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BTC shares undervalued, opportunity for astute investors- Experts

30 November 2019: Investment experts have advised that BTC shares are undervalued in the market given its strong balance sheet, positive growth prospects, extensive coverage and consistent dividend yield.
 

Today, BTC has one of the highest dividend yields on the Botswana Stock Exchange (BSE). An investor who bought shares at Initial Public Offer (IPO) two years ago and never sold their shares, has so far made 33% return on their investment.  “Long term investors should not be moved by the short-term volatility of BTC shares as the fundamentals remain strong for the business. In fact any short-term weakness should be taken as an opportunity by astute long-term investors to increase their holdings.

We have seen it before how some astute investors have taken advantage of BTC share price drop by increasing their holdings and they have been rewarded handsomely when the share price picked up,” says Garry Juma Motswedi Securities Head of Research and Executive Director. Stockbrokers Botswana CEO, Bokete Mokgosi echoes similar sentiments but emphasizes the risk as being driven by retail investors who are primarily concerned with meeting their own liquidity requirements resulting in constant oversupply.

“Perhaps in answering your question let me begin by addressing the volatility the counter is currently experiencing which represents a liquidity risk in the stock. We have observed this as perhaps the most pertinent risk preventing the BTC share price from reaching its intrinsic value. The stock is largely traded by retail investors who are primarily concerned with meeting their own liquidity requirements, resulting in constant oversupply of shares in the market,” notes Mokgosi.

The Stockbrokers’ Chief Executive believes that BTC has made huge investments towards heightening its competitive advantage in the market and thus proves an ideal haven for long-term investors. “BTC is unparalleled in mobile network coverage, estimated to cover 90% of the population. The firm’s network coverage pans across previously undeserved remote areas where competitors have little to no presence,” he highlights.

“BTC’s investment case is supported by strong fundamentals such as convergent product offering – Given BTC’s unique position as the sole fixed network operator, the firm is able to offer its fixed, mobile, and other products and services in a convergent portfolio. Leveraging on this competitive advantage is a key component of its commercial strategy.  BTC is a highly cash generative business and returns profits to shareholders with a 50 – 65% dividend pay out policy. The balance sheet is of low risk with no gearing which provides ample capacity to raise debt if need be.”

“The volatility and inefficient pricing of the stock is indeed an opportunity for investors to pick the shares up at extremely cheap levels. We expect price discovery once the counter is open for trading to non-citizens. Therefore, it is best investors buy the shares now while they are extremely undervalued.  BTC also offers tremendous value, as its net dividend yield at 11.7% is more than double the market’s weighted net dividend yield of 5.5% as at 23 November 2018,” Mokgosi concluded.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives 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, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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