Document ZKa07zE6RB20jqmdE7YQR5OV

FILE NAME Cape Asbestos CAPE DATE 1978 Dec DOC CAPE124 DOCUMENT DESCRIPTION Annual Report - De Beers Consolidated Ltd. Legal - Tibbs Case Exhibit 22 187 ERE Vite BALE E SSRN ST SORE TONG HM Source and application of funds statements : for the year 1978 R'000 Company Group Funds derived from Profit before tax .... 417 156 466 Add charges against profits nor involving the flow of funds Amounts written off investments and loans cscs ceeceeeeeeeeeer webee Increase in stores reserve . Depreciation and other amounts written off beens veaeeuees Provision for shares in prospecting " 121 740 2162 2162 1165 616 Deduct . . > Profit on realisation of fixed assets 0 Profit on realisation of investments 246 222 Funds derived from net income ... Prospecting expenditure recovered , Proceeds of fixed assets realised Proceeds of investments realised a Loa net n .. cs ece een erence ees 165 148 $ 134 986 214 38 449 210 Funds applied to Diamond export duty .seceereeees State's share of profits under mining leases .... cece eran ener net ene tenes Loan portion of tax net sere ees Share of profits payable to a subsidiary State's share of profits in a subsidiary . Acquisition of mining rights .. sees Expenditure on mining assets capitalised Expenditure on other plant and 849 _ 43 867 21331 ; 1 293 946 , . Purchase of diamond irining investments Purchase of other investments 0.6.5 532 Expenditure on property Financing increase in diamond stocks 5 886 '. Financing increased stores and materials 1176 1176 Reduction of term liability 522 De Beers preference dividends 829 De Beers deferred dividends 863 _ Dividends paid by subsidiaries to minority shareholders beeen Increase in net current assets .ssea+. 340 24 850 250 17.590 34 097 4705 4 22 820 233.863 233.863 040 390 911 727 1210931 . The source and application of funds statements deal with the flow of actual funds during the year Changes in the rand equivalent of thues thues of foreign assets and liabilities . ' caused by changes in currency exchange rates between one accounting date another are ignored and the movements shown are expressed in terms of rands at the currency exchange rates ruling at the balance sheet date LOMAS tion DHASV KE MENERUS DAMAYONG GENETRENIRANE GENETRENIRANE Consolidated balance sheet 31st December 1978 De Beers Consolidated Mines Limited and subsidiary companies Share capital Authorised 800 000 40 per cent cumulative preference shares of R5 each 000 000 8 cent cumulative second preference shares of R1 375 000 000 deferred shares of 5 cents each each.. Issued: 800 000 40 cent cumulative preference shares of R5 each eae Less 481 preference shares held by subsidiary companies oe ,....++- shares each 2 866 929 8 per cent cumulative secondpreference of RI 359 each 789 042 deferred shares of 5 cents = ... cag hedeneenees peeebe distributable reserves expenditure fixed Capital for reserve cee Funds appropriated for : on assets fund Capital redemption reserve . Currency reserve . + Legal reserve 176 478 . 880 21 085 .. 000 326-202 , 253 039 ; 7 454351 1.426779 . 72.070 Distributable reserves General reserve .. . : 13 Stores reserve development Reserve for profit Namibia Unappropriated iin n South West . eens Setant enc a es teveee fereees sevens ca r Less Excess . of cost of shares in in acquisitisounbsidiary of net assets at dates of companies over book value : .. eene eesSeances seed eer eetgene, interests <, Outside shareholders term liabilities 1967 U.S. 27 500 000 6 per cent : Other 15 amounts owing year loan of 067 106 689 _ 5947 782 306 * 214 256 544 25 825 25 000 395 280 . 1 702 274 24 824 ~ 1917 450 75 351 117 930 - 126.836 282 T - Ca urrx ent liabilities Dividends Creditors i... ..c008 * 099 - 146 105 162.815 336 240 645 160 2066 2066 834 Fixed assets Claims mining interests and . property Plant permanent works and buildings Unlisted trade investments 6. see eee cece erree Stores and materials .....-- ~ Diamond stocks Mining companies ...0+- reser erees wae Other companies -- seenee doe een poc eeo ns eetennensneee Investments at cost less amounts written off R817 R612 000 Listed Market value Unlisted ... 000 1977 eb er ere ees . 446 Long loans ..eeeree Loan portion of tax eee .eseececeeeee cneceeteenees ersteeenee loans *, Current assets Loan portion of tax veer eee Fixed deposits and short bawend sentence . Debtors S 94 196 51 177 6 211 225 584 1 34 876 72 205 127 56 195 170 527 | 888 35 446 220 184 255 630 417.717 76 596 69 046 359 95 145 38 962 181783 395 489 77 540 425 745 454 915 . 831 527 222 861 294 898 534 901 1860 1860 339 397 683 147 ~~ 1029 305 708 811 ' 2066 2066 834 Consolidated income statement for the year 1978 De Beers Consolidated Mines Limited and subsidiary companies Spey ete 2 Diamond account Interest and dividend income Other revenue Surplus on realisation of fixed assets Deduct Prospecting and research . neers cece eet eenns ae General charges Interest payable Amounts written off investments investments less surplus on of realisation investments . ree ee eee bewoen Group profit before tax : Deduct Group profit after tax Deduct Outsideinterests in subsidiary companies . . sreceneee seteeres Group profit after tax attributable to De Beers Consolidated Mines Limited 936 389 234 123 19 114 246 1219 872 734 765 169 079 470 167 926 381 53.40 53.40 1.56 466 401 635 43 867 445 502 39 615 405 887 750 579 339 741 240 311 5-17 593 328 698 30-501 54 664 717 298 197 573 520 S40 563 346 Appropriations Transfers to reserves Funds appropriated for expenditure on fixed assets- in respect of fixed mining assets teeee in respect of diamond mining investments in respect of other fixed assets Other transfers net Dividends On preference shares R2,00 per share On second preference - shares 8 cents per share On deferred shares -65 -65 cents per share Unappropriated profit 31st December 1977 : Dedrict in Adjustment thereto arising from changes in currency exchange rates .. Lump sum contribution to staff ~ pension in fundin respect of prior years Adjustment De Beers intienrersetspienctthoefupnraepvpirooupsriyaeatre'ds pt roa fitx s fa ormt er i subo sisubdsidin iarieassubrsidiariies e.s _ accumulated De interest in the written off loss of a subsidiary previously - Add Currency translation adjustment by a foreign subsidiary . teens _ Unappropriated profit 31st December 197 +. ee ..--- ee- ees peeves Earnings per equity share 922 37.000 37.000 1740 315 1.591 230 233 863 266 393 286 38 613.136 128 104 : 13.255 623 176 980 - 1591 230 Z 188 889 170 396 382.56 3382.8562.56 778 190 757 .40 16.985 16.985 2342 263 727 449 | 267 176 395 280 145 424 ~ 145 424 326 202 205,5 cents " 156,1 cents a . i a ce = att any pe . aa ; i. , : eat po . P- aa bone , Income statement for the year 1978 De Beers Consolidated Mines Limited ' Diamont Diamont Diamont Interes and dividendincome Other revenue Surplus on realisation of fixed assets Notes 2 wee 0... cee ce cece cence ee cues 14 R'000 269 510 475 557 656 1 1977 R'000 113 696 270 919 807 109 Deduct Prospecticnhg arges aces General and research beee ca e serl eee eneees cece eee es wee Interest on capital of leased subsidiary companies . Interest payable Loss on realisation of investments .... nee . see .115 745 724 14.146 8.671 193 | 297 _ 145 5.569 5.569 193 1476 385 531 . : t Deficit on revaluation of foreign assets and liabilities 21 Less Transferred from currency reserve <4 21 Profit before tax Deduct cece ees reese venaeeas ns 008 11 118 43 867 161 875 12 891 24 307 721417 . Jo . 46 320 593 913 202 408 367 : . Profit after ccc 5 tax i cece ccc cetesecesccercsusesauauenausaceeus _ Deduct Share payable profits subsidiary of , to a company . cere en enene ; Net ...... veeeeeeeee vee eeee cee seve teeeeeeeeeateeeeesens : Add Transferred from reserve for capitalexpndituree xpenditure . veeeas . : } 148 984 572 433 6.344 566 089 59 809 59711 - 307 412 : 2.343 305 069 , 44 955 Appropriations "5. Transfers to reserves : : : : foe . ; : General .. reserve appropriated for expenditure on fixed assets In respect of mining assets re : rere ~ In respect of other fixed assets Dividends On 40 per cent cumulative preference shares base R1 per share declared 30th May R1 per share declared 21st November 1978 an On 8 per cent cumulative second preference shares o beeen eee eeeees 4 cents share declared 30th May 1978 1978 4 cents per share declared 21st November ~ On deferred shares Interim 20 cents per share declared 22nd August . 1978 : Final 45 cents per share declared 6th March 1979 2.0.0.0. : : - ; ; 0..008 : ; Unappropriated profit pension Lump sum 31st December 1977 in contribution to staff fund in ; 0... ce ee cc ese ceeee respect of prior years , Unappropriated profit 31st December 1978 .e0c.ceeee cece ces 375 000 ; . 922 220 . vo . 800 800 Pee 115 115 . 71 958 : 161 905 a , : . . . 46 040 835 "_ 7937 : 46 040 st Lf 70.000 70.000 oohe ma mo . 254 995 nee a : ; an r 200 800 115 115 mo 62.963 62.963 926 >. 3. |S 35 955 5 162 ; 968 0.56 : * 793 . 38 103 105 849 ecastabat s Balance sheet 31st December 1978 De Beers Consolidated Mines Limited 1977 R'000 Share capital Authorised 800 000 40 per cent cumulative preference shares of RS each 000 8 per cent cumulative second preference shares of R1 each .. 375 000 000 deferred shares of 5 cents each ...s e+. 315 493 456 170 295 Issued . 800 000 40 per cent cumulative preference shares of R5 each eabhines 866 8 per cent cumulative second preference shares of R1 each 359 789 042 deferred shares of 5 cents each ..cee eee ch distributable reserves appropriated expenditure Capital reserve Funds for n on fixed assets assets Distributable reserves General reserve ccc cee ccc renner etna ee nen creer esse ee Stores reserve Unappropriated profit. Long liabilities U.S. 27 000 6 per cent 15 year loan of ..... sescseeeres Current liabilities Amounts due to subsidiary companies Div.i . cc.d cc ce eeen esecd savs ees R'000 4.000 3.000 3.000 18 750 25750 71.067 45 063 117 575.000 575.000 10 608 38 103 116 247 711 764 814 301835 301835 1084 736 - dende dende kastSBALAINEN kastSBALAINEN kastSBALAINEN kastSBALAINEN ILGINTANG ILGINTANG TANK TANK tial J Ho EARN BATMANI BATMANI a Fixed assets Diamond production and administration Claims mining interests and property Plant permanent works and buildings Shares in subsidiary companies .. : Loan to subsidiary company : seas veeeee aevens : . : R'000 30617 310 14.136 _ 927 Property and development South West Namibia cue see sees |, Diamond trading > Sharesin subsidiary company aes . venenene inve tras detinm vee stmnent tsscompany see ceeeren ene ecs e eee rere ese rree re 6 84.923 Stores and : materials s...6s eer , cesceeeeneees Diamond stocks 20 screceeeeeeeeeeesnnecuees 2 Investments Listed at cost 000 1977 Subsidiary companies Market value R64 724 000 : R41 822 000 1977 Other companies a a Market Value R32 430 000 R24 846 Unlisted at cost less amounts written off Subsidiary companies Other companies os eeeee eee sees eneneas . . De cele 843 10 8.30 26.268 1977 R'000 1.30 617 342 84 248 049 653 20 332 170 10947 10947 25 117 11 641 147 Loans with interest accrued . Loan portion of tax Current assets Loan portion of tax .. Amounts due by subsidiary companies Fixed deposits ....+.Debtors 25+ Loan at call with subsidiary ... Cas ceceh snecceees subsidiary viet : : company Caueneueeneas : . see . aeeeee bee ; . hee + 603 1014 12 618 504 619 263 835 159 22 919 14.092 410.301 1084 1084 736 Consolidated Limited De Beers Incorporatedin the Republic of South Africa Mines 91st Annual ReportReport to 31st December 1978 Directors H. F. Oppenheimer Chairman Sir Keith Acutt K.B.E. British E. T. Brown E. M. Charles British P. J. L. Crokaert Belgian E. G. J. Dawe British Baron E. de Rothschild French Evelyn de Rothschild British Dr H. B. Dyer G. C. Fletcher M.C. F. M. Hodgson Dr L. Murray N. F. Oppenheimer Sir Philip Oppenheimer British G. W. H. Relly S. Spiro M.C. J. Ogilvie Thompson A. Wilson _ Head Office Administration J. D. B. Engels Secretary J. R. Best Group Accountant Technical Consultants .. Anglo American Corporation of South Africa Limited Consulting Engineers S. F. Gandar a T. Jones oh J. C. Martens Jwaneng Project Consulting Geologist Dr L. G. Murray Management - Group Mining Operations General Managers Hartley W. Richards Kimberley Division D. J. van Jaarsveld Namaqualand Division A. P. Brittz Orapa and Letlhakante Manager K. Whitelock Letsong Head Office 36 Stockdale Street Kimberley South Africa n Afrikaanse vertaling van hierdie verslag is op aanvraag verkrygbaar Notice is hereby given that the ninety annual general meeting of members of De Beers Consolidated Mines Limited will be held at the head office of the Company at 36 Stockdale Street Kimberley on Tuesday 29th May 1979 at 14h30 for the following business to receive and consider the annual financial statements of the Company and of the Group for the year ended the Cae 31st December 1978 to elect directors in accordance with the provisions of the articles of association of the Company ety to consider and if deemed fit to pass with or N pene without modification the following resolution as an ordinary resolution LOTS , That the directors be and they are hereby authorised to allot and issue all or any portion of the unissued tana 133 071 eight per cent cumulative second preference shares of R1 each and 15 210 958 deferred shares of five eng cents each in the capital of the Company at such time or times to such person or persons company or Shed m companies and upon such terms and conditions as they may determine onli A member entitled to attend and vote at the meeting may appoint a proxy to attend speak and vote in his stead A proxy need not be a member of the Company The transfer registers and registers of members of the Company will be closed from 25th May to 29th May 1979 both days inclusive Holders of deferred share warrants to bearer who desire to attend in person or by proxy or to vote at any general meeting of the Company must comply with the regulations of the Company under which share warrants to bearer are issued 21 By order of the board J. D. B. ENGELS Secretary 36 Stockdale Street Kimberley _ P.O. Box 616 Kimberley 8300 26th April 1979 Chairman's statement Sales by the Central Selling Organisation in 1978 ar US 2 552 million reached a record level for the third year in succession and exceeded the 1977 figure by 23 per cent The Group's net attributable profit at R741 million compared with R563 million increased by 32 per cent and deferred dividends were raised from 52,5 cents to 65 cents per share an increase of 24 per cent Net current assets at 31st December 1978 after providing for the dividends amounted to R889 million an increase of 77 per cent over the 1977 figure of R502 million Stocks of diamonds at the mining companies cost cost of production and at the lower of cost or directors valuation in other companies increased by R35 million to R256 million The book value of the Group's investments and term loans increased during the year by R18 million to R563 million The value of these investments and loans taking market value for listed directors valuation for unlisted and book cost for loans was R1 073 million as compared with R815 million last year After deducting those foreign loans that have been used for investment purposes the net value of the Group's investments was R1 046 million Allowing for minority interests the total value of net investments loan levy at R95 million and net current assets attributable to De Beers at 31st December was R1 908 million or 530 cents per deferred share as compared with 351 cents the previous year In accordance with a change in accounting practice which is referred to in the directors report maintenance capital expenditure is deducted in the diamond account and export duty is now included in the general provision for tax instead of being deducted as was past practice from the diamond account I believe that these changes will help to give shareholders a clearer picture of the situation of the Company In the accounts the 1977 figures have been adjusted so as to be directly comparable with Mr D. J. van Jaarsveld General Manager of De Beers Namaqualand Division Mines shows Mr Oppenheimer the mining plan for Koingnaas at its official opening in August 1978. Behind the Chairman are Mr T. LecJones Consulting Engineer and Mr A. Wilson Director those for the year under review In my statement for 1977 I drew attention to an excessive level of speculation in the market for rough diamonds which had resulted in high premiums above CSO prices being paid in the markets secondary These premiums were related to fears about the instability of currencies and the increasing use of diamonds prove to be a satisfactory year for De Beers The demand for industrial diamonds has remained strong and sales in 1978 were higher than in the previous year Synthetic grit sales also increased and substantial expansion programmes are underway to increase the Group's productive capacity particularly in higher qualities and coarser siz~ s as a store of value While the use of diamonds Total diamond production by the Group as a store of value is I believe likely to including the Orapa and Letlhakane mines i a. continue at a higher level than in the which are owned jointly by De Beers and the i past trading of diamonds at prices quite unrelated to those that can be currently Government of Botswana was 12 million carats as compared with 11,8 million carats in sustained in the jewellery market is a threat to the stability of the trade which it is the 1977. The increase was due to higher production from Finsch Namaqualand and Botswana offset prime objective of the CSO to maintain The CSO did not therefore raise its basic prices by slightly lower production from the Kimberley mines Koffiefontein and CDM The major until it could be satisfied that a higher level capital programmes to which I referred last would be maintained in the long term and it year undertaken in order to increase the Group's dealt with the abnormal trading conditions productive capacity are making good progress which had developed by introducing temporary surcharges on top of the basic selling prices which were held at levels judged to be in a sound relationship with conditions in the jewellery trade Accordingly at the March sight last year at the height of the speculative boom a surcharge of 40 per cent was introduced and as the market gradually returned to more normal conditions the surcharge was In Namaqualand the new Koingnaas mine is now operating at its planned capacity of 500 000 carats per annum and it is of interest to note that production from the Namaqualand mines now exceeds that from CDM Work is in progress to increase the productive capacity of Koingnaas to 750 000 carats a year by 1980 and the Finsch mine's productive capacity of 2,6 million carats a year is due to be increased to progressively reduced to 25 per cent 15 per cent and 10 per cent for the three successive sights By August a situation had been reached in the markets for rough and polished diamonds in ^' over 3,5 million carats by 1980. The expansion of Orapa is now complete and production from this mine which amounted to 2,5 million carats last year will reach an annual rate of 4,1 million which it was judged right to cancel the surcharge and replace it with a price increase on a permanent basis In view of the fact that stocks of polished had built up in the cutting centres we decided on the substantial average increase carats in the course of 1979 while Letlhakane which produced 330 000 carats in 1978 will bring its production to the rate of 400 000 carats a year by the year end The agreement with the Government of Botswana for the opening of the of 30 cent in order to encourage the Jwaneng mine has now been concluded and per liquidation of these stocks and in the knowledge work which is estimated to cost about Pula 260 million at this very important property is actively that this might result in some temporary expansion reduction in the level of our sales In practice going forward Altogether our has at high programme is designed to raise the Group's the demand rough continued level but the market is now much quieter and present productive capacity of 12 million carats a to 19 million carats in 1983 the Christmas jewellery sales were lower than year oes many people had expected This represents a A large prospecting programme was beate return to formality in the market and although continued in Africa and also in Brazil and in 1979 we are unlikely to experience the hectic Australia In South West Namibia a boom conditions of 1978 I believe it will still special effort is being made to establish new reserves which might extend the life of CDM's mining operations CDM accounts for nearly 20 per cent of the De Beers Company's profits and will be of major importance to the economy of the emergent state of Namibia CDM is also * participating with the Anglo American Corporation group in prospecting for other minerals in the territory Good progress has been made towards the elimination of the remaining elements of discrimination in regard to conditions of employment on the mines of the Group By the end of this year all conditions of service in South Africa and South West Namibia should be aligned on an integrated wage scale on the basis of the Paterson system of evaluation Participation by black employees in the Company's home ownership scheme has been steadily expanded and it is planned to widen the scheme this year to include the Premier and Namaqualand divisions for the first time Training programmes for all employees which are part of an going term plan continue to show encouraging results and it is intended to broaden their scope As I write this statement the Minister of Finance has announced in his budget the removal of the 2,5 per cent discriminatory surcharge on the taxation paid by diamond and gold mining companies and a lowering by third of the loan portion of taxation on all companies Both these changes are greatly to be welcomed Mr G. W. H. Relly was appointed a director of the Company on the 18th December Mr Relly is a deputy chairman of the Anglo American Corporation of South Africa Limited in which we hold a 33 per cent interest and is chairman of that corporation's executive committee He will undoubtedly be a most valuable member of our board oy Mr A. S. Hall the resident director in Kimberley retired on the 6th March 1979 after fifty years with the Company Mr Hall has rendered us most distinguished services and is an old and valued friend I would like to put on record our sense of gratitude to him and to wish him every happiness in the future Mr Hall's position has been filled by the election to the board of Mr F. M. Hodgson who for five years has held with outstanding success the appointment of Group Secretary I would like to extend a very special welcome to Mr Hodgson in his new role 30th March 1979 Chairman Report of the auditors The annual financial statements which appear on 7 to 18 and 29 to 44 have been approved by the pages board of directors and are signed on its behalf by H. F. OPPENHEIMER A. WILSON Kimberley 6th March 1979 _ To the members of De Beers Consolidated Mines Limited We have examined the annual financial statements and Group annual financial statements set out on pages 7 to 18 and 19 to 44. The audits of certain subsidiaries have been carried out by other firms In our opinion the statements fairly present the financial position of the Company and of the Group at 31st December 1978 and the results of their operations for the year then ended in the manner required by the Companies Act 1973 as amended PIM WHITELEY & CLOSE Chartered Accountants S.A. Kimberley 6th March 1979 taeia Dy cnrba eg eat arennoe Lie Tarn Report of the directors The directors have pleasure in submitting their report for the year ended 31st December 1978 SHARE CAPITAL There was no change in the authorised or issued share capital of the Company during the year under review The issued share capital comprises 800 000 forty per cent cumulative preference shares of R5 each 2 866 929 eight per cent cumulative second preference shares of R1 each 359 789 042 deferred shares of 5 cents each 000 000 2 867 000 17 989 000 R24 856 000 The 40 per cent preference shares rank as regards capital in priority to the second preference and deferred shares for the sum of R40 per share Of the 359 789 042 deferred shares in issue 32 608 600 are in bearer form and the remaining 327 180 442 are in the hands of some 49 000 registered shareholders Of the 40 per cent preference shares in issue 738 990 are held by about 1 800 registered holders and 61 010 are in bearer form while the second preference shares are held by some 1 300 registered shareholders vy There are 15 210 958 unissued deferred shares and 133 071 unissued second preference shares In terms of the Companies Act 1973 as amended the general authority granted to the directors to allot and issue these shares at their discretion expires at the forthcoming annual general meeting and members will accordingly be asked to renew the authority at that meeting to enable the directors to meet any future contingency COMPANY FINANCIAL STATEMENTS INCOME STATEMENT The formalities in regard to the acquisition from our wholly subsidiary Premier Transvaal Diamond Mining Company Proprietary Limited of its 40 per cent interest in the Premier mine with effect from 1st January 1977 and the leasing of the State's 60 per cent interest from the same date have been completed In accordance with the indication given in the Chairman's Statement last year a surcharge of 40 per cent was imposed in March 1978 on the price of rough gem diamonds marketed by the Central Selling Organisation The surcharge was progressively reduced to 10 per cent by July and was followed in August by an increase in the price of rough gem diamonds of 30 per cent These factors together with the effect on a full year's sales of Features of the consolidated financial statements Year ended 31st December Issued capital of De Beers Company Reservest Book value of listed investments .... Market value of listed investments Book value of unlisted investments and loans Directors valuation of unlisted investments and loans Net current assets sees Diamonds on hand an Profit after tax attributable to De Beers Company _ Preference dividends Net carnings attributable to deferred shares Per share .... Dividends . Per sha ..r ...e 606 1978 R 24 834 000 1 892 616 000 417 717 000 817 489 000 145 642 000 255 604 000 888 957 000 255 630 000 741 240 000 821 000 739 419.000 205c 233 863 000 65c After deducting excess of cost of shares in subsidiary companies over book value of net assets at dates of acquisition In companies outside the diamond industry After charging the capital expenditure referred to in Note 1 b ii on page 36 1977 R 24 834 000 1 401 945 000 395 489 000 612 446 000 149 965 000 202 526 000 502 206 000 220 745 000 563 346 000 821 000 561 525 000 . 156c 188 889.000 52,0 It is because of one pipe the Premier that South Africa continues to produce more very large gem diamonds than any other country in the world None bas equalled in quality or size 3 106 carats the Cullinan discovered in 1905 but in the years since then the pipe has produced some superb diamonds In 1978 within a comparatively short time a stone of 250 carats was found inset left a good quality stone of 321,9 carats and a magnificent one of 353,90 carats opposite Named the Premier Rose its transformation into a shaped gem of 137,02 carats was long and delicate task The major cut bottom left took two months and the faceting top right another eight weeks The result is a jewel of truly exceptional quality bottom right The remaining pieces of rough inset right produced a further pearshaped stone of 31,48 carats and a brilliant of 2,11 carats magnified x 2,4 SOAR epee eS TR RI x the 1977 price increases and a larger volume of gem diamond sales contributed to the Company's significantly higher net diamond account of R269 510 000 1977 R113 696 000 which is arrived at before the deduction of export duty which now forms part of the tax charge As set out in note 1 b ii to the financial statements maintenance capital expenditure Diamond Mines of South West Africa Proprietary Limited accounts for the elimination of that item under Fixed assets The book value of unlisted trade investments increased by R532 000 as a result of the Company's participation in a rights issue of ordinary shares made by Banque Diamantaire Anversoise S.A. is now charged against the diamond account The increase in the value of stores and materials is Income from dividends which is largely a function of attributable to an increase in the level of stocks held at what the Company chooses to take from its subsidiaries and interest amounted to R475 000 R270 919 000 Other revenue toralled R656 000 R807 000 and there was a surplus of R1 000 R109 000 from the disposal of fixed assets oN j Expenditure on prospecting and research amounted to R14 146 000 R10 145 000 while general charges totalled R8 671 000 R5 569 000 and interest payable the Namaqualand Division and to generally higher prices of all goods Net current assets at 31st December 1978 amounted to R533 324 000 an increase of R293 318 000 over the previous year DIVIDENDS R1 490 000 R1 669 000 Net profit before tax at An interim dividend of 20 cents a share was declared R721 417 000 was R354 294 000 higher than the previous on the deferred shares in August 1978 and a final : a year . dividend of 45 cents a share was declared in March e Taxation which includes diamond export duty and 1979 making a total in respect of the year ended ary the State's share of profits under mining leases amounted 31st December 1978 of 65 cents 1977 52,5 cents ea to R148 984 000 R59 711 000 After deducting Dividends of R2,00 and 8 cents a share were declared Poms 344 000 R2 343 000 payable to a subsidiary on the 40 per cent preference and 8 per cent second ati ne company in respect of its share of the profits of the preference shares respectively Finsch mine the net profit was R566 089 000 compared LO with R305 069 000 in 1977 aa In order to give effect to the change in accounting CONSOLIDATED FINANCIAL STATEMENTS et policy set out in note b ) on the financial statements R59 809 000 being the balance in the CONSOLIDATED INCOME STATEMENT The net diamond account which as stated earlier is reserve for capital expenditure was released and an arrived at before the deduction of export duty and ea amount of R22 922 000 was appropriated from profits which now takes account of maintenance capital ingame to cover the expenditure incurred during the year on expenditure increased by R221 624 000 to R956 389 000 new mining facilities or expanding existing facilities compared with the previous year The increase is ni e Other appropriations of profit included R375 000 000 attributable to the surcharge imposed in the earlier part nh R70 000 000 transferred to general reserve R220 000 of the year on the price of rough diamonds and the ti appropriated for expenditure on fixed assets representing increases in the price of rough gem diamonds referred sre largely the transfer duty paid on the mining rights to earlier Mining expenditure which now includes se n acquired in the Premier mine and R235 693 000 maintenance capital expenditure increased by te R190 719 000 for dividends on the preference and R46 712 000 to R260 577 000 reflecting mainly the cm deferred shares The unappropriated profit at 31st December 1978 including R46 040 000 brought forward from the previous year amounted to R38 103 000 expenditure of the newly commissioned Koingnaas and Langhoogte mines in Namaqualand a full year's expenditure at the Letseng mine and the effects of wage increases and of inflation BALANCE SHEET celta Income from interest and dividends at R234 123 000 was : R65 044 000 higher than in 1977 attributable to both tate The increase of R252 000 in the book value of claims higher interest and dividend income Other revenue mining interests and property reflects largely the transfer was higher at R29 114 000 1977 R22 470 000 and de duty paid in respect of the mining rights acquired in the there was a surplus of R246 000 R67 000 on the Premier mine realisation of fixed assets a The disposal of the Company's fixed property in South Expenditure on prospecting and research increased by West Namibia to its wholly subsidiary R3 531 000 to R29 385 000 and general charges tel CDM Proprietary Limited formerly The Consolidated increased by R9 782 000 to R28 661 000. Interest Penne near mye hee ys payable was R843 000 higher at R4 461 000 and there was a net deficit of R899 000 R6 313 000 from amounts written off investments less surplus from the realisation of investments Group profit before tax increased by R284 749 000 to R1 156 466 000 The State's share of profits under mining leases increased by R26 274 000 to R43 867 000 as a result of higher profits earned from the Namaqualand Division Finsch and Premier mines Tacation including export duty which is no longer deducted from the diamond account amounted to R362 020 000 which was R81 416 000 higher than in 1977 After deducting outside interests in the profits of subsidiary companies the Group profit after tax attributable to the De Beers Company amounted to R741 240 000 compared with R563 346 000 in 1977 Details of movements in the Group reserves are set out in the notes on the financial statements Dividends on the deferred and preference shares - absorbed R235 684 000 R190 710 000 The unappropriated profit brought forward from the previous year was increased by R783 000 as a result of various adjustments which are set out in the consolidated . income statement . The unappropriated profit at 31st December 1978 including the adjusted amount of R267 176 000 brought forward from 1977 amounted to R395 280 000 CONSOLIDATED BALANCE SHEET The consolidated balance sheet shows net increase of R55 057 000 in the book value of fixed assets The changes are an increase of R21 991 000 in claims mining interests and property attributable mainly to the acquisition of fixed property in Europe and South West Africa Namibia an increase of R9 050 000 in plant permanent works and buildings representing largely the acquisition of aircraft by a subsidiary and capital expenditure incurred by the industrial diamond division and an increase of R24 016 000 in unlisted trade investments arising mainly from the subscription for new shares in De Beers Botswana Mining Company Proprietary Limited and Banque Diamantaire Anversoise S.A. The increase of R7 988 000 in the value of stocks of stores and materials is attributable partly to certain higher stock levels and partly to generally higher prices : of goods The book value of diamond stocks increased by R34 885 000 to R255 630 000 The book value of listed investments increased by R22 228 000 to R417 717 000 during the year and their market value at 31st December 1978 was R817 489 000 compared with R612 445 000 at the end of 1977 The book value of unlisted investments fell by R944 000 to R76 596 000 and the directors valuation of these investments at 31st December 1978 was R186 558 000 R130 101 000 : Long loans dropped by R3 379 000 to R69 046 000 at 31st December 1978 as a result of repayments received during the year Details of the Company's interests in major subsidiaries appear on pages 43 and 44. Particulars of the Group's principal interests in subsidiaries and other companies and sunimaries of their activities are given in the section entitled Principal interests of the Group beginning on page 45 At the end of 1978 current assets exceeded current liabilities by R888 957 000 compared with K502 206 000 at the end of 1977. Current assets increased by R504 812 000 to R1 534 117 000 which included an increase of R611 751 000 in while debtors decreased by R116 536 000 " Current liabilities at R645 160 000 were R118 061 000 higher than at 31st December 1977 and included dividends declared but not paid at the year of R162 815 000 R126 836 000 Long liabilities increased by R29 964 000 to R70 850 000 as a result of a loan raised by an overseas subsidiary partly offset by repayments made against term loans in accordance with their original terms of issue \, The interest of De Beers shareholders in share capital and reserves increased by R490 671 000 to 917 450 000 at 31st December 1978 INVESTMENTS OUTSIDE THE DIAMOND INDUSTRY The Group's investnients and loans at a book value of R563 359 000 1977 R545 454 are almost entirely in companies outside the diamond business though some of the companies themselves have investments in the diamond business . . The value of these investments and loans taking market value for listed investments and directors valuation _ which includes that part of the Group's interest in AECI held by Afex Holdings Proprietary Limited at market value for unlisted investments and loans was R1 073 093 000 R814 000 or 90 per cent above the book value The income from all of these investments was R60 574 000 R45 754 000 An analysis by prime source of the investments and the Analysis of investments including loans in companies outside the diamond diamond industry Industrial Finance Diamondst Property Copper Platinum Value of investments and loans 1978 R'm % 428 40 1977 R'm % 326 40 267 25 182 22 151 14 126 16 114 10 59 7 28 3 31 4 9 1 19 2 12 1 17 2 35 3 27 3 Investment income 1978 1977 |. - R'm % R'm 24,5 41 21,3 98 7,4 11,0 8.9 10,2 3,4 1,2 1,6 0,3 0,8 0,3 0,5 2,7 0,9 29 1073 100 28 4 0,5 1,0 815 100 . 60,5 100 45,8 100 Listed investments at market value unlisted investments at directors valuation and loans at book value . * tarising from companies that have interests in the diamond business income therefrom in 1978 and 1977 is given above It will be appreciated that a strictly accurate analysis of this kind cannot be made owing to the complicated spread of the underlying investments of the companies in which the Group has an interest However the percentages in the table give a fair indication of the diversification of such investments PRODUCTION Diamond production by companies of the Group including the production of De Beers Botswana Mining Company in which the Group has a 50 per cent interest amounted to 11 994 610 carats in 1978 compared with 11 808 195 carats in 1977 Total production from the Kimberley Division mines increased to 054 107 carats 1977 3 920 240 lower production from the four Kimberley mines and Koffiefontein mine being offset by higher production from Finsch mine Since November 1978 part of the mine feed to the central treatment plant in Kimberley has been replaced with material from certain of the older mine dumps in Kimberley While this will result in a small drop in the value of annual production from the Kimberley mines it will have the effect of increasing production in the longer term and of prolonging the life of the mines by about 12 years to at least 20 years At cost of some R59 million including escalation Finsch mine capacitiys being increased from a production over rate of 2,6 million to 1980 3,5 million carats a year by The Namaqualand mines division increased production by 62 200 carats as a result of the commissioning in 1978 of the Koingnaas mine and the small Langhoogte mine Work is in progress to start mining further south in the Mitchells Bay area and to increase production through the Koingnaas plant from the present level of 500 000 carats a year to about 750 000 carats a year during 1980 Premier mine produced 1 983 435 carats 2 010 307 and production by CDM was slightly lower at 1 898 211 carats 2 001 217 The Orapa mine in Botswana produced 2 454 405 carats 2 345 010 while production from the Letlhakane mine was 330 523 carats 345 981 The production of Orapa mine is expected to increase to some 4,1 million carats a year in 1979 while production from the Letlhakane mine is expected to increase by the end of 1979 by some 25 per cent to about 400 000 carats a year when mining moves from the overlying gravels to the kimberlite Capital expenditure of some R70 million has been incurred in bringing Orapa mine to its present level of production while the establishment of the Letlhakane mine and its expansion will cost about R30 million The agreement with the Government of Botswana on the financial and other terms for the opening of the new mine at Jwaneng in southern Botswana was signed on 11th April 1978. The cost of bringing the mine into production in 1982 is currently estimated to be R270 million The Government has an option to subscribe up to 20 per cent of the equity share capital required for the project and has exercised this option in respect of the first Pula 190 million and is entitled to follow its rights in respect of expediture in excess of that sum Geological work is continuing in order to provide more detailed information on the level of annual carat production at a treatment rate of 4,8 million tons a year The Letseng mine in Lesotho which was brought into full production in September 1977 at a cost of R37 produced 48 977 carats in 1978 compared with 22 688 carats in 1977. Its plant capacity which was increased from 100.000 to 120 000 tons a month in February 1978 is being further increasetdo 150 000 tons a month to cater for the treatment of kimberlite from a satellite pipe The sampling results Persian hetene. es ay 2 1969 1970 1971 1973 1974 1976 1969 1970 1971 1972 1973 1974 A 1975 1976 1977 1978 from this pipe still require confirmation but a significant increase in ore reserves seems probable Although the deposit at Letseng is of low grade some larger stones of high quality and value are produced Capital expenditure incurred on expansion projects by Group mining companies including De Beers Botswana Mining Company totalled R62 109 000 in 1978 compared with R31 646 000 the previous year The Group's synthetic diamond factories in South Africa Ireland and Sweden are all undergoing major expansion programmes which will be completed in the next two years The expansion incorporates a SYNDITE factory at Shannon and facilities for increased production of synthetic grits at all three plants The Group continued its prospecting activities in southern Africa certain parts of central Africa and on other continents incurring R19 376 000 thereon compared with R18 220 000 in 1977 Technical matters dealt with in detail in the mining and prospecting section beginning on page 19 RESEARCH A report on the work undertaken at the Diamond Research Laboratory appears on page 27 EMPLOYMENT PRACTICES In furtherance of the objective of achieving fully integrated conditions of service for employees of all races on the Group's mines in South Africa and South West Namibia a comprehensive job grading system was adopted early in 1978 and is steadily being implemented on the mines These steps were accompanied by the alignment of various fringe benefits including overtime pay and shift allowances annual leave and allowances sick leave and service death benefits Increases in the standard wage rates of the white employees at Kimberley and Premier mines were negotiated with the Council of Mining Unions The process of introducing a day week at the Kimberley and Premier mines was completed with the conclusion of negotiations at Premier with the Federation of Mining Unions representing the artisan trades Wages for black employees on the mines in South Africa and South West Namibia were increased in most cases substantially Wages for the lowest employees in South Africa and South West Namibia have for a number of years exceeded the minimum living levels established by the University of South Africa Substantial increases for local employees at Orapa and Letlhakane were negotiated with the relevant branch of ; the Botswana Mine Workers Union Close attention is being paid to the training development of employees on all of mines and good progress has been achieved notably with training of metallurgical plant operators At Kleinzee the programme of employee development has enabled white operators to qualify as artisans and coloured foremen to be appointed in both the plant and mining sections Here as elsewhere these programmes can only advance because of the support of management and the operation of all employees A scheme for the training of skilled artisan mechanics has produced good results at CDM At cost of approximately R1,5 million CDM has financed the construction of a technical training college at Ongwediva in Ovamboland to be known as the Valombola Technical Centre which came into service early in 1979. At Orapa new courses have been introduced for the training of administrative staff In addition an apprentice training centre has been established at Orapa to meet the needs of the Orapa Letlhakane and Jwaneng mines where both theoretical and practical skills will be taught At Letseng in Lesotho local artisans employed on the mine who are drawn from the Lerotholi Training Institute near Maseru have been placed on a year training programme to supplement the three basic training received at the Institute St eT eNO e Development of the Jwaneng mine in eastern Botswana a joint venture of the Government and De Beers is on schedule Commercial production is due to start in mid Above tiro of the prospecting shafts that are being sunk to assist in detailed evaluation of the pipe Left drilling a development end from one of the shafts Top left the 80 kilometre road to Kanye is to be tarred is well advanced completion is which due by the end of 1979 The next page shows the aggregate and block plant in the early stages of construction it produces building material for mine installations and the newly established township bottom left Water for roadbuilding is pumped from underground boreholes into storage dams The mine and the township will be supplied from a major wellfield some 50 kilometres to the north of Jwaneng Industrial relations training courses for senior management from the mines were conducted in Johannesburg while similar courses relating to the particular industrial relations requirements of the individual mines were held at CDM and will be extended to the other mines during 1979 As a result of agreement with the authorities during 1978 it became possible to extend to black and coloured employees at Kimberley and Koffiefontein facilities to buy their own homes Initially demand was slow but since the full range of houses offered under the scheme became available inspection some seventy applications have been received and forty houses are already under construction SALES AND MARKETING 1 Total sales of rough gem and industrial diamonds Organisation through the Central Selling reached a record level for the third year in succession with sales of R2 219 million equivalent to U.S. 2 552 million This represented an increase of 23 per cent over the million figures for 1977 of 1 803 U.S. 073 million In the first quarter of 1978 there was unprecedented demand for most rough diamonds marketed by the Central Selling Organisation This meant that the prices which rough diamonds were being traded in the cutting centres were often well in excess of the prices being received by the producers To rectify the situation the Central Selling Organisation introduced a surcharge of 40 cent on the price of rough diamonds offered at the March sight This policy continued with further surcharges of 25 per cent at the May sight 15 per cent in June and 10 per cent in July For the August sight the surcharge policy was superseded by an overall price increase of 30 per cent These measures did much to help the return of more normal market conditions Industrial diamond sales were higherin 1978 thanin the previous year In natural diamond the emphasis was placed upon producing those qualities for which synthetic substitution is still not technically possible Synthetic diamond sales increased markedly reflecting the sustained growth in market demand for all synthetic grit products and particularly those in the coarser sizes and better qualitics In furtherance of the policy of promoting the industrial uses of diamond by disseminating technical information several seminars were held throughout the world The largest of these was the two industrial diamond seminar held in Kyoto in November 1978 as part of the 30th anniversary celebrations of the Industrial Diamond. Association of Japan Scientists from the diamond research laboratory and the De Beers technical service centre at Charters England presented technical papers DIAMOND SALES Total sales of gem and industrial diamonds through the Central Selling Organisation Million rand 2300 2200 2100 1600 150 1500 1400 ee cee es rene re 1969 1970 1971 1972 1973 1974 soe 1975 a ba 1976 1977 bes 1978 on the properties and application of industrial diamond products and related to an audience of 700 representing a wide section of Japanese industry DIRECTORATE Mr G. W. Pellywas appointed a director of the Company on 18th December 1978. 6th March 1979 Mr. Mr. M. Hodgson was appointed to Boardin place of Mr A. S. Hall who retired active business on that late after 50 years of service with the Company which included nine years as a director His wealth of complex intimate knowledge of the will be sorely missed affairs of the Group In terms of the Coripany's articles of association Mr Relly and Mr Hodgson retire at the forthcoming annual general meeting together with Mr E. G. J. Dawe : eat : . aos pd we ME ay , aa : 11 Dr H. B. Dyer Dr G. Murray and Mr S. Spiro who retire by rotation They are all eligible and offer themselves for election o Mr H. F. Oppenheimer is the registered holder of 222 250 deferred shares Mr Evelyn de Rothschild is the registered holder of 4 230 deferred shares and Mr F. M. Hodgson is the registered holder of 100 deferred shares - in the capitaolf the Company in which they have no beneficial interest Each of the other directors except Baron Edmond de Rothschild and Mr Evelyn de Rothschild is the registered holder of 80 000 deferred- shares which they have no beneficial interest The undermentioned directors hold the following shares beneficially Baron Edmond de Rothschild Mr Evelyn de Rothschild Dr H. Dyer DrL. G. Murray Mr N. F. Oppenheimer Sir Philip Oppenheimer 240 000 deferred shares 80 000 deferred shares ;3 000 deferred shares 1000 deferred shares 1300 deferred shares 103 500 deferred shares There has been no change in these holdings since the year me No service contracts have been granted by the director Company or any of its subsidiaries to any director of the Company . * SUBSTANTIAL SHAREHOLDINGS According to the records of the Company no shareholder is registered as holding 5 per cent or more of the share capital of the Company other than Societe __ Interprofessionnelle Pour La Compensation Des Valeurs Mobilieres Sicovam which is the registered holder of, 28 120 deferred shares and Anglo American Investment Trust Limited Anamint which is the registered holder of 89 000 000 deferred shares However according to Anamint's latest annual report for the year ended 31st March 1978 it was the beneficial owner of 94 862 330 deferred shares at that S date , Kimberley 6th March 1979 AY tn BM Hack eee eta Sty om tt ae A Re Mg tintin areene cae I vate get mien te Ban ate et S conate fected Puen s Oeatta M en tsT Oh ta oh Ret tn ce ee i t t t i Mining and prospecting The consulting engineers and consulting geologists submit their report on Group operations for the year ended 31st December 1978 : - DE BEERS CONSOLIDATED MINES LIMITED KIMBERLEY DIVISION MINES The combined output of the Kimberley Division mines was 11 822 100 tons yielding 4 054 107 carats This compares with 11 861 225 tons and 920 240 carats in 1977 In terms of the policy of extending the life of the Kimberley mines by treating dump material 4 500 tons per day of reclaimed tailings were fed to the treatment plant from the beginning of November and production from the four underground mines correspondingly reduced At the De Beers mine production for the year amounted to 704 800 tons at a grade of 15,85 carats per 100 tons compared _ yielding 111 720 carats with 113 963 carats recovered from 725 497 tons in 1977. The metre block cave was brought into productionin May 1978 and by the end of the year was producing 800 tons per day The metre level automatic haulage is operating successfully Tonnage from the metre and metre considerably block caves was reduced and there were fewer mud pushes thanin 1977. The opening up of the a ore body below the metre block cave for level cave mining operation progressed well and production is scheduled start in April 1979. stability monitoring continued throughout the year but no indications of movement were observed The Dutoitspan mine produced 792 500 tons at a grade of 16,18 . compaLriemdciatrweaidttsh 1977. per tons yielding 128 214 carats 112 143 carats from 792 806 tons in | production from the metre level block cave continued until this block was completed at the October end of After clearing the water and mud from the previous year's inrush production from the 575- metre block was resumed At the beginning of December howevhr owever there was another rush and the cave had to be stopped Production from the 760- metre level block cave temporarily increased to cover the loss until the dump retreatment programme commencedin November Bulkhead doors were in joint installed in the metre haulage to protect thejoint shaft system system in the event of another inrush of water development from the block caves Water tunnel of continued on the northern side the mine for slope stability control and drainageis satisfactory At the Buitfontein mine the production was 883 800 tors grade of 32,35 carats per 100 tons yielding 285 885 carats compared with 1 042 240 tons and 329 729 carats in 1977. Ore production was reduced for two months during the installation of bulkhead doors in the main haulage to protect the joint shaft system Production from the metre block cave continued throughout the year while the metre block cave was stopped in January and the metre block cave in April as planned following depletion of ore reserves The metre block cave was brought into full production in October Water tunnel development on the metre elevation was completed and on the metre level development continued on the western side of the mine with visible reduction of water flow into the open mine At the Wesselton mine production was 1 807 800 tons at a grade of 27,59 carats per 100 tons yielding 498-733 carats compared with 528 817 carats recovered from 1948 1948 348 tons in 1977. The metre rim loading continued to produce satisfactorily and development on the east side of the mine for the metre rim loading made good progress At the Kimberley mine the drainage tunnel for the slope stability project is progressing on schedule and monitoring indicates improved stability The Dump retreatment programme started in November : and a total of 187 400 tons was treated from the Bultfontein floors at a grade of 30,18 carats per 100 tons yielding 56 556 carats At the Finsch mine production was 3 757 900 tons at a grade of 69,99 carats per 100 tons yielding 2 630 166 carats compared with 3 639.640 tons and 2 425 799 _ carats in 1977. Ore was mined between the 136- and metre levels in the open pit with the kimberlite on the lower levels containing an amount of inclusive waste material Good progress was made on the upratingof the Finsch treatment plant during the year and a large portion of the civil construction work was completed The modified plantis due to be commissionedin 1980 andis expected to cost about R.58,7 million It will provide a 40 per cent increase in throughput and much improved recovery efficiency Thisincrease in plant capacity will shorten the life of the open pit and preparation for the move to underground mining has started Precementation of the vertical shaft site is in progress with completion scheduled for early 1979 and this will be followed by construction of the headgear . and sinking of the shaft An inclined ramp from surface primarily to gain early access to the upper mining levels has been started Core drilling from the old metre sampling level is in progress to examine possible changes in the kimberlite type and to establish the shape of the pipe | at depth The Koffiefontein mine produced 3 687 900 tons at a yupttber meena A R39 million scheme for the retreatment of old dumps in Kimberley will extend the life of the four operating mines until at least the end of the century Initially the material is being processed in the central treatment plant but the outlying dumps will be treated in three small plants to be built in 1980 Deliveries from the dumps to replace part of the present mine feed for the central treatment plant began in late 1978 top right Considerable attention is being paid to the naiting and development of employees on all the Personnel Officer talks mine workers centre and final year students work in the design centre part r^^ training scheme for draughtsmen of all races established in Kimberley centre right Over 60 per cent of the black employees in Kimberley live locally with ther families To relieve the shortage of housing De Beers built the village of Ipopeng bottom right for its more senior married workers many of whom are now buying their houses a nae ELS = ESU E e Group production De Beers mine Dutoitspan mine Bultfontein mine Wesselton mine Duzap retreatment Finsch mine Kimberley Division total . Namaqualand mines Premier mine Letseng mine Orapa mine Lealhakane mine Totals Metric tons treated 1978 1977 704 800 792 500 883 800 1 807 800 187 400 757 900 3 687 900 11 822 100 4 964 800 7 527 800 15 136 300 1 417 000 3 585 400 111 200 45 564 600 725 497 792 806 1 042 240 1948 348 - 3 639 640 712 694 11 861 225 066 711 7 074 403 14 899 997 680 000 3 449 565 087 310 43 119 211 Carats recovered 1978 1977 720 128 214 285 885 498 733 56 556 2 630 166 342 833 054 107 1 224 952 1983 435 898 211 48 977 2 454 405 330 523 11 994 610 y 113 963 112 143 729 528 817 _ 2 425 799 409 789 920 240 162 752 2 010 307 2001 217 22 688 2 345 010 345 981 11 808 195 Carats per 100 metric tons 1978 1977 15,85 16,18 32,35 27,59 30,18 69,99 9,30 15,71 14,15 31,64 27,14 - 66,65 11,04 24,67 26,35 12,54 * 3,46 68,45 29,74 28,59 28,42 .. 13,43 . 3,34 67,98 31,82 grade of 9.30 carats per tons yielding 342 833 carats compared with the production of 409 789 carats from 712 694 tons in 1977. The lower diamond production ' was in accordance with the forecast mining programme and resulted from mining in the lower grade contact area of the pipe Waste stripping was completed but small amounts of waste arising from variations in the stockpile pipe limits will continue to be mined An ore is being created to cater for any shortfall during the change from open pit to underground mining in 1981 In the underground mine development continued off the No. 2 main rock shaft throughout the year Poor ground conditions on the metre level and intersections of high pressure water on the 488- and metre hampered progress Conventional grouting techniques proved inadequate in the highly permeable strata and a delay of some four months resulted Improved grouting methods and materials have been introduced and development has recommenced Three air passes from the open pit to the metre level and two ore passes from the 268metre level to the metre level were completed by raise boring NAMAQUALAND DIVISION MINES Diamond production from the Namaqualand Division mines increased by 62 200 carats to 1224 952 carats compared with 1977 despite a decrease of 100 106 carats from the Annex Kleinzee and Dreyers Pan operations as a result of the mine plan requiring the mining of lower grade blocks The decrease however . was more than offset by the production of 132 901 carats from the Koingnaas and Langhoogte mines which came into production in August 1978 as well as an increase of 29 405 carats from improved bulk sampling . operations . At Annex Kleinzee terrace treated increased from " 621 343 to 2 675 100 tons in 1978. Carat production totalled 505 061 carats at an average grade of 18,88 carats per 100 tons compared with 23,05 carats per 100 tons in 1977. Overburden stripped at 10 033 900 tons was slightly lower than the 10 236 074 tons stripped the previous year At Dreyers Pan the average grade dropped from 38,64 to 34,31 carats per 100 tons and the 1 605 200 tons of terrace treated yielded 550 739 carats compared with 500 carats recovered from 1 445 368 tons in 1977 It was again necessary to increase the overburden stripped in order to expose the deeper deposits and compared 13 731 400 tons of overburden were removed with 11 731 517 tons the previous year Minor modifications and three operation of the bulk sampling plant resulted in an increase in throughput to Er te acer a a 256 200 tons compared with 181 6C2 tons in 1977. The plant which treated samples from production faces to monitor grades and prospecting trench material from Tweepad produced a total of 36 251 carats The small Langhoogte mine was recommissioned during the year after rehabilitation and modifications had been completed After rectifying the initial teething problems the plant achieved planned tonnage However the grade was disappointingly low at about 12 carats per . 100 tons and steps are being taken to mine higher grade areas The throughput for the year was 90 400 cons yielding 10 339 carats The new Koingnaas mine situated 70 km south of : Kleinzee treated its first on schedule in July 1978 Difficulties were encountered in treating the varying types and sizes of ore fed to the plant and modifications to the screens and crushers had to be carried out However in December 51 287 carats were produced against the monthly target of 45 000 carats The plant treated a total of 337 900 tons at a grade of 36,27 carats per 100 tons yielding 122 562 carats Overburden amounted to 5 434 400 tons Construction of the new Tweepad plant which is to replace the Dreyers Pan plant during the latter half of 1980 was on schedule at the year end The change of electrical energy supply from the Company's diesel generating station to the national grid of ESCOM was completed in April and the diesel generating sets have been placed on standby PREMIER MINE DIVISION The total tonnage treated at Premier mine increased from 7 074 403 tons in 1977 to 7 527 800 tons in 1978 but owing to a lower underground grade diamond production decreased from 2010 2010 307 to 1983 1983 435 carats Production from the underground mine was slightly higher at 5 340 tons compared with 5 332 663 tons in 1977 but the grade was lower at 30,37 carats per ' 100 tons compared with 31,45 carats in 1977 resulting in a lower diamond production of 1621 580 carats compared with 1 677 271 the previous year Dump retreatment tonnage was higher at 2 187.800 tons compared with 1741 1741 740 tons in 1977 so that in spite of a decrease in the grade of material treated diamond with production increased to 361 855 carats compared . 333 036 carats in 1977 Access development to the L1 block below the sill progressed well but exceptionally bad ground conditions were encountered in the area of contact between the pipe and the surrounding country rock Stoping in this area which was due to commence early in 1980 will be delayed by some months Deepening of the vertical shaft was completed during the year This shaft will provide access to the new haulage system on the metre level and a base . for the extension of the existing man and materials shaft to this level Mining of the two conveyor declines WA has commenced Production from this deeper area below the sill is due to start in 1986 During 1978 modifications were made to the water reticulation system of the plant permitting scale flocculation The consequent increase in recirculated water has greatly reduced the usage of raw water with the result that the present slimes dam is now expected to have a year life handle A prototype ray sorting machine designed to handle material between 45 mm and 75 mm in size has been under test during the year Following this work a plant designed to treat all ore arising in this size fraction prior to secondary crushing is being installed and will be commissioned in 1979 CDM PROPRIETARY LIMITED Diamond production for the year totalled 1 898 211 carats compared with 2001 2001 217 carats in 1977 Modifications and improvements effected during the year to the four conglomerate plants enabled more efficient operations to be achieved with the result that the treatment targets for the year for each of the four- conglomerate plants were exceeded Terrace treated increased to 15 136 300 tons compared with 14 899 997 tons during 1977. The recovery grade however dropped from 13,43 carats per 100 tons to 12,54 carats per 100 tons Bedrock cleaning productivity increased slightly from 17,01 to 18,3 square metres per man shift The quantity of overburden stripped decreased from 58 703 562 tons in 1977 to 54 939 700 tons in 1978. A shortage of married accommodation had an adverse effect on artisan recruitment which was reflected in low scraper fleet availabilities causing the reduction in the quantity of overburden stripped With the completion of additional houses and flats the position improved . towards the end of the year The output of the bucketwheel excavator averaged 540 tons per hour compared to 1 570 tons per hour during 1977. Replacement of a main slewing bearing the bucketwheel bearing and one of the conveyor belts destroyed by a fire reduced the mechanical availability to 73 per cent . . The commissioning problems associated with the 50G sampling plant were overcome early in 1978 and the plant is now operating at full throughput Work continued during the year on the sampling of potential cre reserves in the central western blocks in order to increase ore reserve information and improvements as in trench sampling techniques have resulted in a faster sampling operation Several modifications to the plant are planned for 1979 in anticipation of the plant being available for production purposes the sampling damaged requirement decreases An electrical fire extensively the bars and transformers of the main power station in April but connection to the ESCOM supply was completed within days enabling full production to be resumed The power station has been rehabilitated so as to provide standby power for the town and hostels and four redundant 3,3 MW diesel generators were sold As planned the existing power distribution system at the mine was considerably altered in order to improve its reliability and flexibility As part of this programme the installation of power factor correction equipment has resulted in considerable savings in power cost DE BEERS BOTSWANA MINING COMPANY . PROPRIETARY LIMITED # At Orapa mine production for the year totalled 3 585 400 tons at a recovery grade of 68,45 carats per 100 tons yielding 2 454 405 carats This compares with 3 449 565 treated in 1977 which yielded 2 345 010 carats at ta ongsrade of 67,98 carats per 100 tons Although the tonnage treated through the existing plant was on target for the first nine months of 1978 a two month delay in the construction of the expansion project together with _ subsequent commissioning problems resulted the being 18 p the ent less total tonnage treated for year than the original annual target of 375 000 Major construction work on the expansion September the Orapa plant was completed during September and commissioning started in October 1978. During the three month commissioning period modifications had to be carried out in the primary feed section to obviate damage to the scalper grizzly from large rocks in the head feed and operations generally were adversely affected by difficulties experienced in tying in new sections with existing operating plant However by the year end only minor modifications were still in progress and full production should be achieved early in 1979 As a result of the expansion programme the demand for electrical power increased from 7,45 to 10,60 MW ' during 1978. The electrical energy which increased by 18,51 per cent to 43,528 GWh was generated by diesel alternators at the Orapa power station As part of the expansion programme one 3,3 MW generating set was installed during 1978 in a new extension to the power station Three further sets are to be installed and commissioned during 1979 to increase the total permanent generating capacity to 18,25 MW sufficient to meet the power requirements for both the Orapa expansion and Letlhakane Stage II At Letlhakane mine the mining of the ferruginous gravels surrounding the K1 and K2 pipes continued and preparatory work was undertaken to enable mininogf the K1 pipe itself to commence during the latter half of 1979 Unseasonal heavy rains during the first quarter of 1978 interrupted operations but the 1 111 200 tons treated compared favourably with the 1977 tonnage of 1 087 310 At a grade of 29,74 carats per 100 tons 330 523 carats were produced against a target of 320 000 carats for the year : At the year end progress on the construction of the schedule second stage of the Letlhakane plant was on Civil works were 90 per cent complete and structural mechanicals 50 per cent complete Construction work is scheduled for completion during the first half of 1979 2 and commissioning to full production is planned during the latter half of the year An agreement between the Government of the Republic of Botswana and De Beers relating to the establishment - of the new Jwaneng mine in southern Botswana was Corporation signed on 11th April 1978. The mine will be developed and operated by De Beers Botswana Mining Company A Project Management Committee has been formed and a feasibility study relating to the mine and infrastructure has been prepared by Anglo American of South Africa Limited based on a treatment rate of 400 000 tons a month and on bringing the mine into commercial production in 1982 A bulk sampling plant will be erected on site during 1979 assist with - : groundwater resource the more detailed evaluation of the ore reserves Investigations conducted during 1978 have confirmed the existence of a major which on present information is sufficient for the foreseeable nO needs of the mine At the year end work was in progress on the Kanye- Jwaneng main access road an airfield and telecommunications facilities A quarry and aggregate and making plants have been commissioned and ;, work has started on the construction of 100 houses To Y , date the project is schedule DE BEERS LESOTHO MINING COMPANY PROPRIETARY LIMITED In first full year of production the Letseng mine produced 48 977 carats from the treatment of 417 000 tons of ore compared with 22 688 carats and 680 000 tons during 1977 when operations commenced Modifications to the plant were completed in February enabling throughput to be increased from 100 000 to 120 000 tons per month In the pit ore to meet plant ate hae Be Re Ae anet eh Pn et te ep TH Re te te ig OR e ena etn ae Salisbury O ZIMBABWE 7 B ulawayo Letlhakuna eer Orapa 'Letlhakuna Francistown Letlhakuna BOTSWANA Jwaneng Gaborone Gaborone Annex Kleinres Kleinzee Wesselton 7. Crange Free bh Stat TeRRT Ee EY ag we epee demand was drawn from the 25- to metre benches in the K6 kimberlite body Overburden removed including low grade kimberlite totalled 2 026 000 tons 7 giving a waste to ore mined ratio of 1,43 The provision of an ore stockpile that plant operations continued during periods when miniing operations had to be suspended due to bad weather which during the year amounted to 60 days in all During the year the permanent tailings disposal conveyor was completed and good progress made with the wall of coarse tailings being constructed in the valley below the plant to contain the fine tailings fraction In order to obtain a more accurate evaluation of the grade non kimberlite in the main pipe and of the satellite pipe samples of some 50 000 tons from each source were processed through the main plant The grade of the non kimberlite sample was 2,29 carats per 100 tons with distribution and quality similar to the K6 kimberlite The satellite pipe sample grade was 3,58 carats per 100 tons again with a similar size distribution to the K6 but of somewhat better quality The satellite contains some 11 million tons of kimberlite to depth of 140 metres which compares with less than 6 million tons remaining in the main pit While the sampling results require confirmation a very substantial increase in the ore reserve seems probable It is believed that a further increase in the capacity of the treatment plant from 120 000 to 000 . tons per month can be obtained by minor modifications to the crushing plant and this work has started PROSPECTING Exploration policy remained unchanged during 1978 and an active programme was pursued in the search for new diamond deposits in Africa South America Australia and elsewhere In countries where conditions permitted evaluation work proceeded on deposits discovered in previous years In the Jwaneng area of Botswana sampling of the major kimberlite pipe 2424 K2 was continued The results obtained largely confirm earlier results from this important pipe but sampling will continue until stripping of the overburden commences in the latter part of 1979. Prospecting in the surrounding area led to the discovery of further kimberlite pipes that require testing but initial indications are that none of these pipes is of appreciable size Testing of three small kimberlites in the Orapa area to the north neared completion In the extreme south of the country further kimberlites were found but those tested so far have proved to be barren In South Africa wide spread reconnaissance prospecting ran concurrently with the examination of prospects and the systematic sampling of kimberlites None of these proved to be of economic importance During the year other new kimberlite bodies were discovered and will a . in due course also be tested In Namaqualand prospecting continued along the coast with the emphasis on a search for extensions to the known ore deposits Large portions of the northern half of South West Namibia were covered by reconnaissance _, prospecting to delineate favourable areas for follow work In the south of the country similar work resulted in the discovery of several kimberlite pipes but initial indications are that none of them is of economic interest In the diamond mining area scale sampling continued in an effort to find extensions to the known ore reserves A programme of prospecting the residual surface deposits which lie inland from the present beach was started in the area some 170 km to the north of the mine near Bogenfels On the beach itself a strip some 60 km long which lies midway between the mine and the town of Luderitz was surveyed by seismic means in preparation for a large sampling programme Systematic sampiling at sea continued to make good progress Earlier in the year a detailed geological geochemical and airborne geophysical survey for minerals other than diamonds commenced over selected areas in the castern part of the country In December the first results from this survey were placed on open file with the Geological Survey of South West Namibia where they are available to the public CDM is also Frticpating Frticipating in ale various Anglo American Corporation rop syndicates involved in prospecting for other mine the territory In Swaziland the Ehlane deposit has en abandoned and the surface area restored as a result of investigations having shown that it is clearly uneconomic No further work was done on the Dokolwayo kimberlite pipe after the first quarter of the year The pipe is very small and the sampling to date shows that further prospecting will only be warranted if satisfactory arrangements can be concluded with the Swaziland authorities negotiations to this end are continuing oe Prospecting continued in other countries on the African continent but no discoveries of importance were made Numerous kimberlite pipes were discovered in Brazil and several in Australia Systematic testing of these discoveries is proceeding but none has so far proved to be of economic importance re ANGLO AMERICAN CORPORATION OF SOUTH AFRICA LIMITED Per 5. F. GANDAR Consulting Engineer T. JONES Consulting Engineer L. G. MURRAY Consulting Geologist 6th March 1979 RA tg Re Ec ce ery Ne. ae et De te A tn ett Sg ee DR oe teh a e Research The design of specialised equipment for the recovery of diamonds and production of industrial diamonds is an increasingly important facet of the activities at the De Beers Diamond Research Laboratory Research in this field is typified by the development of improved ray sorting equipment for use on Group diamond mines and by the development of larger more efficient synthesis high pressure diamond systems An investigation into problems experienced at Premier mine with sporadic outbreaks of corrosion in the ferrosilicon heavy medium has been successfully concluded and early warning devices signalling a transition to the corrosion condition have been developed to enable immediate corrective measures to be taken Following the successful optimisation diamond recovery at Finsch mine by the Laboratory's metallurgists heavy medium reconcentration plant was commissioned to handle expected increased volume of concentrates and a full evaluation of the fine diamond pan circuit is being carried out The diamond liberation characteristics of ton samples of Jwaneng ore from various levels in the pipe are being studied to provide data for the economic design of the treatment plant The analysis involves a series of progressively finer crushing steps followed by exhaustive recovery by heavy medium separation grease and other techniques . Continuing research into equipment for the synthesis of diamond has resulted in development of an improved high pressure system This new equipment is designed to be used both in the existing production presses and in the new generation of high capacity presses which were designed as a venture between the Laboratory and engineers at our synthetic factories The first of the new presses has been successfully commissioned at the Laboratory and over next two will years 25 units be installed Springs Shannon and Robertsfors as part of a major expansion programme + Traditionally abrasive grits have ranged in size from the finest at 400 mesh up a limit of 20 mesh coarser material being the domain of natural drilling stones For the first time synthetic diamond has been made commercially available throughout the full grit size range by the development of 20/25 and 20/30 mesh SDA100S and SDA100 for use in saws impregnated : drilling bits in the stone and construction industries .. Although the grit range has now been completed the emergence of several new producers of synthetic diamond has given added impetus to the continual monitoring and reviewing of existing products by the Laboratory in order to maintain competitive superiority One result has been the development of a new high impact strength product MDA100 to augment the already successful MDAS and MDA ranges which are used in impregnated metal bonds for grinding glass and ceramics ~ Further improvements in the quality of amber boron nitride in both the unclad ABN300 nickel clad ABN360 varieties have substantially increased market acceptance of these two superhard diamond abrasives in the grinding of high speed steels The SYNDITE product range has been extended to five grades each based on average grain size The coarser grades are recommended for rock drilling applications whilst the finer grades are suitable for incorporation in cutting tools for turning a wide range ' of ferrous metals including copper aluminium and as dies for the drawing of fine wires scale production of SYNDITE wire drawing dies began at the Springs factory in 1978 and field tests carried out in Europe on the material produced have been most encouraging Commercial availability this produce was announced in January 1979 Fe To accommodate the ever increasing range of research activities a new physical metallurgy laboratory specifically designed for research into powder metallurgy was opened during the year The E.T.S. Brown Building also became available for research purposes and was extensively modelled internally to house application . research in the fields of sawing and drilling African Collaborative research with universities continues Of particul and overseas interest has been technique the development of an ray diamonds diamonds fingerprinting both cut and uncut diamonds by obtaining ray topograph of crystal ects and microscopic imperfections unique to each particular stone Research into the potential use of this technique for identifying growth irregularities in synthetic diamonds is being investigated Financial statistics 1969-1978 FROM THE CONSOLIDATED FINANCIAL STATEMENTS CAPITAL AND RESERVES Issued capital Reserves R'000 R'000 Total R'000 i INVESTMENTS INCLUDING LOANS OUTSIDE PROFITS AND DIVIDENDS ON THE DIAMOND INDUSTRY DEFERRED SHARES . Listed Unlisted Profit after tax and preference dividends Dividends |, | Book value Market value Book value Directors valuation Per Per Amount ; share | Amount | share 000 R'000 R.000 R'000 R'000 | cents | R'000 cents 1969 | 21.013 }. 463 | 1970 | 821 | 513| 1971 | 821 | 718 | | | | 1972 821 629 | 1973 | 821 789 | 1974 | 21 821 822 247 484 402 573 539 994 610 844 068 1975 834 | 920 826 945 660 1976 | 24 834 | 067 900 | 1092 734 1977 834 1.401 945 | 1 426 779 1978 | 834 892 616 | 450 335 | 290 94 826 714 | 480 | 138 | 754 | 343 542 | 228 | 672 | 33,0 | 038 21,6 | 723 | 28,2 | 47 699 153 531 113 | 073 | 128 | | 161.450 45,2 | 236 202 | 463 861 135 196 603 235,954 | 66,1 | 85 649 203 902 | 687 | 416 172 076 199,723 225 | 377 | 095 | 000 | 218 371 56,0 89 217 60,7 | 507 267 088 | 342 | 194 | 231 064 | 306 695 85,2 125 926 395 489 | 612 446 |. 965 | 526 | 525 | 156,1 | 188 889 717 | 489 | 642 | 255 604 | 739 419| 205,5 | 233 863 Including share premium and after deducting excess of cost of shares in subsidiary companies over book value of net assets at dates of acquisition available Not available : From 1978 the capital expenditure referred to in Nore 1 b ii on page 36 has been charged against revenue and the 1977 figures have been restated to reflect the position which would have obtained had this policy been adopted in that year 15 2 . analysis The geographical . follows of Group profit after tax is as : 1978 1977 South Africa South West Africa Elsewhere seve Percentage s+) 33 29 20 22 wee 47 100 100 ned tnigctbi Fetchwine tie Ahan sten one net niet Mets eter et get AR a PMc te Ae ae lt cn OR nA ge te PR Re EN N A Pen a aSse mt ea aT Nig i Source and application for 1978 ~ | Funds derived from eae Profit before tax .. profits Add charges against profits not - 1, involving the flow funds . Amounts written off investments and ~ veces Sbegene : " es loans .R'000 : _ _ Company :- Group Increase in stores reserve : amounts ; Depreciation and other written : off cweeehase! Provision for shares in prospecting companies sees) _evenees + Dedict Cr cre Profit on realisation of fixed assets Profit realisation of investments aon Boo 222 * Funds derived from income 722 381. 165 148 ; - Prospecting expenditure recovered fixed Proceeds of assets realised - Proceeds of investments realised Ce 1.000 ee eo 5134 Oe 986 214 mone = Loans net Ven een tes cece 4333 449 727 7141 210.931 Os . : : _ Funds applied to . eee ee OO Taxi >, Diamond export duty State's share of profits leases i.e sees t tes rs . 45 : 307.921 54 849 : Loan portion of tax net Share of profits payable to subsidiary State's share of profits in subsidiary : of 2s: Acquisition mining rights Expenditure on mining assets -.:. Expenditure on other plant machinery . Purchase of diamond : Purchase of other investments Expenditure on property diamond Financing increase in stocks Financing increased stores and materials .- Reduction of long liability. De Beers preference dividends . De Beers deferred dividends _ . Dividends paid by subsidiaries to ... cyan minority shareholders 911 . + Increase in net current assets oo an -e7+++ 727-714 1.210 * statements - The source and application of funds deal with the flow of actual funds during the year Changes the rates between rand equivalent of the values of foreign assets and liabilities . ~~" i caused by changes in currency exchange one + accounting date another are ignored and the moveT mo es ne ts of shown are expressed in terms rands at the currency exchange rates ruling at the balance sheet date Onsolidatedbalance sheet 31st December 1978 - ore De BeersConsolidated Consolidated MinesLimited and subsidiary companies " ye Share capital preference Authorised _ 800.000 40 per centcumulative shares R5each v 375 deferred shares each 3.000'000 each . preference shares 3.000'000 3.000'000 8 cent cumulative second 000 000 of5 cents of R1 .. : on wens eddageceames Vieeees . Issued .800 000 40 per cent cumulative preference shares of RS 5 eac isLess 4 481 preference shares held by subsidiary companies . a 2866929 8per centcumulative secondpreference shares of R1each : - 359 789 042 deferred shares of 5 cents each distributable reserves te a | : Meet : . Capital rescrve Funds appropriated ffor or expenditure onfixed assets v Capital redemption reserve fund Currency reserve Legal reserve 176.478 176.478 : Distributable reserves | : o General reserve Storesreserve "|Reserve for development inin South West Africa Namibia 6 Unappropriated profit pe fen. 71 067 106 689 5.947 5.947 an 30.782 117 930| 126 836 Long Long liabilities : U.S. 27 500 000 6 per cent 15 year loan of 1967 066.834 066.834 _ 162.815 336 Claims mining interests and property . : Plant permanent works buildings : Unlisted investments Diamond stocks ; compani Mining Other compani : Sia eeeatenet 35'440 2 220 184 527 og ed - 26 888 Ate Bn OW oo eco ree oreetemern ra . Diamond account Interest and dividend incoime ncome R'000 2s 956 389 234 123 he 29.114 246- ~ 219-872 |. 1977 > 000 * 734- 079 0 payable Interest Amounts written offinvestments investments less surplus on realisation of 11561156 466 * 635 43 867| 445 502 .39 615 2. 405 ~ 750 Y 54 664 871 717 311 105 17593 328.698 30-501 | : Groupprofit aafterftertaxattributabletoDe Beers Consolidated Mines Limited on fixed assets- in respectof diamond mining investments investments in respect of other fixed 7 Other transfers net Dividends On - preferenceshares R2,00 per share share second preference shares - 8 cents per = per On deferred shares ~ 65 centss share 3 Unappropriated profit 31st December December 1977 currency Adjustment exchange unappropriated thereto arisingfrom changes rates Lump contribution to staff pension fundin respect of prior years Loa Adjustment in respect of previous year's taxation subsidiaries De Beers interest in the profits of former of in the accumulated loss accumulated subsidiary subsidiary subsidiary previously * Earnings per equity share eeeeeee tert vavuadeasereeees 790 '.1591 230 233 863 -266 393 38 2342 263 727 3449 3449 176 | 280 F 205,5 cents 145 424 * 3 326.202 156,1 cents woe Incomestatement | the year 1978 bt De Beers Consolidated Mines Limited . byes Diamond < account and ~ Interest and dividendinciome ncome on , lee ae: 1977 510 . -269 : 2 R'000 a oS R'000 696 Pee: o S557 270919 ' 103 : 307 ' 417 11 118.008 43.867 0 961 875 12.891. | 148 984 5): 572 433 350 ' 375 +22 922 oo 220 - On 40 per cent cumulativepreference shares R1 share declared 30th May 1978 oo aa Bee : : . + 800 - R1 per share declared 21st November 1978 May preference On 8 cent cumulative second 4 cents share declared 30th preference shares 1978 : - Te . Boge Meee sot 800 ee 115 1978 4 cents per sharedeclared 21st November wees * August .* On deferredshares .. + Interim 20 cents per share declared 22nd ; 1978 declared oa Final 45 cents pershare 6th March 1979 = me ee oy = : es " 31st December 1977 eee as eines profit in Unappropriated respect prior Lump sum contribution to staff pension fund in of : et we Ce 115 a p <2 958 161 905 Toss : be So - years . oe 689 B35 es GBA) iy nt EO Poe a 274 75.056 : Balance sheet +: 31st December 1978- : De BBeeersers Consolidated Mines Limited Limited ors Sliare capital . preference i Authorised see 800,000 per cent cumulative each shares of each 3.000 000 percent cumulative second preference shares -, 000 40 per centcumulative preference shares 2866 929 cent cumulative second preference Diamond mining mining production and administration R1 Claims mining interests and property Plant permanent works andbuildings at nominal value Othercompanies R24 Market value R32 430 000 1977 846 000 a All figures are in rand thousands unless otherwise SHARE by 2. CAPITAL The directors are empowered of resolution | the ore stated oan ACCOUNTING POLICIES ' ; a The consolidated annual financial statements deal- . shareholders and until the forthcoming annual general meeting to dispose of the unissued share capital for any purpose and upon such terms and conditions as . they may deem advisable 31st December 1978 | ~ with the and allits subsidiaries preference shares Company Company's * b The Company's mining assets are of a wastingCompany recognise Company order dome . nature and inin to this the 15 210 958 deferred shares of 5 cents cach and 133.071 8 per cent cumulative second of R1 - - each remained unissued itl COMMITMENTS CONTINGENT Swe policy profits a guaranteCeompany LIABILITIES capaapcpirtoypriate the mer distribution isis - - - to from within lifetime | Re : \ of the mines amounts equal to expenditure on 3. AND : in . such assets for the purpose of establishing a new * There are commitments andcontingent liabilities in : _ mining facility or expanding an existing respect of the and Group account of _.. Profitsso appropriated are not A . withothers to diamond mining : ; . therefore available for to company in respect of ananagreement between that re shareholders an company and a subsidiary company , of , Corporation the ii to charge againstrevenue within diamond A guarantee with Anglo American oe which account in the year in it it is incurred -. South Africa Limited for theservicing and ~ oye : expenditure on mining assetsincluding repayment of a foreign to Highveld Steel and mo replacements maintain renewalsand designed to Vanadium Corporation Limited amounting to - U.S. 000 000. The servicing and repayment ofcontract capacity an existing mining facility or A 2 : taken of In pursuance of this policy no account - 20 | loanis covered by forward exchange contract depreciation gee of cumulative exhaustion ofore reservesor of with the South African Reserve Bank , the holders of 150 000 % mining assets - < at A guarantee to redeemable preferencesharesSeries andprefrenc converted the rates ruling Mo c Foreign currenciesare 000 af vl 100 64 cumulative redeemable ; preference at thebalance sheet date s* |sharesSeries all with a of value Canadian- A d - Diamondstocksarae re valued at average cost ofusing 100 each issued by Debhold Canada Limited AT Limited : production in in thecase ofmining companies using for the payment ofdivendds ividends capital a permitted thelast first out basis where this oe redemptionpremiums ifany thereon : ot by taxlegislation and at the lower of cost or Guarantees to others of R47 281 000 1977 ps case of other : d R12 395 000in respect ofthe Company ae e Stores and : materials are valued at cost using af <7) varying methods appropriate to thevarious types Ce Company of business andin thecase of the and full a mining subsidiary arereserved against R618.000 ( f ) Thesource andaplicatiaon pplication of funds statements -. 1977 - ! dealflow of actual during year : Changes inin the rand equivalent of the values of Company foreign assets and liabilities caused by changesin ; weyR458 000 in respect of the Company and R618.000 1977 R608 000in respect of the Group . Undrawn loanfacilities of R140710 000 R145 952respect of the Group A surety executed by the iin n respect _ oa currency exchangerates between one accounting |: -.. date another are ignored and the movements of halfof anassociated company'scompany's liability under insurance contract covering pension commitments =" shown areexpressedin termsof rands the to thatcompany's employees 0 performance currency exchange rates at the balance sheet Guarantees by the Company for the due : These ruling buildings the obligations but > - . date by subsidiaries of their under building policies are are consistentwith those of previous contracts relating to theconstruction of office n oO : year except for item An additional change ii n n . : aan accounting methodsis that diamond export dutyiiss now : treated as part ofthethe tax charge instaesadtohf ebeing In CAPITAL EXPENDITURE 2 . a : \ deducted from the diamond account past order to achieve comparability 1977 financialposition -. Capital expenditure authorised by the directors not - \ " statements have restated to show theposition yet incurred 31st December 1978 includingfolowing amounted the following that would have obtained had these in in policy expenditure contracted for to R102 occurred changes 1977 655 000 iinn that year *. : The Company R196 000 901 T vigete i gag CAB ARE ** + a! 1977 @ has subordinated loan subsidiary Group The R233 786 000 R146 467 000 -- - A In addition the Group has undertaken to finance the ; of R575 505 a to the extent 4 capital expenditure of an associated company The iii A list of material 1investments iss given on pages . expenditure authorised by directors of that '. company 31st December amounted to . oO expenditure 14 R216 030 000 1977 R36 345 000 ; The method of financing mining capital is .40 Lit to 42 : ; : ; ; : INTERESTS 7. ' SUBSIDIARIES IN SUBSIDIARIES mS ., ; a set out in Note b me, will SLhaoresans expenditure : Itis estimated that in in 1979 amount to . 351 * . 141 9969 . R134 Company 733 000 Other ; j 000 913 in the - ; Group and R175 the amouants mounts owing 6s yee sae esa ec ee a 981 392 544 consolidated financial statementsstaemnts The include the * va by dividends subject the withholding . : acquired . : 5. FIXED ASSETS distribution aA register of land and buildingsowned other than those or used for Company kept mining and ancillary purposesis at the Sis ncome .s od taxes 97 i and reserves as toe So ; certain subsidiaries which on will be to a . : os . 7 Cd Os , oo Company's registered office - policy 27 the ) In accordance with accounting . . b i LOANS : U.S. 6 700 000 the U.S. U.S. _ 500.000 500.000 loan of assets described as Claims mining interests ( December and works 1967 had been redeemed at 31st 1978 * Plant property and permanent works mining for by certain mining The remainingU.S.U.S. 800 000 isis repayable at par buildings between are provided of the > by annual instalments of U.S. U.S. 200.000 : companies of the Group by means funds | : circumstances certain =, appropriated for expenditure on assets f'unds . 1979 and 1982 but may in : R52 ConsequentlyClaims mining interestsand moe be repaidearlier Qf term of 763 000 liabilities amount property continue be shown atthe -: . ii The long consolidated balance standingin the books at 31st December 1952 with rc R18277 000 shownin the : . : . additions since at cost less sales and Plant . ' _ sheet include following . of .. participation loan : works and buildings continueto be oo a A 22,71 cent in a : down follows permanent 1977 shownshown at written value arrived at as sie UU..S.S4.7 000000000 -=- RR4048270000000 whicahit >: "- shown December Group : . value Company Book 31st 1952 at ole eieckeeedenbees a Op R1 - wR, interestatthe rate 8,598,59 cent per annum R1 The loanis repayable atpar by annual : Mining and allied capital GN Wen recoupments 530 767 expenditure since then at cost 242 531 000 less cteeecasees ; ; 530 oe 000 5". ce 242 531.001 - 530 767 : ap ropriated Transferred expenditurenexpendituren bR8 1977 _ on fixed assets . soennsees a re 5 a 531 531 242 000 001 479.590 001 R1 177.000 instalments of U.S. 500 000between 1979 =" 2 1981 U.S. 000in 1982 U.S. 8.000.000 8.000.000 between 1983 and 1987 but may in certain circumstances be repaid earlier A revolving loan of U.S. 10,000,000 repaid ' 696 which 000 R8 696 000 U.S. 000 cent bears interest at 14 per cent ~. the rate = London Interbank offered fr above Interbak & Shares subsidiary unlisted trade in companies and overdraftasmounting OVERDRAFTS ; investments are shown aatt cost less amounts written 9. BANK Includedin creditors are bank to vo ay 000 6. INVESTMENTSINVESTMENTS 000 1977 moe we 219 R11 oe R4 240 Hoa & 2 ts. : unlisted SUBSIDIARIES valuation FROM 3, ) The directors of the . ae 10. INCOME investments as follows.. a nn ; SUBSIDIARIES eg 7 . = 1978 1977 , Company ws * * Group Dividends Unlisted Commission 1978 1977 1978 1977 ~ Interest . tradeinvestments 88 998 91/732 353-772 462 : Unlisted investments 16.544 16.544 876 186 558 130 -- : 542 608 540 424 ol 2 471 082 oo 87.378 218 493 446 264 - Company _ ; Company 1977 1978 1 575 200 256 544 880 200,000 -. | 000 | - : Beep 130 .. 000 US pe 752 .689-663 792 610 A Deb 4521 21 085 ~ 38.103 49 49.202 588 , 251 234 169 079 : . Group _ 1978 1977 Emoluments in respect of services as directors in Emoluments in respect of other services a 172 vo nyz . consolidatednet profitthe year aftertax and os after deducting outside shareholders interests and preference dividends : - Mining finance and C Anglo American Corporation oof f South Africa Limited : Mining finance andinveistment nvestment 7 CharterAmerican Corporation of . South Africa Limited Sundry ' . Authority GovernmentGovernment and Local Total market value Securiti Units held oh 1977 - - 1978 73 889.702- 73.889.702 73.889.702 73.889.702 163 673| 163 673 162 464 162 464 892 - 892 651 369 - 39 904 .651 8.870 = 657 213 - 657.213 200 191 200 * 430.708 566988 486 : 607 .5.565 o ; 4 943 ET 67va 50 10 004 533 828 4 533-828 533-828 465 . : _ 226 310 39 499 3246 28 336 726 : 523 * 250.960 |437-367 838 506 253 401 250 996600 860 20 886-860 | 20 886 3 135,182 763-744 763-744 10 583773 fe : 110 271 3.135-182 744 10 583 773-- 110.271 2674.753 2674.753 753 1611 562 611 SE2 114 299 244 504 261 2504-2612504-261 6.443 6.443 433 6 433 3 982.109 26612 26612 319 | Pb a PRE oe gr pes Unlisted investments of the GroGup roup Mining financeand investment . . American Corporation Corporation of Canada Canada Limited . Anglo American Corporation Rhodesia Limited Australian Anglo American Limited Meadow Investments Limited : MorupuleColliery Proprietary Limited . - Swaziland Iron Ore Development Company Limited Hodgetts Abrasive Proprietary Limited International Pipe andSteelInvestments South Africa Proprietary Shaft Sinkers Proprietary Limited SoerveldeFarmsLimited . Unihetld s1977 2 1978 1977 2 867 555 .2 867 555 * .748 .748 752 4.400 4 400 000 000- 000 ~ Directors valuation cae _ 3 4 7 102 400 ' *- 102 400 : t 50 000 7 : - 500.000 739.939 000 2) 136.875 136.875 614 . 766 614 939 - 3 527939: 158570 440 - 158570 500 478 Egret Investments Limited ea Epoch Investments Investments Limited . . ~ Euranglo Euranglo Proprietary Limited Limted 120 000 Propietary Limited Central Reserves Africa Consolidated Reserves LimitedFinace : : Commonwealth Development Finance . Discount House of South Africa Limited Industrial Finance Corporationof South NationalFinance CorporationSouth Africa Property Investments McCarthy Limited foe ; eT 2 2) Amaprop * AngloAmerican O.F.S.O.F.S. Housing : Company Limited : Anglo American Properties Limited Deferred : Borsalano PropertiesProprietaryLimited i 100 000 02 217-500 186 217.500 - 436 436-186 525 450 000 Lo p bac ed " : neetess a! : 100 100 500 500 ~ 667 ~ 2667 .75 .75 MainKenPillwaocrtehHCoelntdrienPgrsoprietary Distributors 1946Proprietary Limited Distributors ShannonLimited . BanqueDiamantaireAnversoise S.A. ITnhdeusDtiriaaml oDnisdtrPurichabsiung tors1946 Proprietary Limited ATS BT ENR et Te eg EE Be ng ee iy So ery BS te eee a Age Ee den ag ch ee Bg ea Interests in major subsidiary companies 31st December 1978 Company Incorporated in the Republic of South Africa Mineral rights holders Consolidated Company Bultfontein Mine Limited Finsch Diamonds Proprietary Limited Griqualand West Diamond Mining Company Dutoitspan Mine Limited ... Issued ordinary share capital unless otherwise stated 1978 1977 R'000 R'000 443 1 2114 1443 1 114 Investment De Beers Holdings Proprietary Limited . De Beers Industrial Corporation Limited - Preference Orama Holdings Proprietary Limnited Preference Sea Diamond Corporation Proprietary Limited enna net rece e cece eerenen . cece ... Preference 46 900 27 500 17.000 17.000 851 840 100 278 46 900 27 500 17.000 17.000 851 840 100 278 Percentage held directly or indirectly 1978 1977 Book value of Company's direct interest 1978 R'000 1977 ': = R.000 67,04 80,00 67,02 80,00 72,54 72,54 100,00 60,93 100,00 60,93 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 901 901 769 769 11 637 170 11.637 11.637 170 Amount owing by or to subsidiary company 1978 1977 R.000 = R'000 23 344 26 343 (3) 512 2.378 222 262 ms Diamond trading The Diamond Corporation Proprietary Limited .. CorporationCorporation rere. rrereeneees Management and diamond trading De Beers Industrial Diamond Division Proprietary Limited .eces cere errr eee 44 000 657 Proprietary Marketing De Beers Industrial Diamonds South Africa - 20 Limited .. es cece ereeceeeee 6) a Property owner PremierTransvaal Diamond Mining Company Proprietary Limited . RR Preference 75 44 000 - 4.657 20 27 75 100,00 100,00 100,00 100,00 ' 100,00 100,00 s 100,00 100,00 100,00 100,00 923 923 205 118 206 657 657 126 284 124 1752 124 1752 H 4 15 406 Incorporated in South West Namibia 4 Diamond mining CDM Proprietary Limited formerly The Consolidated Diamond Mines of South West Africa Proprietary Limited .. Mineral rights holders Marine Diamond Corporation Proprietary Limited os. e ere ceee ence Corporation The South West Finance Corporation Proprietary Limited ...ss ces eeeer ee Marine Group Investments Proprietary Limited Prospecting Proprietary CDM Prospecting Proprietary Limited formerly De Beers Prospecting S.W.A. Proprietary Limited : Property owner CDM Properties Proprietary Limited ... Administration services De Beers Services Proprietary Limited cA 414 414 103 ie 5 359 103 359 16 16 41 41 100,00 100,00 ry 851 19 851 100,00 100,00 100.00 100,00 100,00 2.383 2.383 100,00 100,00 100,00 100,00 3.485 2482 129 53 12 Company we : x a Ireland Incorporated in Ireland - Administration and technical services De Beers Industrial Diamond Division Ireland Limited . : Marketing De Beers Industrial Diamonds Ireland : Limited : Issued ordinary share capital unless otherwise stated 1978 000 .1977 000 Percentage held " directly or indirectly . Q 1978 1977 re 100,00 100,00 4A 100,00 Incorporated in Botswana Prospecting 1 De Beers Prospecting Botswana Proprietary Limi ccc ct ece e cece d seen eens deveneeae . Diamond trading The Diamond Corporation Botswana Proprietary Limited ...... wee ; 483 483 . e : 100,00 100,00 Incorporated in Lesotho Diamond mining ~ De Beers Lesotho Mining Company Proprietary Limited ....++-65+-++ Diamond trading : : The Diamond Corporation Lesotho Proprietary Limited ....--- seeeee R'000 24 090 Incorporated in Luxembourg US 000 Investment . : De Beers European Holding S.A 3 200 US 000 2 100 : 100,00 Book value of | Company's direct interest 2 1978 R'000 1977 R'000 Amount owing by or to subsidiary company 1978 1977 000 R'000 Incorporated in Zimbabwe : j Investment De Beers Rhodesia Investments Limited |<|000 i i i 4 .... ) 7 000 R000 000 Ben Incorporated in Canada " ; Can 000 Investment Debhold Canada . , Limited Preference A 3 Preference B 5 164 15 000 . 10 000 + Can 000 { 164 15 000 10 000 100,00 7 100,00 100,00 The aggregate profits and losses after taxation of subsidiaries which are taken into account in the profits attributable to the Company are Aggregate profits R603 686 000 1977 R508 623 000 Aggregate R379 000 1977 R2 658 000 Nominal value Nae APP A ty tl cia Bautonet Regma = t ty Mic den ee pe ien on ey aL ee % fs 4 i L aa ; 3 } 7 so i + t a bs f , : \ 3 : 2 5 ? a * I ? : i } t }. a 2 q 2 St La me ra WE, ae PE uae a The principal activities and interests of the De Beers Group are (1 the mining of gem and industrial diamonds and the manufacture of synthetic diamond for use in industry OO the marketing through the Central Selling Organisation of diamonds produced by the Group and by other producers mining a portfolio of internationalinvestments in industrial and finance companies DIAMOND MINING The mining operations of the Group are conducted by De Beers Consolidated Mines Limited and its wholly subsidiary CDM Proprietary Limited formerly The Consolidated Diamond Mines of South West Africa Proprietary Limited De Beers Lesotho Mining Company Proprietary Limited a 75 per cent owned subsidiary and by De Beers Botswana Mining .. Company Proprietary Limited which is 50 per cent owned In Kimberley where De Beers Consolidated Mines was registered on the 12th March 1888 to analgamate the De Beers and Kimberley mines the Company owns the De Beers Kimberley and Wesselton mines and leases the Bultfontein and Dutoitspan mines from its subsidiaries Consolidated Company Bultfontein Limited Griqualand West Diamond Mining Company Dutoitspan Mine Limited The Kimberley Beers mine The Big Hole was closed in 1914. The De Beers mine was brought back into production in 1963 after being closed for 55 years In the Northern Cape De Beers operates the Finsch mine which it brought into full production at a rate of some 2 million carats a year atthe end of 1966. Its production will be increased to about 3,5 million carats a yea by 1980. De Beers owns 30 per cent of the mine and leses the State's 70 per Cont interest In the Orange Free State De Beers owns the Koffiefontein mine which after being dormant for 40 . . Jagersfontein of years was brought into productionin 1971 to replace mine which had reached the end !! itis ts economic life and was closedin the same year Ar Cullinan near Pretoria De Beers operates the Premier mine in which it has a 40 per cent interest acquired from its wholly subsidiary Premier Transvaal Diamond Mining Company Proprietary Limited at January State's 1st 1977. De Beers leases the ,. interest in the mine State's 60 per cent recovers Namaqualand De Beers Division which recovers high quality gem diamonds from alluvial deposits similar to those north of the Orange Riverin South West Africa producing from the farms Annex Kleinzee Dreyers Koingnaas and Langhoogte The latter came into productionin 1978at production rates of 500 000 and 60 000 carats year respectively As owner of the mineral rights on these farms the State a 25 per cent share in the profits ., except from Annex Kleinzee where it has a 30,7 per cent share CDM conducts large mining operations over the coastal area extending 100 km north of the Orange River and is actively prospecting in other areas of its concession whereit holds the mineral rights until 31st December 2010. In terms of an agreement which expires December 1980 but which may be extended with official approval CDM leases from its fellow subsidiary Marine Diamond Corporation Proprietary Limited the right to prospect and to mine for diamonds in that corporation's foreshore area and sea concessions adjacent to the company's own concession 30 The Orapa mine in central Botswana discovered by - De Beersin 1967 was commissioned by De Beers Botswana Mining Company Proprietary Limited in 1971 at an annual production rate of 2,4 million carats The Botswana Government initially received an interest of 15 per cent in the company which was subsequently increased an equal participation with De Beers At the end of 1978 production of the Orapa mine had been increased to some 4,1 million carats a year De Beers Botswana Mining Company also operates the Letlhakane mine 40 km south of Orapa which De Beers discovered in 1971 in the course of its continuing prospecting programme in Botswana Production from Letlhakane which came into production at the end of 1976 at a rate of 320 000 carats a year is to be increased to 400 000 carats by 1980. At Jwaneng in Botswana De Beers Botswana ,. Mining Company is establishing a large new mine which De Beers discovered in 1973 it is expected to come into production during 1982 and on current estimates to * achieve a production rate of the order of 4 million carats year shortly thereafter Q The Letseng mine in eastern Lesotho was brought into full productionin September 1977 at a Brate of some 50 000 carats a year by De Beers Lesotho Mining Company Proprietary Limited in which the Lesotho Government has an interest of 25 per cent MANUFACTURE SYNTHETIC DIAMOND AND RELATED HARD MATERIALS The manufacture of diamond and related hard materials is undertaken by companies under management of De Beers Industrial Diamond Division Proprietary Limited A complete range of super abrasive products including synthetic diamond grit cubic boron nitride and composites of these materials are manufactured at factories in Springs by Ultra High Scr coat) acre ect ams ne Coal contributed 8 per cent of Anglo American Corporation's investment income in 1978. The new Kleinkopje mine near Witbank an important Amcoal undertaking will ultimately produce 3,5 million tons of steam coal and some 700 000 tons of low metallurgical coal More than half of the steam coal will be exported ' Pressure Units Proprietary Limited in Shannon by Ultra High Pressure Units Ireland Limited and in Sweden by Scandiamant Aktiebolag De Beers interest in each of these companies is 50 per cent MARKETING GEM DIAMONDS The policy of De Beers as leader of the diamond industryis to maintain the term stability and prosperity of the industry as a whole To that end De Beers established and built up the Central Selling Organisation which on behalf of the various producers markets approximately 80per cent of the world's diamond production meeting so far as possible the preferences of the individual cutting centres for the . rough diamonds that are produced Diamonds from South Africa and South West Namibia are sold to the Central Selling Organisation through The Diamond Producers Association Other producers who wish their diamonds to be marketed through the Central Selling Organisation enter into contracts with De Beers owned subsidiary The Diamond Limited or its subsidiaries Corporation Proprietary for the of their production Through associated companipuerschase Organisation the Central Selling also purchases diamonds offered on the open marketsin Africa and elsewhere The contractual arrangements between the members The Diamond Producers Association and the Association's agreement with the Central Selling Organisation for the disposal of its a members productionwere renewed for minimum period of five years from 1st January 1976 To help meet the growing world demand for diamonds the De Beers Group alone has more than doubledits production nearly 12 million carats a year over the last fifteen years partly by extending operations at established mines and partly throughits successful efforts to discover develop new diamond reserves A further enlargement of capacity is now in hand to raise Group production to an annual rate of 15 million carats by the end of 1979 and more than 19 million carats in 1983. Though the trend of demand is uowards there are setbacks in the world market sizes or qualities of diamonds During these periods the Central Selling Organisation maintains price stability by adjusting supply to demand while maintaining its curtailment or closure of mining operations is thereby avoided and the CSO drawing on its large financial resources holds the temporary stock until demand improives mproves excessexcess of production iin n Stability has always been recognised as essential to the ue diamond industry simply because the price fluctuatifons luctuations that are accepted as normalin the case of most raw materials would be destructive of public confidencein the case of gem diamonds which are a pure luxury and of which the stock held by the publicin the form of jewellery is infinitely greater than the world's new production Whether this measure of control monopoly F. amounts to a I would not know Mr H. Oppenheimer has said But ifit doesit is certainly a * monopoly of a most unusual Thereis no one concerned with diamonds whether as producer dealer cutter jeweller or customer who does not benefit from it It protects not only the shareholder in the big diamond companies but also the miners they employ and the communities that are dependent on their operations The being of tens of thousands of diamond diggers individual diamond its maintenance ' of all races is dependent on + We are very conscious of our responsibilities not only to our shareholders not only to the industry as a whole and to the consuming public but also to the governments of the countries in which we operate To sustain and broaden the demand for diamonds De Beers has for many years conducted extensive promotional campaigns for diamond jewellery in all the major markets of the world There are full scale advertising campaigns supported by information services for the Press and public and by promozional jewellery services for the tradein the UnitedStates Japan throughout Europe andin Canada Australia Brazil South Africa and Hong Kong and South Asia INDUSTRIAL DIAMOND Industrial diamond grit and related hard materials are subsidiary marketed by De Beers wholly De Beers Industrial Diamonds Ireland * behalf of the selling companies The principal ones are Industrial Distributors 32 per cent De owned for drilling diamor.d Industrial Grit Distributors Shannon 10,28 per cent owned for natural diamond grit and Abrasive Grit Sales 13,21 per cent owned for all Development synthetic hard materials of the marketis stimulated by national and international conferences to technology demonstrate and discuss advances in technology and new applications for De Beers products by advertising campaigns by the work of the Diamond Research Laboratory anbdy the technical advisory centres operating in London and Ascot Dusseldorf Milan Tokyo Hong Kong Bombay and Melbourne ie INVESTMENTS From the time of its formation by Cecil Rhodes De Beers has participated in mining and industrial i \ 4 { i C i 5 { i. { { < 4 4 y i: qe i { it z re \ \ or ! H {- poe i 1 \ t 6 2 \ t , ^' 4 * } i. 6 fe ott rk ee ON PE Pe cenate ban ek SS ah v broad developments over Rhodes saw the a field , Company's roleas a dynamic one befittingits 7 '. responsibility one of the earliest industrial enterprises in southern Africa anda means of strengthening De Beers carnings base and thereby enhancing the security. of the diamond trade Theseinvestments now highly diversified and internationalin scope are held directly or through subsidiary companies notably De Beers Holdings Proprietary Limited and De Ecers Industrial Corporation Limited whose major investment is in ' per AECI Limited and throughthe Group holding of 33,11 cent Anglo American Corporation of South Africa Limited De Beers also holds directinvestments virtually in all of Anglo American's major investment - interests companies in addition the indirect interests through 7" Anglo American itself . while Hudbay also has 62 per cent of Canadian Merrill & Limited another oil and gas producer Francana Oil Gas has an effective interest of 57 per cent in Trend _ Exploration Limited De Beers Holdings nas an interest in Anglo American . CorporationBrasil Limitada which has a number of prospecting venturesforgold and other mineralsin Brazil and owns 49 percent of Mineracao Morro Vello S.A. a small gold producerin the State of Minas Gerais Another subsidiary De Beers European Holding S.A. has an interest in Australian Anglo American manages Limited which Australia prospecting activities in DE BEERS INDUSTRIAL CORPORATION LIMITED . An industrial finance and investment company whose DE BEERS HOLDINGS HOLDINGS PROPRIETARY LIMITED Share capital and reserves consolidated at 31st ' December 1978 totalled R378 084 000 1977 main investment is a direct and indirect holding through Afex Holdings Proprietary Limited of 39,91 per cent of the equitoyf AECI Limited Further information on AECI is given below R326 391 000 The corporation has a 9,16 per cent interest in Mondi De Beers Holdings hasinvesitmentsnvestments in mining industrial and financial companies and finances the Group's prospecting campaigns outside South Africa Through - ~ De Beers Botswana Company Proprietary - Limited and a subsidiary De Lesotho Mining Paper Company Limited which has a production capacity of 260 000 tons of newsprint and fine paper a year and a 5,13 per cent interest in Highveld and Vanadium Corporation Limited which is the largesta privately owned steel producer in South Africa and a Limited Company Proprietary holds the Group interest in the diamond mines in Botswana and Lesotho Throughits shareholdingin Finsch Diamonds major world producer of vanadium pentoxide ended Year 31st December . 1978 R2000 1977 R'000 Limitedit has an interest in the of Proprietary profits the Finsch mine arid it holds the Groupinterest in Total share capital and reserves : companies having prospecting and mining concessions consolidated to eee , ft 881 84 017 et uf shore and on a portion of the foreshore of South 7 * Book value of unlistedinvestments 29.099 , 29 099 West Namibia It holds the Group's 12 per cent Directors valuation of unlisted listed investments investments interest in Minerals and Resources Corporation Limited investments ... 302 638 ae8 Minorco whose major investments are a 49,98 per cent of listedinvestments 20792 _ value value 20.792 of listed 81 535 58 432 Market value investments interest in Zambia Copper Investments Limited and a 37 052 29 per cent interest in Engelhard Minerals & Chemicals tax eo. 13 716 Consolidated profit before Corporation Minorco has an effectiveinterest of e Preference 43 per cent in Trend Exploration Limited a United dividends ...5. 2-237 Copper ae States based international company and 50 per cent 14 : paid Rb Ve of the equity of Inspiration Consolidated Ordinary dividends - amount 10,313 - Company of Arizona . wy A subsidiary of De Beers Holdings Debhold Canada Limited through its 28,88 per cent holding in Anglohas ., American Corporation of Canada Limited Amcan has interests in several North Americari base metal companies in particular Hudson Bay Mining and AECI LIMITED Administered outside the De Beers Group De Beers association with the explosives industry dates from the turn of the century whenits works at Smelting Co. Limited Hudbay whichis 38 per cent- owned by Amcan and Inspiration Copper Consolidated Company in which Hudbay has a 50 per equity cent interest Hudbay Amcan hold 55 per cent and per cent respectively in Francana Oil & Gas Limited Somerset West near Cape supplied explosives to the diamond and gold mines amalgamation of this interest with similar interests of Nobel Industries later Imperial Chemical Industries Limitedin 1924 led to the formation of the company now known as AECI Limited a aa! a ie : io weak Mondi Paper Company now producing 260000 tons of paper a year at its Durban mill last year exported newsprint to the value of some R26 million Mondi is a subsidiary of Anglo American Industrial Corporation L ' The shiking shiking ladle in Highveld Steel and Vanadium , Corporation's Witbank plant The Highreld group ' recently added ferrosilicon metallicgical char electrode paste to existing product range by purchasing AECP's 68 per cent interest in Rand Carbide An incline shaft at the deep Marro Velho Gold Mine in the State of Minas Gerais the Anglo American Corporation group and associates interest in the mine through hold a 19 per cent Anglo American Corporation do Brasil Oe TALI TES in whicDh e Beers effective interest arising from direct explosives and indirect Group holdings of 42,89 per cent is 27,30 per cent AECI produces mining and accessories a wide range of plastics heavy chemicals for industrial and agricultural use vinyl products animal feedstuffs coal Latein 1977 AECI commissioned a large and based chemical complex for the production of polyvinyl chloride and a range of chemical products AECI contributed 60 per cent of the total cost of some R220 000 000 and Sentrachem Limited the balance AECI's wholly owned subsidiary South African Nylon Spinners Proprietary Limited is the leading producer of synthetic fibresin South Africa while another subsidiary manufactures phosphatic fertilizer and Rhodesia industrial chemicalsin Other important investments include Prolux Paint Holdings Proprietary Limited and Duropenta Holdings Proprietary Limited which are wholly and Triomf Fertilizer Proprietary Limited which is 49 per cent owned Year ended 31st December * . 1978 R'millions Total share capital and reserves consolidated . wees 380,2 Loan capital tee. Book value of fixed assets 165,2 363,3 _: Trade investments cost 45,7 foreign Investment in cost . subsidiaries | 36505 Net current assets . 36505 Sales ..:.' 36505 Consolidated profit before tax Tax ( cece ceececeeee . Preference dividend _ 36505 36505 ~ 38 Equity earnings ....0..- 38 38 >. share veseeeces dividei^<d * Ordinary dividei^<d_ , amount paid 32,7 _ per share 22c 1977 R'millions _ 351,5 202,0 . .379,7 1. 44,9 15,6 166,7 590,2 64,6 26,3 0,3 3% 37,2 25,1c , 3 26,7 18c Group turnover in 1978 totalled R703,5 million an increase of R113,3 million or 19,2 per cent over 1977 This includes export sales of R45,2 million 1977 R39,6 million Group net income before taxation for the year at R95,3 million showed an increase of 47,5 per cent over the corresponding figure for 1977. Earnings per increased from 25,1 cents to 38,6 cents A further R5 million was charged against income to complete the funding of the company's share of increases in pensions and also its other supplementary pension commitments The main feature of the year's trading was an 11 per ** cent increase in the volume of local sales over 1977 Increasesin sales were achievedin all areas of operation a agricultural particularlyin filament yarns products and synthetic higher . The improved rate of profit resulted mainly from production levelsat the group's large capitalintensive plants The loss on Coalplex was lower than forecast as operating efficiencies and production levels were above expectation and substantial export orders for PVC were secured vs SOUTH SOUTH ANGLO AMERICAN CORPORATION OF AFRICA i LIMITED Administered outside the De Beers Group Corporation Anglo American isis the head of an Meow international group ofmining industrial andinvestment companies In mining the corporation has important interests the production of gold and uranium diamonds copper and nickel coal platinum tin lead zinc and manganese The industrial interests range from making and heavy engineering to construction , motor vehicles paper and textiles chemicals drilling tools refractories and foodstuffs Its principal commercial, banking interests are property development insuirance nsurance freight and travel and computer services in southern in Africa Through 36 cent holding in Charter o Consolidated Limited the London mining finance house the corporation has further indirect interests in gold diamonds copper asbestos tin wolframindustrial platinum potash and other minerals andin industrial enterprises in the United Kingdom The corporation's investments are held mainly through a number of specialised companies such as Anglo - American Gold Investment Company Limited Anglo American Investment Trust Limited for the diamorid Anglo mining and marketinginterests and American Industrial Corporation Limited The majority of the coal mining interests are held by Anglo American Coal :, Corporation Limited The Bermuda Minerals and Resources Corporation participates in the group's international mining and industrialinterests while on a : geographic basis there are Anglo American Corporation Des of Canada Limited Anglo American Corporation Rhodesia Limited Zambia Copper Investments Limited , Australian Anglo American Limited and AnCorpatgion lo American Corporation do Brasil Limitada Following the merger with Rand Selection Corporation in May 1977 which took effect from 1st JanuaryJanuary 1977 Anglo American Corporation changedits financial reported from 31st December to 31st March and reported the following consolidated results for the fifteen months ended 31st March 1978. Because of the different accounting periods and the merger the figures are not comparable with those for the twelve months act re cee tm see ee a tem ert EN RR ne ie et ee eth ton acre Na Sn, pan gf tt tat agen ectree et na cn etOY Stepan alt ie SBR { ended 31st December 1976 . Post- merger 31-3-78 15 months R'C00 Group profit before taxation Deduct Taxation 258 678 17 027 Group profit after taxation Deduct Outside shareholders interest bee cec een eeeeeere 241 651 Premerger 31-12-76 12 months R'000 93 865 647 89 218 2.940 31-3-78 ; R'000 Life insurance investments Fixed assets . oe wee 572 057 178 Leasing assets Instalment debtors less deferred income 10 401 17 030 Loans - associated companies and others less provision . - 446 Goodwill : Other assets > 443 _ 949 636 31-12-76 R'000 _ 11 453 - - ' 858 8 380 101 175 - 938 554 } 5 4 a4 ot Ve Group profit before extraordinary item attributable to Anglo we American Corporation of South Africa Limited Dividends ; * On preferred stock . On ordinary shares including a , 278 751 286 following The following analysis by primary source and geographical location of Anglo American Corporation's direct investments and the underlying investments of the holding companies in which it is interested was given in its 1978 annual report These figures exclude the interests attributable to outside shareholders in subsidiary special dividend of 8,25 cents a share declared on 3rd May 1977 . 43 465 companies : Value of investments Investment income Retained profit before extraordinary item Extraordinary provision against investment in Botswana RST 42527 source By prime source Gold < ele 4 Diamonds : apeeee Percentage a , ; Percentage 30 32 Limited and S.M.T.F. copper project in Zaire : es Copper .: Coal 4 1976 S.M.T.F. .. eee L Retained profit after extraordinary a item .. eee beesLievees tees 000 22.527 22.527 Platinumi Other mining Industrial - Number of shares in issue at end of respective periods share 000's : .. 131,725 Finance Property . Oil and :Earnings ordinary share -; gas a before extraordinary item based 1 181 17 17 17 100 100 100 on number of shares effectively in a Geographical issue during the periods cents ' 89,9 . 65,3 South Africa 75 70 75 70 following The following is a summary of Anglo American sheet Corporation's consolidated balance woe At ~*~ ~ __., South West Namibia Rest of Africa south of the At fo equator ni . . 2 bog 31-3-78 R'000 31-12-76 R'000 North America eee Elsewhere .. 0s ee esses faces on Capital and reserves - * Loan capital 078 474.451 . 166 541 60 038 4 100 100100 subsidiary Life insurance shareholders interests in companies interestsinterestsinterst inin Loans - associated companies and Deferred taxation . Creditors eisee 456 767 231 : 419 220 1. 129 660 - 63.008 63.008 , 287 050 007 American Corporation reported unaudited , . group profits after tax of R88 021 000 attributable ended 39,5 cents per share : the six months 30th September 1978 compared with R69 036 000 cents per share for the six months comparble June 1977. These results howevearre not comparable because income does not accrue evenly throughout the . os Listed general investments 636 938 7) 636 713 411 009 year and in particular the flow of income is higher than normal in the quarter to the end of March Corporation American R1 996996 731 000 ( 1976 Market value F Unlisted general investments ; 796 The market value Anglo American Corporation . 114 4: group's listed general investments at 30th September 1978 was R2 678 million an appreciation of R1 924 Directors valuation R272 296 000 , million over the book cost 1976 R168 059 000 cant a ety iw i Un abr^'g^t'raduction fran^aisedu rappor annuel et des comptes peut ^"treobtenu aupr^sde De Beers Consolidated Mines Limited 40 Holborn Viaduct London EC1P AJ et des banques suivantes BANQUE ROTHSCHILD 21 Rue LAFFITTE PARIS 75009 os 4 BANQUE BRUXELLES LAMBERT 2 RUE DE LA REGENCE 1000 BRUXELLES SOCIETE GENERALE DE BANQUE 3 RUE MONTAGNE DU PARC 1000 BRUITELLES BRUITELLES 7 BANQUE DIAMANTAIRE ANVERSOISE S.A. PELIKAANSTRaat 54 2000 ANTWERPEN BANQUE PRIVEE 5.A. 18 RUE DE HESSE 1204 GENEVE L'UNION DE BANQUES SUISSES BAHNHOFSTRASSE 45 8001 ZURICH SOCIETE DE BANQUE SUISSE AESCHENVORSTADT ^ 4002 BASLE 7 CREDIT SUISSE PARADEPLATZ 8 | 8021 ZURICH ROTHSCHILD BANK AJMG ROLES ZOLLIKERSTRASSE 181 spoteiSt 80034 ZURICH a a) 3 BANQUE INTERNATIONALE A LUXEMBOURG atrat 2 BOULEVARD ROYAL * LUXEMBOURG i BANQUE GENERALE DU LUXEMBOURG S.A. 14 RUE ALDRINGEN LUXEMBOURG Changes of address should be notified to the Company's transfer secretaries Consolidated Share Registrars Limited 62 Marshall Street Johannesburg 2001 P.O. Box 61051 Marshalltown 2107 or Charter Consolidated Limited wo P.O. Box No. 102 Charter House Park Street Ashford Kent TN24 8EQ United Kingdom