Botswana Diam Regulatory News (BOD)

22 November 2013

Botswana Diamonds PLC

Preliminary Results for the Year Ended 30 June 2013

Botswana Diamonds plc (AIM: BOD) ("Botswana Diamonds" or "the Company") today announces financial results for the year ended 30 June 2013.

Operational Highlights:

· Exploration joint venture signed with the world's largest diamond producer, Alrosa.

· High potential targets identified in Botswana.

· Field work begins January 2014.

Enquiries:

www.botswanadiamonds.co.uk

Statement Accompanying the Preliminary Results

Botswana Diamonds is about to enter a high powered phase of exploration. In early January 2014 the first ground phase of our joint venture with Alrosa will begin when four Russian geologists will start fieldwork on PL117 in the Orapa area of Botswana. It has taken two years to negotiate the joint venture. Most of the time was well spent with Botswana supplying mountains of data and Alrosa analysing it and identifying targets. PL117 contains the top ranking targets. A series of other targets are lined up to follow including areas where deep sand cover has meant that no kimberlites have ever been discovered.

Ladies all over the world want diamonds. As 2 billion people become middle class in the next two decades the demand for gem quality diamonds is expected to grow at a faster rate than the supply of new diamonds coming to market. The result is expected to be rising prices.

Contrast this benign environment with the economic turmoil in the rough diamond segment, the weakness in the share prices of diamond producers and the depression in the prices of diamond explorers who find it almost impossible to raise fresh equity.

For a century De Beers maintained an orderly market in diamonds. They held a virtual monopoly on supply which is the key to controlling prices. In recent years there has been significant structural change and De Beers' monopoly is no longer. Our partner, Alrosa, the recently listed Russian producer, is now the largest diamond producer in the world. A number of multinational miners, RTZ and BHP tried to gain a foothold in the industry with limited success. A number of independents have emerged with a small impact.

Marketing of rough diamonds has changed dramatically. The "sight" in London has moved to Gaborone in Botswana which is fast becoming the hub of the world diamond industry. Dubai has become a major if not the major diamond trading centre and Indian buyers now dominate the trade. One result is significantly more volatility in prices as auctions replace the "sight".

Botswana Diamonds, formed in 2011 from the exploration assets of African Diamonds, is focused on Botswana. We hold very good prospective ground and in July 2013 signed a joint venture with Alrosa of Russia to explore the Orapa area of Botswana. In addition to our Alrosa joint venture we hold ground in the Gope region in a joint venture with a South African company while we have sole ownership of three licences 30 km east of the Lethlekane mine in Orapa.

The Alrosa Joint Venture

Alrosa believes that its exploration techniques can predict the location of diamondifereous kimberlites up to 100m below a cover of Kalahari sand and basalt. The first test of this will be in Q1 and Q2 2014 when the joint venture will explore PL117, a 2.9 sq km licence in Orapa, very close to the new Karowe mine which is producing spectacular diamonds.

Few, outside of the mining industry, understand the difficulties of "seeing" into the ground. Most new discoveries are made from surface indicators or by exploring where there is or was a mine. But, once the surface is explored you have to go deeper. There are no magic bullets. Despite the best efforts of the world's leading mining companies the only lie detector is a drill hole.

Alrosa working in Siberia, with no access to Western technology, developed new techniques and adapted existing methods to handle the tundra which has an overburden up to 200m thick before they hit rock. Over decades Alrosa has refined these techniques and has had remarkable success to the extent that they are now the number one diamond producer in the world by volume, with 17 producing mines.

The directors of Alrosa believe that their techniques can work in Botswana, the home of diamonds and the world's biggest producer by value. Most of Botswana is covered by the Kalahari desert. For 18 months Alrosa and Botswana Diamonds have gathered and analysed as much data as possible on Botswana geology in the Orapa region - the logical place to start where four of the world's great diamond mines exist.

Twelve targets have come from this analysis. We have applied for ground covering these targets. The process is slow and opaque. Some of the ground was already under licence so we have had to adapt.

The top target identified by Alrosa was in an area covered by a small 2.9 sq km licence held by local interests. We farmed into this licence. This is ground we know well having held it earlier under the African Diamonds name. In 2004 we discovered a five hectare kimberlites, AK10, containing diamonds. We spent over $2,000,000 exploring it only to drop it in favour of the AK6 discovery 6 km to the South. AK6 is now the Karowe mine of Lucara. A detailed work programme using four Russian geologists will commence in January 2014. The objective is to refine drill targets. This should be followed by a drilling programme in March/April 2014. There are high expectations for this work but it is grassroots exploration.

Other Exploration Activities

While Alrosa is focused on the Orapa region they ran an analysis of the Gope area of Botswana. This is in the Kalahari Game Reserve so environmental considerations are paramount. The area is highly prospective. The Ghagoo mine is expected to come on stream in late 2014 while a significant discovery has been made on KX36 in the East of the area.

South African and local interests had obtained a substantial block of 13 licences covering much of the area. Botswana Diamonds has a joint venture with the licence holders whereby we can earn a 51% interest in the block by spending US$940,000. Farming in makes sense. If you discover something exploration spending very quickly brings you to 95%. If you find nothing it matters little what percentage you hold.

Our geologists, with the assistance of Alrosa, have identified a series of targets which, finance permitting, we will explore in 2014.

We had high hopes for PL170 a 100% owned exploration licence to the West of Orapa. The ground has good geophysical signatures while diamond indicator minerals, garnets, ilmenities and spinels were found. We drilled 4 holes in early 2013 but found no kimberlites.

The geology is good. The indicator minerals have come from somewhere. We successfully applied for two adjacent licences. During 2014 we will collect, collate and analysis all of the available data. The licences are valid until 2016.

Other Projects - Cameroon, Mozambique and Bugeco

The outstanding opportunities and potential in Botswana led to a board decision to focus our activities in this country. We have excellent ground in Cameroon adjacent to a developing Korean owned diamond mine. We maintain contact with the Korean firm.

We evaluated an alluvial opportunity on the banks of the Save River on the Zimbabwe/Mozambique border. The Save drains the Maranage area of Zimbabwe which is now a major world class diamond producing region. There is undoubtedly potential in the area but the terms of the joint venture and the costs of exploration outweighed the benefits.

A legacy asset of African Diamonds transferred to Botswana Diamonds at no cost is, a 35% shareholding in Bugeco, a privately held Belgian explorer focused on the Congo. A diamond joint venture came to nothing but a 20% interest in a large base metal licence has attracted the interest of Robert Friedland the legendary mining entrepreneur. He is taking control of Concordia, a TSX company, which owns the other 80% of the Congo licence. He wants 100% ownership so Bugeco is selling the 20% for cash and shares. When the Concordia and Bugeco transactions complete in Q1 2014 Botswana Diamonds will look to dispose of its interest in Bugeco. Whilst the sale is dependent upon the completion of the wider transaction and the structure of any disposal is yet to be agreed current estimates are a return of about US$450,000 cash to Botswana Diamonds for the interest in Bugeco.

Future Strategy

Our exploration ambitions are limited by our finances. The retail market for fresh equity in AIM listed explorers is virtually non-existent. Falling share prices not only dilute existing shareholders when funds are raised but also make funding more difficult as investors believe that by waiting prices will be lower. Often they are right. We are hoping to place shares with long term investors. The directors take shares instead of financial compensation.

We will have the funds to operate the Alrosa joint venture which has a 2014 budget of £600,000 on a 50/50 basis. Our second priority is to fund the Gope area exploration. Diamonds have wonderful demand fundamentals. They are very scarce and hard to find. The best way to find them is to use the best technology, best and experienced people on the most prospective ground. This we are doing. We look forward to the future with great confidence.

John Teeling

Chairman

21 November 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2013

Share Premium

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 YEAR ENDED 30 JUNE 2013

NOTES:

1. ACCOUNTING POLICIES

There were no changes in accounting policies from those set out in the Group's Annual Report for the year ended 30 June 2012. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2. 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):

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:

3. INTANGIBLE ASSETS

Exploration and evaluation assets:

Exploration and evaluation assets relate to expenditure incurred in exploration for diamonds in Botswana, Zimbabwe and Cameroon. 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 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 sharingand 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 £3,378 of share based payments (2012: £2,950), £16,429 (2012: £17,822) of wages and salaries and £50,000 (2012: £50,000) of directors remuneration.

4. CALLED-UP SHARE CAPITAL

Allotted, called-up and fully paid:

Movements in share capital

On 16 February 2012, 37,750,000 new ordinary shares were issued at a price of 4p per share to provide additional working capital and fund development costs.

5. POST BALANCE SHEET EVENTS

On July 23 2013 the group entered into an agreement with Siseko Minerals (Pty) Ltd over the 13 licence Brightstone block in the Gope area of Botswana. Under the terms of the agreement the company will earn a 51% interest in the block by spending up to US $940,000 over three years.

On July 25 2013 the group entered into an agreement with Eversharp Investments (Pty) Ltd over the PL117/2011 licence area in Botswana. Under the terms of the agreement the company will earn a 51% interest in the block by spending up to US$300,000 over three years.

On August 16 2013 the group entered into a joint venture agreement with Sunland Holdings SA a wholly owned subsidiary of OJSC Alrosa of Russia to explore for diamonds in Botswana

6. GENERAL INFORMATION

The financial information set out above does not constitute the Company's financial statements for the year ended 30 June 2013. The financial information for 2012 is derived from the financial statements for 2012 which have been delivered to the Registrar of Companies. The auditors have reported on the 2013 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. The financial statements for 2013 will be delivered to the Registrar of Companies.

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.

7. 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 Friday 20 December 2013 at 11.00am.