Botswana Diam Regulatory News (BOD)

18 December 2012

Botswana Diamonds PLC

Preliminary Results for the Year Ended 30 June 2012

Botswana Diamonds plc (AIM: BOD) ("Botswana Diamonds" or "the Company") today announces financial results for the year ended 30 June 2012.

Highlights within the period:

·; Awarded a new 249 square kilometre diamond exploration licence in Botswana, licence PL170/2012, about 30 kilometres from the world-class Letlhakane diamond mine

·; Raised £1.51 million through a placing and direct subscriptions with the company

·; First diamond recovered during sampling project at Libongo, Cameroon

Post Period End Highlights:

·; Positive results from follow up gravity and ground magnetic surveys on anomalies identified in licence PL170/2012, Botswana

·; 13 targets, believed to contain diamondiferous kimberlites, identified following exploration activities with JV partner (a multinational diamond major) in Botswana; targets identified through use of JV partner's bespoke technology applied to data collected by Botswana Diamonds

·; Exploration licences applied for and exploration programme ready to proceed once licences obtained; 40 drill holes budgeted for

·; Technical Cooperation Agreement with JV partner extended to mid-2014

·; Additional diamonds discovered in Cameroon

John Teeling, Chairman, Botswana Diamonds, commented:

"In the last year Botswana Diamonds has made good progress. The early indications from the work we have carried out in both Botswana and Cameroon are encouraging. We will undertake substantial drilling in 2013, all of which is fully funded, and are targeting the discovery of one or more diamondiferous kimberlites. While nothing is certain in exploration, we are optimistic." 

Enquiries:

Botswana Diamonds PLC

John Teeling, Chairman +353 1 833 2833

Robert Bouquet, Director +32 477 228851

Westhouse Securities Limited

Richard Baty +44 (0)20 7601 6100

Petre Norton

Keith Bayley Rogers & Co. Limited

Niall Pearson +44 (0)20 3100 8139

Hugh Oram +44 (0)20 3100 8170

Blythe Weigh Communications +44 (0)20 7138 3204

Tim Blythe +44 (0) 7816 924626

Paul Weigh +44 (0) 7989 129658

Roberts Kellner +44 (0) 7800 554377

Pembroke Communications

David O'Siochain +353 1 649 6486

www.botswanadiamonds.co.uk

Statement Accompanying the Preliminary Results

Mining lore has it that the best place to find a mine is where there is or was a mine. In diamonds, the best place is Botswana, the world's biggest producer by value. For years the principals in Botswana Diamonds (BOD) have explored Botswana. They were successful with the discovery of what is now the Karowe mine, which opened in 2012. BOD is the successor company to that which discovered Karowe - African Diamonds. We have good ground, a large data base and a strong and experienced team.

On top of this we also have a unique advantage in that a diamond multinational is applying their proprietary technology to our data to identify what they believe will be previously unknown, large diamond-bearing kimberlites - the source of all Botswana's diamonds. Following a year's successful technical co-operation a total of thirteen sites have been identified in the Orapa area of northeast Botswana. Ground has been applied for and plans made to survey and drill the targets. An exciting year lies ahead.

Before discussing the exploration projects being undertaken by the company let me look at the fundamentals of the diamond industry. In a sentence, diamonds are scarce, yet women all over the world want them. A detailed Bain report predicts annual growth in demand of 6.0%. They analysed all sources and concluded that supply would be flat. It takes years from diamond discovery to first production so the only way to match demand to supply in the near future is through increased prices. Wild price swings in recent years do not help accurate forecasting. These swings reflect availability of cheap credit driving up prices and credit clampdowns leading to sell offs causing sharp price falls. But the fundamentals appear sound.

What is in a state of flux is the structure of the industry. The diamond industry was one of the world's great monopolies. For almost a century De Beers exercised control of supply and prices. In the last two decades the monopoly first cracked then broke. Big companies such as BHP Billiton and Rio Tinto entered the industry. They either bought into or discovered new mines. Also, Alrosa, the Russian state diamond company, long excluded from selling directly to world markets, gradually took control of their domestic marketing. Alrosa now outperforms De Beers in terms of diamond output in carats - 40% of the world's diamonds from seventeen mines. Junior exploration companies appeared but many are struggling. De Beers itself has now been re-absorbed back into Anglo American. Recently, BHP and Rio Tinto decided to exit the industry after failing to reach the scale demanded by their respective boards. What is sure is that more change is coming.

Turning now to operations, Botswana is the focus. This is a very exciting time for us in Botswana.

·; We will drill our 100% owned licence PL170/2012 in early 2013. The indicators are good.

·; Our year-long data analysis with our multinational colleagues has identified thirteen targets in the Orapa area. Of these, six are high priority. We have a joint budget of $1 million for 2013 to explore and to drill up to forty holes.

·; The good results from the Orapa analysis have led us to extend the Technical Cooperation Agreement with the multinational to mid-2014 so that the southern part of Botswana can also be analysed.

In April we were awarded PL170/2012 - a very prospective 249 sq km licence about 30 km from the world class Letlhakane diamond mine. Geology indicates that this part of Botswana should be very prospective for diamonds but sand and basalt cover meant that there was relatively little serious exploration unlike the two adjacent licences where excellent indicators were found. Incidentally, so impressed are we with the results to date from PL170 that we have applied for the adjacent ground which is now available.

An intensive programme of evaluating all historical data on PL170 was followed by ground gravity and ground magnetic surveys combined with soil sampling which found G-9 and a few G-10 garnets. Twelve anomalies were whittled down to five of which three have been prioritised for drilling in early 2013. Of particular interest is BOD7, a fifteen hectare anomaly with good signatures.

The work being done with the diamond multinational is focussed and producing very specific results. This company, as yet unnamed, has applied their specific, proven technology to a large data base compiled by Botswana Diamonds personnel. The objective is to identify sites which may contain diamond-bearing kimberlites. The work outlined thirteen targets in the Orapa region. We have agreed a budget to explore and drill these targets. The budget allows for forty drill holes. We need to secure the ground and to negotiate the details of the joint venture. It is important to note that these sites are thought to contain previously undiscovered kimberlites which may contain diamonds.

The success of the first year of analysis led the partners to extend their Technical Cooperation Agreement until mid-2014 so that the south part of Botswana can be evaluated. This means we are running two separate programmes with our colleagues.

Our second area of operations is in Cameroon where the search is for palaeoplacer diamonds. Diamonds in palaeoplacer conglomerates is a new concept only slowly gaining credence in the exploration industry. A Korean company, CNK, has found diamonds in such rock in Mobilong in Eastern Cameroon - a very remote rainforest up to seven days drive in wet weather from the capital Yaounde. But you must go where the diamonds are.

Botswana Diamonds applied for ground adjacent to the Mobilong diamond discovery. Libongo is an 8,000 sq km block of rainforest. Preliminary prospecting found palaeoplacer rock. A follow up sampling programme in 2012 was designed to discover if the rock contains diamonds. It does. The next stage is a ground sampling exercise to discover the spread of diamonds followed by drilling. But, the sampling programme recently completed also identified the difficulties of operating in such remote areas. Over the past year discussions have taken place with CNK on how we might cooperate. Ideas range from shared logistics to equity involvement. In the coming months Botswana Diamonds will work with CNK and with expert consultants to see how best we can work together.

Zimbabwe, our remaining theatre of activity, remains problematic. It is believed that the Marange palaeoplacer deposit is producing 12 million carats a year of diamonds worth $40 a carat. We had an interest in developing Block J in Marange. The ground was given to a Chinese/Zimbabwean group. We had an agreement with locals to develop and mine in the Chimanimani area where we discovered diamonds in palaeoplacers in 2010. After tortuous negotiations a licence was obtained but the cash demands of locals made the project non-viable.

Finance

Botswana Diamonds raised £1.51m in March 2012. This money will fund all proposed exploration until end 2013. In common with other AIM listed companies we believe that our share price does not reflect the value in the company. Many investors in Botswana Diamonds got their shares for nothing as part of the Lucara deal to buy African Diamonds. Arbitrageurs bought into African Diamonds as a proxy for Lucara, which is quoted in Toronto. They ended up with unwanted Botswana Diamonds shares. At various times over the short two year life of Botswana Diamonds blocks of shares have hit the market driving down the price. We hope and believe that these loose holders have now all sold.

The Future

Drilling and more drilling. The target in 2013 is one or more diamondiferous kimberlites. More mines will be discovered in Botswana. We have data and the best available technology to outline targets.

The drilling will tell the truth. We are optimistic.

John Teeling

Chairman

18 December 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

Share Premium

The Share Premium comprises the excess over par value.

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 year and prior period.

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 intercompany loans, denominated in foreign currency.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2012

NOTES:

1. ACCOUNTING POLICIES

There were no changes in accounting policies from those set out in the Group's Annual Report for period ended 30 June 2011. 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 period 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 including:

- price fluctuations;

- foreign exchange 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;

- liquidity risks;

- funding risks;

- going concern; and

- operational and environmental risks.

Included in additions for the year are £2,950 of share based payments (2011: £13,075), €17,822 of wages and salaries and £50,000 (2011: £Nil) of directors remuneration.

4. CALLED-UP SHARE CAPITAL

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. GENERAL INFORMATION

The financial information set out above does not constitute the Company's financial statements for the year ended 30 June 2012. The financial information for 2011 is derived from the financial statements for 2011 which have been delivered to the Registrar of Companies. The auditors have reported on the 2012 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 2012 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.

6. 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 Thursday 24 January 2013 at 1.00pm.