Burgundy Diamond Mines : Preliminary Financial Report for the period ended 31 December 2023

For personal use only

Appendix 4E | Period Ended 31 December 2023

BURGUNDY DIAMOND MINES LIMITED

APPENDIX 4E

PRELIMINARY UNAUDITED FINANCIAL REPORT

FOR THE PERIOD ENDED 31 DECEMBER 2023

Name of Company	Burgundy Diamond Mines Limited
ABN	33 160 017 390
Current Reporting Period	6 months ended 31 December 2023
Previous Reporting Period	12 months ended 30 June 2023
onlyResults for Announcement to the Market
These unaudited results are prepared in accordance with Australian Accounting Standards. Amounts presented
are in US Dollars, except as otherwise noted.
use
			(Restated*)
	Statutory Results	31 December 2023	30 June 2023	Up/(Down)	%
	Unaudited	$'000	$'000	$'000
	Revenue from ordinary activities	257,484	3,452	254,032	7,359%
		Profit (loss) before income taxes	11,082	(17,802)	28,884	162%
		Net loss after income taxes	(676)	(17,802)	(17,126)	(96%)
		Total comprehensive loss
		attributable to owners	(1,181)	(17,802)	(16,621)	(93%)
		* Refer to Note 35 in the accompanying unaudited financial report for details on restatement of comparatives.
There were no dividends paid or declared during the period ended 31 December 2023 (30 June 2023: $Nil). Basic
l ss per share and diluted loss per share are shown on page 3.
personalurchase of 100% interest in Ekati Diamond mine into the Burgundy portfolio.

Explanation of Results

On 1 July 2023, Burgundy Diamond Mines Limited (the "Company") completed acquisition of 100% of the common shares of Arctic Canadian Diamond Company Ltd. ("ACDC") in Canada and Arctic Canadian Diamond Marketing N.V. ("ACDM") in Belgium (the "Acquisition"). ACDC owns 100% of Ekati Diamond Mine, a producing diamond mine located in Canada's Northwest Territories.

During the period ended 31 December 2023, the focus of the Company was the integration of the transformational

ForRevenue from ordinary activities of $257.5 million, consists primarily of rough diamond sales of $256.6 million and $0.9 million of polished diamond sales. The increase in revenue from prior year is due to sale of rough diamond recovered from Ekati Diamond Mine that was acquired on 1 July 2023, whereas in prior period revenue consisted f polished diamond sales only. Despite the current period containing results for six months compared to twelve months in prior period, there was significant improvement in profit before income taxes and net loss after income taxes in current period due to profit from sale of rough diamonds. Whereas in prior period the higher net loss arose from loss on sale of polished diamonds, polished diamond inventory write-down of $2.1 million, impairment of

Ellendale Diamond Project $2.5 million and transaction costs of $2.3 million incurred in Acquisition.

As at 31 December 2023, the Group had funds of $94.4 million (30 June 2023: $125.4 million of which $123.4 million were held in escrow for the Acquisition). During the period, the Group generated $68.0 million from operating activities primarily from sales of rough diamonds and working capital related timing adjustments. Cash used in financing activities of $30.7 million related to $26.6 million in repayment of debt assumed with the Acquisition and $4.1 million of principal lease repayments. Cash used in investing activities of $68.0 million mainly comprised of $28.0 of consideration transferred for the Acquisition net of cash acquired, $12.6 million on purchase of property, plant and equipment and $27.8 million related to cash collateral for reclamation security and surety deposits.

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Appendix 4E | Period Ended 31 December 2023

Net tangible assets per ordinary share

		(Restated*)
Net tangible assets per ordinary share	31 December 2023	30 June 2023	Up/(Down)
Unaudited	$	$	$
Net tangible assets per ordinary share	0.11	0.10	Up 0.01 Cents
* Refer to Note 35 in the accompanying unaudited financial report for details on restatement of comparatives.

onlyChanges in Controlled Entities

On 1 July 2023, the Company completed acquisition of 100% of the common shares of ACDC and ACDM. ACDC owns 100% of Ekati Diamond Mine, a producing diamond mine located in Canada's Northwest Territories. Ekati Diamond Mine consists of the Core Zone, which includes the primary mining operations and other kimberlite pipes, as well

useas the Buffer Zone, an adjacent area hosting kimberlite pipes having both development and exploration potential. ACDM is a marketing business responsible for management of the supply chain, sorting, preparation, marketing and sales of rough diamonds from Ekati Diamond Mine. The Company together with its subsidiaries are referred to as the Group.

In addition, the Company filed cancellation certificate for Burgundy Diamonds LLC in the US.

Details of Associates and Joint ventures

personalRefer to Note 28 of the attached 31 December 2023 preliminary financial report and accompanying notes for further details.

Accounting standards used by foreign entities

All subsidiaries use International Financial Reporting Standards.

Independent auditor's report

The financial report is in the process of being audited with an expectation of an unmodified audit report with no emphasis of matter paragraph.

Attachments forming part of Appendix 4E

Preliminary unaudited financial report of Burgundy Diamond Mines Limited for the period ended 31 December 2023 is attached.

For

2

Appendix 4E | Period Ended 31 December 2023

Consolidated Statement of Loss and Other Comprehensive Loss (Unaudited)

(expressed in thousands of United States dollars)

onlyRevenue Cost of sales

Gross margin

Other income

Selling and distribution expenses useGeneral and administrative expenses

Other expenses

Operating profit (loss) Finance expenses Finance income

Net finance costs

Fair value adjustment on consideration payable

Foreign exchange (loss) gain personalProfit (loss) before income taxes

Current tax expense

Deferred tax recovery

Tax expense

Net loss

Other comprehensive loss

Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations

Items that will not be reclassified to profit or loss Re-measurementof defined benefit obligation (net of tax recovery of $0.3 million for period ended 31 December 2023)

Other comprehensive loss for the period, net of tax

Total comprehensive loss attributable to the owners

		(Restated*)
	Six month	Twelve month
	period ended	period ended
Note	31 December 2023	30 June 2023
6	257,484	3,452
7	(231,146)	(6,203)
	26,338	(2,751)
8	7,532	-
7	(3,709)	(1,511)
7	(10,460)	(3,749)
7	(2,049)	(7,694)
	17,652	(15,705)
9	(14,155)	(3,084)
	2,685	44
	(11,470)	(3,040)
22	5,764	-
	(864)	943
	11,082	(17,802)
10	(14,951)	-
10	3,193	-
	(11,758)	-
	(676)	(17,802)

-(0)

(505)-

(505)(0)

(1,181) (17,802)

For
Loss per share for the period attributable to the owners:
Basic loss per share (cents)	11	(0.05)	(5.09)
Diluted loss per share (cents)	11	(0.05)	(5.09)

* See Note 35 for further details on restatement of comparatives.

The Consolidated Statement of Loss and Other Comprehensive Loss should be read in conjunction with the notes to the consolidated financial statements.

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Appendix 4E | Period Ended 31 December 2023

Consolidated Statement of Financial Position (Unaudited)

(expressed in thousands of United States dollars)

			(Restated*)
	Note	31 December 2023	30 June 2023
ASSETS
Non-current assets
Property, plant and equipment	12	238,518	718
Other non-current assets	13	74,941	-

Total non-current assets		313,459	718
Current assets
onlyInventory and supplies	14	244,931	5,272
Other current assets		4,262	376
use	12	-	22
Plant and equipment classified as held for sale
Trade and other receivables	15	9,907	5,559
Cash and cash equivalents	16	94,426	125,355
Total current assets		353,526	136,584
Total assets		666,985	137,302
EQUITY
Contributed equity	17	200,607	153,511
personal	18	6,803	7,324
Reserves
Accumulated losses		(49,171)	(48,495)
Total equity		158,239	112,340
LIABILITIES
Non-current liabilities
Loans and borrowings	19	73,834	20,845
Provision for make good	20	64	64
Contingent consideration	21	7,111	-
Consideration payable	22	25,935	-
Lease obligations	23	16,468	312
Employee benefit plans	24	3,828	-
Reclamation provisions	25	236,204	-
Deferred tax liabilities	10	22,202	-
Total non-current liabilities		385,646	21,221

Current liabilities

Trade and other payables

ForCurrent portion of loans and borrowings

Current portion of consideration payable

Current portion of lease obligations

Current portion of employee benefit plans

Tax payable

Total current liabilities

Total liabilities

Total equity and liabilities

* See Note 35 for further details on restatement of comparatives.

26	54,017	3,644
19	22,304	-
22	10,844	-
23	9,644	97
24	347	-
10	25,944	-
	123,100	3,741
	508,746	24,962
	666,985	137,302

The Consolidated Statement of Financial Position should be read in conjunction with the notes to the consolidated financial statements.

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Appendix 4E | Period Ended 31 December 2023

Consolidated Statement of Changes in Equity (Unaudited)

(expressed in thousands of United States dollars) For the Period Ended 31 December 2023

only(Restated*) At 1 July 2022

Net loss for the period

Effect of translating foreign operations to Company presentation currency

Total comprehensive loss for the period

Transactions with owners of the Group: useIssue of share capital

Share issue costs

Share-based payments

At 30 June 2023

Note	Issued	Convertible	Other	Accumulated	Total
Capital	Notes Reserve	Reserves	Losses
	27,375	4,384	2,478	(30,693)	3,544
	-	-	-	(17,802)	(17,802)
	-	-	(0)	-	(0)
	-	-	(0)	(17,802)	(17,802)
17	131,304	-	-	-	131,304
17	(5,168)	-	-	-	(5,168)
29	-	-	462	-	462
	153,511	4,384	2,940	(48,495)	112,340

Net loss for the period		-	-	-	(676)	(676)
personalFor		-	-	(505)	-	(505)
Re-measurement of defined benefit obligation
Total comprehensive loss for the period		-	-	(505)	(676)	(1,181)
Transactions with owners of the Group:
Issue of share capital	17	47,096	-	-	-	47,096
Share-based payments	29	-	-	(16)	-	(16)
At 31 December 2023		200,607	4,384	2,419	(49,171)	158,239

* See Note 35 for further details on restatement of comparatives.

The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the consolidated financial statements.

5

Appendix 4E | Period Ended 31 December 2023

Consolidated Statement of Cash Flows (Unaudited)

(expressed in thousands of United States dollars)

onlyOPERATING Net loss Adjustments for

Depreciation and amortisation Deferred tax expense Current tax expense Finance expenses

useShare-based compensation Other non-cash items

Derecognition of contingent consideration

Fair value adjustment on consideration payable Private royalties paid

Unrealised foreign exchange loss (gain) Defined benefit plan contributions Impairment losses on inventory Impairment of assets

personalInterest paid Reclamation expenditures

Income taxes paid

Settlement of share-based compensation

Change in non-cash operating working capital

Accounts receivable

Inventory and supplies

Other current assets

Trade and other payables

Employee benefit plans

Net cash from (used in) operating activities

FINANCING

Net proceeds from issuance of shares

Repayment of borrowings

Lease payments

Net cash (used in) from financing activities

INVESTING

Consideration for acquisition (net of cash acquired)

Proceeds from exercise of stock options

ForPurchase of property, plant and equipment Decrease in restricted cash

Increase in collateral for reclamation surety bonds Increase in collateral for reclamation security deposits

Net cash used in investing activities

Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of the period Foreign exchange effect on cash balances

Cash and cash equivalents, end of the period

		(Restated*)
	Six month	Twelve month
	period ended	period ended
Note	31 December 2023	30 June 2023
	(676)	(17,802)
7	43,897	554
10	(3,193)	-
10	14,951	-
9	14,155	3,084
	298	462
	(226)	(20)
21	(7,401)	-
22	(5,764)	-
22	(4,739)	-
	457	(986)
24	(906)	-
7	146	2,131
7	-	2,477
	(5,538)	-
	53	-
	(1,366)	-
29	(62)	-
	4,629	(2,606)
	8,569	(258)
	3,127	-
	8,008	548
	(465)	(15)
	67,954	(12,431)
	-	123,670
30	(26,626)	-
23	(4,116)	(95)
	(30,742)	123,575
	(27,994)	-
	338
	(12,614)	(1,091)
13	153	-
13	(11,943)	-
13	(15,899)	-
	(67,959)	(1,091)
	(30,747)	110,053
	125,355	14,317
	(182)	985
	94,426	125,355

* See Note 35 for further details on restatement of comparatives.

The Consolidated Statement of Cash Flow should be read in conjunction with the notes to the consolidated financial statements.

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Appendix 4E | Period Ended 31 December 2023

Notes to the Consolidated Financial Statements (Unaudited)

NOTE 1 REPORTING ENTITY

Reporting Entity

Burgundy Diamond Mines Limited ("Burgundy" or "the Company") is a company limited by shares and domiciled in Australia. Burgundy's registered office is located at Level 25, South32 Tower, 108 St Georges Terrace, Perth WA 6000, Australia. The consolidated financial statements of the Company as at and for the period ended 31 December 2023 comprise the Company and its subsidiaries ("the Group") - see Note 2(e).

onlyOn 1 July 2023, the Group completed the acquisition of Arctic Canadian Diamond Company Ltd. ("ACDC") in Canada and Arctic Canadian Diamond Marketing N.V. ("ACDM") in Belgium (collectively referred to as "Arctic Companies").

The Company's Perth location focuses on cutting, polishing and sales of polished diamonds. ACDC owns 100% of Ekati Diamond Mine, a producing diamond mine located in Canada's Northwest Territories. Ekati Diamond Mine consists of the Core Zone, which includes the primary mining operations and other kimberlite pipes, as well as the

useNOTE 2 BASIS OF PRESENTATION

Buffer Zone, an adjacent area hosting kimberlite pipes having both development and exploration potential. ACDM is a marketing business responsible for management of the supply chain, sorting, preparation, marketing and sales of rough diamonds from Ekati Diamond Mine. Refer to Note 4 for details of assets acquired and liabilities assumed.

(a) Statement of compliance

The Preliminary Financial Report has been prepared in accordance with ASX Listing Rule 4.3A and has been derived personalfrom the unaudited consolidated financial statements. The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ("AASB") and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards ("IFRS") adopted by the I ternational Accounting Standards Board ("IASB"). Burgundy Diamond Mines Limited is a for-profit entity for the

purpose of preparing the financial statements.

The Group is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the consolidated financial statements are rounded off to the nearest thousand dollars ($'000), unless otherwise indicated.

(b) Going concern

The consolidated financial statements have been prepared on the going concern basis that contemplates the continuity of business activities in the foreseeable future and the realisation of assets and extinguishment of liabilities in the normal course of operations. During the period ended 31 December 2023, the Group incurred net loss of $0.7 million, generated cash flows of $68.0 million from operating activities and has net current assets of $230.4 million. The Group also has $231.4 million of contractual commitments of which $161.0 million (see Note

For31) relate to surety cash collateralisation due in the second quarter of 2024 and $123.1 million of current liabilities due in the next 12 months. Included in current liabilities is the current portion of convertible notes of $23.7 million (face value) maturing on 16 September 2024, which will require cash settlement if not converted into shares by the noteholders on maturity. The executive chairman subscribed to 5,000,000 convertible notes on issuance and as at 31 December 2023, holds $3.4 million of convertible notes.

In order to continue as a going concern, the Group must generate sufficient income and cash flows to repay obligations, finance operations and fund capital investments to sustain operations. The future of the Group is dependent on its ability to maintain profitable operations, meeting its surety cash collateralisation commitments and extinguishing current liabilities including convertible notes upon maturity. This will require the Group to generate sufficient funds from operations, continue receiving support from surety providers, lenders by extending maturity of the convertible notes or obtain new financing via debt or share issuance. There is no certainty that the Group will raise these necessary funds from operations or financings or receive the required support from surety providers or its lenders.

As a result of these factors, there is uncertainty which may impact the ability of the Group to meet its commitments and obligations as they come due and continue as a going concern.

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Appendix 4E | Period Ended 31 December 2023

The Directors believe that there are reasonable grounds that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the consolidated financial statements after consideration of the following:

• Management is in advanced stages of discussion with surety providers, to extend the surety cash

only	collateralisation timeline and to reduce the cash collateral requirements;
• In February 2024, an agreement was reached with surety providers to issue a new surety bond for CDN$13.6
million for Point Lake security requirements. Under terms of this agreement, the Group will cash collateralise
the letters of credit that will be issued to surety providers over a period of four year ending in 2028 (see
Note 37). This agreement will further reduce the Groups' cash collateralisation requirements for Point Lake
in 2024;
• Closer to maturity of the convertible notes the Group will proactively approach the convertible noteholders
use	to extend the term of the notes. In the event a cash repayment is required ACDC and ACDM generate
sufficient income and have sufficient cash reserves to advance an intercompany loan to the Company.
Approval of surety providers is required prior to advancing funds from ACDC or ACDM to the Company;
• In the event that the cash flows become constrained, the Group can reduce development capital and
exploration expenditures through postponing or pausing projects; deferring or cancelling discretionary
spending; and
• The Group has a strong track record of successfully raising capital and expects to be able to raise additional
personal	capital through equity placements to existing and new investors.

The consolidated financial statements do not reflect adjustments that might be necessary if the going concern ssumption was not appropriate. If the going concern basis was not appropriate for these consolidated financial statements, adjustments to the carrying value of assets and liabilities would be necessary, the reported revenues and expenses and the statement of financial position classification used.

(c) Basis of measurement

The consolidated financial statements have been prepared in accordance with the historical cost convention unless therwise stated.

(d) Significant Judgements and Estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

(e) Change in fiscal year end and comparatives

Effective 30 November 2023, the Company changed its fiscal year end from 30 June 2023 to 31 December 2023 to better align the Company's financial disclosures with its peers in the mining sector and for operational and Foradministrative efficiencies. The operating results represent the 6 month period from 1 July 2023 to 31 December 2023 with comparative figures being for the period from 1 July 2022 to 30 June 2023. Certain comparative figures have been reclassified to conform to the presentation adopted in the current period (see Note 34). Due to the

longer comparative period, the comparative amounts presented are not entirely comparable.

(f) Change in functional and presentation currency

Effective 1 July 2023, the Company changed its functional and presentation currency from Australian Dollars ("AUD") to US Dollars ("US$"). The change in functional and presentation currency of the Company is due to the increased exposure to the US dollar as a result of the growth in international operations through acquisition of the Arctic Companies, diamonds are traded in US$ predominantly globally and diamond prices are often quoted in US$ in diamond price indexes. Furthermore, the Company purchases diamond inventory in US$, all rough diamond sales are denominated in US$ and a significant portion of polished diamond sales are in US$. The Company and all subsidiaries now have a functional currency of US Dollars.

As a change in presentation currency is accounted for retrospectively from the date of change, on 1 July 2023, the financial position of Company was translated from Australian Dollar to US Dollar using the exchange rate of 0.66571

8

Appendix 4E | Period Ended 31 December 2023

at that date. All comparative information as at 30 June 2023 including the consolidated statement of loss and other comprehensive loss, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and all comparative note disclosures were translated from Australian Dollar to US Dollar at the exchange rate as at 1 July 2023.

only(g) Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in Note 33.

(h) New, revised or amended standards and interpretations adopted by the Group

The Group adopted the following accounting standards and interpretations adopted during the period: Deferred tax assets and liabilities arising from a single transaction

The Group has adopted Deferred Tax related to Assets and Liabilities arising from a Single Transaction (amendments useto IAS 12) from 1 July 2023. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences - e.g. leases and decommissioning liabilities. For leases and decommissioning liabilities, an entity is required to recognise the associated deferred tax assets and liabilities from the beginning of the earliest comparative period presented, with any cumulative effect recognised as an adjustment to retained earnings or other components of equity at that date. For all other transactions, an entity applies the amendments to transactions that occur on or after the beginning of the earliest

period presented.

Adoption of the amendment to IAS 12 did not result in any material impact to the Group's consolidated financial personalstatement figures or disclosures.

Material accounting policy information

The Group also adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1 July 2023. Although the amendments did not result in any changes to the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements.

The amendments require the disclosure of 'material', rather than 'significant', accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statements. Management reviewed the accounting policies and made updates to the information disclosed in Note 36 Material accounting policies (30 June 2022: Significant accounting policies) in certain instances in line with the amendments.

(i) New accounting standards issued but not yet effective Non-currentliabilities with covenants (Amendments to IAS 1)

The International Accounting Standards Board ("IASB") has published 'Non-current Liabilities with Covenants For(Amendments to IAS 1) to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. These amendments modify the requirements introduced by Classification of Liabilities as Current or Non-current on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances: only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non- current liabilities with covenants could become repayable within twelve months. The amendments are effective for reporting periods beginning on or after 1 January 2024. The amendments are applied retrospectively in accordance with IAS 8 and earlier application is permitted. The Group is on track for implementation of this standard by the

effective date and does not expect any material impact on the consolidated financial statements.

9