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Business Fundamentals

The two main organic growth initiatives at Letšeng and Ghaghoo will require careful and skilful implementation over the next few years and management is confident in its ability and experience to deliver these two projects on time and within budget. This will result in an effective doubling of the carat production at Letšeng together with very attractive production and recovery efficiencies.

The Letšeng mine has been developed into a world-class diamond asset. The Company's 70% stake in this mine was acquired in 2006 for a net consideration of US$118 million. Since its acquisition, Letšeng’s annual production has risen from 55 000 carats in 2006 to 95 053 carats in 2013, with a peak of 114 350 carats produced in 2012. The mine continues to demonstrate its status as the foremost producer of some of the world's largest high quality rough diamonds, with 566 rough diamonds greater than 10.8 carats in size being recovered during 2013. The average value for Letšeng’s rough diamond exports (including diamonds extracted for manufacturing) for 2013 was US$2 043 per carat, compared with the average price of US$1 932 per carat achieved in 2012, representing an increase of 6%.

It is anticipated that the Ghaghoo  mine, which will commence commercial production in the second half of 2014, will add an additional 200 000 to 220 000 carats per annum once full production ramp up is achieved.  Studies will continue to assess various long-term mining and processing scenarios which, depending on the outcome of Phase 1 and the expected economic outlook, will determine the next stage of the Ghaghoo Project.

Production and Demand Q12012