Irish exploration minnow African Diamonds says it will be producing "gem quality" stones within eight weeks.

Chairman Dr John Teeling told the company's annual general meeting yesterday that a pilot plant at its Koidu deposit in Sierra Leone would process 240 tons a day from March. And he said the firm expected to bring another mine in Lesotho in which it holds a 55 per cent stake to full commercial production.

The news drove the company's shares to a new high on London's Alternative Investment Market (AIM), rising 8p to 31.5p sterling. The company floated at 7p a share last July.

Dr Teeling told the meeting the company had high hopes for the operation, which would initially process 10,000 tons of ore to assess the grade of diamonds.

Nearby mines had been producing strong results, he told shareholders. "Koidu produces some of the highest quality diamonds in the world and Pipe 3 [the company's mine\] has every chance of becoming a high grade commercial mine," he said.

Dr Teeling said African Diamonds was currently negotiating an exploration joint venture on certain prospects and he hoped to make an announcement shortly.

It will announce drilling results for its Botswana licence in March, where it has encountered high-quality diamonds.

The £800,000 (€1.16 million) raised in last July's floatation will cover requirements until June, the a.g.m. heard.