* AK6 mine partner Lucara Diamond seen as likely buyer
* Price was not acceptable - source close to talks
* Progress continues on financing options for AK6 mine
* Shares down 0.6 percent, after Thursday's 21 percent gain
(Adds comment from source)
By Julie Crust
LONDON, Aug 13 London-listed African Diamonds
AFD.L, an exploration company operating in Botswana, has
rejected an unsolicited approach, saying on Friday the proposal
was not one it could recommend to shareholders.
African Diamonds, responding to a 21 percent rise in its
share price on Thursday, did not say who made the approach.
"The price was not acceptable," said a person close to the
African Diamonds also said it was still working on options
to develop the AK6 mine in which it has a 40 percent stake, and
was in talks with a potential investor regarding additional
The company's shares were down 0.6 percent at 0915 GMT,
valuing the company at about $53 million.
At full production, African Diamonds expects AK6 to produce
around 700,000 carats annually and realise more than $175
million in revenue. Output was expected to ramp up to full
capacity in 2012.
John Meyer, an analyst at Fairfax IS, said Toronto Stock
Exchange-listed Lucara Diamond Corp LUC.V -- holder of a 60
percent interest in AK6 -- was the most likely buyer.
However, he also noted that diamantaires were looking to
gain control of a greater proportion of the supply chain.
"It would not be out of the realms of possibility for a
Russian group or one of the Indian cutters" to be interested, he
said. "Indian cutters are competing with Chinese cutters for
supply and this is one of the things that have driven up
Producers have said that rough diamond prices have recovered
from lows seen during the global recession. [ID:nLDE65Q0FA]
Rival AIM-listed producer Firestone Diamonds (FDI.L) is in
the process of aquiring Kopane Diamond Developments KDD.L in
an all-share offer valued at $71 million. [ID:nLDE66K13A]
(Editing by Matt Scuffham and Dan Lalor)
($1 = 0.6383 pound)