I am pleased to report significant advances in our operations in Botswana. The depressed share price makes it difficult to accept and understand that Botswana Diamonds (BOD) is doing well. We are actively exploring in Botswana, the biggest diamond producing country in the world by value. We have interests in 27 licences. 14 licences located in the Orapa and Gope areas are in a 50% joint venture with Alrosa, the world's largest diamond producer by volume. 3 licences are wholly owned by BOD and 10 licences in the Kalahari are operated by BCL, where we hold a 15% indirect interest.
Our main operating focus is a joint venture with Alrosa with whom we have worked together for four years. Diamonds are hard to find. Using the results of Alrosa data analysis of our substantial database, we have in the past 18 months obtained and analysed a lot of ground and drilled on two separate licences in the Orapa area of Botswana - home to four of the world's best diamond mines. In neither programme did we find a commercial discovery, although in each case positives were found. On PL117, we found kimberlite stringers. On PL210, we discovered the ultramafic source of the anomaly identified by geophysics and soil sampling, but the ultramafic rock was not kimberlite. The positives are that Alrosa techniques, refined in Siberia, have been demonstrated to work in Botswana. As we continue into 2016 with extensive ground in both the Orapa and Gope regions we believe that focused exploration will yield positive results.
In addition to our joint venture we have an indirect 15% carried interest in what was known as the Brightstone block of 10 licences in the Gope Region of Botswana, which is in the Kalahari Desert. Recent years have seen growing activity in the area. The Gem Diamonds owned Ghagoo Mine is coming on stream, while Petra Diamonds is proving up the KX36 discovery. The Brightstone licences have been acquired by BCL, a Botswana owned copper and nickel miner. We supplied BCL with an extensive database and our analyses of potential targets. BCL drilled in early 2015. It is known that they found kimberlites and we await further news with interest.
Before commenting on our exploration plans for the future let me quickly review the market for diamonds. There is a rapid shift in diamond demand from the Western world to the East. Notwithstanding recent volatility in China, emerging markets throughout Asia are experiencing rapid economic growth. There is an emerging Middle Class with disposable income and diamonds are high on the list of desirable purchases for Chinese and Indian consumers. But there are other very big markets which are rapidly expanding such as Thailand, the Philippines, and Vietnam to name three.
As the percentage of the world diamonds supplied by De Beers falls, price volatility increases. A dominant market player can control supply and therefore price by having the financial strength to hold inventories of diamonds. This facility is now largely gone. The old order has changed with new entrants at all levels of the supply chain. New buyers of rough stones, mainly Asian, lack the financial strength of De Beers. In times of liberal credit these buyers stock up. When credit gets tight some find themselves exposed and forced to sell thereby increasing volatility.
Let me turn now to our current areas of activity.
BOD has interests in 14 licences in a 50% joint venture with Alrosa called Sunland Minerals.
During the period under review a Sunland Minerals team which consists of Russian geologists, geophysicists and mineralogists combined with the local Botswana geologists worked mainly in the Orapa area on licences PL206 to PL210 awarded in 2014. The ground had been selected by Alrosa. Subsequently an additional licence was awarded PL085/2015. The work consisted of extensive sampling in defined grids, ground magnetic surveys and Transient Electromagnetic surveys. Mobile laboratories and skilled experienced mineralogists were on site. As a result, rapid analyses were carried out enabling subsequent exploration to be better defined and focused. This phase finished in late 2014.
A follow up field campaign took place in H1 2015. The effort was concentrated on three of the six licences, PL206/PL207/PL210. Extensive sampling and geophysics were carried out and results analysed. By mid-2015 a drill target was selected on PL210 and a three hole drill programme was agreed for Q3 2015.
Following the period end an intensive fieldwork programme took place on PL210 and on new licence PL055 in the Orapa area throughout September and October 2015. A three hole, 330 metre drilling campaign was carried out on PL210. Two of the three holes intersected the anomaly which was an ultramafic rock but not a kimberlite. The results are being analysed. The anomaly is not the source of the heavy concentration of Kimberlite Indicator Minerals (KIMs) found on PL210.
Having completed their work in the Orapa area the exploration team moved to our new ground, PLs 135, 136 and 137, in the Gope kimberlite field in the Kalahari. Earlier work by Botswana Diamonds had identified anomalies on each of these small licences. A programme of ground magnetics, electromagnetics and soil sampling were carried out. Results are being analysed. Initial analysis confirms the presence of anomalies on at least two of the licences.
We have been aggressive in applying for and being awarded new ground. In recent weeks we have been awarded four additional licences in the Gope region, PLs 232-235. A high priority licence in the Orapa area has also been obtained, PL260. This lies between the Karowe and Orapa mines and contains known kimberlites. The initial concentration of the joint venture was on ground in the Orapa area showing potential for new diamondiferous kimberlites. This is now being extended to the emerging Gope diamond province. The policy is to work the ground as soon as possible after an award is made. This policy will continue in 2016.
The work programme for 2016 includes:
· Probable verification drilling of two anomalies identified on PL210 in Orapa;
· Detailed soil sampling on a 200 m x 200 m grind on PL085 to discover the dispersion of KIMs around mineralogical anomalies;
· A TEM programme will be undertaken over the area;
· Magnetics, soil sampling and TEM on the four new Gope licences; and
· PL260 will be surveyed in Q1 2016. A TEM survey will be undertaken on one of the known pipes to better understand the geological model. All known data on the three pipes, AK21, AK22 and AK23, will be analysed. Following this drilling decisions will be made.
Future:
There is an active programme planned by Alrosa/BOD for 2016. Each time fieldwork is undertaken the data is refined and the focus of our activities improves. The Brightstone block appears to have exciting potential soon to be commented on.
Exploration requires funding. We are fully carried in the Brightstone block and are 50/50 in the Sunland joint venture. To provide maximum flexibility with regards to future funding we are proposing to change the par value of existing shares from 1p to 0.25p as set out in Resolution 6 in the Notice of the Company's forthcoming Annual General Meeting. This has no impact whatsoever on the value of existing shares or the number of shares in issue. In what is a very difficult market we will have the support of family, friends and followers. Diamond exploration is a high risk, potentially high return, business. Our people are good, our partners are experienced and capable and we have choice ground in the best diamond address in the world.
John Teeling
Chairman
18th November 2015
-Ends-
Enquiries:
Botswana Diamonds PLC |
|
John Teeling, Chairman |
+353 1 833 2833 |
Jim Finn, Director |
|
Dipti Mehta |
|
Northland Capital Partners Limited |
|
David Hignell/Gerry Beaney |
+44 (0) 20 7382 1100 |
John Howes/Mark Treharne (Broking) |
|
Dowgate Capital Stockbrokers Limited |
|
Jason Robertson |
+44 (0) 129 351 7744 |
Blytheweigh |
+44 (0) 20 7138 3204 |
Camilla Horsfall |
+44 (0) 78 1784 1793 |
PSG Plus |
|
Aoife Ross |
+353 (0) 1 661 4055 |
Alan Tyrrell |
+353 (0) 1 661 4055 |
www.botswanadiamonds.co.uk
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
|
2015 |
|
2014 |
|
£ |
|
£ |
|
|
|
|
Administrative expenses |
(335,529) |
|
(434,768) |
|
|
|
|
Impairment of exploration and evaluation assets |
- |
|
(615,796) |
|
|
|
|
OPERATING LOSS |
(335,529) |
|
(1,050,564) |
|
|
|
|
Profit on disposal of investment |
- |
|
100,454 |
(Loss)/profit on investment held at fair value |
(4,000) |
|
1,500 |
|
|
|
|
LOSS FOR THE YEAR BEFORE TAXATION |
(339,529) |
|
(948,610) |
|
|
|
|
Income tax expense |
- |
|
- |
|
|
|
|
LOSS AFTER TAXATION |
(339,529) |
|
(948,610) |
|
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
Exchange difference on translation of foreign operations |
(32,973) |
|
(76,793) |
|
|
|
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR |
(372,502) |
|
(1,025,403) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic |
(0.16p) |
|
(0.57p) |
|
|
|
|
Loss per share - diluted |
(0.16p) |
|
(0.57p) |
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2015
|
30/06/2015 |
|
30/06/2014 |
|
£ |
|
£ |
ASSETS: |
|
|
|
|
|
|
|
NON CURRENT ASSETS |
|
|
|
|
|
|
|
Intangible assets |
6,169,129 |
|
5,866,467 |
Financial assets |
8,000 |
|
12,000 |
|
|
|
|
|
6,177,129 |
|
5,878,467 |
CURRENT ASSETS |
|
|
|
|
|
|
|
Other receivables |
16,428 |
|
65,445 |
Cash and cash equivalents |
175,850 |
|
419,880 |
|
|
|
|
|
192,278 |
|
485,325 |
|
|
|
|
TOTAL ASSETS |
6,369,407 |
|
6,363,792 |
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Trade and other payables |
(120,475) |
|
(176,934) |
|
|
|
|
TOTAL LIABILITIES |
(120,475) |
|
(176,934) |
|
|
|
|
NET ASSETS |
6,248,932 |
|
6,186,858 |
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
Called-up share capital |
2,394,876 |
|
1,962,283 |
Share premium |
7,825,081 |
|
7,824,825 |
Share based payment reserves |
89,908 |
|
88,181 |
Retained deficit |
(2,897,660) |
|
(2,558,131) |
Translation reserve |
(179,986) |
|
(147,013) |
Other reserve |
(983,287) |
|
(983,287) |
|
|
|
|
TOTAL EQUITY |
6,248,932 |
|
6,186,858 |
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
|
Called-up Share Capital |
Share Premium |
Share Based Payment Reserve |
Retained Deficit |
Translation Reserve |
Other Reserve |
Total |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
At 30 June 2013 |
1,382,823 |
7,111,556 |
83,228 |
(1,729,523) |
(70,220) |
(983,287) |
5,794,577 |
|
|
|
|
|
|
|
|
Share based payment |
- |
- |
4,953 |
- |
- |
- |
4,953 |
|
|
|
|
|
|
|
|
Issue of shares |
579,460 |
869,190 |
- |
- |
- |
- |
1,448,650 |
|
|
|
|
|
|
|
|
Share issue expenses |
- |
(35,919) |
- |
- |
- |
- |
(35,919) |
|
|
|
|
|
|
|
|
Warrants issued |
- |
(120,002) |
120,002 |
- |
- |
- |
- |
Transfer to retained deficit |
- |
- |
(120,002) |
120,002 |
- |
- |
- |
|
|
|
|
|
|
|
|
Loss for the year and |
|
|
|
|
|
|
|
total comprehensive income |
- |
- |
- |
(948,610) |
(76,793) |
- |
(1,025,403) |
|
|
|
|
|
|
|
|
At 30 June 2014 |
1,962,283 |
7,824,825 |
88,181 |
(2,558,131) |
(147,013) |
(983,287) |
6,186,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based payment |
- |
- |
1,727 |
- |
- |
- |
1,727 |
|
|
|
|
|
|
|
|
Issue of shares |
432,593 |
9,907 |
- |
- |
- |
- |
442,500 |
|
|
|
|
|
|
|
|
Share issue expenses |
- |
(9,651) |
- |
- |
- |
- |
(9,651) |
|
|
|
|
|
|
|
|
Loss for the year and |
|
|
|
|
|
|
|
total comprehensive income |
- |
- |
- |
(339,529) |
(32,973) |
- |
(372,502) |
|
|
|
|
|
|
|
|
At 30 June 2015 |
2,394,876 |
7,825,081 |
89,908 |
(2,897,660) |
(179,986) |
(983,287) |
6,248,932 |
|
|
|
|
|
|
|
|
Share Premium
The share premium comprises of a premium arising on the issue of shares.
Share Based Payment Reserve
The share based payment reserve arises on the grant of share options under the share option plan.
Retained Deficit
Retained deficit comprises of losses incurred in the current and prior year.
Other Reserve
During 2010 the Company acquired certain assets and liabilities from African Diamonds plc, a Company under common control. In accordance with accounting standards the assets and liabilities acquired were recognised at their book value and no goodwill was recognised on acquisition. The difference between the book value of the assets acquired and the purchase consideration was recognised directly in reserves.
Translation Reserve
The translation reserve arises from the translation of foreign operations.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
|
30/06/2015 |
|
30/06/2014 |
|
£ |
|
£ |
|
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Loss for the year |
(339,529) |
|
(948,610) |
Share option charge |
1,299 |
|
1,575 |
Loss/(Profit) on investment held at fair value |
4,000 |
|
(1,500) |
Foreign exchange gains |
(33,537) |
|
(57,178) |
Impairment of exploration and evaluation assets |
- |
|
615,796 |
|
|
|
|
|
(367,767) |
|
(389,917) |
MOVEMENTS IN WORKING CAPITAL |
|
|
|
|
|
|
|
Increase in trade and other payables |
96,041 |
|
160,801 |
Decrease/(Increase) in trade and other receivables |
49,017 |
|
(52,734) |
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES |
(222,709) |
|
(281,850) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
Exploration costs capitalised |
(294,734) |
|
(245,808) |
Disposal of investment |
- |
|
100,000 |
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(294,734) |
|
(145,808) |
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from share issue |
282,500 |
|
847,650 |
Share issue costs |
(9,651) |
|
(35,919) |
|
|
|
|
NET CASH GENERATED FROM FINANCING ACTIVITIES |
272,849 |
|
811,731 |
|
|
|
|
|
|
|
|
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
(244,594) |
|
384,073 |
|
|
|
|
Cash and cash equivalents at beginning of the financial year |
419,880 |
|
39,480 |
|
|
|
|
Effect of foreign exchange rate changes |
564 |
|
(3,673) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the financial YEAR |
175,850 |
|
419,880 |
|
|
|
|
|
|
|
|
1. ACCOUNTING POLICIES
The accounting policies and methods of computation followed in these financial statements are consistent with those published in the Group's Annual Report for the year ended 30 June 2014.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union.
The financial information set out below does not constitute the Group's financial statements for the year ended 30 June 2015 or 30 June 2014, but is derived from those accounts. The financial statements for the year ended 30 June 2014 have been delivered to the Registrar of Companies and those for the year ended 30 June 2015 will be delivered following the Group's Annual General Meeting.
The auditors have reported on the 2015 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
2. GOING CONCERN
The Group incurred a loss during the year end 30 June 2015 of £372,502 after exchange differences on retranslation of foreign operations (2014: £1,025,403) and had a retained deficit of £2,897,660 (2014: £2,558,131) at the balance sheet date. These conditions represent a material uncertainty that may cast doubt on the Group's ability to continue as a going concern.
The directors have prepared cashflow projections and forecasts for a period of not less than 12 months from the date of this report which indicate that the group will require additional finance to fund working capital requirements and develop existing projects. Although it is not possible at this stage to predict whether financing efforts will be successful the directors are confident that they will be able to raise additional finance as required to meet the group's committed obligations as they fall due.
As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.
3. LOSS PER SHARE
Basic loss per share is computed by dividing the loss after taxation for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the profit or loss after taxation for the year 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 year.
The following table sets forth the computation for basic and diluted earnings per share (EPS):
|
2015 |
|
2014 |
|
£ |
|
£ |
Numerator |
|
|
|
|
|
|
|
For basic and diluted EPS retained loss |
(339,529) |
|
(948,610) |
|
|
|
|
|
|
|
|
Denominator |
No. |
|
No. |
|
|
|
|
For basic and diluted EPS |
206,684,510 |
|
166,923,653 |
|
|
|
|
Basic EPS |
(0.16p) |
|
(0.57p) |
Diluted EPS |
(0.16p) |
|
(0.57p) |
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. |
|
|
|
|
Share options |
8,410,000 |
|
8,160,000 |
4. INTANGIBLE ASSETS
Exploration and evaluation assets: |
|
|
|
|
2015 |
|
2014 |
|
£ |
|
£ |
Cost: |
|
|
|
At 1 July |
6,482,263 |
|
6,249,019 |
Additions |
302,662 |
|
249,186 |
Exchange variance |
- |
|
(15,942) |
At 30 June |
6,784,925 |
|
6,482,263 |
|
|
|
|
Impairment: |
|
|
|
At 1 July |
615,796 |
|
- |
Provision for impairment |
- |
|
615,796 |
At 30 June |
615,796 |
|
615,796 |
|
|
|
|
Carrying Value: |
|
|
|
At 1 July |
5,866,467 |
|
6,249,019 |
At 30 June |
6,169,129 |
|
5,866,467 |
|
|
|
|
|
|
|
|
Segmental analysis |
2015 |
|
2014 |
|
£ |
|
£ |
Botswana |
6,148,832 |
|
5,866,467 |
Zimbabwe |
20,297 |
|
- |
|
6,169,129 |
|
5,866,467 |
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.
The Group's focus is to maximize the full potential of the Botswana operations. Therefore, in the prior year, the directors had decided to provide in full against the carrying value of the operations in Zimbabwe and Cameroon. Accordingly, an impairment provision of £615,796 had been recorded by the Group in the prior year (Company: £197,232).
On 23 July 2013 the Group entered into an agreement with Siseko Minerals (Pty) Limited over the 13 licence Brightstone block in the Gope area of Botswana. Under the terms of the agreement the company would have earned a 51% interest in the block by spending up to US $940,000 over three years.
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% carried interest.
On 16 August 2013 the Group entered into a joint venture agreement with Alrosa Overseas SA a wholly owned subsidiary of OJSC Alrosa of Russia to explore for diamonds in Botswana.
The directors believe that there were no facts or circumstances indicating that the carrying value of intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. 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:
- price fluctuations;
- foreign exchange 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;
- liquidity risks;
- funding risks;
- going concern; and
- operational and environmental risks.
Included in additions for the year are £428 of share based payments (2014: £3,378), £14,008 (2014: £18,481) of wages and salaries and £32,500 (2014: £50,000) of directors remuneration.
5. CALLED-UP SHARE CAPITAL
Allotted, called-up and fully paid: |
Number |
|
Share Capital |
|
Share Premium |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
At 1 July 2013 |
138,282,267 |
|
1,382,823 |
|
7,111,556 |
Issued during the year |
57,946,000 |
|
579,460 |
|
869,190 |
Share issue expenses |
- |
|
- |
|
(35,919) |
Warrants issued |
- |
|
- |
|
(120,002) |
At 30 June 2014 |
196,228,267 |
|
1,962,283 |
|
7,824,825 |
|
|
|
|
|
|
Issued during the year |
43,259,381 |
|
432,593 |
|
9,907 |
Share issue expenses |
- |
|
- |
|
(9,651) |
At 30 June 2015 |
239,487,648 |
|
2,394,876 |
|
7,825,081 |
Movements in share capital
On 13 December 2013, the Company raised £540,000 through the issue of 21,600,000 new ordinary shares at a price of 2.5p per share to provide additional working capital and fund development costs. In addition, the Company settled £200,000 of existing liabilities with the directors of the Company through the issue of 8,000,000 new ordinary shares at a price of 2.5p.
On 13 December 2013, 59,200,000 warrants were granted to the subscribers of the placing at a price of 2.5p per share. These warrants were exercisable for a period of six months from date of issue. At date of issue the warrants had a fair value of 0.44p.
On 20 January 2014, 1,000,000 warrants were exercised at a price of 2.5p per warrant for £25,000.
On 20 June 2014, 27,346,000 warrants were exercised at a price of 2.5p per warrant for £683,650. The balance of the warrants expired before the year end.
On 31 March 2015, the Company raised £282,500 through the issue of 28,250,000 new ordinary shares at a price of 1p to provide additional working capital and fund development costs.
On 8 April 2015, the Company settled £160,000 of existing liabilities with the directors of the Company through the issue of 15,009,381 new ordinary shares at a price of 1.066p per share.
6. POST BALANCE SHEET EVENTS
There are no material post balance sheet events affecting the Group.
7. GENERAL INFORMATION
The Annual Report and Accounts will be mailed shortly only to those shareholders who have elected to receive it. Otherwise, shareholders will be notified that the Annual Report and Accounts will be available on the website at botswanadiamonds.co.uk. Copies of The Annual Report will also be available for collection from the company's registered office at 20-22 Bedford Row, London, WC1R 4JS.
8. ANNUAL GENERAL MEETING
The Annual General Meeting is due to be held at the Hilton London Paddington Hotel, 146 Praed Street, London W2 IEE on Friday 18 December 2015 at 11.00am. A Notice of the Annual General Meeting is included in the Company's Annual Report.
