Issue of Equity

16 December 2010                                                               

                        Karelian Diamond Resources Plc                         

                                (the "Company")                                

                           Placing to raise £350,000                           

  * Placing of 11,666,666 new ordinary shares at 3 pence per share and 
    3,888,888 warrants to subscribe for ordinary shares at 5 pence to raise £35
    0,000 before expenses
   
  * Proceeds of the placing to be applied to develop various prospects in
    Finland
   
Karelian (AIM:KDR, ESM:KDR.I), the diamond exploration company focused on
Finland, announces that it has conditionally raised £350,000, before expenses,
through a placing (the "Placing") of 11,666,666 ordinary shares ("Placing
Shares") and warrants to subscribe for 3,888,888 ordinary shares of EUR 0.01 in
the capital of the Company ("Ordinary Shares") ("Placing Warrants"). The
Placing Shares have been placed at a price of 3 pence per Placing Share (the
"Placing Price") and the Placing Warrants can be exercised at 5 pence per
Ordinary Share at any time from the date of admission of the Placing Shares to
trading on AIM and the Enterprise Securities Market operated by the Irish Stock
Exchange Limited ("ESM") ("Admission") until the second anniversary of
Admission.

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 £326,000, primarily to fund the Company's various prospects in
Finland and for working capital generally.

Application has been made to AIM and ESM for the Placing Shares to be admitted
to trading. Admission and trading in the Placing Shares are expected to
commence on 23 December 2010.

On Admission of the 11,666,666 Placing Shares, the Company will have 72,208,342
Ordinary Shares in issue in total.

Professor Richard Conroy, Chairman, commented: 

"These additional funds will allow us to accelerate the processing and
interrogation of the considerable amount of data that is being made available
by Rio Tinto.  This data is complementary and builds upon our very encouraging
work to date. We are confident the team can use this information to quickly
expand our knowledge and make further progress towards our objective of making
a world class diamond discovery in Finland comparable to those made across the
border in Russia."

Further Information:

Professor Richard Conroy, Chairman, Karelian Diamond    Tel: [phone]
Resources plc                                                               
                                                                            
Simon Clements/Virginia Bull, Merchant Securities       Tel:                
Limited (Nomad)                                         [phone]    
                                                                            
John Grant/ Karen Kelly/ David Lawman, XCAP Securities  Tel: [phone]    
PLC (Broker)                                            7070                
                                                                            
John Tuite, IBI Corporate Finance Limited (ESM Adviser) Tel: [phone]
                                                                            
Michael Padley/Michael Spriggs, Lothbury Financial      Tel:                
Services                                                [phone]    
                                                                            
Don Hall, Hall Communications                           Tel: [phone]

http://www.kareliandiamondresources.com