Placing & Directors shareholding

18 July 2007

                Karelian Diamond Resources PLC (the "Company")                 

 Placing of 15,770,000 new ordinary shares, with warrants attached ("Placing") 

                            Directors' Shareholding                            

The Company announces that, City Capital Corporation Limited, as agents for the
Company, have placed a total of 15,770,000 new ordinary shares of €0.01 cents
each at 6.5p each ("Placing Shares"), raising £1,025,050 (€1,520,000) before
expenses. Every three Placing Shares subscribed have one warrant attached,
exercisable at 10p during the three years following admission of the Placing
Shares. No admission to trading is to be sought in respect of the 5,256,661
warrants.

As part of the Placing, Professor Richard Conroy, Chairman of the Company, and
Conroy P.l.c a company in which Professor Conroy has a controlling interest,
has agreed to subscribe for a total of 8,500,000 Placing Shares. Consequently,
Professor Conroy now has a beneficial interest in 37,031,701 ordinary shares of
€0.01 cents each, representing 60.89 per cent of the enlarged ordinary share
capital of the Company. Of the total, 30,815,030 ordinary shares (representing
50.90 per cent) will be registered in the name of Conroy P.l.c and the balance
of 6,216,671 ordinary shares (representing 10.27 per cent) will be registered
in the name of Professor Conroy.

In view of Professor Conroy's position as a director of the Company, Professor
Conroy's participation in the placing (directly and through Conroy P.l.c) is
deemed to be a Related Party Transaction under the AIM Rules. The independent
directors consider, having consulted with John East & Partners Limited, that
his participation in the Placing is fair and reasonable insofar as its
shareholders are concerned. In giving advice to the board, John East & Partners
Limited has taken into account the commercial assessment of the independent
directors.

The net proceeds of the Placing amounting to £970,000 will be utilised in
ongoing exploration, the maintenance and renewal of licences, the repayment of
debt and for general working capital purposes.

Pursuant to the Placing, application has today been made for the 15,770,000
Placing Shares to be admitted to trading on the AIM Market of the London Stock
Exchange. Dealings in the Placing Shares are expected to commence on 24 July
2007.

Following the issue of these shares the Company will have a total of 60,541,676
voting shares in issue.

Further Information:

Professor Richard Conroy, Chairman Karelian Diamond Resources plc. Tel:
+-353-1-661-8958

Charles Dampney, City Capital Corporation Limited. Tel: +-44-20-7842-5867

Jeffrey Coburn/Simon Fox, John East & Partners Limited Tel: +-44-20-7628-2200

Ron Marshman/John Greenhalgh, City of London PR Limited. Tel: +-44-20-7628-5518

Karelian Share Price