Notes:

1.            INFORMATION

The financial information for the six months ended 31 December 2021 and the comparative amounts for the six months ended 31 December 2020 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006.

The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.

The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2021 Annual Report, which is available at www.botswanadiamonds.co.uk

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2.             DIVIDEND

No dividend is proposed in respect of the period.

3.             LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the period available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the period.

Diluted loss per share is computed by dividing the loss after taxation for the period by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the period.

The following table sets forth the computation for basic and diluted earnings per share (EPS):

4.             INTANGIBLE ASSETS

Exploration and evaluation assets relate to expenditure incurred in exploration for diamonds in Botswana and South Africa. The directors are aware that by its nature there is an inherent uncertainty in exploration and evaluation assets and therefore inherent uncertainty in relation to the carrying value of capitalized exploration and evaluation assets.

During the prior year, the Group incurred expenditure of £58,815 on exploring for new licences in Zimbabwe and £11,203 miscellaneous costs. As at year end no licences had been granted. Therefore, the directors decided to impair the costs. Accordingly, an impairment of £70,018 had been recorded by the Group in the prior.

On 6 February 2017 the Group entered into an Option and Earn-In Agreement with Vutomi Mining Pty Ltd and Razorbill Properties 12 Pty Ltd (collectively known as 'Vutomi'), a private diamond exploration and development firm in South Africa. Pursuant to the terms of the Agreement, Botswana Diamonds earned a 40% equity interest in the project. More recently a separate agreement for funding of exploration resulted in the Company's interest in Vutomi increasing from 40% to 45.94%.

On 29 September 2021 the Company exercised its pre-emptive right to acquire the outstanding third-party interests in Vutomi Mining (Proprietary) Limited and Razorbill Properties 12 (Proprietary) Limited. Vutomi holds the mineral rights to the Thorny River Diamond Project as well as other exploration assets.

The consideration for Vutomi comprises 56,989,330 new ordinary shares in Botswana Diamonds plc which, at the closing mid-market price on 28 September 2021 of 1.10p per share, is valued at £626,883. There are no lock-in arrangements, but the consideration shares will be issued in two equal tranches (three months apart) following Completion. Completion is subject to a number of conditions (with a long stop date of 22 September 2022 unless otherwise agreed between the parties).

The Company expects the conditions to be fulfilled and the transaction to complete during Q2 2022.

The Company has further agreed that, immediately on completion of the acquisition, the Company will sell 26% of Vutomi for a deferred consideration of US$316,333 to the Company's local South African Empowerment partner, Baroville, in order to comply with South African requirements on empowerment ownership, which will be funded by a loan from Botswana Diamonds.

On completion, the Company will own 74% of Vutomi.

The realisation of these intangible assets is dependent on the successful discovery and development of economic diamond resources and the ability of the Group to raise sufficient finance to develop the projects. It is subject to a number of significant potential risks, as set out below:

·      licence obligations;

·      exchange rate risks;

·      uncertainties over development and operational costs;

·      political and legal risks, including arrangements with governments for licenses, profit sharing and taxation;

·      foreign investment risks including increases in taxes, royalties and renegotiation of contracts;

·      title to assets;

·      financial risk management;

·      going concern; and

·      operational and environmental risks.

Included in additions for the period are £6,500 (June 2021: £14,225) of wages and salaries and £35,831 (June 2021: £65,553) of directors remuneration which has been capitalized. This is for time spent directly on the operations rather than on corporate activities.

5.             PLANT AND EQUIPMENT

On 18 July 2020 the Group entered into an agreement to acquire the KX36 Diamond discovery in Botswana, along with two adjacent Prospecting Licences and a diamond processing plant. These interests are part of a package held by Sekaka Diamond Exploration (Pty) Ltd.  The acquisition was completed on 20 November 2020. The diamond processing plant is a recently constructed, fit-for-purpose bulk sampling plant on site. The sampling plant includes crushing, scrubbing, dense media separation circuits and x-ray recovery modules within a secured area. 

6.             SHARE CAPITAL

Movements in share capital

On 7 September 2020, the Company raised £300,000 through the issue of 50,000,000 new ordinary shares of 0.25p each at a price of 0.60p per share to provide additional working capital and fund development costs. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per share for a period of two years from 7 September 2020.

On 22 January 2021, the Company raised £363,000 through the issue of 60,500,000 new ordinary shares of 0.25p each at a price of 0.60p per share to provide additional working capital and fund development costs. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per share for a period of two years from 23 January 2021.

               On 13 May 2021, a total of 11,000,000 warrants were exercised at a price of 0.60p per warrant for £66,000.

               On 25 October 2021, the Company raised £550,000 through the issue of 55,000,000 new ordinary shares of 0.25p each at a price of 1p per share to provide additional working capital and fund development costs. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 2p per share for a period of three years from 5 November 2021.

               On 3 December 2021, a total of 1,683,333 warrants were exercised at a price of 0.60p per warrant for £10,100.

7.             SHARE BASED PAYMENTS

WARRANTS

Further information of the warrants are detailed in Note 6 above.

8.            POST BALANCE SHEET EVENTS

On 20 January 2022 the Company announced pursuant to the receipt of conversion notices from holders of 29,666,667 warrants exercisable at 0.60 pence each, it had issued 29,666,667 ordinary shares of £0.0025 each at the exercise price of 0.60 pence per new share. The proceeds of the exercise of £178,000 will be used for additional working capital.

On 1 February 2022 the Company released a statement regarding a joint venture with Vast Resources plc ("VAST") that was previously announced in August 2021. The company had announced in August 2021 that Okwa Diamonds Pty Ltd ("Okwa"), a joint venture with VAST in which the Company has an initial 10% carried interest, had conditionally agreed to acquire Gem Diamonds Botswana Pty Ltd ("GDB"), a wholly owned subsidiary of Gem Diamonds Ltd ("Gem Diamonds"), for a cash consideration of US$4 million. 

Under the terms of the joint venture agreement, VAST was responsible for funding Okwa with the first US$15 million of funding required for the purposes of carrying out due diligence, acquiring GDB and placing the mine back into production. Completion was subject to a number of conditions (with a long stop date of 31 January 2022) including relevant regulatory and competition authority approvals within Botswana which have now been fulfilled and written approvals have been obtained from the Competition Authority and, most recently in December 2021, the Ministry of Mineral Resources, Green Energy and Technology of the Government of the Republic of Botswana.

On 1 February 2022 VAST informed the Boards of Botswana Diamonds and Gem Diamonds that they did not intend to proceed with the transaction.

The Board of BOD has identified alternative potential partners to replace VAST as its joint venture partner in Okwa and confirmed to Gem Diamonds its commitment to conclude the transaction as originally envisaged as soon as possible.  BOD, VAST and Gem Diamonds have been working together towards a mutually beneficial outcome and agreed initially to extend the long stop date under the sale agreement from 31 January 2022 to 31 March 2022, and which has now been extended further to [DATE] 2022,  to allow BOD to secure an alternative joint venture partner. The new partner replacing VAST in the Okwa joint venture may require further approval from the relevant Government of Botswana authorities. 

9.            APPROVAL

               The Interim Report for the period to 31^st December 2021 was approved by the Directors on 30^th March 2022.

10.         AVAILABILITY OF REPORT

               The Interim Statement will be available on the website at www.botswanadiamonds.co.uk