On May 9, 2003 construction works began at the foundation of a new processing plant to become a major operation facility of the Second Stage of the Diamond Mining and Processing Complex at Catoca.

A huge volume of project design and general construction work has been done at the site, and excavation works completed. With the foundation laid, the project has entered its practical implementation stage. The construction is to be completed in 2004 and the commissioning of the second module of the processing plant is scheduled for December 2004.

When commissioned, the Second Stage facilities will turn Catoca into a major diamond mining operation in the South African Region, with an annual capacity of 7.5 million tons as estimated by the Yakutniproalmaz Research Institute. It will be about twice as much as now, as the capacity of the First Stage is 3.6 million tons. Sales revenues are expected to reach approximately $350 million.

The development of the Second Stage at Catoca was conceived by ALROSA. Construction is being carried out by Russian builders with the employment of Russian know-how. The bulk of the production equipment for the processing plant under construction will be supplied by major Russian mining engineering equipment companies.

NOTE:

1. ALROSA Co. Ltd.

ALROSA is a world’s major diamond mining company accounting for about 25 per cent of the world diamond output. In 2002 it produced $1.466 billion worth of rough diamonds, its sales volume amounting to $1.557 billion, with $106 million from polished diamond sales. ALROSA’s production target for 2003 is $1.560 billion. The company’s biggest shareholders are the Russian Ministry of State Property (37%), and the Yakutian Ministry for the Management of State Property (32%).

2. Catoca Ltd.

Catoca Ltd. was founded in the Republic of Angola in 1992 as a joint venture among the Russian NPO Yakutalmaz (Research and Production Association), ENDIAMA (Angola) and Odebrecht Mining Service Inc. (Brazil) for the commercial mining of the Catoca kimberlite pipe. ALROSA being the successor of Yakutalmaz has 32.8% interest in Catoca.

In 2001 Catoca diamond sales revenues were $169.5 million, and its profit amounted to $38.4 million.

Catoca is one of the largest kimberlite pipes in the world.