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African Diamonds www.afdiamonds.com
Full African Diamonds profile here

African Diamonds was established to develop diamond mines in Botswana and West Africa. The target is to have a producing mine within three years. Having a balanced portfolio of projects will help reach the objective. The current portfolio of the Company consists of:
JV in Botswana with Lucara to fast track the development of our licences to our goal of large gem stone quality diamond mine;
late stage exploration projects which are known to contain diamonds or diamond indicator minerals; and
early stage high potential concessions, both alluvial and hardrock.

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African Diamonds exercises AK6 option, now holds 40% stake

African Diamonds plc (AIM: AFD) has now exercised its option with regard to the AK6 diamond deposit in Botswana, thus increasing its stake in the project to 40%. The transaction follows the recent £9.6m placing and the strategic partnership with Lucara Diamond Corporation (TSX-V: LUC).

"This is another significant step on the road to becoming a significant diamond miner”, African Diamonds chairman John Teeling commented. “By the end of 2011 African Diamonds should begin to see a flow of up to 400,000 carats per year with a value of up to US$200 per carat once full production is reached."

When Lucara - an associate of the Lundin Group of companies - took over De Beers' 70% stake in the AK6 project for US$49 million, it agreed a new partnership with African Diamonds. As part of the new agreement, the AIM listed company gained the right to increase its interest from 29% to 40%.

On 6 April 2010, African Diamonds raised approximately £9.6m through the placing of 24.1m shares at 40p each. Today, the company has confirmed it has now increased its stake in AK6 to 40% for a total cash consideration of US$8 million paid to Lucara Diamond Corporation and Wati Ventures Pty Ltd. The remaining 60% is retained by Lucara.

Last month, Lucara submitted a revised resource estimate for the AK6, reporting 51m tonnes at an average grade of 22 carats per hundred tonnes (cpht) - 11.2 million carats - and a further inferred resource of 20 million tonnes at 19 cpht. Notably, the average modelled diamond value jumped from US$151 per carat to US$194 per carat in Lucara’s resource statement, giving an in situ value of the indicated resource of US$2.2 billion.

The update was conducted as part of an ongoing feasibility study being completed by Lucara on AK6 which is expected to be completed in May 2010.

In March, African Diamonds reported that the pace of development at the AK6 diamond mine is accelerating, with the mine expected to come on stream in 2011 and within previously set cost parameters. Indeed in this morning’s announcement John Teeling stated: “As the final studies on AK6 are nearing completion, the fundamentals of the mine continue to improve.   The mine is expected to come on stream in late 2011.”

As part of the placing, the company’s directors and families are investing a total of £1m. John Teeling bought 750,000 shares and he subsequently owns approximately 4m shares, which represents 4% of the company’s enlarged share capital. Non-executive directors David Horgan and James Finn both bought 500,000 shares, taking each of their shareholding to approximately 3.2m shares, representing 3.28% of the enlarged share capital.

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