London Stock Exchange (LSE) explorer Botswana Diamonds (BOD)’s operating losses increased by 45 percent last year as the company lamented a lack of investment and an exploration sector which is “out of favour.”
According to BOD financial results for the year ended 30 June 2018 released this week, losses plummeted from P4 233 874 in 2017 to P7 577 267 this current year. One of the things that pumped BOD’s losses and keeping the company on a back-foot is the “impairment of exploration and evaluation assets” charge of P2 444 795, according to the company’s annual results. BOD lost P985 304 on exchange difference on translation of foreign operations when compared to the previous year with a profit of P2 028 160.
A deficit of P8 579 594 compared to P2 204 352 in the previous year was recorded in total comprehensive income. “Despite making progress we have struggled to attract investors. We are not alone. The junior exploration sector is out of favour,” said BOD in its latest financial report.BOD also believes funding is “difficult, expensive and dilutive” due to its share price and those of its peer companies languishing at near the bottom of their price range. BOD’s share price on the London Stock Exchange is currently 0.66 Pounds and has gone done by 2.22 percent.
THE BOTSWANA PROJECTS
BOD operates in three sub- Saharan countries – Botswana, South Africa and Zimbabwe. The company said: “Each of the three has different political risk profiles but share one crucial factor – they are geologically favourable for diamonds. We must explore in locations where we can find diamonds. While this seems obvious it is not. Very few places on earth are thought to contain diamond bearing rocks.”
BOD has two ongoing projects in Botswana – Sunland Minerals and Maibwe. The Sunland Minerals was established in 2014 as a 50:50 equal contribution joint venture between BOD and Alrosa, the Russian diamond producer. In this latest endeavor, BOD has vowed to use the latest Alrosa exploration technology with its huge data base and on the ground knowledge. The exploration company’s second project – the Maibwe joint venture has been mired in an ongoing liquidation in Botswana with regards to the ongoing winding up of the copper smelter BCL.
“It should be noted that drilling in the Gope region of the Kalahari on four of the Maibwe licences produced very good results in 2016. Maibwe is a joint venture between BCL, a State owned copper company in Botswana (51 percent), local interests 20 percent and Siseko, a South African company controlled 51 percent by Botswana Diamonds. This means the net interest to Botswana is 15 percent. BCL is in a protracted liquidation. I am pleased to report that progress has been made. BCL has recently produced a prospectus on the Maibwe project in the hope of disposing of their interest. There are pre-emption rights in Maibwe. I hope to report progress to shareholders in the coming months,” said BOD.
The exploration company said over the decades of experience the BOD directors have had success, providing significant returns to investors. BOD had a rare success in diamonds with the discovery and development of the Karowe mine in Botswana – one of the world’s highest per carat value mines.
“We believe that we can reduce the very high risk in exploration by country selection, ground selection and the application of not only the latest exploration technology but also the knowledge, experience and “savvy” of our prospector’s, technicians and management. It remains high risk but we believe that our approach significantly reduces the risk,” said BOD.
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.
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.
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.