Business Overview
Botswana Diamonds Plc (LON: BOD) is based in the United Kingdom. It focuses on diamond exploration and mining-related project development. Botswana is the key place for the exploration activities of the Group. The company's operations are in Botswana, South Africa and Cameroon. It operates in Orapa where its mines are located. It also operates in Gope which is a diamond province with one mine, Ghagoo. The company is engaged in a joint venture with Alrosa, a Russian company, in Orapa and its operations are carried out under Sunland Minerals.

Recent News
On 5^th February 2020, the company announced that for the purpose of AIM rules, it had appointed Novum Securities Limited as its joint broker.

Financial Highlights - Financial Year 2019 (30^th June 2019, GBP)

(Source: Interim Report, Company Website)

In the fiscal year 2019, the company’s operating loss grew to GBP 772,104 as compared to a loss of GBP 556,407 in the fiscal year 2018. Loss for the year before taxation was GBP 772,104 as compared to a loss of GBP 557,657 in the same period last year. Loss for the year after taxation was GBP 772,104 as compared to a loss of GBP 557,657 in the same period last year. Total comprehensive loss for the FY2019 was GBP 905,051 against a loss of GBP 630,009 for FY2018. Basic loss per share increased in the fiscal year 2019 to 0.14p as compared to basic loss per share of 0.12p in the fiscal year 2018.

Share Price Performance  

Daily Chart as on 17^thFebruary 2020, before the market closed (Source: Thomson Reuters)

On February 17^th, 2020, Botswana Diamonds Plc shares were trading at GBX 1 at the time of writing before the market close (at 2:20 PM GMT), up by 5.26 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 1.44/GBX 0.45. The stock price has given37.93 per cent returns during the previous year. In the last three months, the stock price has given 8.10 per cent returns, and now we expect some correction in the stock price.

Conclusion
In the fiscal year 2019, the company’s financial performance has declined. The company operates in a licence obligations scenario, if the company fail to cope up with the licence obligations, it could hamper its operations. Inability to secure funding for its operations could affect the operations as well as the business of the company. The group has planned to ramp up the Marsfontein gravel production to generate immediate cash flow which shows the inability to generate cash from outside sourcing. The Group is not able to win investor’s trust due to which it is facing difficulties in securing funds. There are geological and developments related risks which could affect the overall business of the company. In the mining business, the operations are capital intensive, and there is no guarantee of obtaining commercially recoverable products which could affect the revenue and profitability of the Group. Fluctuation in foreign exchange rates could affect the profitability of the Group. Political risks and macroeconomic related risks could affect the overall business of the company. Due to all these factors, the company is failing to gain interest from investors, and it is unable to gain the trust of the investors. The company’s outlook is looking unattractive.

Based on the above rationale, we recommend investors to “AVOID” taking fresh positions in the stock at the current price of GBX 1.04 (as on 17th February 2020 before the market close at 8:05 AM GMT).

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