Interim Results for the 6 Months Ended 31 Dec 17

Botswana Diamonds plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
									Six Months		Six Months		Year
									Ended		Ended		Ended
									31 Dec 17		31 Dec 16		30 Jun17
									unaudited		unaudited		Audited
									£'000		£'000		£'000
REVENUE									-		-		-
Cost of sales									-		-		-
GROSS PROFIT									-		-		-
Administrative expenses									( 178 )		( 136 )		( 311 )
OPERATING LOSS									( 178 )		( 136 )		( 311 )
LOSS BEFORE TAXATION									( 178 )		( 136 )		( 311 )
Income tax expense									-		-		-
LOSS AFTER TAXATION									( 178 )		( 136 )		( 311 )
Exchange difference on translation of foreign operations									1		197		149
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD									( 177 )		61		( 162 )
LOSS PER SHARE- basic and diluted									(0.04p)		(0.04p)		(0.09p)
CONDENSED CONSOLIDATED BALANCE SHEET									31 Dec 17		31 Dec 16		30 Jun17
									unaudited		unaudited		audited
ASSETS:									£'000		£'000		£'000
NON-CURRENT ASSETS
Intangible assets									8,155		7,238		7,766
Financial assets									1		1		1
									8,156		7,239		7,767
CURRENT ASSETS
Trade and other receivables									50		45		60
Cash and cash equivalents									230		60		106
									280		105		166
TOTAL ASSETS									8,436		7,344		7,933
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables									( 237 )		( 206 )		( 429 )
TOTAL LIABILITIES									( 237 )		( 206 )		( 429 )
NET ASSETS									8,199		7,138		7,504
EQUITY
Share capital - deferred shares									1,796		1,796		1,796
Share capital - ordinary shares									1,148		846		949
Share premium									9,751		8,598		9,085
Share based payments reserve									104		97		97
Retained deficit									( 3,690 )		( 3,337 )		( 3,512 )
Translation reserve									73		121		72
Other reserves									( 983 )		( 983 )		( 983 )
TOTAL EQUITY									8,199		7,138		7,504
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 2016	2,642		8,598		90		( 3,201 )		( 76 )		( 983 )		7,070
Share based payment	-		-		7		-		-		-		7
Total comprehensive loss	-		-		-		( 136 )		197		-		61
At 31 December 2016	2,642		8,598		97		( 3,337 )		121		( 983 )		7,138
Ordinary shares issued	103		508				-		-		-		611
Share issue expenses	-		( 21 )				-		-		-		( 21 )
Total comprehensive loss					-		( 175 )		( 49 )		-		( 224 )
As at 30 June 2017	2,745		9,085		97		( 3,512 )		72		( 983 )		7,504
Ordinary shares issue	199		670				-		-		-		869
Share issue expenses	-		( 4 )				-		-		-		( 4 )
Share based payment	-		-		7		-		-		-		7
Total comprehensive loss	-				-		( 178 )		1		-		( 177 )
At 31 December 2017	2,944		9,751		104		( 3,690 )		73		( 983 )		8,199
CONDENSED CONSOLIDATED CASH FLOW									Six Months		Six Months		Year
									Ended		Ended		Ended
									31 Dec 17		31 Dec 16	30 Jun 17
									unaudited		unaudited		audited
									£'000		£'000		£'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period									( 178 )		( 136 )		( 311 )
Exchange movements									4		188		145
									( 174 )		52		( 166 )
Movements in Working Capital									( 182 )		40		232
NET CASH USED IN OPERATING ACTIVITIES									( 356 )		92		66
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration costs capitalised									( 382 )		( 541 )		( 994 )
NET CASH USED IN INVESTING ACTIVITIES									( 382 )		( 541 )		( 994 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue									869		-		550
Share issue costs									( 4 )		-		( 21 )
NET CASH GENERATED IN INVESTING ACTIVITIES									865		-		529
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS									127		( 449 )		( 399 )
Cash and cash equivalents at beginning of the period									106		500		500
Effect of foreign exchange rate changes									( 3 )		9		5
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD									230		60		106

 

Notes:

 

1.             INFORMATION

 

The financial information for the six months ended 31 December 2017 and the comparative amounts for the six months ended 31 December 2016 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 2017 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 17		Six Months Ended  31 Dec 16		Year Ended 30 Jun 17
	£		£		£
Numerator
For basic and diluted EPS retained loss	(178,390)		(136,055)		(310,798)
	No.		No.		No.
Denominator Weighted average number of ordinary shares	444,239,174		338,411,181		351,659,107
Loss per share - Basic and Diluted	(0.04p)		(0.04p)		(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 17		31 Dec 16		30 June 17
	£'000		£'000		£'000
Exploration and evaluation assets:
Cost:
Opening balance	8,415		7,339		7,339
Additions	389		548		1,076
	8,804		7,887		8,415
Impairment:
Opening balance	649		649		649
Provision for impairment	-		-		-
	649		649		649
Carrying Value:
Opening balance	7,766		6,690		6,690
Closing balance	8,155		7,238		7,766

 

 

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.

 

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 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 has agreed to pay Vutomi a total of £942,000 in cash, of which £581,000 will be used to fund exploration activities. In addition, the Company will issue 100 million ordinary shares of 0.25p each ("Ordinary Shares") to Vutomi shareholders. The Agreement will be executed in three Phases after which the Company will own 72% of Vutomi.  The remaining 28% will continue to be held by Vutomi's Black Economic Empowerment ('BEE') partners. The three Phases are summarised below: 

 

                Exclusivity and Option Fee

Botswana Diamonds paid Vutomi an exclusivity and option fee of £122,000, with £61,000 paid in cash and £61,000 paid in the Company's Ordinary Shares at a price of 1.9p. The shares were issued on 3 April 2017.  Upon completion of this payment Phase 1 of the earn-in commenced.

 

                Phase 1

Phase 1 will last for 12 months, during which period the Company will, subject to available funding, have the option to pay Vutomi £215,000 to fund exploration activities to earn an initial 15% of Vutomi. During Phase 1 Vutomi will grant the Company the sole and exclusive right to fund exploration activities in, on and under the Vutomi Prospecting Rights Area in order to prepare a conceptual mining and development plan. The required mining permits are in place.

 

                Phase 2

Phase 2 will last for a further 12 months, during which period the Company will, subject to available funding, have the option to pay Vutomi £366,000 to fund exploration activities to earn an additional 25% of Vutomi.

 

                Phase 3

Phase 3 will commence within 90 days of the successful completion of Phase 2. Pursuant to the Agreement, the Company will have the option to issue the outstanding balance of 96.8m Ordinary Shares, priced at VWAP, to Vutomi and, subject to available funding, settle Vutomi's shareholders loan accounts of approximately £300,000 in cash to earn a further 32% of Vutomi.

 

 

                Termination

At any point the Agreement will lapse if the Company does not exercise its option regarding a specific Phase. 

 

                As at 31 December 2017, the Company had completed Phase 1 and entered into Phase 2.

 

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:

 

 

·      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 year are £6,951 (June 2017: £6,951) of share based payments, £7,989 (June 2017: £16,006) of wages and salaries and £50,277 (June 2017: £73,758) of directors remuneration.

 

 

5.             SHARE CAPITAL

 

	Number	Share Capital £'000	Share Premium £'000
At 1 July 2016
Deferred shares of 0.75p	239,487,648	1,796,157	-
Ordinary shares of 0.25p
At 1 July 2016	338,411,181	846	8,598
Issued during the period	-	-	-
At 31 December 2016	338,411,181	846	8,598
Issued during the period	41,151,727	103	508
Share issue expenses	-	-	(21)
At 30 June 2017	379,562,908	949	9,085
Issued during the period	79,484,300	199	670
Share issue expenses	-	-	(4)
At 31 December 2017	459,047,208	1,148	9,751

 

 

Movements in share capital

 

On 27 February 2017, the Company raised £525,000 (before expenses) through the issue of 35,000,000 new ordinary shares of 0.25p at a price of 1.5p per share to provide additional working capital and fund development costs.

 

On 13 March 2017, 1,764,700 warrants were exercised at a price of 0.85p per warrant for £15,000.

 

On 3 April 2017, the Company issued 3,210,527 new ordinary shares of 0.25p each at a price of 1.9p to Vutomi shareholders for £61,000 as part of the Joint Venture Agreement entered into. 

 

On 11 May 2017, 1,176,500 warrants were exercised at a price of 0.85p per warrant for £10,000.

 

On 3 August 2017, the Company raised £603,000 (before expenses) through the issue of 43,440,000 new ordinary shares of 0.25p at a price of 1.25p per share to provide additional working capital and fund development costs.

 

On 3 August 2017, 31,244,300 warrants were exercised at a price of 0.85p per warrant for £265,577.

 

 

6.            POST BALANCE SHEET EVENTS

 

On 14^th February 2018 the Company announced that they had raised £500,000 (before expenses) via the placing of 50,000,000 new ordinary shares with new and existing investors at a price of 1p per share.

 

The net proceeds of the placing will fund ongoing diamond exploration in South Africa and Botswana and will also provide the Company with additional working capital.

 

 

7.            APPROVAL

 

               The Interim Report for the period to 31^st December 2017 was approved by the Directors on 20^th March 2018.

 

 

8.            AVAILABILITY OF REPORT

 

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