Supervisory Board of ALROSA approved updated master budget for 2012

The Supervisory Board of ALROSA met in Moscow on Friday to consider the approval of an updated master budget for 2012.
Despite the sufficiently high volatility in diamond prices in the last few years, ALROSA believes the diamond market is mainly driven by objectively prevalent demand for rough over supply, which is a consequence of reduced output and moderate growth in demand for diamond jewelry in the traditional markets of the United States and Japan, as well as due to wanton growth of diamond consumption in the new markets - India and China.
Given the current price movement, the company estimates the average annual increase in diamond prices at 1% versus 2011 (compared to estimates at the beginning of 2012 - 4%) and views this moderate price growth, which excludes speculative pressure on the value of diamonds almost across all the product range, as a stabilizing factor positively influencing market prospects for 2013.
Taking into account the dynamics of prices and expected supplies to the market, ALROSA forecasts diamond sales for the Group in 2012 (both for rough and polished goods) to reach approximately $4,590 million, which is 3% up against 2011.
ALROSA Group is expected to drive its output to almost 34.4 million carats in 2012, which is comparable to what was produced in 2011 (34.6 million carats). A slight decline in production is a scheduled factor caused by technological specifics in the investment program for the construction of underground mines.
ALROSA’s net profit is forecast to be about 34.3 billion rubles or 0.4% above the initial target for 2012 and over 16% up versus 2011. In order to stimulate the development of new markets, ALROSA plans to enter into additional long-term agreements for the supply of rough diamonds in the near future within the program of geographical diversification of its sales policy.
The Supervisory Board approved the “Regulation on Procedure and Terms for Sale of Natural Rough Diamonds by ALROSA” earlier agreed by the company with the Federal Antimonopoly Service.
The Supervisory Board also approved the agreement between the Government of the Republic of Sakha (Yakutia) and ALROSA on cooperation in the sphere of social support for orphans and children left without parental care. Under the agreement, ALROSA will allocate RUB 86 million for housing to orphans and children left without parental care.
The Supervisory Board has decided to include Valery Kornilov, Director of Capital Construction Department at ALROSA; Mikhail Lopatinski, Director of Mirninski GOK; and Rishat Yuzmuhametov, Chairman of the Profalmaz Trade Union, in the Executive Committee of ALROSA.
The Supervisory Board also reviewed the company procurement results in the first half of 2012.