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Market NewsCommentLUKoil, Archangel, De Beers sign agreement

LUKoil, Archangel, De Beers sign agreement

LUKoil, Archangel Diamond Corporation and De Beers announced in a joint statement today the signing of definitive agreements concerning the ownership and development of the Verkhotina diamond project located in the northwest of Arkhangelsk, Russia. Under the agreement, Archangel acquires an interest in OAO Arkhangelskoe Geologodobychnoe Predpriyatie (AGD), a Russian open joint stock company currently wholly-owned by LUKOIL Group and the holder of the licence to explore and mine the Verkhotina licence area. The AGD interest to be acquired by Archangel will not exceed 49.99%. LUKOIL will continue to own the remaining interest in AGD. Completion of the transaction is subject to the receipt of the consent of the Federal Anti-Monopoly Service of the Russian Federation and other conditions precedent. Upon completion, the litigation and arbitration proceedings relating to the ownership of the Verkhotina licence will be terminated. The announcement looks certain to reinvigorate sentiment in the global diamond mining industry. The Grib pipe, at Verkhotina, in Arkhangelsk region, was assayed by De Beers several years ago, and on those data, it is the one of the world's largest undeveloped deposits. Depending on valuations which have moved upward with rising prices for rough, the asset value of the diamonds to be mined is between $5 billion and $7 billion. If the feasibility planning to come satisfies these reserve data and valuations, the Verkhotina project will be the diamond world's first big new open-pit mine since the Canadian discoveries.

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