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De Beers Q4 2018 Production +12% To 9.1M Ct.; Sales +20.7% To 9.9M Ct.

De Beers reported that its rough diamond production in the fourth quarter of 2018 increased 12 per cent to 9.1 million carats, bringing total production for the year to 35.3 million carats.

Rough diamond sales volumes totalled 9.9 million carats (9.2 million carats on a consolidated basis) from three sales cycles, up 20.7 percent from the 8.2 million carats (7.5 million carats on a consolidated basis) from the same number of sales cycles during the equivalent period in 2017.

Fourth quarter rough sales revenues increased year on year as the re-phased allocations of some lower value rough diamonds from Sight 7 (in September) were realised in Sights 9 and 10.

For the full year, rough diamond sales volumes were four per cent lower at 33.7 million carats (31.6 million carats on a consolidated basis) compared with 35.1 million carats (33.1 million carats on a consolidated basis) in 2017. Sales volumes in 2018 were also lower than production, driven by lower demand for lower value rough diamonds in the second half of 2018.

The consolidated average realised price of $171 per carat was six per cent higher than the $162 per carat in 2017 due to a lower proportion of lower value rough diamonds sold in 2018.

This was due to a planned production increase at its Orapa mine. The production was, however, in the lower half of the guidance range of 35 to 36 million carats.

In Botswana, production increased 15 per cent to 6.3 million carats. Orapa production increased 20 per cent to 3.6 million carats, driven by planned favourable grade and higher plant utilisation. Jwaneng production increased nine per cent following an increase in tonnes treated.

In Namibia, production increased three per cent to 505,000 carats, driven by the Mafuta crawler vessel at Debmarine Namibia spending fewer days in port. This was partly offset by the land operations following the transition of Elizabeth Bay to care and maintenance.

Production increased seven per cent to 1.2 million carats at the De Beers Consolidated Mines in South Africa as a result of planned higher grade ore at Venetia.

Canadian production increased five per cent to 1 million carats due to higher grades at Victor as it reaches the end of its life. This was partially offset by planned lower grades at Gahcho Kué.

Production guidance for 2019 is 31 to 33 million carats, subject to trading conditions. The lower production is driven by the process of exiting from the Venetia open pit with the underground becoming the principal source of ore from 2023. Associated with this, an increased proportion of production in 2019 is expected to come from De Beers Group’s joint venture partners, a proportion of which only generate a trading margin, which is lower than the mining margin generated from own mined production.

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