With product sales expected to increase...

ALROSA's executive committee today approved the company's budget for 2011 and set corporate goals for the upcoming fiscal year. ALROSA intends to maintain "global leadership" with carat output, implement an investment program for underground mine construction, improve the efficiency of operations through cost reduction, and introduce energy saving measures.

ALROSA projected rough production of 34.438 million carats for 2011 with core product sales expected to increase 3.2 percent to $3.526 billion. The breakdown would be $3.366 billion from rough diamond sales; and $160 million from polished diamond sales.

ALROSA projected 2011 profit of $334 million (RUB 10.5 billion), which would be up from an anticipated profit of $191 million (RUB 6 billion) in 2010. The proportion of the net profit distributed for dividend payments would therefore be increased from 14 percent to 20 percent. ALROSA intends to reduce its credit portfolio from RUB 98.56 billion in January 2011 to RUB 82.96 billion in January 2012.

Total costs for 2011 were approved at $2.3 billion (RUB 73.3 billion). ALROSA will increase allocations for research and development by 22 percent to $28 million (RUB 878.3 million) and will increase exploration spending 32 percent to $118 million (RUB 3.7 billion). ALROSA will allocate $19 million (RUB 589 million) for implementing new innovative programs such as: Develop technology to preventing diamond breakage; develop mines with low mineral grade; and build an integrated management information system.

Capital expenditures are planned to increase 27 percent to $463 million (RUB 14.5 billion) with construction allocations at $376 million (RUB 11.8 billion) and retooling at $86 million (RUB 2.7 billion).

By: Jeff Miller

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