RNS Number : 0432I
Botswana Diamonds PLC
25 March 2024
 

25 March 2024

 

 

Botswana Diamonds PLC ("Botswana Diamonds", "BOD" or the "the Company")

Unaudited Interim Statement and Financial Results for the Six Months Ended 31 December 2023

 

 

In turbulent times I am pleased to share some positive developments in Botswana Diamonds.

 

?            A gravity survey has discovered a high-grade anomaly similar in size or larger than BOD's KX36 high-grade kimberlite pipe in the Kalahari.

?            Positive progress on the awarding of the Thorny River Mining Permits.

?            There is renewed interest in the Ghaghoo diamond mine.

?            A Prospecting Licence was granted over diamond properties in Eswatini after a long application period.

 

Market

 

While the diamond market was depressed throughout 2023, it is important to recognise that it is the long term trend which is important for the diamond industry, and particularly for explorers. Meanwhile 2024 has started in more positive fashion with diamond sales taking place and a semblance of stability after a difficult last year. 

 

We believe that the long-term outlook for mined diamonds remains strong. Over the next 20 years up to 3 billion people will enter the Middle Class. These new Asian and African consumers will want many of the products purchased in the West including diamonds. Lab grown diamonds will take a share of the overall growing market but there are strong indications that the rarity of natural mined diamonds will always prevail and be valued.

 

Any discovery by BOD in 2024 is unlikely to come into production before 2032. But it is important to realise that the shareholder base for explorers differs radically from that of producers. A successful diamond find would be expected to ratchet up the share price and provide liquidity for shareholders wishing to cash out.

 

Botswana

 

The Kalahari is likely to become the third main diamond producing area in Botswana. It is the area where BOD is focused.

 

Earlier this year a gravity survey on a licence adjacent to our KX36 diamond discovery found a high-grade anomaly. Current indicators are that the anomaly is as big or bigger than KX36.  Further work needs to be done on this anomaly. An Environmental Impact Study is underway. Follow-up drilling is likely. Kimberlites are found in clusters. The discovery of the new anomaly strongly indicates that more will be discovered in the surrounding area. BOD has applied for further ground in the area and is hopeful for expeditious award of the licences.

 

The KX36 project is a 3.5 hectares ("Ha") kimberlite pipe in the Kalahari. The pipe has resources of 17.9 million tonnes ("Mt") at 35 carats per hundred tonnes ("cpht") (indicated) and 6.7Mt at 36 cpht (inferred) at $65 per carat ("/ct"). The modelled grade range is 57-76 cpht at an estimated diamond value of up to $107/ct.

 

The Board understands there is interest from a new investor in acquiring the Ghaghoo mine. Ghaghoo, which is currently on care and maintenance, together with KX36, and the new anomaly, if diamondiferous, and the Maibwe licences in which BOD is a joint venture partner, could provide the core for a new diamond-producing area in Botswana.

 

I have written before about the extensive diamond data base held by BOD. We are examining a proposal to use Data Analytics and Artificial Intelligence techniques to evaluate the data. We strongly believe that this approach will identify new targets.

 

South Africa

 

Our Africa diamond producing area in South Africa, Marsfontein, was placed on care and maintenance at the end of 2023 as a result of rising fuel prices and falling diamond prices. It is important to remember the purpose of mining the Marsfontein dumps and dykes is to provide information and experience prior to mining the adjacent Thorny River dyke deposits.

 

The operations at Marsfontein and Thorny River are contracted out on a royalty basis thus there are no costs to BOD.

 

BOD applied for the necessary mining permits on Thorny River in 2022. Slow but good progress has been made with the outstanding hurdle being community support which is at an advanced stage of completion. Further updates will be provided as and when appropriate.

 

Samples have been taken and submitted for analysis on the Reivilo group of pipes, where BOD hold 100% of the ground. Previous work on their pipes discovered they were diamondiferous.

 

Other

 

The company has been awarded a Prospecting License in Eswatini where, with our local partners, it is currently undertaking a desktop study with a view to commencing operations. 

 

The company is also of the view that Zimbabwe remains highly prospective and thus continues to engage with various partners to gain a reasonable entry into the country.

 

Outlook

 

Junior mineral explorers are and have been friendless for the past number of years. The recent diamond price falls and the growth of the lab grown diamonds have exacerbated the gloom. But, without exploration there will be no new mines. Producing diamond mines do not last forever. BOD is one of the only remaining active junior explorers in the diamond producing area of Southern Africa. We remain focused on our task and are well positioned for an upturn in the market when it comes. We must last the course and take advantage of the rich potential coming from the decline in exploration activity. Funding is critical, but with the right backing we have a great deal of work to do and remain optimistic of delivering shareholder returns in the long term.

 

 

 

John Teeling

Chairman

22 March 2024

?

This release has been approved by James Campbell, Managing Director of Botswana Diamonds plc, a qualified geologist (Pr.Sci.Nat), a Fellow of the Southern African Institute of Mining and Metallurgy, the Institute of Materials, Metals and Mining (UK) and the Geological Society of South Africa and who has over 35-years' experience in the diamond sector. 

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014. The person who arranged for the release of this announcement on behalf of the Company was James Campbell, Director

 

A copy of this announcement is available on the Company's website, at www.botswanadiamonds.co.uk

ENDS

 

Enquiries:

 

Botswana Diamonds PLC
John Teeling, Chairman

James Campbell, Managing Director

Jim Finn, Director

 

 

+353 1 833 2833

+27 83 457 3724

+353 1 833 2833

Nominated & Financial Adviser

Strand Hanson Limited

Ritchie Balmer

Rory Murphy

David Asquith

 

 

+44 (0) 20 7409 3494

Broker 

First Equity Limited
Jason Robertson

 

+44 (0) 207 374 2212

Public Relations

BlytheRay
Megan Ray
Said Izagaren

 

+44 (0) 207 138 3206

+44 (0) 207 138 3553

+44 (0) 207 138 3206

 

Teneo

Luke Hogg

Alan Tyrrell

Fia Long

Alan Reynolds

 

 

+353 (0) 1 661 4055

+353 (0) 1 661 4055

 

 

 

www.botswanadiamonds.co.uk

 


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 


Six Months

Six Months

Year

 

Ended

Ended

Ended

 

31 Dec 23

31 Dec 22

30 Jun 2023

 

unaudited

unaudited

audited

 

£'000

£'000

£'000

REVENUE

 



Royalties

                  24

                  -

                15

Operating expenses

                  (20)

                  -

(5)

GROSS PROFIT

                  4

                  -

                10





Administrative expenses

(255)

(330)

(567)

Impairment of exploration and evaluation assets

                  -

                  -

(3,124)

OPERATING LOSS

(251)

(330)

(3,681)





LOSS BEFORE TAXATION

(251)

(330)

(3,681)

Income tax expense

                  -

                  -

                   -

LOSS AFTER TAXATION

(251)

(330)

(3,681)





Exchange difference on translation of foreign operations

                  -

(24)

             299

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

(251)

(354)

(3,382)





LOSS PER SHARE - basic and diluted

 (0.02p)

 (0.04p)

 (0.38p)

 

CONDENSED CONSOLIDATED BALANCE SHEET

 

 

 

 

31 Dec 23

31 Dec 22

30 Jun 2023

 

 unaudited

 unaudited

 audited

ASSETS:

 £'000

 £'000

 £'000

NON-CURRENT ASSETS

 



Intangible assets

         5,509

         8,764

          5,442

Plant and equipment

            207

            207

             207


         5,716

         8,971

          5,649

CURRENT ASSETS

 



Other receivables

            266

               38

             283

Cash and cash equivalents

            334

               95

             199

 

            600

            133

             482

TOTAL ASSETS

         6,316

         9,104

          6,131





LIABILITIES:

 



CURRENT LIABILITIES

 



Trade and other payables

(870)

(1,041)

(802)

TOTAL LIABILITIES

(870)

(1,041)

(802)

NET ASSETS

         5,446

         8,063

          5,329





EQUITY

 



Share capital - deferred shares

         1,796

         1,796

          1,796

Share capital - ordinary shares

         2,800

         2,392

          2,610

Share premium

       12,398

       11,844

        12,220

Share based payments reserve

            111

            111

             111

Retained Deficit

(10,676)

(6,774)

(10,425)

Translation Reserve

                  -

(323)

                   -

Other reserves

(983)

(983)

(983)

TOTAL EQUITY

         5,446

         8,063

          5,329

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 











 

Share Capital

Share Premium

 Share based Payment Reserves

Retained Deficit

Translation Reserve

Other Reserve

Total Equity

 

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 








As at 30 June 2022

      3,994

    11,487

            111

(6,444)

(299)

(983)

         7,866

Ordinary shares issued

          194

          357

                  -

               -

                  -

                 -

             551

Share issue expenses

               -

               -

                  -

               -

                  -

                -

                 -

Total comprehensive loss

(330)

(24)

                -

(354)

As at 31 December 2022

      4,188

    11,844

            111

(6,774)

(323)

(983)

         8,063









Ordinary shares issued

          218

          376

                  -

               -

                  -

                 -

             594

Transfer of reserves


-

-

(299)

            299

-

                  -

Total comprehensive loss


 -

                  -

(3,352)

               24

                 -

(3,328)

As at 30 June 2023

      4,406

    12,220

            111

(10,425)

                  -

(983)

         5,329









Ordinary shares issued

          190

          190

                  -

               -

                  -

                 -

             380

Share issue expenses

               -

(12)

                  -

               -

                  -

                 -

(12)

Total comprehensive loss

               -

-

                  -

(251)

                  -

                 -

(251)

As at 31 December 2023

      4,596

    12,398

            111

(10,676)

                  -

(983)

         5,446









 

 

CONDENSED CONSOLIDATED CASH FLOW

 

 

 

 

Six Months

Six Months

 Year

 

Ended

Ended

 Ended

 

31 Dec 23

31 Dec 22

30 Jun 2023

 

 unaudited

 unaudited

 audited

 

 £'000

 £'000

 £'000

CASH FLOW FROM OPERATING ACTIVITIES

 



Loss for the period

(251)

(330)

(3,681)

Impairment of exploration and evaluation assets

                  -

                  -

          3,124

Foreign exchange losses

                  -

(2)

                  2


(251)

(332)

(555)





Movements in Working Capital

               85

               76

                82

NET CASH USED IN OPERATING ACTIVITIES

(166)

(256)

(473)





CASH FLOWS FROM INVESTING ACTIVITIES

 



Additions to exploration and evaluation assets

(67)

(105)

(132)

NET CASH USED IN INVESTING ACTIVITIES

(67)

(105)

(132)





CASH FLOWS FROM FINANCING ACTIVITIES

 



Proceeds from share issue

            380

            295

             647

Share issue costs

(12)

                  -

                   -

NET CASH GENERATED FROM FINANCING ACTIVITIES

            368

            295

             647





NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

            135

(66)

                42





Cash and cash equivalents at beginning of the period

            199

            159

             159

Effect of foreign exchange rate changes

                  -

                 2

(2)

CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD

            334

               95

             199

 

Notes:

 

1.            INFORMATION

 

The financial information for the six months ended 31 December 2023 and the comparative amounts for the six months ended 31 December 2022 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 2023 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):

 

 


Six Months Ended

 31 Dec 23

Six Months Ended

 31 Dec 22

 

Year Ended

30 Jun 23


£'000

£'000

£'000

Numerator




For basic and diluted EPS retained loss

(251)

(330)

(3,681)






No.

No.

No.

Denominator

Weighted average number of ordinary shares

 

1,057,998,118

 

924,921,167

 

977,271,808





Loss per share - Basic and Diluted

(0.02p)

(0.04p)

(0.38p)









The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of shares for the purposes of the diluted earnings per share:                


No.

No.

No.

Share options

11,410,000

11,410,000

11,410,000

 

 

4.            INTANGIBLE ASSETS

 


31 Dec 23

31 Dec 22

30 June 23

Exploration and evaluation assets:

£'000

£'000

£'000

Cost:




Opening balance

10,188

9,807

9,807

Additions

67

603

381

Exchange variance

-

(24)

-

 

10,255

10,386

10,188

Impairment:




Opening balance

4,746

1,622

1,622

Provision for impairment

-

-

3,124

 

4,746

1,622

4,746





Carrying Value:




Opening balance

5,442

8,185

8,185


 

 

 

Closing balance

5,509

8,764

5,442





 

 

Regional Analysis           

31 Dec 23

£'000

31 Dec 22

£'000

30 Jun 23

£'000

Botswana

3,550

6,638

3,550

South Africa

1,959

2,126

1,892

Zimbabwe

-

-

-


5,509

8,764

5,442

 

 

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.

 

In the prior year the Group incurred expenditure to date of £3,124,284 on certain licences held in Botswana, these licences lapsed and were not renewed. The directors decided to fully impair the expenditure and accordingly, an impairment charge of £3,124,284 was recorded in the prior year.

 

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. A separate agreement for funding of exploration resulted in the Company's interest in Vutomi increasing from 40% to 45.94%.

 

On 28 September 2022 the Board announced that it had exercised its pre-emptive right to acquire the outstanding third-party interests in Vutomi and had increased its' interest from 45.94% to 74%.

 

The consideration for Vutomi comprised 56,989,330 new ordinary shares of £0.0025 each in the Company ("Consideration Shares"). The Consideration Shares were issued in two tranches. 28,464,665 Consideration Shares (First Tranche) were issued to the vendors on 28 September 2022 and the balance of 28,524,665 (Second Tranche) was issued on 27 January 2023.

 

The Company also agreed that immediately on completion of the Acquisition, the Company would sell 26% of Vutomi for a deferred consideration of US$316,333 to the Company's local South African Empowerment partner, Baroville Trade and Investments 02 Proprietary Limited ("Baroville"), in order to comply with South African requirements on empowerment ownership, which will be funded by a loan from Botswana Diamonds (Note 6). On completion, the Company therefore owns 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 £28,000 (June 2023: £71,521) of directors' remuneration which has been capitalized. This is for time spent directly on the operations rather than on corporate activities.

 

 

5.            SHARE CAPITAL

 

Deferred Shares - nominal value of 0.75p per share

Number

Share Capital

£'000

Share Premium

£'000

At 1 July 2022 and 1 July 2023

239,487,648

1,796,157

-

At 30 June 2023 and 31 December 2023

239,487,648

1,796,157

-





 

 

Ordinary Shares - nominal value of 0.25p per share

Number

Share Capital

£'000

Share Premium

£'000

At 1 July 2022

879,071,902

2,198

11,487

Issued during the period

77,543,877

194

357

Share issue expenses

-

-

-

At 31 December 2022

956,615,779

2,392

11,844





Issued during the period

87,262,120

218

376

Share issue expenses

-

-

-

At 30 June 2023

1,043,877,899

2,610

12,220





Issued during the period

76,000,000

190

190

Share issue expenses

-

-

(12)

At 31 December 2023

1,119,877,899

2,800

12,398





 

 

Movements in share capital

 

               On 27 November 2023 the Company raised £380,000 through the issue of 76,000,000 new ordinary shares at a placing price of 0.5p via a placing and subscription with existing and new investors. Each Placing Share has one warrant attached with the right to subscribe for one new Ordinary Share at 0.5p per new Ordinary Share for a period of two years from 27 November 2023.

 

 

 

 

6.            OTHER RECEIVABLES

 

31 Dec 23

£'000

31 Dec 22

£'000

30 Jun 23

£'000

Prepayments

17

38

34

Debtor Baroville (Note 4)

249

-

249


266

38

283

 

                The carrying value of other receivables approximates to their fair value.

 

7.            TRADE AND OTHER PAYABLES

 

31 Dec 23

£'000

31 Dec 22

£'000

30 Jun 23

£'000

Trade payables

86

82

51

Petra Diamonds creditor

123

123

123

Accruals

661

594

628

Consideration due - Vutomi acquisition

-

242

-


870

1,041

802

 

It is the Company's normal practice to agree terms of transactions, including payment terms, with suppliers and provided suppliers perform in accordance with the agreed terms, payment is made accordingly. In the absence of agreed terms it is the Company's policy that the majority of payments are made between 30 - 40 days. The carrying value of trade and other payables approximates to their fair value.

              

8.            SHARE BASED PAYMENTS

 

WARRANTS

 


Dec 2023

Jun 2023

Dec 2022

 

Number of Warrants

Weighted average exercise price in pence

Number of Warrants

Weighted average exercise price in pence

Number of Warrants

Weighted average exercise price in pence








Outstanding at beginning of period

55,000,000

2.0

113,737,455

1.28

162,816,667

1.07

Issued

76,000,000

0.50

-

-

-

-

Exercised

-

-

(58,737,455)

0.60

(49,079,212)

0.60

Expired

-

-

-

-

-

-

Outstanding at end of period

131,000,000

1.13

55,000,000

2.0

113,737,455

1.28

 

Further information on the warrants are detailed in Note 5 above.

 

 

9.            POST BALANCE SHEET EVENTS

There are no material post balance sheet events affecting the Group.

 

10.         APPROVAL

               The Interim Report for the period to 31st December 2023 was approved by the Directors 22 March 2024.

 

 

11.         AVAILABILITY OF REPORT

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

 

 

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