304 THE DIAMOND MINES OF SOUTH AFRICA
The actual cost of the properties thus acquired by the Consolidated Mines was approximately £ 14,500,000.
There would have been no difficulty in expanding the capital of the
corporation by the issuing of shares to an amount sufficient to cover
this immense acquisition, but a more conservative course was adopted.
It was decided not to increase the capital of the corporation beyond
.£3,950,000. The purchases in excess of this issue were provided for by
the issue of debentures. The adoption of this plan necessitated a
provision for covering very heavy fixed charges in the early years of
the operations of the Consolidated Mines ; but this obligation was
undertaken with confidence in view of the assurance of the control of
the diamond market, brought about through the consolidation, and the
actual return in the rapidly increasing output of the mines with
systematic and scientific development.
During the financial year following the completion of consolidation, De Beers produced 2,195,112
carats of diamonds. This product, including the proceeds of diamonds
from debris washing, realized in the market £3,287,728. In that year
the total weight of diamonds produced by all the mines in the Kimberley
division was 2,415,655 carats. Thus approximately ninety per cent of
the total production was then furnished by the Consolidated Mines. The
net profit of the operations for the year exceeded £1,000,000 sterling,
and two half-yearly dividends of ten per cent each were paid to the
shareholders. The actual cost of winning over 2,000,000 carats of
diamonds, including all expenses at the mines and office charges, was a
little over a million sterling, or roughly 10s. per carat. The
difference between the estimated net profit and the costs of operation
was expended in the payment of interest on debentures and obligations
and in provision for their redemption, and in the setting aside of an
exceedingly liberal provision of over £500,000 as an offset for
depreciation of plant, etc.
The
directors of the De Beers Consolidated Mines could point with high
satisfaction to this profitable showing in contrast with the records of
disastrous competition and conflicting mine
