Issue of Equity

7 April 2011

KARELIAN DIAMOND RESOURCES PLC

Placing to Raise £700,000

  * Placing of 20,000,000 new ordinary shares at 3.5 pence per share and
    6,666,666 warrants to subscribe for Ordinary Shares at 6 pence to raise £
    700,000 before expenses
   
  * Proceeds of the placing to be applied to develop various prospects in
    Finland
   
  * Exploration programme includes drilling on the known diamondiferous
    kimberlite pipes and targets
   
Karelian Diamond Resources plc ("Karelian") (AIM: KDR, ESM: KDRI), the diamond
exploration company focussed on Finland, announces that it has conditionally
raised £700,000, before expenses, through a placing ("the Placing") of
20,000,000 ordinary shares ("Placing Shares") and warrants to subscribe for
6,666,666 Ordinary Shares of EUR0.01 in the capital of the Company ("Ordinary
Shares") ("Placing Warrants"). The Placing Shares have been placed at a price
of 3.5 pence per Placing Share ("the Placing Price") and the Placing Warrants
can be exercised at 6 pence per Ordinary Share at any time from the date of
admission of the Placing Shares until the second anniversary of admission to
trading on the AIM Market operated by the London Stock Exchange ("AIM") and the
Enterprise Securities Market operated by the Irish Stock Exchange Limited
("ESM").

The Placing Shares were placed with institutional and retail investors by XCAP
Securities Plc ("XCAP"). The Placing is conditional, inter alia, on admission.
The Placing Shares will rank pari passu with the existing issued Ordinary
Shares.

The Company intends to use the net proceeds of the Placing, amounting to
approximately £650,000, primarily to fund its exploration programme which will
include;

  * drilling on its Seitaperä diamondiferous pipe, and the other known
    diamondiferous kimberlite pipes on its licences;
   
  * to follow up on the results of its exploration programme to date with
    ground geophysics;
   
  * integrating the large amount of data received under its agreement with Rio
    Tinto and further drilling where warranted; and
   
  * general working capital.
   
Application has been made to AIM and ESM for the Placing shares to be admitted
to trading. Admission and trading are expected to commence on 13 April 2011.

On admission of the 20,000,000 Placing Shares, the Company will have 92,208,342
Ordinary Shares in issue in total.

Professor Richard Conroy, Chairman commented:

"These additional funds will enable us to accelerate the Company's exploration
programme in Finland. This will include drilling on our newly acquired licences
covering known Kimberlite bodies to the North of the Company's diamondiferous
kimberlite pipe at Seitaperä, accelerating the assessment and integration of
the extensive and highly valuable data received from Rio Tinto and applying for
further licences."

Further Information:

Professor Richard Conroy, Chairman, Karelian       Tel: [phone]        
Diamond Resources plc                                                          
                                                                               
Simon Clements/Virginia Bull, Merchant Securities  Tel: [phone]       
Limited (Nomad)                                                                
                                                                               
Brian Farrell, IBI Corporate Finance Limited (ESM  Tel [phone]         
Adviser)                                                                       
                                                                               
John Grant/Karen Kelly/David Lawman , XCAP         Tel: [phone]       
Securities PLC (Broker)                                                        
                                                                               
Michael Padley/Michael Spriggs, Lothbury Financial Tel: [phone]       
Services Limited                                                               
                                                                               
Don Hall, Hall Communications                      Tel: [phone]        

http://www.kareliandiamondresources.com