London, England — MININGREVIEW.COM — 25 January 2010 – The De Beers Group “’ the largest diamond mining company in the world – is upbeat about cash flow after slashing costs by half, and is making progress on shoring up its balance sheet after agreeing refinancing terms.
In a statement issued here, the group “’ which is 45% owned by mining group Anglo American “’ said it was moving forward on refinancing a US$1.5 billion (R11.25 billion) debt facility and a rights issue of up to US$1 billion (R7.5 billion) announced last month.
“We’ve agreed a set of terms with our international lenders,” director of communications David Prager told Reuters. “That process will come to a conclusion over the next several weeks. We’re feeling very good about it.”
Prager added that once the refinancing process was concluded, shareholders would commit funding to help recapitalise the business through the rights issue.
“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.”
De Beers “’ which controls about 40% of the rough diamond market “’ posted a 99% plunge in first-half net profit to US$3 million (R22.5 million) last July, after it closed mines in response to sliding prices amid the global downturn.
The group slashed output in early 2009 and its biggest unit in Botswana shut down completely for several months after demand for luxury goods plummeted. Group mines are open again, but at reduced levels as the sector adjusts to the post-crisis economy.
“Production will surely go up in 2010, but only in response to demand going up from clients,” Prager said.
De Beers is due to release its annual results on 11 February.