MIRA INFORM REPORT

Report No. :	328977
Report Date :	22.06.2015

IDENTIFICATION DETAILS

Name :	BOTETI MINING PVT LTD
Registered Office :	Diamond Technology Park Aeh Block 8 Industrial Park Suite 211, P. o. Box AE 668, Gaborone
Country :	Botswana
Date of Incorporation :	2001
Legal Form :	Limited Corporation
Line of Business :	Subject operate mining and exploration of diamond
No. of Employees :	850

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Slow but correct
Litigation :	Clear

NOTES:

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ECGC Country Risk Classification List – March 31, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
Botswana	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

BOTSWANA - ECONOMIC OVERVIEW

Botswana’s diamond dependent economy has maintained one of the world's highest economic growth rates since independence in 1966. However, economic growth was negative in 2009, with the industrial sector shrinking by 30%, after the global crisis reduced demand for Botswana's diamonds. Although the economy recovered in 2010-12, GDP growth slowed in 2012-14. Through fiscal discipline and sound management, Botswana transformed itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of $16,600 in 2014. Two major investment services rank Botswana as the best credit risk in Africa. Diamond mining has fueled much of the expansion and currently accounts for more than one-third of GDP, 70-80% of export earnings, and about one-third of the government's revenues. Botswana's heavy reliance on a single luxury export was a critical factor in the sharp economic contraction of 2009. Tourism, financial services, subsistence farming, and cattle raising are other key sectors. According to official government statistics, unemployment reached 17.8% in 2009, but unofficial estimates run much higher. The prevalence of HIV/AIDS is second highest in the world and threatens Botswana's impressive economic gains. An expected leveling off in diamond production within the next 10-15 years overshadows long-term prospects. A major international diamond company signed a 10-year deal with Botswana in 2012 to move its rough stone sorting and trading division from London to Gaborone by the end of 2013. The move has supported the development of Botswana's nascent downstream diamond industry.

Source : CIA

Company name
Registered Name:	BOTETI MINING PVT LTD
Requested Name:	BOTETI MINNING PVT LTD
Other Names:	None
ADDRESS AND TELECOMMUNICATION
Physical Address:	Diamond Technology Park Aeh Block 8 Industrial Park Suite 211
Postal Address:	P. o. Box AE 668
	Gaborone
Country:	Botswana
Phone:	267-3922310
Fax:	267-3922338
Email:	sophias@namdo.com
Website:	www.lucaradiamond.com
CREDIT OPINION
Financial Index as of December 2014 shows subject firm with a medium risk of credit. However, bank and credit information obtained reveal a history of prompt payments.
LEGAL
Legal Form:		Limited Corporation
Date Incorporated:		2001
Reg. Number:		Botswana
Nominal Capital		BWP. 1,000,000
SubBWPibed Capital		BWP. 1,000,000
SubBWPibed Capital is SubBWPibed in the following form:
		Position	Shares
Mr. Lukas H. Lundin		Group Chairman
Mr. William Lamb		Group CEO
Mr. Paul K. Conibear		Director
Mr. Richard P. Clark		Director
Mr. Brian Edgar		Director
Mr. Eira Thomas		Director
Mrs. Marie Inkster		Director
Lucara Diamond Corporation		Holding Co.	100%
RELATED COMPANIES
Lucara Diamond Corporation		Parent company.
None		Subsidiary company.
None		Affiliated company.
None		Shareholder of subject firm.
None		Branches of the firm
OPERATIONS
Registered to operate mining and exploration of diamond
Imports:		Europe
Exports:		Asia, Europe, UK
Trademarks:		None
Terms of sale:		Cash (40%) and 25-90 days (60%), invoices.
Main Customers:		Industries, firms and organizations
Employees:		850 employees.
Vehicles:		Several motor vehicles.
Territory of sales:		Botswana
Location:		Owned premises, 500,000 square feet,
AUDITORS AND INSURANCE
Auditors:		Information not available.
Insurance Brokers:		Information not available.
FINANCE
Currency Reported:		Botswana Pula (BWP.)
Approx. Ex. Rate:		1 US Dollar = 9.48 Botswana Pula
Fiscal Year End:		December 31, 2014
Inflation:		According to information given by independent sources, the inflation at December 31st, 2014 was of 13%.
Group Financial Information Submitted Below
BANK
Bank Name:		Standard Chartered Bank Botswana Limited
Branch:		Botswana
Comments:		None
TRADE REFERENCES
Experiences:		Good
NOTARIAL BONDS None
COMMENTS/ADDITIONAL INFORMATION
This information was obtained from outside sources other than the subject company itself and confirmed the above subject.

DIAMOND INDUSTRY – INDIA

- From time immemorial, India is well known in the world as the birthplace for diamonds.  It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8^th Century B.C.  India, in fact, remained undisputed leader till 18^th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

- The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

- The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

- Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

- Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

- Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

- Excerpts from Times of India dated 30^th October 2010 is as under –

- Gem & Jewellery Export Promotion Council in its statistical data has shown the export of polished diamonds to have increase by 28 % in February 2013. Compared to $ 1.4 bn worth of polished diamond export in February, 2012, India exported $ 1.84 billion worth of polished diamonds in February 2013. A senior executive of GJEPC said, “Export of cut and polished diamonds started falling month-wise after the imposition of 2 % of import duty on the polished diamonds. But February, 2013 has given a new ray of hope to the industry as the export of polished diamonds has actually increased by 28 %. It means the industry  is on the track of recovery and round tripping of diamonds has stopped completely.” Demand has started coming from the US, the UK, Japan and China. India’s polished diamond export is expected to cross $ 21 bn in 2013-14.

- The banking sector has started exercising restraint while following prudent risk management norms when lending money to gems and jewellery sector. This follows the implementation of Basel III accord – a global voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.82
UK Pound	1	Rs.101.26
Euro	1	Rs.72.36

INFORMATION DETAILS

Analysis Done by :	RAS
Report Prepared by :	ANK

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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