REG - Botswana Diamonds - Unaudited Interim Statement and Financial Results
29/03/2023 07:00
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RNS Number : 5344U Botswana Diamonds PLC 29 March 2023
29(th) March 2023
Botswana Diamonds PLC ("Botswana Diamonds" or the "the Company")
Unaudited Interim Statement and Financial Results for the Six Months Ended 31
December 2022
Botswana Diamonds PLC (AIM:BOD) is a diamond explorer in Sub-Saharan Africa
with startup diamond production in South Africa. We are one of the most active
players in this field and offer one of the few high-potential opportunities to
invest in junior diamond exploration in Africa, or elsewhere.
Highlights:
- The first diamonds have now been produced from the Marsfontein dumps
and gravels project in South Africa.
- Plans to begin production on the nearby Thorny River hard rock
kimberlite dyke system are well advanced.
- In Botswana, we expanded our additional stake in the prospective
Maibwe concession.
Despite global political and economic turbulence, diamond prices have been
resilient. The United States stands-out with growing diamond jewellery sales.
Expected growth in Asian markets has been disrupted, but long-term trends
remain positive.
Supply disruptions support prices. Alrosa - the world's largest diamond
producer by volume - continues to supply - though more smaller stones could
hit the market. Diamonds from Botswana and South Africa, where we operate,
tend on average to be bigger and of higher quality.
The industry is in a period of adjustment, as lab grown diamonds find their
market niche as an entry-level "value" diamond for those not yet able to
afford the real thing. But the re-sale value of non-natural stones shows that
they constitute a separate segment. Consider the automotive industry, which
offers excellent economy and mid-priced cars but luxury car sales grow. There
will be (consumer) room for both.
Natural diamonds are more than compressed carbon. Owning them represents a mix
of human emotions, aspirations and feelings. Diamonds are forever.
Operations: South Africa
Our recent focus has been bringing two operations into production: Marsfontein
dumps and gravels and the adjacent Thorny River Dyke system. Diamonds are now
being produced from Marsfontein, which is a proof-of-concept trial project. We
have contracted out all production operations in return for a 15% production
royalty on Run-of-Mine goods, and 25% on special diamonds. This plant, plus
operational experience gained, will facilitate operations this year on the
larger Thorny River project.
Teething issues at Marsfontein, along with plant delivery delays and adverse
weather delayed the first production by a month. Current operations are
processing 500 tons of dumps and gravels per day. Diamonds are now being
produced although as yet we do not have a true representation of the average
grade and quality.
Over the past two years we conducted drilling campaigns on the Thorny River
kimberlite dyke system and have identified several areas where dykes have
expanded, making mining more commercial. We plan to mine these hot-spots
using the same operational approach as at Marsfontein - for a 15% production
royalty agreement using the same plant and equipment. These projects will thus
deliver cash to BOD with no further capital expenditure.
BOD is obtaining two full mining permits over the Thorny River licences. Once
the permits have been issued and the gravels mined out at Marsfontein, the
plant and equipment will move to Thorny River. Production at Thorny River is
expected to commence in the second half of 2023.
Botswana:
Current Botswanan activities are in the under-explored Kalahari. Negotiations
with the receiver of BCL (a former Botswana copper producer), allowed Siseko
(of which BOD owns 51%) and our local partner Future Minerals, to acquire 50%
each of the ten Prospecting Licenses in the central Kalahari. Diamonds were
confirmed in earlier drilling. Given the Kalahari's potential, we allowed
certain low potential licences to expire.
Prevailing circumstances during 2022 complicated our efforts to secure a new
joint venture partner to acquire the Ghaghoo mine, which is close to our KX36
project. This fully equipped diamond mine was placed on care and maintenance
by the owner, Gem Diamonds.
There now seems reviewed market interest in Ghaghoo, and we will report as
appropriate.
Outlook:
In January 2023, we raised £350,000 new capital via the exercise of
outstanding warrants. The cash came from a small group of investors, including
directors. Assuming operational success, royalties from the Marsfontein
/Thorny River operations are expected to fully fund ongoing activities by end
2023.
Recent years have been difficult for junior diamond explorers with little new
cash available. But without exploration there can be no new mines. And most
new greenfield discoveries are made by juniors.
Botswana Diamonds has raised money and prospected for ten years with some
limited success to date; most of our early-stage investors continue to support
new funding efforts and I hope that their loyalty can be rewarded shortly.
John Teeling
Chairman
29(th) March 2023
_______________
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 (http://www.botswanadiamonds.co.uk)
ENDS
Enquiries:
Botswana Diamonds PLC
John Teeling, Chairman
+353 1 833 2833
James Campbell, Managing Director
+27 83 457 3724
Jim Finn, Director
+353 1 833 2833
Beaumont Cornish - Nominated Adviser +44 (0) 020 7628 3396
Michael Cornish
Roland Cornish
Beaumont Cornish Limited - Broker +44 (0) 207 628 3396
Roland Cornish
Felicity Geidt
First Equity Limited - Joint Broker +44 (0) 207 374 2212
Jason Robertson
BlytheRay - PR +44 (0) 207 138 3206
Megan Ray
+44 (0) 207 138 3553
Said Izagaren
+44 (0) 207 138 3206
+44 (0) 207 138 3206
Teneo
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
www.botswanadiamonds.co.uk (http://www.botswanadiamonds.co.uk)
Botswana Diamonds plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six Months Six Months Year
Ended Ended Ended
31 Dec 22 31 Dec 21 30 Jun 2022
unaudited unaudited audited
£'000 £'000 £'000
Administrative expenses (330) (228) (486)
Impairment of exploration and evaluation assets - - (253)
OPERATING LOSS (330) (228) (739)
LOSS BEFORE TAXATION (330) (228) (739)
Income tax expense - - -
LOSS AFTER TAXATION (330) (228) (739)
Exchange difference on translation of foreign operations (24) (159) 23
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (354) (387) (716)
LOSS PER SHARE - basic and diluted (0.04p) (0.03p) (0.09p)
CONDENSED CONSOLIDATED BALANCE SHEET 31 Dec 22 31 Dec 21 30 Jun 2022
unaudited unaudited audited
ASSETS: £'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 8,764 8,126 8,185
Plant and equipment 207 207 207
8,971 8,333 8,392
CURRENT ASSETS
Other receivables 38 16 49
Cash and cash equivalents 95 318 159
133 334 208
TOTAL ASSETS 9,104 8,667 8,600
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables (1,041) (650) (734)
TOTAL LIABILITIES (1,041) (650) (734)
NET ASSETS 8,063 8,017 7,866
EQUITY
Share capital - deferred shares 1,796 1,796 1,796
Share capital - ordinary shares 2,392 2,124 2,198
Share premium 11,844 11,383 11,487
Share based payments reserve 111 111 111
Retained Deficit (6,774) (5,933) (6,444)
Translation Reserve (323) (481) (299)
Other reserves (983) (983) (983)
TOTAL EQUITY 8,063 8,017 7,866
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share based
Share Share Payment Retained Translation Other Total
Capital Premium Reserves Deficit Reserve Reserve Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 30 June 2021 3,778 10,984 111 (5,705) (322) (983) 7,863
Ordinary shares issued 142 418 - - - - 560
Share issue expenses - (19) - - - - (19)
Total comprehensive loss (228) (159) - (387)
As at 31 December 2021 3,920 11,383 111 (5,933) (481) (983) 8,017
Ordinary shares issued 74 104 - - - - 178
Total comprehensive loss - (511) 182 - (329)
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
CONDENSED CONSOLIDATED CASH FLOW Six Months Six Months Year
Ended Ended Ended
31 Dec 22 31 Dec 21 30 Jun 2022
unaudited unaudited audited
£'000 £'000 £'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period (330) (228) (739)
Impairment of exploration and evaluation assets - - 253
Foreign exchange losses (2) 2 16
(332) (226) (470)
Movements in Working Capital 76 (69) (17)
NET CASH USED IN OPERATING ACTIVITIES (256) (295) (487)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to exploration and evaluation assets (105) (91) (222)
NET CASH USED IN INVESTING ACTIVITIES (105) (91) (222)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue 295 560 738
Share issue costs - (19) (19)
NET CASH GENERATED FROM FINANCING ACTIVITIES 295 541 719
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (66) 155 10
Cash and cash equivalents at beginning of the period 159 165 165
Effect of foreign exchange rate changes 2 (2) (16)
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD 95 318 159
Notes:
1. INFORMATION
The financial information for the six months ended 31 December 2022 and the
comparative amounts for the six months ended 31 December 2021 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 2022
Annual Report, which is available at www.botswanadiamonds.co.uk
(http://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 Six Months Ended
31 Dec 22 31 Dec 21 Year Ended
30 Jun 22
£'000 £'000 £'000
Numerator
For basic and diluted EPS retained loss (330) (228) (739)
No. No. No.
Denominator
Weighted average number of ordinary shares 924,921,167 813,171,948 844,141,491
Loss per share - Basic and Diluted (0.04p) (0.03p) (0.09p)
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 22 31 Dec 21 30 June 22
Exploration and evaluation assets: £'000 £'000 £'000
Cost:
Opening balance 9,807 9,563 9,563
Additions 603 91 222
Exchange variance (24) (159) 22
10,386 9,495 9,807
Impairment:
Opening balance 1,622 1,369 1,369
Provision for impairment - - 253
1,622 1,369 1,622
Carrying Value:
Opening balance 8,185 8,194 8,194
Closing balance 8,764 8,126 8,185
Regional Analysis 31 Dec 22 31 Dec 21 30 Jun 22
£'000 £'000 £'000
Botswana 6,638 6,925 6,636
South Africa 2,126 1,201 1,549
Zimbabwe - - -
8,764 8,126 8,185
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 recorded an impairment charge of £253,380 on
expenditure incurred exploring for new licences in Botswana and South Africa
and expenditure incurred on the Ghaghoo diamond mine as the Group was
unsuccessful in securing a joint venture partner to complete the acquisition.
On 11 November 2014 the Brightstone block was farmed out to BCL Investments
(Proprietary) Limited, a Botswana Company, who assumed responsibility for the
work programme. Botswana Diamonds will retain a 15% equity interest in the
project.
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 Group 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. There are no lock-in arrangements, but the
Consideration Shares were issued in two equal tranches (three months apart)
following Completion. Accordingly, 28,464,665 Consideration Shares ("First
Tranche Consideration Shares") were issued to the vendors of Vutomi on 28
September 2022. 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, in order to
comply with South African requirements on empowerment ownership, which was to
be funded by a loan from Botswana Diamonds. 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 £35,854 (June 2022: £71,768) 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
31 Dec 22 31 Dec 21 30 Jun 22
£'000 £'000 £'000
Opening balance 207 207 207
Additions - - -
Closing 207 207 207
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
Deferred Shares - nominal value of 0.75p per share Number Share Capital Share Premium
£'000 £'000
At 1 July 2021 and 1 July 2022 239,487,648 1,796,157 -
At 30 June 2022 and 31 December 2022 239,487,648 1,796,157 -
Ordinary Shares - nominal value of 0.25p per share Number Share Capital Share Premium
£'000 £'000
At 1 July 2021 792,721,902 1,982 10,984
Issued during the period 56,683,333 142 418
Share issue expenses - - (19)
At 31 December 2021 849,405,235 2,124 11,383
Issued during the period 29,666,667 74 104
Share issue expenses - - -
At 30 June 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
Movements in share capital
On 4 July 2022, a total of 1,666,667 warrants
were exercised at a price of 0.60p per warrant for £10,000.
On 8 September 2022, a total of 47,000,000
warrants were exercised at a price of 0.60p per warrant for £282,000.
On 28 September 2022, a total of 28,464,665
shares were issued at a price of 0.90p per share totalling £256,182 to Vutomi
Mining Pty Ltd and Razorbill Properties 12 Pty Ltd (collectively known as
'Vutomi'), as part consideration for the acquisition of the company. Further
information is detailed in Note 4 above.
On 6 October 2022, a total of 412,545 warrants
were exercised at a price of 0.60p per warrant for £2,475.
7. TRADE AND OTHER PAYABLES
31 Dec 22 31 Dec 21 30 Jun 22
£'000 £'000 £'000
Trade payables 82 25 48
Petra Diamonds creditor 123 104 123
Accruals 594 521 563
Consideration due - Vutomi acquisition 242 - -
1,041 650 734
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.
The Company was due to issue a total of 28,524,665 ordinary shares of £0.0025
each in the Company at a price of 0.85p per share as part consideration of the
acquisition of Vutomi. These shares were issued after the period end on 27
January 2023. Further information is detailed in Notes 4 and 9.
8. SHARE BASED PAYMENTS
WARRANTS
Dec 2022 Jun 2022 Dec 2021
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 the period 162,816,667 1.07 192,483,334 1.07 139,166,667 0.60
Issued - - 0.60 55,000,000 2.00
Exercised (49,079,212) 0.60 (29,666,667) 0.60 (1,683,333) 0.60
Expired - - - - - -
Outstanding at end of the period 113,737,455 1.28 162,816,667 1.07 192,483,334 1.07
Further information of the warrants are detailed in Note 6 above.
9. POST BALANCE SHEET EVENTS
On 27 January 2023, the Company issued 28,524,665 ordinary shares of £0.0025
each in the Company in respect of the second tranche of consideration shares
due following completion of the acquisition of Vutomi. Further information is
detailed in Notes 4 and 7 above.
On 27 January 2023 the Company announced that it had raised £352,425 pursuant
to the receipt of conversion notices from holders of 58,737,455 warrants
exercisable at 0.60 pence each.
10. APPROVAL
The Interim Report for the period to 31(st)
December 2022 was approved by the Directors on 28(th) March 2023.
11. AVAILABILITY OF REPORT
The Interim Statement will be available on the
website at www.botswanadiamonds.co.uk (http://www.botswanadiamonds.co.uk)
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