Notes:

1.            INFORMATION

The financial information for the six months ended 31 December 2020 and the comparative amounts for the six months ended 31 December 2019 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 2020 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):

4.             INTANGIBLE ASSETS

Exploration and evaluation assets relate to expenditure incurred in exploration for diamonds in Botswana, South Africa and Zimbabwe. 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.

During the prior year, some licences held by the Group in its subsidiary company Sunland Minerals (Pty) Ltd were relinquished. Therefore, the directors decided to impair the costs of exploration on these licences. Accordingly, an impairment of £34,394 (2019: £435,139) had been recorded by the Group in the year ended 30 June 2020.

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 earned a 40% equity interest in the project.

On 20 July 2020 the Company agreed to acquire the KX36 Diamond discovery in Botswana, along with two adjacent Prospecting Licences and a diamond processing plant. These interests are part of a package held by Sekaka Diamonds. Botswana Diamonds plc acquired 100% of the shares of Sekaka. The vendor was Petra Diamonds. The consideration comprised a cash payment of US$300,000 and a 5% royalty on future revenues.  The cash consideration is payable on a deferred basis with US$150,000 payable on 27 November 2021 and the balance on or before 27 November 2022. The acquisition was completed on 30 November 2020.

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 £7,223 (June 2020: £14,599) of wages and salaries and £30,210 (June 2020: £76,910) of directors remuneration which has been capitalized. This is for time spent directly on the operations rather than on corporate activities.

5.             SHARE CAPITAL

Movements in share capital

On 18 July 2019, the Company raised £250,000 through the issue of 50,000,000 new ordinary shares of 0.25p each at a price of 0.50p per share to provide additional working capital and fund development costs.

On 18 November 2019, a total of 1,000,000 warrants were exercised at a price of 0.60p per warrant for £6,000.

On 28 January 2020, the Company raised £250,000 through the issue of 41,666,667 new ordinary shares of 0.25p each at a price of 0.60p per share to provide additional working capital and fund development costs. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per share for a period of two years from 28 January 2020.

On 12 June 2020, a total of 2,000,000 warrants were exercised at a price of 0.60p per warrant for £12,000.

On 7 September 2020, The Company raised £300,000 through the issue of 50,000,000 new ordinary shares of 0.25p each at a price of 0.60p per share to provide additional working capital and fund development costs. Each placing share has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per share for a period of two years from 7 September 2020.

6.             SHARE BASED PAYMENTS

WARRANTS

Further information of the warrants are detailed in Note 5 above.

7.            POST BALANCE SHEET EVENTS

On 22 January 2021 the Company announced that it had raised £363,000 via the placing of 60,500,000 new ordinary shares at a placing price of 0.60p 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 22 January 2021.

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.

On 16 February 2021 the Company announced it had entered into a cooperation agreement to fund exploration of its prospecting licence assets in Botswana with Diamexstrat Botswana Pty Ltd ("DESB"), which in turn has an alliance agreement with Burgundy Diamond Mines Limited ("Burgundy" ASX: BDM).  Botswana Diamonds prospecting assets comprise the recently acquired Sekaka Diamonds Exploration Pty Ltd database and Prospecting Licenses, as well as the Prospecting Licences held by Botswana Diamonds subsidiary, Sunland Minerals Pty Ltd.

Cooperation Agreement highlights;

-      DESB (and its partner, Burgundy) can earn up to a 70% interest in BOD's Botswana Sunland Minerals and Sekaka's Prospecting Licences

-      BOD can earn a 15% interest in Prospecting Licences held by DESB (and partners) on the first US$1.5m spent on exploration by DESB where BOD's database assists in the discovery of a primary kimberlite

-      On 3^rd party Prospecting Licences where targets are identified in BOD's database, a joint earn-in will be negotiated at the time

-      For new Botswana Prospecting Licences, DESB (and its partner, Burgundy) can earn up to 70%

8.            APPROVAL

               The Interim Report for the period to 31^st December 2020 was approved by the Directors on 29^th March 2021.

9.            AVAILABILITY OF REPORT

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