3 Dec 2010 13:46

Alrosa could mine 34.4 mln carats of diamonds, sees $3.56 bln sales in 2011

MOSCOW. Dec 3 (Interfax) - Alrosa expects to produce 34.438 million carats of diamonds in 2011, the Russian diamond monopoly said in a statement.

The production target is contained in the 2011 budget proposal that the Alrosa management board considered on Friday and will submit to the supervisory board.

Alrosa told Interfax that mine output next year would be 2% higher than in 2010 in carats.

Alrosa said in the statement that revenue next year is targeted at $3.526 billion, 3.2% more than projected for 2010, including $3.366 billion revenue from rough diamond sales (2.2% more).

Net profit will amount to 10.542 billion rubles, or 4.6 billion rubles more than in 2010. The board proposes to increased dividends to 20% of net profit from 14%.

Alrosa expects pretax profit will be 4.57 billion rubles above this year's planned total at 14.858 billion rubles in 2011.

Overall costs of 73.26 billion rubles are expected.

Spending on exploration should rise 32.3% to 3.65 billion rubles, and spending on R&D by 21.8% to 878.3 million rubles.

Capex could rise 27.4% to 14.487 billion rubles, including 11.782 billion rubles on construction and 2.705 billion rubles on retooling. Alrosa's strategy is to put more than 70% of its capex into creating new and sustaining existing core production capacity. It will spend 6.545 billion rubles developing underground diamond mining in 2011.

Alrosa also plans to sell a few non-core assets in 2011-2012.

The company expects its loan portfolio will total 98.56 billion rubles at the start of next year, and fall to 82.964 billion rubles during 2011. In other words, the company could achieve one of its key goals of reducing its total debt to below $3 billion, with long-term debt making up around 90% of this.

Alrosa mines a quarter of the world's diamonds. Mine output was $2.093 billion and cut and uncut diamond sales were $2.213 billion in 2009.