TIDMBOD
RNS Number : 5067P
Botswana Diamonds PLC
18 November 2016
18(th) November 2016
Botswana Diamonds PLC
("Botswana Diamonds" or the "Company")
Preliminary Results for the Year Ended 30 June 2016
Highlights:
-- Visual observation of the core from AK22 noticed a diamond
-- Four diamond bearing kimberlite pipes, forming a cluster
within close proximity to each other, identified at Maibwe
Botswana, where we work, is the home of diamonds. It is the
world's largest producer by value and is the outstanding provider
of large stones including the second largest diamond ever found,
the 1,109 ct. stone found in the Karowe mine in 2015. There are 13
known kimberlite fields in the country containing over 400
kimberlites, 8 of which have become mines, including two of the
world's biggest diamond mines, Orapa and Jwaneng, producing about
15% of the world's diamonds.
Botswana itself is an excellent place in which to explore. Known
to some as the Switzerland of Africa it is a stable democracy. The
Rule of Law applies and title to assets is good. There are just
over 2 million people in the country with one main ethnic group in
a land mass 93% covered by the Kalahari Desert.
Botswana Diamonds (BOD) holds substantial ground in the country
and has an active exploration programme ongoing in two separate
joint ventures.
The first, Sunland Minerals, is a 50/50 joint venture with
Alrosa, the world's biggest diamond producer. The joint venture
holds 14 exploration licences of which 7 are in the Orapa area
where existing diamond mines operate and 7 are in the Gope area, an
emerging diamond province.
The partnership, which is working well, merges the in-house
technological expertise of Alrosa with the extensive geological and
local expertise of BOD personnel. We run two field campaigns a
year. Up to 15 Alrosa geologists, geophysicists and mineralogists
work with the local BOD geologists and management team. We have
conducted extensive soil sampling, electromagnetic and drilling
programmes over a number of licences.
Extensive background research enabled the joint venture to apply
for ground in Orapa covering 3 known kimberlites AK 21, AK 22 and
AK 23. These had been discovered, explored and abandoned by De
Beers in 2008 who believed the diamond grades found at about 1.5
carats per hundred tonne (cpht) were not commercial. Alrosa
specialists believe the grades may be higher in fresh kimberlite.
They believe that the mineralogy and geology is similar to BK 11
which is a Botswana kimberlite being assessed for commerciality. We
were awarded licence PL 260 covering the ground in 2015 and have
spent the last two years undertaking work on it.
Fieldwork led to a core hole drilling programme in 2015,
followed by a Large Diameter Drilling (LDD) programme on AK 21 in
early 2016 and a recent core hole programme on AK 22. Alrosa
believes AK 22 and AK 23 are one.
Processing in South Africa of a 80 ton bulk sample from the LDD
drilling was poor with no diamonds recovered - not even the nine
control diamonds we inserted into the material. We are reworking,
in Botswana, the concentrate from the bulk sample and have
discovered two small diamonds. Material from an earlier drill hole
on AK 21 and from the two new holes drilled on AK 22 is currently
being analysed for microdiamonds - again in South Africa, but at a
new, independent processing facility. Visual observation of the
core from AK 22 noticed a diamond - a positive sign. The objective
of the drilling is to assess economic potential.
Drilling has been undertaken, in H2 2016, on two other licences
PL 135 in the Gope region of the Kalahari and PL 085 in Orapa. Gope
is an emerging diamond area with two projects, the Ghagoo mine and
an advanced discovery KX-36. No kimberlites were found. The complex
anomaly under 400 feet of sand on PL 135 is a magnetic basalt.
Drilling on PL 085 in Orapa encountered dolerite sills rather than
kimberlite. No additional work is planned on these licences.
Fieldwork will continue on licence 260 in Orapa and on licence
PL 235 in Gope. The initial fieldwork undertaken in 2016 on
licences PL 232, PL 233 and PL 234 will be expanded on in 2017.
The second joint venture had exciting results in 2015. Maibwe is
a joint venture on 10 licences in the Gope region. The joint
venture is made up of three parties BCL, a Botswana state owned
copper/nickel producer which was given 51% in return for a 10
million Pula investment (US$1 million approx.); Future Minerals, a
local Botswana group (20%) who first acquired the licences and
Siseko Minerals (29%), a South African company. Botswana Diamonds
holds 51% of Siseko. Siseko and Future have a free carry up to
Bankable Feasibility Study. BCL is the operator.
Though 10 prospecting licences are held by Maibwe, comprehensive
work has been successfully carried out on PL 186. This work has
managed to identify four diamond bearing kimberlite pipes forming a
cluster within close proximity to each other. The pipes were
identified through a series of ground-magnetic surveys at 50m
spacing and 800m of diamond core drilling from which 305kg of
sampled material returned diamonds. The work was carried out by
Joint Venture partner BCL.
The four pipes have sizes 5ha, 6ha, 2ha and 1ha respectively,
collectively summing up to more than 12ha of diamondiferous
kimberlite material. These pipes are in close proximity to each
other. The mineral chemistry shows the pipes have diamond
compositions similar to the Orapa diamond composition.
Verification drilling is needed. The fall in commodity prices
has made BCL heavily loss making and as a result BCL have been
unable to undertake their agreed work programme. To date, BCL have
been reluctant to dilute their interest by allowing outside
investors to undertake the necessary work. BCL is now in
provisional liquidation. Discussions are ongoing with the
liquidator to allow a combination of Future
Minerals/Siseko/BOD/others, to conduct the essential drilling to
verify exactly what is in kimberlite GP 173 on PL 186.
Why Diamonds
Powerful fundamentals are driving the diamond market.
Historically the US and Continental Europe drove demand but
emphasis is moving now to Asia, led by China and India. As per
capita income rises, so too does disposable income. Gem quality
diamonds are a major beneficiary of growing incomes. Consumers
decide to spend their growing wealth on jewellery. Botswana
benefits as a large percentage of its diamond production is gem
quality.
Demand is only one side of the equation. Diamonds are hard to
find and existing mines are depleted. There has been no major
discovery in the past 12 years though there have been several
smaller discoveries including the ultra-high value Karowe mine in
Botswana in November 2004. The principals of Botswana Diamonds
played a seminal role in the discovery of Karowe, then known as AK
6.
There is typically a long lead time from discovery to production
so given the lack of new finds analysts expect a demand supply gap
to exist in the coming years with upward pressure on prices. In
fact, despite world economic uncertainty prices have been very
resilient.
Future
We are very active on good ground in the best diamond province
in the world. We are partnered with the most technologically
advanced diamond explorer in the world. Our own team is very
experienced and has found diamonds previously, specifically the
Karowe discovery in the early 2000s.
We believe that our expertise and experience can reduce the
extreme risk in grass roots diamond exploration. We are making
steady progress in the Alrosa/BOD joint venture. To date we have
been able to fund the exploration activities. We now have diamonds
in two pipes on PL 260. An economic assessment will be made in
2017. The potential in the Maibwe discovery is exciting as GP 173
and PL 186 has kimberlites and diamonds. Verification of the work
to date is essential. We are offering to conduct this work. It
needs to be drilled.
John Teeling
Chairman
17(th) November 2016
-Ends-
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Enquiries:
Botswana Diamonds PLC
John Teeling, Chairman +353 1 833 2833
Jim Finn, Director
Northland Capital Partners
Limited
David Hignell/Gerry Beaney
(Corporate Finance) +44 (0) 203 861 6625
John Howes (Broking)
Dowgate Capital Stockbrokers
Limited
Jason Robertson +44 (0) 129 351 7744
Blytheweigh +44 (0) 207 138 3204
Camilla Horsfall +44 (0) 781 784 1793
Nick Elwes +44 (0) 7831 851 855
Rachael Brooks
Jonathan Garfield
PSG Plus
Colm Heatley +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
www.botswanadiamonds.co.uk
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 30
JUNE 2016
2016 2015
GBP GBP
Administrative expenses (262,779) (335,529)
Impairment of exploration and evaluation assets (33,625) -
OPERATING LOSS (296,404) (335,529)
Loss due to fair value volatility (6,850) (4,000)
LOSS FOR THE YEAR BEFORE TAXATION (303,254) (339,529)
Income tax expense - -
LOSS AFTER TAXATION (303,254) (339,529)
----------
Exchange difference on translation of foreign operations 103,408 (32,973)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (199,846) (372,502)
Loss per share - basic (0.11p) (0.16p)
Loss per share - diluted (0.11p) (0.16p)
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2016
30/06/2016 30/06/2015
GBP GBP
ASSETS:
NON CURRENT ASSETS
Intangible assets 6,689,647 6,169,129
Financial assets 1,150 8,000
6,690,797 6,177,129
------------ ------------
CURRENT ASSETS
Other receivables 30,625 16,428
Cash and cash equivalents 500,426 175,850
531,051 192,278
TOTAL ASSETS 7,221,848 6,369,407
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables (152,098) (120,475)
TOTAL LIABILITIES (152,098) (120,475)
NET ASSETS 7,069,750 6,248,932
EQUITY
Called-up share capital - deferred shares 1,796,157 -
Called-up share capital - ordinary shares 846,028 2,394,876
Share premium 8,598,008 7,825,081
Share based payment reserves 90,336 89,908
Retained deficit (3,200,914) (2,897,660)
Translation reserve (76,578) (179,986)
Other reserve (983,287) (983,287)
TOTAL EQUITY 7,069,750 6,248,932
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30
JUNE 2016
Share Based Payment
Called-up Share Reserve
Capital Share Premium Retained Deficit Translation Other Reserve
Reserve Total
GBP GBP GBP GBP GBP GBP GBP
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 based
payment - - 428 - - - 428
Issue of
shares 247,309 810,208 - - - - 1,057,517
Share issue
expenses - (37,821) - - - - (37,821)
Loss for the
year and
total
comprehensive
income - - - (303,254) 103,408 - (199,846)
At 30 June
2016 2,642,185 8,598,008 90,336 (3,200,914) (76,578) (983,287) 7,069,750
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 YEARED 30 JUNE 2016
30/06/2016 30/06/2015
GBP GBP
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year (303,254) (339,529)
Share option charge - 1,299
Loss/(Profit) on investment held at fair value 6,850 4,000
Foreign exchange losses/gains 100,426 (33,537)
Impairment of exploration and evaluation assets 33,625 -
(162,353) (367,767)
MOVEMENTS IN WORKING CAPITAL
Increase in trade and other payables 110,783 96,041
(Increase)/Decrease in trade and other receivables (14,197) 49,017
NET CASH USED IN OPERATING ACTIVITIES (65,767) (222,709)
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration costs capitalised (546,215) (294,734)
NET CASH USED IN INVESTING ACTIVITIES (546,215) (294,734)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from share issue 970,857 282,500
Share issue costs (37,281) (9,651)
NET CASH GENERATED FROM FINANCING ACTIVITIES 933,576 272,849
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 321,594 (244,594)
Cash and cash equivalents at beginning of the financial year 175,850 419,880
Effect of foreign exchange rate changes 2,982 564
Cash and cash equivalents at end of the financial YEAR 500,426 175,850
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 2015.
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 2016 or 30
June 2015, but is derived from those accounts. The financial
statements for the year ended 30 June 2015 have been delivered to
the Registrar of Companies and those for the year ended 30 June
2016 will be delivered following the Group's Annual General
Meeting.
The auditors have reported on the 2016 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 for the year of GBP199,846 after
exchange differences on retranslation of foreign operations (2015:
GBP372,502) and had a retained deficit of GBP3,200,914 (2015:
GBP2,897,660) 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):
2016 2015
GBP GBP
Numerator
For basic and diluted EPS retained
loss (303,254) (339,529)
============ ============
Denominator No. No.
For basic and diluted EPS 278,469,644 206,684,510
============ ============
Basic EPS (0.11p) (0.16p)
Diluted EPS (0.11p) (0.16p)
============ ------------
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 8,410,000
========== ==========
4. INTANGIBLE ASSETS
Exploration and evaluation assets:
2016 2015
GBP GBP
Cost:
At 1 July 6,784,925 6,482,263
Additions 554,143 302,662
------------ ------------
At 30 June 7,339,068 6,784,925
============
Impairment:
At 1 July 615,796 615,796
Provision for impairment 33,625 -
------------ ------------
At 30 June 649,421 615,796
============ ============
Carrying Value:
At 1 July 6,169,129 5,866,467
============ ============
At 30 June 6,689,647 6,169,129
============ ============
Segmental analysis 2016 2015
GBP GBP
Botswana 6,689,647 6,148,832
Zimbabwe - 20,297
------------ ------------
6,689,647 6,169,129
============ ============
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 current year, the directors
have decided to provide in full against the carrying value of the
operations in South Africa. Accordingly, an impairment provision of
GBP33,625 has been recorded by the Group in the current year
(Company: GBP33,625).
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 GBP428 of share based
payments (2015: GBP428), GBP14,749 (2015: GBP14,008) of wages and
salaries and GBP15,000 (2015: GBP32,500) of directors
remuneration.
5. CALLED-UP SHARE CAPITAL
Allotted, called-up and fully paid: Number Share Share
Capital Premium
GBP GBP
At 1 July 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 196,228,267 1,962,283 7,824,825
------------ ---------- ----------
On 22 December 2015 the Group converted the 239,487,648
existing ordinary shares of 1p each into 239,487,648
ordinary shares of 0.25p each and 239,487,648
deferred shares of 0.75p each.
Issued during the year 98,923,533 247,309 810,208
Share issue expenses - - (37,281)
Warrants issued - - (134,847)
------------ ---------- ----------
At 30 June 2016 338,411,181 2,642,185 8,463,161
============ ========== ==========
Movements in share capital
On 22 December 2015, the Company raised GBP458,656 through the
issue of 53,959,400 new ordinary shares of 0.25p each at a price of
0.85p per share to provide additional working capital and fund
development costs. In addition, the Company settled GBP86,660 of
existing liabilities with the directors of the Company through the
issue of 10,195,450 new ordinary shares of 0.25p at a price of
0.85p.
On 22 December 2015, 64,154,850 warrants were granted to the
subscribers of the placing at a price of 0.85p per share. These
warrants are exercisable for a period of three years from 24
December 2015.
On 6 May 2016, the Company raised GBP500,000 through the issue
of 33,333,333 new ordinary shares at a price of 1.5p to provide
additional working capital and fund development costs.
On 15 June 2016, 588,250 warrants were exercised at a price of
0.85p per warrant for GBP5,000.
On 28 June 2016, 847,100 warrants were exercised at a price of
0.85p per warrant for GBP7,200.
.
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
Thursday 15 December 2016 at 10.00am. A Notice of the Annual
General Meeting is included in the Company's Annual Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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November 18, 2016 02:00 ET (07:00 GMT)