Botswana Diamonds (BOD) has reported a loss according to its Interim Results for the Six Months Ended 31 December 2015. The results showed that the diamond exploration company recorded an operating loss of £155, 000 which was better than £166, 000 reported in the same period in 2014. Loss before taxation stood at £161, 000 as opposed to £166, 000 on the prior year.
The same figures were recorded after taxation. BOD said the total comprehensive loss for the period widened from £149, 000 from Six Months Ended 31 December 2014 to £274, 000.
The company, which is scouring for diamonds in the Orapa and Gope areas in Botswana, said in a statement accompanying the results that its focus is to maximise the full potential of the Botswana operations. “Therefore, the directors have decided to provide in full against the carrying value of the operations in South Africa. Accordingly, an impairment provision of £33,625 has been recorded by the Group in the current period,” the company said.
The group has 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.
Equally, 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 retains a 15% carried interest. On August 16 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 company Chairman, John Teeling said despite the depressed market for diamonds and the total lack of investor interest in exploration companies, “diamonds are a luxury product and will always appeal to jewellers and their customers in Europe, North and South America, Asia and throughout Africa.”
He said prices and investor interest are in the doldrums and have been for several years adding there is a well-known investor cycle in exploration shares.
“Exploration shares are by their nature high risk. Investors accept the risk in the hope and expectation of significant returns with exploration success and that is what happens,” stated the charismatic Irishman.
Since 2010, AIM listed exploration shares have been in a severe bear market which has been exacerbated by declines in the commodity super cycle due to slowdowns in the Asian markets.
“The net effect of these trends is that there is very little fresh capital available for explorers. That which can be obtained is at highly dilutive share prices,” he added. In recent years, Botswana Diamonds has raised new capital to meet their commitments in Botswana. Most recently in late 2015 over £500,000 was raised. The source of this money has been mainly directors, family and friends.