership of the mine change hands, depending on the policy of the government.

Meanwhile, London-listed Gem Diamonds has joined the fray by showing keen interest in buying out the AK 6 project.

James Campbell, MD of African Diamonds, told Miningmx he met with Gem CEO Clifford Elphick during the Botswana Resource Sector Conference in Gaborone on July 24 soon after his company declared a dispute with De Beers over AK6.

Gem Diamonds is currently involved in the development of the controversial Gope project in the CKGR. The company bought the project from De Beers last year for $34.1m. African Diamonds owns 28 per cent of JV company Boteti, which controls AK6 but is in dispute over development of the mine with De Beers, which owns 71 per cent of Boteti. Said Campbell: "We had a general discussion with Elphick and some of the Gem directors. We get on well with Gem and have great respect for their talents and expertise. We recommended that they approach De Beers." Elphick could not be reached for comment. Yesterday was the date by which De Beers and African Diamonds were supposed to accept the terms of the mining licence offered by the Botswana government for the AK6 mine.

What happens next depends on the attitude of the Botswana government, which has received a request from De Beers to extend the August 12 deadline as well as an application for a "retention licence" over AK6.

"The government has so far not responded to the requests made by De Beers for the extension period and the retention licence," said Campbell. "If it does not make a decision by August 12 then, effectively, the mining licence falls away and AK6 becomes open ground again."

If De Beers is granted a retention licence, it will be able to maintain ownership of AK6 for another three to five years without developing the mine. According to a statement from African Diamonds, "De Beers used its majority stake in Boteti, the joint venture company developing AK6, to pass a resolution to apply for a retention licence."

African Diamonds brought an urgent interdict in the Botswana High Court to prevent the application but lost. It is now proceeding with legal action against De Beers with a hearing due in September.

But this is a side issue compared with the impact a decision by the Botswana government could have as well as the fact that the overall dispute between African Diamonds and De Beers will be settled through arbit ration in Botswana.

A diamond industry analyst commented that he believed government is likely to grant a short extension of about three months and effectively tell African Diamonds and De Beers to sort out their differences in that period.

Originally published by Mmegi website. Gaborone, in English 13 Aug 08.

(c) 2008 BBC Monitoring Africa. Provided by ProQuest LLC. All rights Reserved.