Interim Results for the 6 Months Ended 31 Dec 18

Botswana Diamonds plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
									Six Months	Six Months			Year
									Ended		Ended		Ended
									31 Dec 18		31 Dec 17	30 Jun 18
								unaudited		unaudited			audited
									£'000		£'000		£'000
REVENUE									-		-		-
Cost of sales									-		-		-
GROSS PROFIT									-		-		-
Administrative expenses									( 190 )		( 178 )		( 378 )
Impairment of exploration and evaluation assets									-		-		( 180 )
OPERATING LOSS									( 190 )		( 178 )		( 558 )
LOSS BEFORE TAXATION									( 190 )		( 178 )		( 558 )
Income tax expense									-		-		-
LOSS AFTER TAXATION									( 190 )		( 178 )		( 558 )
Exchange difference on translation of foreign operations									-		1		( 72 )
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD									( 190 )		( 177 )		( 630 )
LOSS PER SHARE - basic and diluted									(0.04p)		(0.04p)		(0.12p)
CONDENSED CONSOLIDATED BALANCE SHEET									31 Dec 18		31 Dec 17	30 Jun 18
									unaudited	unaudited			audited
ASSETS:									£'000		£'000		£'000
NON-CURRENT ASSETS
Intangible assets									8,364		8,155		8,234
Financial assets									-		1		-
									8,364		8,156		8,234
CURRENT ASSETS
Trade and other receivables									12		50		25
Cash and cash equivalents									39		230		260
									51		280		285
TOTAL ASSETS									8,415		8,436		8,519
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables									( 386 )		( 237 )		( 300 )
TOTAL LIABILITIES									( 386 )		( 237 )		( 300 )
NET ASSETS									8,029		8,199		8,219
EQUITY
Share capital - deferred shares									1,796		1,796		1,796
Share capital - ordinary shares									1,273		1,148		1,273
Share premium									10,099		9,751		10,099
Share based payments reserve									104		104		104
Retained deficit									( 4,260 )		( 3,690 )		( 4,070 )
Translation reserve									-		73		-
Other reserves									( 983 )		( 983 )		( 983 )
TOTAL EQUITY									8,029		8,199		8,219
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 2017	2,745		9,085		97		( 3,512 )		72		( 983 )		7,504
Issue of shares	199		670				-		-		-		869
Share issue expenses	-		( 4 )				-		-		-		( 4 )
Share based payment	-		-		7		-		-		-		7
Total comprehensive income							( 178 )		1		-		( 177 )
At 31 December 2017	2,944		9,751		104		( 3,690 )		73		( 983 )		8,199
Issue of shares	125		377				-		-		-		502
Share issue expenses	-		( 29 )				-		-		-		( 29 )
Total comprehensive income					-		( 380 )		( 73 )		-		( 453 )
At 30 June 2018	3,069		10,099		104		( 4,070 )		-		( 983 )		8,219
Total comprehensive income	-				-		( 190 )		-		-		( 190 )
At 31 December 2018	3,069		10,099		104		( 4,260 )		-		( 983 )		8,029
CONDENSED CONSOLIDATED CASH FLOW									Six Months	Six Months			Year
									Ended		Ended		Ended
									31 Dec 18		31 Dec 17	30 Jun 18
									unaudited		unaudited		audited
									£'000		£'000		£'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period									( 190 )		( 178 )		( 558 )
Impairment of exploration and evaluation assets									-		-		180
Exchange movements									-		4		( 68 )
									( 190 )		( 174 )		( 446 )
Movements in Working Capital									99		( 182 )		( 109 )
NET CASH USED IN OPERATING ACTIVITIES									( 91 )		( 356 )		( 555 )
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration costs capitalised									( 130 )		( 382 )		( 625 )
NET CASH USED IN INVESTING ACTIVITIES									( 130 )		( 382 )		( 625 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue									-		869		1,371
Share issue costs									-		( 4 )		( 33 )
NET CASH GENERATED IN INVESTING ACTIVITIES									-		865		1,338
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS									( 221 )		127		158
Cash and cash equivalents at beginning of the period									260		106		106
Effect of foreign exchange rate changes									-		( 3 )		( 4 )
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD									39		230		260

 

 

Notes:

 

1.             INFORMATION

 

The financial information for the six months ended 31 December 2018 and the comparative amounts for the six months ended 31 December 2017 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 2018 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 18		Six Months Ended  31 Dec 17		Year Ended 30 Jun 18
	£'000		£'000		£'000
Numerator
For basic and diluted EPS retained loss	(190)		(178)		(558)
	No.		No.		No.
Denominator Weighted average number of ordinary shares	509,282,508		444,239,174		470,397,102
Loss per share - Basic and Diluted	(0.04p)		(0.04p)		(0.12p)
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 18		31 Dec 17		30 June 18
	£'000		£'000		£'000
Exploration and evaluation assets:
Cost:
Opening balance	9,063		8,415		8,415
Additions	130		389		648
	9,193		8,804		9,063
Impairment:
Opening balance	829		649		649
Provision for impairment	-		-		180
	829		649		829
Carrying Value:
Opening balance	8,234		7,766		7,766
Closing balance	8,364		8,155		8,234

 

 

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 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. On 15 November 2018 the director announced that the company now holds 100% of the equity in Sunland Minerals having acquired for a nominal sum the 50% previously held by Alrosa as part of the Company's joint venture with Alrosa.

 

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 a further 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.

 

On 29 September 2017, the company moved into Phase 2 of the Option and Earn-In Agreement.

 

Phase 2

Phase 2 lasted until 5 January 2019 and the company extended their option for a further 90 days, 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.

 

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 period are £Nil (June 2018: £6,951) of share based payments, £7,791 (June 2018: £15,516) of wages and salaries and £44,969 (June 2018: £90,443) of directors remuneration.

 

 

 

5.             SHARE CAPITAL

 

Deferred Shares	Number		Share Capital £'000		Share Premium £'000
At 1 July 2017 and 1 July 2018	239,487,648		1,796,157		-
At 30 June 2018 and 31 December 2018	239,487,648		1,796,157		-

 

 

Ordinary Shares	Number		Share Capital £'000		Share Premium £'000
At 1 July 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
Issued during the period	50,235,300		125		377
Share issue expenses			-		(29)
At 30 June 2018	509,282,508		1,273		10,099
Issued during the period	-		-		-
At 31 December 2018	509,282,508		1,273		10,099

 

 

 

 

 

 

 

 

Movements in share capital

 

On 3 August 2017, the Company raised £603,000 through the issue of 48,240,000 new ordinary shares of 0.25p each at a price of 1.25p per share to provide additional working capital and fund development costs. In addition, 31,244,300 warrants were also exercised at a price of 0.85p per warrant for £265,577

 

On 20 December 2017, 235,300 warrants were exercised at a price of 0.85p per warrant for £2,000.

 

On 14 February 2018, the Company raised £500,000 through the issue of 50,000,000 new ordinary shares of 0.25p each at a price of 1p per share to provide additional working capital and fund development costs.               

 

 

6.            POST BALANCE SHEET EVENTS

 

On 23^rd January 2019 the Company announced that they had raised £370,000 via the placing of 67,272,727 new ordinary shares at a placing price of 0.55p per share. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from 23^rd January 2019.

 

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 2018 was approved by the Directors on 22^nd March 2019.

 

 

8.            AVAILABILITY OF REPORT

 

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