On December 20, 2011, a meeting of ALROSA Supervisory Board was held chaired by Ilya Yuzhanov.
The Supervisory Board discussed approval of ALROSA’s consolidated budget for 2012.
The budget provides for the following major parameters:
- rough diamond production — 34.6 million carats (total rough diamond production by ALROSA Group);
- core product sales:
— rough and polished diamonds sales are estimated of some USD 5,074 million by ALROSA Group;
— USD 3,898.8 million by ALROSA;
- ALROSA’s net profit — RUB 34,120.1 million;
- ALROSA’s capital investment will amount to RUB 21,823.8 million;
- consolidated budget of costs for geological prospecting and onsite exploration works by ALROSA — RUB 5,358.3 million.\
The Supervisory Board approved the consolidated budget for 2012 and instructed ALROSA’s Executive Committee to consider achieving target parameters of the approved consolidated budget to be its foremost task.
The Supervisory Board amended ALROSA’s adjusted consolidated budget for 2011, which was approved by ALROSA’s Supervisory Board on September 26, 2011. The amendments made are related to ALROSA’s managerial decisions aimed at stabilizing prices on the world market under uncertainty in the world financial system. To maintain the rough diamond price stability, the Company’s management decided to cut rough diamond sales at tenders (auctions) and on spot market, which resulted in a USD 590.6 million reduction in yield by ALROSA Group in 2011 as compared to the budget for this year.
The Supervisory Board approved the measures of the management and agreed with the new parameters of yield in the consolidated budget of ALROSA and ALROSA Group for 2011:
- yield from core product by ALROSA Group — USD 4,424.4 million;
- yield from core product by ALROSA — USD 3,425.5 million.
The Supervisory Board decided to define the arrangements aimed to enhance investment attractiveness of the Company’s shares as one of the priority directions of ALROSA’s activities. The schedule of activities for including ALROSA’s shares in the Russian stock-exchange quotation lists was approved. The Company’s shares being included in the quotation lists, the scope of potential investors will broaden materially. When determining the lim its for securities to effect deals, generally investors rely on the level of the quotation list in which the securities are included. Moreover, non-speculative investors -pension funds and insurance companies, which make long-term investments, pursuant to statutory lim itations are entitled to invest (accordingly) pension accruals and insurance reserves only in the securities included in the first level quotation lists «A».
Members of the Supervisory Board approved the new «Regulation on Purchases in OJSC «ALROSA» and declared void the «Regulation on Purchase of Goods, Works (Services) in ARLOSA Co. Ltd.) approved by the Supervisory Board of ALROSA Co. Ltd. on February 23, 2011.
The Supervisory Board approved the «Regulation on the Dividend Policy of OJSC «ALROSA», as well as the plan of activities for 2012.
In an effort to continue ALROSA’s almost 20-year practice of supporting target social programs on the territory of the Republic of Sakha (Yakutia), the Supervisory Board approved ALROSA’s entering into a donation agreement in 2011 with the non-profit organization (fund) «Target Fund for Future Generations of the Republic of Sakha (Yakutia)».
The non-profit organization (fund) «Target Fund for Future Generations of the Republic of Sakha (Yakutia)» was created based on the Order of the President of the Russian Federation of October 12, 1992, No. 568-rps «On the Target Fund for the Republic of Sakha (Yakutia)», and the Decree of the President of the Republic of Sakha (Yakutia) «On Creation of the Target Fund for Future Generations of the Republic of Sakha (Yakutia)» with a view to liquidate consequences of ecosystem dysfunction and compensate for losses related to destruction of the traditional lifestyle of indigenous peoples of the North.
The donation agreement was concluded on the following conditions: ALROSA shall undertake to donate to the «Target Fund for Future Generations of the Republic of Sakha (Yakutia)» the money for carrying out its statutory activities, including construction, repairs and/or reconstruction of buildings, structures and other facilities for education, science, arts, health care, physical culture and sport, on the territory of the Republic of Sakha (Yakutia). The donation amount shall be RUB 521 million. In its turn, the non-profit organization «Target Fund for Future Generations of the Republic of Sakha (Yakutia)» shall undertake to finance the said activities and use the money for the intended purpose.
ALROSA’s Executive Committee was instructed to include in the Company’s expenses the sums of the targeted donations to the non-profit organization «Target Fund for Future Generations of the Republic of Sakha (Yakutia)» in the amount provided for in clause 2.12 of the Agreement on Social and Economic Development of the Republic of Sakha (Yakutia) between the Government of the Republic of Sakha (Yakutia) and OJSC «ALROSA» dated March 5, 2011. The Executive Committee must apply this procedure annually in the process of setting the budgets in the period from 2012 to 2020.
The Supervisory Board excluded Valentina Potrubeyko, former ALROSA’s Vice-President, and Sergey Alabyev, former director of Nyurba Mining and Processing Division, from the list of the members of ALROSA’s Executive Committee.
The Supervisory Board introduced Dmitry Voyan, head of ALROSA’s Strategic Planning and Budgeting Department, and Dmitry Uvarov, director of Nyurba Mining and Processing Division, into the Executive Committee.