Half-yearly Report
28 February 2012
Karelian Diamond Resources plc
("Karelian" or "the Company")
Half-year results for the six months ended 30 November 2011
FURTHER ENCOURAGING RESULTS FROM DIAMOND EXPLORATION PROGRAMME IN FINLAND
Karelian Diamond Resources plc (AIM: KDR; ESM: KDR.I), announces its results
for the six months ended 30 November 2011.
Highlights:
* Five further holes drilled at Seitaperä all intersect kimberlite.
* Till sampling programme at nearby Riihivaara suggests possibility of
another diamondiferous pipe or dyke.
* Integration and assessment of data received from Rio Tinto Mining and
Exploration continues.
* Additional exploration licence applications submitted.
Professor Richard Conroy, Chairman, said:
"Drilling at Seitaperä and till sampling at Riihivaara together with
integration of Rio Tinto data all aid our diamond exploration programme and
encourage application for further licences."
Further Information:
Professor Richard Conroy, Chairman/Karelian Diamond Tel: +353-1-661-8958
Resources plc
Simon Clements/Virginia Bull/Merchant Securities Limited Tel:
(Nomad) +44-20-7628-2200
John Grant/Karen Kelly/David Lawman/XCAP Securities PLC Tel:
(Broker) +44-20-7101-7070
Brian Farrell/IBI Corporate Finance Limited (ESM Adviser) Tel +353-1-637-7800
Michael Padley/Michael Spriggs/Lothbury Financial Services Tel:
+44-20-7868-2010
Don Hall/ Hall Communications Tel: +353-1-660-9377
Visit the website at: www.kareliandiamondresources.com
Dear Shareholder,
I have great pleasure in presenting your Company's interim results for the six
months ended 30 November 2011, a period of continued progress by your Company.
During the period covered by the report the price of diamonds remained high
with increased demand particularly from China.
Your Company has continued its exploration programme in the Karelian Craton in
Finland which is based on your Board's belief that one or more diamond finds of
similar magnitude to the major finds made in the Russian area of the Karelian
Craton may be made in that part of the Craton which lies in Finland.
Your Company has outlined in the Kuhmo area of Eastern Finland, the largest
diamondiferous kimberlite pipe to be found so far in Finland. This is the
Seitaperä kimberlite pipe, which covers approximately 6.9 hectares. 67 diamonds
have been recovered from the pipe during your Company's exploration programme
including six macrodiamonds and 61 microdiamonds. Some of these may be
fragments of a larger diamond or diamonds which were present in the mantle
xenoliths and broke apart during processing. These findings suggest that there
is the possibility of larger diamonds in the pipe with much of the kimberlite
remaining untested.
Recent drilling by your Company of the pipe encountered kimberlite in all five
holes drilled including a new large (52 metre) zone of mantle bearing
kimberlite. The new zone is approximately 120 metres from where mantle xenolith
material was previously encountered and is in a mica rich brown kimberlite
whereas the previous zone was black serpentinized kimberlite. There are also a
number of sections in the hole that had olivine xenocrysts present in the core
which are also derived from the diamond forming mantle.
The drilling programme has added substantial further information on the scope
and extent of this diamondiferous pipe and to our understanding of the
potential of the Kuhmo area in general for diamonds.
Positive results from a basal till sampling programme near the Seitaperä pipe
suggest that another diamondiferous kimberlite pipe or dyke may exist in the
nearby Riihivaara area of Eastern Finland.
The till sampling programme at Riihivaara resulted in the recovery of twelve
garnet indicator minerals, comprising three G10's, five G9's, one G4, one G3
and two G1's. Six of the positive results, including the G4 pyroxenitic garnet
occurred within a single till sample. The adjacent sample had two positive
results, including the eclogitic G3 garnet. These garnets and other
mantle-derived minerals are used to locate kimberlites and are referred to as
kimberlite indicator minerals. Some of these garnets, the G10's and certain
G9's, are created under similar conditions to diamonds within the ultramafic
mantle rocks underlying the crust and are therefore used as predictors of the
presence of diamonds. There is a strong statistical correlation between G10 and
certain G9 garnets, like those found in Riihivaara, and the presence of
diamonds.
The sampling programme was undertaken on Karelian's behalf by the Geological
Survey of Finland (GTK) in conjunction with the Company's technical staff.
Sample analysis was undertaken in the GTK laboratories.
Dr. Hugh O'Brien, a diamond specialist with the GTK stated: "G3 (eclogitic) and
G4 (pyroxenitic) garnets are very unusual for eastern Finland. It is surprising
to find eclogitederived grains in this area, because the kimberlites found to
date in the Kuhmo-Lentiira Kostomuksha area are very poor in eclogite
component, being rather much more dominated by peridotite indicators."
Eclogite mantle material is significant as it tends to be associated with a
much higher grade of diamonds than peridotite mantle material.
We are very pleased with these latest sample results at Riihivaara which show a
strong correlation with the possible presence of diamonds together with the
discovery of eclogitic material which tends to be associated with higher
diamond grades. Arising from these results applications have been made for
further exploration acreage in the Riihivaara area.
The review and integration of the extensive data on Finland made available to
your Company by Rio Tinto Mining and Exploration Limited continues. Arising
from this review, applications have been made for additional exploration
licences.
Finance
The results for the six months ended 30 November 2011 are set out below. The
loss for the period was €84,692 (2010: loss €88,124).
Outlook
Finland clearly has potential for diamonds and we look forward to continuing
with our objective of making a diamond discovery in the Karelian Craton in
Finland comparable to the major discoveries on the Russian side of the Craton.
Directors and Staff
I would like to thank my fellow directors, staff and consultants for their
support and dedication, which has enabled the continued success of the Company.
I look forward to the future with confidence.
Yours faithfully,
Professor Richard Conroy
Chairman
28 February 2012
INCOME STATEMENT
FOR HALF-YEAR ENDED 30 NOVEMBER 2011
Six months Six months Year ended
ended ended
30 November 30 November 31 May
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
€ € €
OPERATING EXPENSES (77,907) (80,605) (171,813)
Finance income - bank interest 5 - -
receivable
Operating loss (77,902) (80,605) (171,813)
Finance costs - interest on (6,790) (7,519) (15,448)
shareholder loan
LOSS BEFORE TAXATION (84,692) (88,124) (187,261)
Taxation - - -
LOSS FOR THE YEAR (84,692) (88,124) (187,261)
Loss per ordinary share - basic (€0.0009) (€0.0015) (€0.0027)
and diluted
STATEMENT OF COMPREHENSIVE INCOME
FOR HALF-YEAR ENDED 30 NOVEMBER 2011
Six months Six months Year ended
ended ended
30 November 30 November 31 May
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
€ € €
LOSS FOR PERIOD (84,692) (88,124) (187,261)
Total income and expense - - -
recognised in other comprehensive
income
TOTAL COMPREHENSIVE INCOME FOR THE (84,692) (88,124) (187,261)
PERIOD - ENTIRELY ATTRIBUTABLE TO
EQUITYHOLDERS
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2011
30 November 30 November 31 May
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
ASSETS € € €
Non-current Assets
Intangible assets 6,154,525 5,456,424 5,760,090
Investment in Subsidiary 4 4 4
Property, plant and equipment 585 753 669
6,155,114 5,457,181 5,760,763
Current Assets
Trade and other receivables 8,551 5,804 12,536
Cash and cash equivalents 203,917 4,635 745,908
212,468 10,439 758,444
Total Assets 6,367,582 5,467,620 6,519,207
EQUITY AND LIABILITIES
Capital and Reserves
Called up share capital 922,083 605,416 922,083
Share premium 4,621,158 3,801,202 4,621,158
Share based payments reserve 333,981 273,957 292,921
Retained losses (1,268,025) (1,084,196) (1,183,333)
Total Equity 4,609,197 3,596,379 4,652,829
Non-current Liabilities
Financial Liabilities 812,665 895,241 937,665
Total Non-current Liabilities 812,665 895,241 937,635
Current Liabilities
Trade and other payables 945,720 976,000 928,713
Total Current Liabilities 945,720 976,000 928,713
Total Liabilities 1,758,385 1,871,241 1,866,378
Total Equity and Liabilities 6,367,582 5,467,620 6,519,207
Statement OF CHANGES IN EQUITY
For the HALF-Year Ended 30 NOVEMBER 2011
Share-based Retained
Share Share Payment Earnings Total
Capital Premium Reserve (Deficit) Equity
€ € € € €
At 1 June 2010 605,416 3,801,202 210,803 (996,072) 3,621,349
Share-based payments - - 63,154 - 63,154
Loss for the period - - - (88,124) (88,124)
At 30 November 2010 605,416 3,801,202 273,957 1,084,196 3,596,379
At 1 December 2010 605,416 3,801,202 273,957 (1,084,196) 3,596,379
Share issue 316,667 - - - 316,667
Share premium - 819,956 - - 819,956
Share-based payments - - 18,964 - 18,964
Loss for period - (99,137) (99,137)
At 31 May 2011 922,083 4,621,158 292,921 (1,183,333) 4,652,829
At 1 June 2011 922,083 4,261,158 292,921 (1,183,333) 4,652,829
Share-based payments - - 41,060 - 41,060
Loss for the period - - - (84,692) (84,692)
At 30 November 2011 922,083 4,621,158 333,981 (1,268,025) 4,609,197
CASh Flow Statement
For the HALF-Year Ended 30 NOVEMBER 2011
Six months Six months Year ended
ended ended
30 November 30 November 31 May
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
€ €
Cash flows from operating activities
Cash (used in)/generated by operations (56,031) 150,912 38,549
Tax paid - - -
Net cash (used in)/ generated by (56,031) 150,912 38,549
operating activities
Cash flows from investing activities
Investment in exploration and (360,965) (206,408) (443,136)
evaluation
Net cash used in investing activities (360,965) (206,408) (443,136)
Cash flows from financing activities
Issue of share capital - - 1,136,623
Advances of shareholder loan - 42,424 42,424
Repayment of shareholder loan (125,000) - -
Bank interest received 5 - -
Interest paid on shareholder loan - - (46,259)
Net cash (used in)/generated from (124,995) 42,424 1,132,788
financing activities
(Decrease)/Increase in cash and cash (541,991) (13,072) 728,201
equivalents
Cash and cash equivalents at beginning 745,908 17,707 17,707
of period
Cash and cash equivalents at end of 203,917 4,635 745,908
period
NOTES TO THE FINANCIAL StatementS
For the HALF-Year Ended 30 NOVEMBER 2011
1. Basis of preparation
The half-yearly financial statements have been prepared on the basis of the
recognition and measurement requirements of International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU), and their
interpretations adopted by the International Accounting Standards Board (IASB).
The accounting policies used in the preparation of the half-yearly financial
information are the same as those used in the Company's audited financial
statements for the year ended 31 May 2011.
2. Earnings per share
The calculation of the loss per ordinary share of €0.0009 (2010 - €0.0015) is
based on the loss for the financial year of €84,692 (2010 - €88,124) and the
weighted average number of ordinary shares in issue during the year of
92,208,342 (2010 - 60,541,676).
Since the Company incurred a loss the effect of share options and warrants
would be anti-dilutive.
3. Dividends
No dividends were paid or are proposed in respect of the period ended 30
November, 2011.
4. Copy of half yearly report
A copy of the half yearly report will be available on the Company's website
www.kareliandiamondresources.com and will be available from the Company's
registered office, 10 Upper Pembroke Street, Dublin 2.
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