On May 21 the Supervisory Board of ALROSA held another meeting in Moscow under the chairmanship of Alexey Kudrin, Russia’s Minister of Finance and the Board’s chairman.

The Board gave its preliminary approval to the company’s 2003 Annual Report, financials,

P & L statement. The Annual Report together with the Auditor’s Report and the Statement of the Auditing Commission will be put for approval before the Shareholders’ Annual General Meeting scheduled on 19 June 2004.

According to the Annual Report, ALROSA’s basic performance data for 2003 are as follows:

-rough diamond production (together with ALROSA-Nyurba output) – US $ 1649.0 m;

-total sales (all kinds of activity) – 56752.3 m RUR;

-taxes charged – 18630.1 m RUR;

-net profit – 9663.2 m RUR;

-capital construction expenditure – 15034.0 m RUR;

-geological exploration expenditure – 1146.8 m RUR;

-R & D – 236.7 m RUR.

The Board recommended that the Annual General Meeting approve 2003 net profit distribution. 4624.1 m RUR will be allocated for investment into fixed capital, 882.2 m RUR – for exploration, 2956.9 m RUR – for long-term investments.

The Board recommended that the Annual General Meeting authorize the 2003 dividend to be paid in the amount of 6000 RUR per share, or total of 1200 m RUR. The payment is to be effected by 19 August 2003.

The feasibility study of investment in the Udachny underground mine project was considered. Open mining will be stopped at the Udachnaya pipe in 2010. In case transition to underground mining were not effected, the underpit diamond reserves would be excluded from turnover, with ALROSA being unable to maintain its projected output. Also the company would have to cover the costs of resettlement of 20 thousand Udachny residents to Central Russia.

With regard to the strategic importance of the underground mine project the Board resolved that proposals on the scheme of financing, ways to alleviate the tax burden and increase the economic efficiency of the project should be worked out. However these must not delay the schedule for construction to begin.