Statement re Exploration Programme

For immediate release

                                                                20 October 2005

                    Karelian Diamond Resources Plc ('KDR')                     

              KARELIAN FOLLOWS SUCCESSFUL AIM LISTING WITH FIRST               

                  DRILLING TARGETS IN FINNISH DIAMOND SEARCH                   

  * Company's Initial Exploration Programme Will Focus On Kuhmo Claim Block
   
  * Significance Of Seitapera Pipe Enhanced By Other Untested Mineral Anomalies
   
  * Evidence Suggests Multiple Sources Of Diamonds May Be Present At Kuhmo
   
Since its shares were admitted to trading on AIM, Karelian Diamond Resources
plc has made encouraging progress in its Finnish diamond search, recently
announcing that several drilling targets have been identified on its Kuhmo
claim block in eastern Finland. These targets were picked out following a
ground magnetic survey over one of 16 diamond indicator mineral (DIM) anomalies
that KDR previously outlined by till sampling.

Trading on AIM commenced at the beginning of September when 10m shares were
placed at 5p each to raise £500,000 (before expenses) for diamond exploration
on its claims in the Finnish sector of the Karelian Craton. This block of
ancient crustal rocks occupies much of eastern and northern Finland, extending
over the border into Russia where it hosts a number of significant diamond
deposits, including the world-class Lomonosova and Grib discoveries.

In the annual report for the 14 months ended May 31, 2005, KDR chairman,
Professor Richard Conroy, says that the company believes that the Finnish
sector of the Craton has the potential to host similar world-class deposits
and, given its size and potential, it is under-explored by comparison with
other diamond producing regions of the world. He also points out that Finland's
climate and terrain are amenable to year-round mining and exploration.

In selecting exploration areas, KDR has made use of the extensive aeromagnetic
and electromagnetic data publicly available in Finland to identify geophysical
anomalies that might represent kimberlite pipes. Interpretation of the
geophysical data has been followed by regional till sampling in the targets
areas, some of which yielded kimberlitic and diamond indicator minerals,
including G9 and G10 garnets which form at similar temperatures and pressures
to diamonds.

KDR now holds 58 diamond claims in Finland, mostly over targets which were
identified using this strategy. Of this total, 37 claims have been awarded
since July 2004, when the Finnish diamond interests of Conroy Diamonds and Gold
Plc and Conroy Plc were transferred to KDR. The claims are grouped
geographically into four blocks, each of which has been independently assessed
as 'highly prospective for diamonds'. The Kuhmo block is the largest with 49
claims, including those covering a known diamondiferous pipe at Seitapera and
the 16 other DIM anomalies found by KDR following till sampling.

The presence of the Seitapera kimberlite pipe shows that the right geochemical
conditions to host diamonds occur in the Kuhmo area. Furthermore, because KDR
has identified other DIM anomalies elsewhere on the claim block, the
significance of this pipe is now much greater than at the time of its
discovery. When linked to the fact that kimberlite pipes typically occur in
clusters, KDR says this suggests that multiple sources of diamonds may be
present at Kuhmo. For this reason, it is the focus of the company's initial
exploration programme.

In the coming year this programme will include further drilling of the
Seitapera pipe which has a surface area of 4 hectares, and systematic
evaluation of the 15 other known DIM anomalies to determine if they warrant
drilling. Till sampling will also continue, as will work on KDR's three other
highly prospective claim blocks, the company states.

KDR management has established a close working relationship with the Geological
Survey of Finland (GTK) and is able to draw on its expertise, extensive
knowledge of the country's geology and its excellent technical and laboratory
services. Karelian employs GTK staff as local consultants and to undertake
fieldwork, and it has benefited greatly from this relationship. KDR can also
call on its senior consultant, Dr Bert Gerryts, an internationally respected
diamond geologist who pioneered the use of indicator minerals and geophysics in
diamond exploration.

'SIGNIFICANT ADVANTAGE' SAYS INDEPENDENT REPORT

KDR's admission document included an independent assessment of its diamond
exploration properties and information portfolio prepared by the CSA Group.
Amongst other things, this noted that Conroy Diamonds and Gold Plc and Conroy
Plc (whose Finnish diamond interests were transferred into KDR) had been active
in diamond exploration in the Karelian Craton since 1994. These companies had
carried out a large amount of work and gained extensive exploration experience
in the region, and the comprehensive data package, exclusive survey results and
significant portfolio of claims transferred into Karelian 'will provide it with
a significant advantage in its future operations', CSA commented.

Annual Meeting: Dublin, November 14.

COPIES OF THE ANNUAL REPORT ARE AVAILABLE ON REQUEST

Further Information:

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