De Beers to sell Cullinan, Kimberley mines

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De Beers to sell Cullinan, Kimberley mines

February 28, 2007

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Johannesburg, South Africa—To position itself for future growth by focusing its resources, De Beers announced it is seeking offers for two of its oldest mines in South Africa—Cullinan, established in 1903, and Kimberley Underground Mines, established in 1884—along with residual and dormant diamond-tailing resources in and around Kimberley.

"De Beers is on a journey from being the world's major supplier of diamonds to being the leader of a highly competitive industry. As we build the De Beers of the future, we are carefully examining our portfolio of mining assets, as our new global business model is no longer based simply on maximizing our market share of production," De Beers Group Managing Director Gareth Penny said in a statement. "Instead, we're looking to drive greater returns on capital, and that means we want to focus our resources on mines and exploration activities that will be a part of that vision."

The announcement follows the recent agreement between De Beers and the South African Department of Minerals and Energy to consolidate its West Coast diamond operations into a single, independent diamond company.

De Beers Consolidated Mines (DBCM) said it intends to offer Cullinan as a going concern, which will limit the need for change in the number of employees working at the mine. Because the Kimberley underground operations closed in late 2005, and the tailing resources being offered are not being used by DBCM, there could be an opportunity for new jobs, the company stated.

De Beers has appointed Standard Bank to act as investment bank and financial advisor with respect to the proposed sales.

Looking at long-term profitable growth, De Beers is investing in new mines in South Africa. SASA (South African Sea Areas) Project and Voorspoed Mine in the Free State are expected to be operational this year and next year, respectively. Other investments in growth opportunities include the Finsch and Venetia Mines, as well as funding new exploration in South Africa.

The company also continues its efforts to play a leadership role in the local industry by encouraging industry growth through BEE ownership and competition in the country's diamond sector.

"In this way De Beers is strengthening its commercial future in South Africa while helping to meet the government's aspirations for a transformed South African diamond industry," DBCM Managing Director David Noko said.

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