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LONDON – Top diamond miner De Beers is upbeat about cash flow after slashing costs by half and ramping up output and is making progess on shoring up its balance sheet after agreeing refinancing terms.
The group – 45%-owned by mining group Anglo American – has cut group costs by 50% and is seeing strong demand after a slump during the downturn, David Prager, director of communications, told Reuters on Friday.
“We’re starting to see demand return and prices beginning to rise and it takes half the cost to produce what we produce,” he said. “In the future you can see how that is positive for growth and makes us a strong cash generative business.”
Christmas sales in the United States, which makes up about half of the diamond jewellery market, were slightly better than expected and demand for rough or unpolished diamonds was still healthy, he said in an interview.
“We’re feeling quite good about the level of production we’re at and the price we’re at because there’s demand for it.
“The ’sight’ (sales event) that just ended this week showed very healthy demand coming out of Christmas, so we were quite pleased.”
The firm has agreed terms with lenders on refinancing a $1,5-billion facility and is making progress on finalising a rights issue of up to $1-billion announced last month, he added.
“We’ve agreed a set of terms with our international lenders… That process will come to a conclusion over the next several weeks. We’re feeling very good about it.”
Last month De Beers said Anglo and other shareholders had agreed to a rights issue to cut its $4-billion of debt.
Source: Reuters
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March 5th, 2010 at 9:06 am