Half-yearly Report
25 February 2010
Karelian Diamond Resources plc
("the Company")
Half-yearly results for the six months ended 30 November 2009
NEW LICENCE APPLICATIONS SUBMITTED
Karelian Diamond Resources PLC (AIM: KDR), the diamond exploration company
focused on Finland, announces its results for the six months ended November 30,
2009.
Highlights:
* Seitaperä Pipe has potential to host large diamonds
* Much of 6.9ha pipe remains untested
* Further drilling and micro-diamond analysis on hold pending market revival
* Licence applications submitted over other known kimberlites
Post-Period
* Company lists on Irish Enterprise Exchange (IEX)
Professor Richard Conroy, Chairman, said:
"Although the demand for both rough diamonds and jewellery is showing signs of
recovery, investor interest in junior explorers remains quite flat. Under such
circumstances we have decided to limit the amount of expensive drilling and
micro-diamond sampling work we undertake in order to conserve our resources.
However, we continue to evaluate opportunities on our licences on the Kuhmo and
Joensuu areas of Finland and have also submitted a number of new licence
applications over other known kimberlites, both near Seitaperä and in the wider
Kuhmo area. As market conditions improve, these work programmes will be
reviewed."
Chairman's Statement
I have great pleasure in presenting your Company's Half-Yearly results for the
six-months ended 30 November 2009, a period when we largely focused on in-house
analytical and interpretational work in relation to our diamond exploration in
Eastern Finland.
During this period, sales of diamond jewellery showed welcome signs of recovery
and, in the US, which accounts for around half of the market, improved sales
were recently reported for the Thanksgiving and Christmas periods, whilst
demand from India and China remains strong.
Sentiment also improved in the rough diamond market, where the resulting
recovery in prices was also a feature, though they still remain below the highs
of 2008. However, cutters and polishers are not likely to be able to build up
inventories in the current climate in which debt is hard to come by.
Our Seitaperä deposit in the Kuhmo area is the largest known diamondiferous
kimberlite pipe in Finland and analytical work has indicated that it has
potential to host large diamonds. In the Joensuu area, your Company has
identified kimberlite indicator mineral trains and these increase the
likelihood of kimberlites being present.
However, until stock market interest in junior diamond explorers shows
sustained recovery, your Company has stepped back from undertaking further
drilling and micro-diamond sampling/analysis at Seitaperä, both of which are
expensive. Much of the 6.9ha pipe identified at Seitaperä remains untested,
including the north-east extension.
Whilst conserving resources, we will continue to evaluate opportunities on our
licences in the Kuhmo and Joensuu areas. We are also taking advantage of market
conditions to evaluate other areas of interest in Finland. To this end we have
submitted a number of licence applications over other known kimberlites, both
in the vicinity of Seitaperä and in the wider Kuhmo area.
Corporate
In December 2009, the shares of your Company were listed on the Irish
Enterprise Exchange (IEX). Whilst the shares already attract the interest of
many Irish investors, we believe that the IEX listing will facilitate dealings
for investors in Ireland and elsewhere who normally trade shares in Euro.
Finance
The results for the six months ended 30 November 2009 are set out below. The
loss for the period was €83,636. (2008: loss €112,612).
During this period I have supported the working capital requirements of the
Company and in the period under review have advanced aggregate loans amounting
to €70,772.
The loans have been made under normal commercial terms in accordance with a
letter of support dated 11 November 2008. This letter provides confirmation of
support from me for the current financial year ending 31 May 2010. The loans
have been and will continue to be made on normal commercial terms. The interest
on the loans is currently accruing at a rate of 8.25 per cent. per annum. The
loans may be repaid at any time but I have confirmed to the Company that I will
not request repayment, other than in exceptional circumstances, within a period
of less than one year.
The other directors consider, having consulted with the Company's Nominated
Adviser, that the terms of the loan are fair and reasonable in so far as the
Company's shareholders are concerned.
Directors and Staff
I would like to thank my fellow directors, staff and consultants for their
support and dedication, which has enabled the continued success of the Company.
I look forward to the future with confidence.
Professor Richard Conroy
Chairman
Further enquiries:
Karelian Diamond Resources plc Tel: 00 353 1 661 8958
Professor Richard Conroy
Merchant John East Securities Limited Tel: 020 7628 2200
(Nomad) Simon Clements / Virginia Bull
IBI Corporate Finance Limited (IEX Tel: 00 353 1 637 7800
Adviser)
John Tuite
City Capital Corporation Limited Tel: 020 3178 3399
Charles Dampney
Lothbury Financial Limited Tel: 020 7011 9411
Ron Marshman / Michael Padley
Hall Communications Tel: 00 353 1 660 9377
Don Hall
UNAUDITED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 NOVEMBER 2009
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
€ € €
OPERATING EXPENSES (83,641) (112,783) (194,342)
Other Income 5 171 216
LOSS BEFORE TAXATION (83,636) (112,612) (194,126)
Taxation - - -
LOSS RETAINED FOR THE PERIOD (83,636) (112,612) (194,126)
Loss per ordinary share - Basic and (0.0014) (0.0019) (0.0032)
diluted
UNAUDITED BALANCE SHEET
AS AT 30 NOVEMBER 2009
30 November 30 November 31 May
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
€ € €
ASSETS
Non-current Assets
Intangible assets 5,062,451 4,614,881 4,883,865
Financial assets 4 4 4
Property, plant and equipment 1,005 1,089 1,089
5,063,460 4,615,974 4,884,958
Current Assets
Trade and other receivables 8,378 46,708 10,222
Cash and cash equivalents 14,037 108,614 7,666
22,415 155,322 17,888
Total Assets 5,085,875 4,771,296 4,902,846
EQUITY AND LIABILITIES
Capital and Reserves
Called up share capital 605,416 605,416 605,416
Share premium 3,801,202 3,801,202 3,801,202
Share based payments reserve 169,744 128,685 128,685
Retained losses (906,627) (741,477) (822,991)
Total Equity 3,669,735 3,793,826 3,712,312
Non-current Liabilities
Trade and other payables: Amounts 790,765 582,914 719,993
falling due after more than one year
Total non-current liabilities 790,765 582,914 719,993
Current Liabilities
Trade and other payables: Amounts 625,375 394,556 470,541
falling due within one year
Total Current Liabilities 625,375 394,556 470,541
Total Liabilities 1,416,140 977,470 1,190,534
Total Equity and Liabilities 5,085,875 4,771,296 4,902,846
UNAUDITED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 NOVEMBER 2009
Six months Six months Year
ended ended ended
30 November 30 November 31 May
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
€ € €
Cash generated by operations 114,185 121,032 118,876
Tax paid - - -
Net cash generated by operating 114,185 121,032 118,876
activities
Cash flows from investing activities
Investment in mineral interests (178,586) (359,626) (628,611)
Net cash used in investing activities (178,586) (359,626) (628,611)
Cash flows from financing activities
Shareholder loan advances 70,772 311,778 481,971
Net cash from financing activities 70,772 311,778 481,971
Increase/(Decrease) in cash and cash 6,371 73,184 (27,764)
equivalents
Cash and cash equivalents at 7,666 35,430 35,430
beginning of year
Cash and cash equivalent at year end 14,037 108,614 7,666
Notes to the Financial Statements
1. Publication of non-statutory accounts
The financial information set out in this document does not comprise the
statutory accounts of the Company.
2. Earnings per share
The calculation of the loss per ordinary share of €0.0014 (2008: loss €0.0019)
is based on the loss for the half year of €83,636 (2008: loss €112,612) and the
weighted average number of ordinary shares on a basic and fully diluted basis
during the year of 60,541,676 (2008: 60,541,676). Share options and warrants
are not included in the calculation of fully diluted shares since the Company
incurred a loss in both periods which results in these potential shares being
anti-dilutive.
3. Dividends
No dividends were paid or are proposed in respect of the period ended 30
November 2009.
4. Copy of half yearly report
A copy of the half yearly report 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.