2025 a ‘tough year’ but Botswana Diamonds remain optimistic

In his reflection on the financial year ended 30 June 2025, Botswana Diamonds’ chairman, John Teeling, reflected on a “a very difficult year for the diamond industry but a year of significant progress … characterised by strategic expansion, the adoption of advanced technologies, and the strengthening of our asset base across both diamond and critical metal exploration”.

Market Overview

The Global diamond industry experienced another challenging year, characterised by muted consumer spending and continued uncertainty in several major markets. Demand in China remained soft, while the United States, the world’s largest consumer market, saw slower jewellery sales due to inflationary pressures and broader economic caution.

The situation was exacerbated by growing supply of lab-grown diamonds (LGDs), which continued to compress prices in the lower-to-mid-value segments of the natural diamond market. However, the negative effects were most pronounced in categories where volume outweighs rarity. Importantly, BOD’s exploration portfolio is aimed at higher-value stones, where natural diamonds retain strong consumer preference and pricing resilience.

During the year:

• Indian polishing activity slowed significantly due to elevated inventories and softer U.S. demand.
• Later in the year, manufacturing activity picked up as inventory levels normalised, contributing to improved sentiment.
• Several major producers introduced temporary production cuts and sales pauses, which helped reduce surplus stocked and stabilised prices.
• The pre-Valentine’s Day sales cycle exhibited signs of renewed momentum as cutters and polished restarted operations.

While global diamond demand remains uneven, the longer-term supply fundamentals remain favourable. Many alluvial and small-scale operations worldwide are uneconomic, reducing natural supply. Major producers are approaching peak output from existing mines and new large-scale kimberlite mines are few.

These dynamics underpin BOD’s strategy of focusing on value over volume and investing in geologically robust, high-potential assets in stable mining jurisdictions.

A Year of Strategic Transformation

In 2025, we made a significant shift in our strategic positioning as a mining company. For over two decades, Botswana Diamonds has been known for its disciplined, technically focused diamond exploration across Southern Africa.

While diamonds remain central to our identity and core strengths, we have responded to fundamental changes in the diamond market by diversifying into critical minerals, particularly copper.

This evolution arises not from abandoning our roots, but from leveraging them. Botswana remains underexplored for many commodities, despite its exceptional mining code, political stability, and extensive geological database. Our longstanding presence, coupled with deep operational expertise and proprietary knowledge, positions us uniquely to capitalise on these emerging opportunities.

The diversification effort is not speculative. It is built on robust data, rigorous analysis, and the integration of artificial intelligence (“AI”), which has allowed us to extract new value from over twenty years of accumulated geoscientific data.

We also believe that we are aligned with government policy in terms of both continuing diamond exploration while diversifying into alternative potential mineral resources for the benefit of Botswana’s future economic prosperity.

Harnessing Artificial Intelligence to Drive Discovery

The Company’s strategic collaboration with Planetary AI Ltd was one of the defining initiatives of the year. Our objective was simple but ambitious: to use advanced semantic AI to evaluate the vast, disparate mining related data collected over decades, and to identify previously overlooked mineralisation potential across Botswana.

The results were exceptional:

• AI identified seven entirely new kimberlite targets in areas that had not previously been considered prospective.
• Eleven high-quality critical metal targets were generated, particularly copper, but including nickel, PGMs, zinc-silver, and gold prospects.
• The platform integrated more than 375,000 km of airborne geophysics, 228,000 soil samples, 32,000 drill logs, and extensive open-source datasets.
• Over 57 mineral deposit models were applied to generate high-resolution prospective areas.

This is one of the most advanced applications of AI in mineral exploration undertaken in Botswana and positions BOD among the industry’s early adopters of data-driven exploration at scale. The initiative has opened new frontiers, accelerated our targeting pipeline, and derisked the early stages of exploration.

It also sends a powerful message about the future of the Company:
Botswana Diamonds is becoming a modern exploration business-leveraging technology, innovation, and decades of knowledge to unlock new value.

Expansion into Critical Minerals

Following the AI programme, we submitted eight Prospecting Licence (PL) applications across Botswana covering 6,550 km², targeting:

• Predominantly, copper, but also,
• Nickel, PGMs, lead-zinc-silver and gold.

These applications were prompted by the identification of multiple mineralised corridors, several of which show geological similarities to known prospective areas in neighbouring countries. Botswana has seen limited exploration for many of these commodities, offering first-mover advantage and a low-cost entry point for value creation.

We are hopeful of obtaining these licences, after which fieldwork will begin immediately. We have initiated discussions with potential partners who recognise the strategic importance of the portfolio.

New Kimberlite Discoveries

The initial AI analysis identified multiple new kimberlite anomalies that had never before been recorded. Four new diamond PLs were granted over high-priority targets, including the exceptionally promising Jwaneng South-West zone, where historical samples included abraded diamonds-an indicator of potential high-value sources nearby.

These new licences reflect not only the strength of our targeting but also the enduring geological potential of Botswana’s diamond fields.

Legacy Projects: Preserved and Enhanced

Our legacy Botswana diamond assets remain a cornerstone of future value:

• KX36: A high-quality, SAMREC-compliant kimberlite resource of 12-13 million carats, with new AI targets identified nearby.
• Maibwe: Licence renewals in process, ownership increased, and new potential identified for future work.
• Data archives: Modernised into an AI-ready, integrated, digital resource.

We enter the coming year with one of the most robust, data-rich diamond exploration portfolios in Botswana.

Our South African portfolio delivered an important milestone: the granting of the first Mining Permit at Thorny River.

Thorny River is an asset of considerable potential. Independent assessments indicate that a viable small open pit is achievable, and mining could generate early cash flow to support the wider business. We await the granting of the second permit, which will enable the full development plan to progress. The current weakened state of the diamond industry will delay commercial production.

Elsewhere in South Africa:

• Marsfontein demonstrated strong potential, supported by historically exceptional grades and favourable near-surface geology.
• Reivilo provides an attractive kimberlite cluster opportunity, secured via a Data Licence Agreement with minimal capital exposure.

These projects complement our Botswana pipeline and provide optionality and diversification potential.

Financial Prudence and Capital Discipline

Botswana Diamonds has always operated with disciplined financial management, and this year was no exception. We expanded our exploration footprint and embraced cutting-edge technology while maintaining modest overheads and directing funds to areas of highest strategic value.

The Board recognises that prudent capital allocation is essential in exploration, particularly during periods of market volatility. Our approach ensures that the Company remains agile, resilient, and capable of advancing when opportunities emerge.

Outlook: A Pipeline for the Future

The Company enters the new financial year with momentum and clear strategic direction.

• Our diamond portfolio-anchored by KX36, Maibwe, Thorny River, and newly discovered kimberlite targets-is stronger than ever.
• Our critical minerals applications give us potential exposure to commodities essential to global decarbonisation.
• Our AI-assisted exploration model provides a competitive advantage, improving success probability and reducing cost.
• Our two-decade presence in Botswana and South Africa remains a key advantage in terms of political stability, regulatory transparency, and geological potential.

We believe that the work completed this year lays the foundation for significant value creation in the medium term. Early-stage exploration is inherently uncertain, but the breadth and quality of our pipeline provide multiple pathways to success.

On behalf of the Board, I extend sincere thanks to our management team, employees, and technical partners. Their expertise and commitment have been vital to a year of substantial progress. I also thank our shareholders for their continued support, patience, and belief in our long-term strategy.

We look forward to the future with optimism, purpose, and determination.