De Beers 2006 Operating and Financial Review Publicized
June 30, 07
In De Beers’ “Operating and Financial Review for 2006,” the company reveals that it had a record production of 51 million carats and that De Beers Diamond Jewellers recorded sales in excess of $100 million.
In the report, Managing Director Gareth Penny reaffirms his drive to build a new De Beers, fit for leadership in a competitive and evolving diamond industry. According to Penny, this includes reviewing current mining assets, driving efficiencies across the organization and investing in new production capacity and exploration activities to create a strong future project pipeline.
Financial highlights for 2006 include:
- DTC sales at $6.15 billion were the second highest on record. The sales were lower than 2005, reflecting reduced Russian supply available to the DTC, and the continued challenging environment in the wholesale market for rough diamonds.
- EBITDA at $1.232 billion (2005: $1.403 billion) is down 12 percent because of the lower level of DTC sales and increased exploration and development costs.
- Net earnings at $730 million (2005: $554 million) increased by 32 percent due to the sale of 26 percent stake of De Beers Consolidated Mines (DBCM), and the sale of its interest in the Fort a la Corne joint venture in Canada.
- De Beers sold 26 percent of the equity in DBCM at a price of R3.7 billion ($604.8 million) to the Black Economic Empowerment Group Ponahalo Holdings. This exceeded the South African Mining Charter requirement for 2009.
- The Government of Botswana and De Beers renewed their agreement for a 25-year mining license for the Jwaneng mine. All other mining licenses were extended until 2029.
- The company agreed to establish a 50/50 joint venture, Diamond Trading Company Botswana (DTCB).
- The Government of Namibia and De Beers signed a definitive agreement for the extension of the DTC sales contract period for eight years and established a 50/50 joint venture, Namibia Diamond Trading Company (NDTC).