5 November 2009
Karelian Diamond Resources Plc
("KDR" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 MAY 2009
A PERIOD OF FURTHER POSITIVE FINDINGS
Karelian (AIM: KDR), the diamond exploration company focused on Finland,
announces its results for the year ended 31 May 2009.
Highlights:
* Capacity Of Seitaperä Pipe To Carry Diamond-Bearing Material Clearly
Demonstrated
* Grade Distribution Likely To Be Highly Variable
* Potential For Larger Diamonds To Be Present
* Licence Applications To Cover Two Other Known Kimberlites In Kuhmo Area
Professor Richard Conroy, Chairman, said:
"As a result of the downturn in the diamond market since the final quarter of
2008 we are, wherever possible, limiting our activities to office-based work in
order to contain costs whilst we continue to assess additional opportunities in
Finland. Given that the findings of our work to date have been positive, both
at Seitaperä and in the Kuhmo area generally, we have therefore submitted
additional licence applications over areas of particular interest. These
include two other known kimberlites in the Kuhmo area - kimberlites 18
(Havukkasuo) and 24 (Lentiira).
"The outlook for diamonds is beginning to improve. Although stocks of both
rough and polished stones remain high, we are encouraged by recent comments
from De Beers that the pace of recovery in the rough diamond market is
beginning to pick up. This is a particularly significant development given that
the diamond industry was among the hardest hit by the global financial crisis."
Further enquiries:
Karelian Diamond Resources Plc Tel: 00 353 1 661 8958
Professor Richard Conroy
Merchant John East Securities Limited Tel: 020 7628 2200
Simon Clements / Virginia Bull
City Capital Corporation Limited Tel: 020 3178 3399
Charles Dampney
Lothbury Financial Limited Tel: 020 7011 9411
Ron Marshman / Michael Padley
http://www.kareliandiamondresources.com
Chairman's Statement
I have pleasure in presenting your Company's Annual Report and Financial
Statements for the year ended 31 May 2009. This was a year during which your
Company made further progress with its diamond exploration programme in Finland
and clearly demonstrated the capacity of the Seitaperä kimberlite pipe to carry
diamond-bearing material.
A full mineralogical study of all the Seitapera micro-diamonds recovered to
date, including the 67 micro- and macro-diamonds recovered from a 100.20 kg
sample as reported in July 2008, has been completed at MCC Geoscience of
Vancouver, Canada. The results indicate that the grade distribution in the
Seitaperä Kimberlite is likely to be highly variable, a feature common to the
diatreme root zones of many kimberlites. At this point, however, it is not
possible to estimate an overall bulk diamond grade.
These findings suggest that there is potential for larger diamonds to be
present in the Seitaperä pipe, however, the majority of the kimberlite,
including the new northeast extension, remains untested. In view of the present
state of the diamond market, the Company will not at this stage proceed with
the extensive further drilling and micro-diamond sampling that will be required
to adequately test a kimberlite of this size (6.9ha). Nevertheless, the Company
will continue with evaluation work and advancing its diamond claim applications
in Finland.
There has been only limited historical diamond exploration in the Kuhmo area,
but when this is considered in conjunction with the results achieved by
Karelian, the area's potential for diamondiferous kimberlites is clearly
demonstrated. As a result of these encouraging indications, your Company has
applied for licences covering the two other known Kimberlite occurrences in the
area - Kimberlites 18 (Havukkasuo) and 24 (Lentiira).
The Company also continues to explore in the Joensuu area of Eastern Finland,
where recent sampling programmes recovered kimberlite indicator minerals,
including G9 and G10 garnets. These results, taken in conjunction with those
from earlier work, increase the likelihood that the Joensuu area could also
contain a number of kimberlite pipes.
Financials
The loss after taxation for the year ended 31 May 2009 was €194,126 (2008: €
268,638) and the net assets as at 31 May 2009 were €3,712,312 (2008: €
3,865,379).
As in previous years, I have supported the working capital requirements of the
Company and in the period under review have advanced loans to the value of €
238,022 and the balance of the loans due to me at the period end was €719,993.
The loans have been made on normal commercial terms.
The other Directors consider, having consulted with the Company's Nominated
Adviser, that the terms of these loans are fair and reasonable in so far as the
Company's shareholders are concerned.
Auditors
I would like to take the opportunity of thanking the partners and staff of
Deloitte and Touche for their services to your Company during the course of the
year.
Directors, Consultants and Staff
I would also like to express my deep appreciation of the support and dedication
of the Directors, Consultants and Staff, which has made possible the continued
progress which your company has achieved.
Future Outlook
Despite the downturn in the diamond market, we will continue to evaluate
opportunities to enhance shareholder value. In view of the positive findings to
date, both at Seitapera and in the Kuhmo area generally, we will press on with
our applications for licences over the other known kimberlites in the Kuhmo
area as well as licence applications in the Joensuu area. We look forward with
confidence to a successful future.
Professor Richard Conroy
Chairman
5 November 2009
INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2009
2009 2008
€ €
OPERATING EXPENSES (194,342) (280,720)
Other income 216 12,082
LOSS BEFORE TAX (194,126) (268,638)
Taxation - -
LOSS RETAINED FOR THE YEAR (194,126) (268,638)
Loss per ordinary share (€0.0032) (€0.0046)
Balance Sheet
at 31 May 2009
2009 2008
€ €
ASSETS
Non-current Assets
Intangible assets 4,883,865 4,221,785
Financial assets 4 4
Property, plant and equipment 1,089 1,173
4,884,958 4,222,962
Current Assets
Trade and other receivables 10,222 50,441
Cash and cash equivalents 7,666 35,430
17,888 85,871
Total assets 4,902,846 4,308,833
EQUITY AND LIABILITIES
Capital and Reserves
Called up share capital 605,416 605,416
Share premium 3,801,202 3,801,202
Share based payments reserve 128,685 87,626
Retained earnings (822,991) (628,865)
Total equity 3,712,312 3,865,379
Non-current Liabilities
Trade and other payables: Amounts falling due 719,993 238,022
after more than one year
Total non-current liabilities 719,993 238,022
Current liabilities
Trade and other payables: Amounts falling due 470,541 205,432
within
one year
Total Current Liabilities 470,541 205,432
Total Liabilities 1,190,534 443,454
Total Equity and Liabilities 4,902,846 4,308,833
Cash Flow Statement
FOR the Year Ended 31 May 2009
2009 2008
€ €
Cash generated by/(used in) operations 118,876 (196,010)
Tax paid - -
Net cash generated by/(used in) operating 118,876 (196,010)
activities
Cash flows from investing activities
Investment in exploration and evaluation (628,611) (553,053)
Net cash used in investing activities (628,611) (553,053)
Cash flows from financing activities
Issue of share capital - 1,429,254
Shareholder loans 481,971 (760,163)
Net cash generated from financing activities 481,971 669,091
Decrease in cash and cash equivalents (27,764) (79,972)
Cash and cash equivalents at beginning of year 35,430 115,402
Cash and cash equivalents at end of year 7,666 35,430
Notes to the Financial Statements
1. Publication of non-statutory accounts
The financial information set out in this preliminary announcement is
abbreviated accounts as defined in Section 19 of the Companies (Amendment) Act
1986.
The financial information for the period ended 31 May 2009 have been extracted
from the Company's financial statements to that date which have received an
unqualified auditors' report but have not yet been delivered to the Registrar
of Companies.
2. Earnings per share
The calculation of the loss per ordinary share of €0.0032 (2008 - €0.0046) is
based on the loss for the financial year of €194,126 (2008 - €268,638) and the
weighted average number of ordinary shares on a basic and fully diluted basis
during the year of 60,541,676 (2008 - 57,913,343).
Since the Company incurred a loss the effect of share options and warrants
would be anti-dilutive.
3. Dividends
No dividends were paid or are proposed in respect of the period ended 31 May
2009.
4. Copy of Accounts
A copy of the Annual Report and Financial Statements will be available on the
Company's website www.kareliandiamondresources.com and will be available from
the Company's registered office, 10 Upper Pembroke Street, Dublin 2. It will
also be forwarded to shareholders who requested a hard copy.