23 Feb 2017

Operations review for the year ended 31 December 2016 has indicated that rough diamond production decreased by five per cent to 27.3 million carats, reflecting the decision taken in 2015 to reduce production in response to prevailing trading conditions.

Addressing the media through teleconferencing service, De Beers head of strategy and corporate affairs, Mr Gareth Mostyn however said Debswana maintained production at close to the previous year’s levels, with output of 20.5 million carats (2015: 20.4 million carats).

He said Jwaneng’s production increased by 23 per cent, driven by higher tonnes treated, largely offset by Orapa, where the production was 20 per cent lower.

By year end, Mr Mostyn said 85 per cent of the 500 million tonnes of waste stripping required to expose the ore had been mined at Jwaneng Cut-8.

He also noted that the first Cut-8 ore to the processing plant remained scheduled for the first half of 2017, with Cut-8 becoming the main source of ore from 2018, while Damtshaa mine was placed onto temporary care and maintenance from January 1st last year.

Meanwhile, as for the De Beers financial results, he noted that underlying earnings before interest, tax, depreciation and amortization (EBITDA) increased by 42 per cent to US$ 1, 406 million (2015: US$990 million). He noted that this was the result of higher revenues from stronger rough diamond demand, which led to reduced inventory levels, reflecting improved trading conditions compared with those experienced in the second half of 2015.

Mr Mostyn said results also benefited from cost-saving programmes, portfolio changes and the impact of favourable exchange rates, while unit costs decreased by 19 per cent from US$83 per carat to $67 per carat.

The total revenue increased by 30 per cent to US$6.1 billion (2015: US$4.7 billion) driven by higher rough diamond sales, which increased by 37 per cent to US$5.6 billion.

This was attributed to a 50 per cent increase in consolidated sales volumes to 30.0 million carats (2015: 19.9 million carats), partly offset by a 10 per cent decrease in the average realised rough diamond prices to US$187 per carat (2015: US$207 per carat) reflecting the 13 per cent lower average rough price index, offset to some extent by an improved sales mix. BOPA