OREANDA-NEWS. April 23, 2010. The ALROSA Supervisory Board held its regular meeting in Moscow, reported the press-centre of ALROSA.

The Board reviewed ALROSA’s production and financial results for 2009, financial statements, auditor’s report, the Audit Committee’s report.

In the course of the discussion that centered on the Company’s performance in 2009, the Board pointed out that the measures taken to support diamond mining, restore the sales and launch the program to reduce debt had proven effective.

In H1 2009 ALROSA actually suspended all of its sales in the market following the downturn in the world diamond sector. At the same time ALROSA believed it expedient to maintain its production level and workforce. That led to a material increase in the Company’s consolidated debt which consequently necessitated financial restructuring. Due to the state assistance in the form of rough diamond purchases by the Gokhran of the Russian Federation, strict adherence to the corporate anti-crisis program and implementation of measures aimed at restoring the pre-crisis sales levels and disposing of non-core assets allowed ALROSA to sidestep the irreversible effects of the crisis and end 2009 with a net profit.

Serious measures were taken by the Company to build an efficient distribution system. ALROSA is already distributing a large part of its output through long-term contracts with major diamond manufacturers. This form of contract relationship will be offered to both domestic and foreign-based customers.

In spite of a reduction in the employees’ incomes resulting from a series of anti-crisis measures including a downtime period, the Company has been able to avoid mass lay-offs and has taken measures to gradually restore its pre-crisis remuneration level.

The Supervisory Board approved ALROSA’s preliminary production and financial results for 2009, including its profit & loss statement:

mine production by the ALROSA Group (including mine production by OJSC ALROSA-Nyurba, OJSC Almazy Anabara, OJSC Severalmaz) — 32,791.4 thousand carats;

Core product sales (i.e. sales of rough and polished diamonds) by the ALROSA Group, total — USD 2,212.6 million,

this including:
— rough diamond sales — USD 2,152.2 million,
— polished diamond sales — USD 60.4 million;

sales of products (works and services) by the ALROSA Group — RUB 81,815.7 million;

сonsolidated costs and expenses, total for the ALROSA Group — RUB 73,054.0 million;

ALROSA Co. Ltd. net profit — RUB 2,348.4 million;

consolidated debt (closing balance) — RUB 114,601.6 million;

consolidated exploration costs & expenses, the ALROSA Group — RUB 2,653.8 million.

Also the Board discussed issues related to rough and polished diamond sales in Q1 2010. The strong market in the first months of 2010 enabled ALROSA not to resort to sales to Gokhran of the Russian Federation. In the reporting period the ALROSA Group sold a total USD 1,004. 2 million worth of rough diamonds.

Considerable amounts of the Company’s production have been sold to Belgian and Indian customers through long-term contracts. At the same time ALROSA is in the process of negotiating long-term supply contracts with Russia’s major diamond manufacturing companies. As part of its program of geographic diversification of sales the Company intends to establish similar style trading relationships with Israeli and Chinese diamond companies.

Also it was resolved by the Board that special committees (Audit, Strategic Planning, HR) reporting to the Supervisory Board should be set up, and relevant internal regulations approved.