Interim Results

To be embargoed until Tuesday 27 February at 7.00am.

                        Karelian Diamonds Resources plc                        

                                ("the Company")                                

           Interim Results for the six months ended 30 November 2006           

Chairman's Statement

I have great pleasure in presenting your Company's Interim Report for the six
months ended 30 November 2006. During the period your Company made excellent
progress in its exploration programme for diamonds in Finland.

This programme is focussed on discovering a potential world-class diamond
deposit in the Finnish sector of the Karelian Craton. This is a block of
ancient crustal rocks which occupies much of eastern and northern Finland,
extending over the border into Russia where two world class diamond deposits,
Lomonosova and the Grib pipe, have been discovered.

Your Company believes that the Finnish sector of the Craton, given its size and
potential, is under-explored and, by analogy with the Russian sector, has the
potential to host similar world class deposits.

Your Company's claims in Finland are grouped on a geographical basis into four
blocks, all of which lie within the Karelian Craton. The Kuhmo block is the
largest and includes claims covering a proven diamondiferous kimberlite pipe at
Seitaperä.

The Seitaperä pipe, which has a surface area of approximately 4 hectares, was
discovered by Malmikaivos Oy in 1993 but was never fully explored. Only a very
limited number of shallow vertical drill holes were completed by Malmikaivos Oy
and its partner Ashton before the latter withdrew from the area to focus on
other Finnish claims some 120km away. However, a 13.3 tonne composite sample
from the Seitaperä pipe was reported to have returned a grade of 1.09 carats
per hundred tonnes. As the Seitaperä pipe covers a large surface area which had
previously been the subject of only limited drilling, your Company is carrying
out a drilling programme as part of a comprehensive reassessment of the diamond
potential of the pipe.

The presence of diamonds in the Seitaperä pipe indicates that the right
geochemical conditions exist to host diamonds in the Kuhmo area. Your Company
has discovered 18 separate indicator mineral anomalies in the same general area
as the Seitaperä pipe. It has also encountered kimberlitic material in a
preliminary trenching programme that followed a detailed magnetic survey of one
of these anomalies.

Your Company believes that these developments, together with the fact that
kimberlites typically occur in clusters, suggest that multiple sources of
diamonds may exist in the Kuhmo area in which your Company is conducting an
active exploration programme to locate these sources.

Award of 41 Additional Diamond Licences in Eastern Finland

Your Company has recently been awarded all 41 additional claim reservations for
which it had applied to augment the diamond claims already held.. The
applications followed detailed analysis of the recent release of data by the
Geological Survey of Finland (GTK) from an extensive sampling programme carried
out by them in eastern Finland where your Company has carried out limited
regional exploration.

The GTK programme comprised nearly 500 roadside sites from which samples,
mostly representing basal tills, were collected by an excavator. The sampling
results, made available by the GTK on 15 October 2006, included the recovery of
a number of G9 and G10 pyrope garnet diamond indicator minerals, as well as
large quantities of chromite grains.

Your Company is delighted to have been awarded the new claim reservations over
ground which complements our existing diamond claims in Finland. The GTK
sampling data clearly shows that the new ground has potential to host diamond
deposits and will form an integral part of our ongoing exploration programme.

Results

The results for the half-year are set out below. The loss for the period was €
79,989 (€74,292 for the corresponding period last year).

Directors and Staff

I would like to thank my fellow directors, staff and consultants for their
support and dedication. They have made the success of the Company possible. I
look forward to the future with confidence.

Yours faithfully

Professor Richard Conroy
Chairman
27 February 2007


PROFIT AND LOSS ACCOUNT
For the six months ended 30 November 2006

                                             Six months   Six months Year ended
                                                  ended        ended     31 May
                                            30 November  30 November       2006
                                                   2006         2005           
                                            (Unaudited)  (Unaudited)  (Audited)
                                                                               
                                                      €            €          €
                                                                               
Operating expenses                             (80,047)     (76,366)  (139,599)
                                                                               
Other income                                         58        2,074      3,647
                                                                               
Loss for the financial period                  (79,989)     (74,292)  (135,952)
                                                                               
Profit and loss account at beginning of       (234,893)     (98,941)   (98,941)
period                                                                         
                                                                               
Profit and Loss account at end of period     (€314,882)   (€173,233) (€234,893)
                                                                               
Loss per share                                  €0.0018      €0.0017    €0.0032


BALANCE SHEET
At 30 November 2006

                                           30 November  30 November      31 May
                                                  2006         2005        2006
                                           (Unaudited)  (Unaudited)   (Audited)
                                                                               
                                                     €            €           €
                                                                               
Fixed Assets                                                                   
                                                                               
Mineral interests                            3,704,588    3,167,141   3,541,406
                                                                               
Tangible assets                                  1,425        1,593       1,509
                                                                               
Financial assets                                     4            4           4
                                                                               
                                             3,706,017    3,168,738   3,542,919
                                                                               
Current Assets                                                                 
                                                                               
Debtors                                          8,966       10,438      13,661
                                                                               
Cash at bank and in hand                        23,604      309,721     112,791
                                                                               
                                                32,570      320,159     126,452
                                                                               
Creditors: amounts falling due within one    (109,122)    (575,097)   (442,117)
year                                                                           
                                                                               
Net Current Liabilities                       (76,552)    (254,938)   (315,665)
                                                                               
Total Assets less Current Liabilities        3,629,465    2,913,800   3,227,254
                                                                               
Creditors: amounts falling due after more    (966,983)            -   (484,783)
than one year                                                                  
                                                                               
Net Assets                                  €2,662,482   €2,913,800  €2,742,471
                                                                               
Capital and Reserves                                                           
                                                                               
Called up share capital                        447,716      447,716     447,716
                                                                               
Share premium account                        2,529,648    2,639,317   2,529,648
                                                                               
Profit and loss account                      (314,882)    (173,233)   (234,893)
                                                                               
Shareholders' Funds - all equity            €2,662,482   €2,913,800  €2,742,471


CASH FLOW STATEMENT
For the six months ended 30 November 2006

                                            Six months   Six months  Year ended
                                                 ended        ended      31 May
                                           30 November  30 November        2006
                                                  2006         2005            
                                           (Unaudited)  (Unaudited)   (Audited)
                                                                               
                                                     €            €           €
                                                                               
Net Cash (Outflow) Inflow from Operating     (408,205)       93,364      53,753
Activities                                                                     
                                                                               
Capital Expenditure and Financial            (163,182)    (282,987)   (657,252)
Investments                                                                    
                                                                               
Net Cash Outflow before financing            (571,387)    (189,623)   (603,499)
                                                                               
Financing                                      482,200      499,341     716,287
                                                                               
Increase/(Decrease) in Cash                  (€89,187)     €309,718    €112,788

Notes to the Financial Statements

1. Publication of non-statutory accounts

The financial information set out in this document does not comprise the
statutory accounts of the Company.

2. Loss per share

The calculation of the loss per ordinary share of €0.0018 is based on the loss
for the half year of €79,989 and the weighted average number of ordinary shares
on a basic and fully diluted basis during the period of 47,771,676. Share
options and warrants are not included in the calculation of fully diluted
shares since the Company incurred a loss which results in these potential
shares being anti-dilutive.

3. Dividends

No dividends were paid or are proposed in respect of the period ended 30
November, 2006.

4. A copy of the Interim Report will be sent to all shareholders shortly and
will be available from the Company's registered office, 10 Upper Pembroke
Street, Dublin 2.

Further enquiries:

Professor Richard Conroy
Karelian Diamond Resources plc 00 353 (1) 661 8958

Jeffrey Coburn
John East & Partners Limited 020 7628 2200

Charles Dampney
City Capital Limited 020 7822 7107