Despite this decline in carat production, revenue for the group increased to P18 billion compared to P17, 4 billion over the same period last year.

Increased sales volumes reached a record level of 34.9 million carats as a result of high opening stock levels for the year.

"Although we scored slightly less than 2006, we met our target with impressive overall diamond production," the company's managing director Blackie Marole said yesterday during the company's annual review launch.

Persistent diamond market pressure and the continued decline of the US dollar saw an average revenue per carat of US dollar 83.15 realised in 2007, reflecting a 5 percent decrease over 2006.

As a result, despite the record sales volumes, total US dollar revenue for the year under review remained flat as it stood at $2.9 billion, which is marginally down compared to 2006 revenue of $3.0 billion.

The depreciation of the average per Pula/US dollar exchange rate of diamond sales, which was at 6 percent, came to the rescue of the group as it helped to offset the lower US dollar revenue, resulting in revenue increase.

The gross profit for 2007 stood at P14,8 billion compared to last year's figure of P14,4 billion, while profit from operations was P12,7 billion, which translates into a P3 million increase from P12,4 billion of 2006.

But operating costs for the year were 7 percent above 2006 levels owing to inflationary increases in the cost of major consumables, such as fuel and tyres.

Debswana encountered other daunting challenges during the year, including a crippling shortage of tyres for haulage trucks, power shortages, failure of the slope and loss of a shovel at Orapa Mine.

Marole said some of the challenges the group faces will remain in 2008, but they have put in place programmes aimed at mitigating them to ensure that they have a minimal impact on Debswana's operations.

For 2008, revenue in US dollar terms for the group is likely to be negatively impacted by the continuing fall of the US dollar due to the credit squeeze and the volatile market in the US, which is the largest destination of Debswana diamonds.

Group finance manager Tabake Kobedi said they forecast the revenue in US dollar terms to remain flat and again to be boosted by the depreciation of average US dollar/Pula exchange rate.

Debswana also maintains that because people in the high-income bracket are the ones who largely buy diamonds, the escalating food and fuel prices in the world market are unlikely to impact on their returns in 2008.

Marole said under the North Star strategy, Debswana would continue to operate profitably through the optimal and efficient use of resources for the benefit of all its stakeholders.

Marole's road map since he took over the reins at the diamond mining company has been to focus on its core business, which is mining. The operations of BDVC have since been changed to stand alone as Diamond Trading Company (DTC) Botswana.

The group's diamond operations are at Orapa, Letlhakane, Jwaneng and Damtshaa Mines and a coal mining entity, Morupule Colliery, near Palapye.