Statement re Magnetic Survey

4 October 2005

                    Karelian Diamond Resources Plc ('KDR')                     

               KARELIAN IDENTIFIES FIRST DRILLING TARGETS ON ITS               

                     KUHMO CLAIM BLOCK IN EASTERN FINLAND                      

  * Ground Geophysics Highlights Drill Targets Within Indicator Mineral Anomaly
   
  * Further 15 Similar Anomalies Scheduled For Systematic Evaluation
   
  * Evidence Of Possible Multiple Diamondiferous Kimberlite Sources In Kuhmo
    Area
   
AIM-quoted Karelian Diamond Resources plc is pleased to announce that it has
identified several drilling targets on its diamond exploration acreage in the
Finnish sector of the highly prospective Karelian Craton. This follows a ground
magnetic survey over one of the 16 separate indicator mineral anomalies
previously outlined by the company on its Kuhmo claim block in eastern Finland.

This magnetic survey is part of the Company's programme of systematically
evaluating these anomalies by ground geophysics to determine if they represent
potential drill targets. The ground geophysics has been carried out on KDR's
behalf by the Geological Survey of Finland (GTK), with whom KDR has a
long-standing working relationship.

KDR'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 presence of the pipe shows that the right geochemical conditions to host
diamonds occur at Seitaperä. This, coupled with the 16 separate indicator
mineral anomalies in the same general area, and the fact that kimberlite pipes
typically occur in clusters, suggests that multiple sources of diamonds may
exist in the Kuhmo area. For this reason, it is the focus of KDR's initial
exploration programme.

Diamondiferous kimberlites are largely confined to ancient stable cratons where
the thickness of the earth's crust is sufficient to minimise heat loss and
preserve the high temperatures necessary for diamond formation. The Kuhmo area
of Finland is characterised by a particularly thick crustal zone.

The potential of the Karelian Craton to host diamonds is indicated by
discoveries in the Russian sector of the Craton. These include two world-class
deposits: De Beers Grib pipe which is estimated to contain a resource of 98
million tonnes at an average grade of 69 carats per hundred tonnes (cpht) with
an estimated in situ value of US$3.7 billion, and Alrosa's Lomonosova deposit
where diamond reserves are estimated to be worth US$12.0 billion.

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

Further Information:

Professor Richard Conroy, Chairman Karelian Diamond Resources plc. Tel:
[phone]

Charles Dampney, City Capital Securities Limited. Tel: [phone]

Jeffrey Coburn, John East & Partners Limited. Tel: [phone]

Ron Marshman/John Greenhalgh, City of London PR Limited. Tel: [phone]