African Diamonds cuts pre-tax losses to £205k

AFRICAN Diamonds – the Dublin-headquartered mining company – has reported pre-tax losses of £205,000 (€230,000) for the first half of its current financial year.

The figure, for the six months to the end of December, represents a significant slashing of first-half losses, as the John Teeling-chaired company had reported losses of £775,000 for the same period the previous year.

The AIM-listed company also cut its operating losses by 33% to £223,000 and its first half loss per share went from £1.02 to 27p, on a year-on-year basis.

The firm confirmed that its key AK6 diamond mine in Botswana is on track to come on stream and begin producing diamonds next year. A feasibility study into the mine will be completed in about two months’ time.

Mr Teeling said that this is “an exciting time” for African Diamonds and its shareholders.

“The pace of development at AK6 is accelerating. The mine will come on stream in 2011, within the cost parameters that we have previously set.

“Our new partner, Lucara, has the same objectives as us to bring the mine on stream as quickly and efficiently as possible. The mine will come on stream at the perfect time; prices and demand are high. The recent valuation report has also vindicated our view that AK6 will produce high quality, beautiful stones,” he added.

Industry giant De Beers recently sold out of AK6 – with joint ownership switching to African Diamonds and Canadian diamond company, Lucara. The Irish firm holds a 27% stake in the mine, but has the option to up that to 40% – a right which it is likely to exercise in the coming weeks. At full production, African Diamonds’ share of AK6’s output should be about 400,000 carats of good quality diamonds.

The Dublin-based firm has announced it is considering joint venture proposals on two other Botswana-based diamond discoveries in its portfolio – although these plans are understood to be at a very early stage. Detailed exploration work is also planned for a third discovery in the same country.

Added Mr Teeling: “While the focus is clearly on AK6, other opportunities are not being neglected. We are developing ideas on how to expand our Botswana presence.”