Boteti, Botswana Sign Mining Agreement

De Beers mining partner Boteti has signed an agreement with the Government of Botswana setting out the terms and conditions for the granting of a mining licence for the AK06 deposit, Boteti said in a statement. 

The terms and conditions of the agreement include the following:

* The license will be issued from Oct. 10, 2008, for 15 years till Oct. 9, 2023;

* Production will begin April 9, 2011;

* All of Boteti’s production will be sold through Diamond Trading Company Botswana,

* Power will be supplied from Botswana’s national grid;

* The government of Botswana will not take equity in the project;

* The project will be taxed by the government’s variable income tax rate plus the normal royalty specified in the Botswana Mines and Minerals Act.

The mine will be developed in two phases and will cost approximately $377.5 million from 2009 to 2014. The mine is estimated to produce 600,000 carats per year in the first 3 years increasing to 880,000 carats per year over the remainder of the life of the mine (estimated at seven years). This equates to approximately 8.1 million carats by the end of the 10-year life of the mine with an average dollar-per-carat of approximately $138.

The employment levels at Boteti will vary depending on the stage in the project life. For instance, during phase 1 of construction, up to 850 people will be employed. The figure will reduce to 274 permanent employees during the operational stage of the same phase.

Caption: The location of the AK06 Deposit within Botswana.