Karelian Regulatory News (KDR)

13 November 2013 Karelian Diamond Resources Plc ("KDR" or the "Company") Final results for the year ended 31 May 2013 Excellent Results from all Three Target Sites Karelian (AIM: KDR, ESM: KDRI), the diamond exploration company focused onFinland, announces its results for the year ended 31 May 2013, a year in whichthe exploration programme continued to show highly encouraging progress. Highlights: * Further microdiamonds have been recovered at the Seitaperä kimberlite pipe * + two of the micro-diamonds greater than 60 per cent broken, indicating the possibility of larger stone sizes * Excellent results at the exploration target Riihivaara * + discovery of G9 and G10 diamondiferous indicator minerals * New claim applications at Kuusamo following positive test results * + two areas applied for following results and interrogation of Rio Tinto data * Other targets identified Professor Richard Conroy, Chairman, stated: "The Rio Tinto data is proving very useful in identifying new targets and inconfirming existing analysis." "Recent drilling of further potentially diamond bearing mantle xenolith atSeitaperä, subsequently confirmed as diamondiferous by the recovery ofmicrodiamonds, and the results from elsewhere is very heartening." Further Information: Professor Richard Conroy, Chairman, Karelian Tel: +353-1-661-8958Diamond Resources plc Simon Clements/Virginia Bull, Sanlam Securities UK Tel: +44-20-7628-2200Limited (Nomad) Ger Heffernan, IBI Corporate Finance Limited (ESM Tel: +353-7662-34800Adviser) Jon Belliss/ David Lawman, XCAP Securities PLC Tel: +44-20-7101-7070(Broker) Michael Padley/Michael Spriggs, Lothbury Financial Tel: +44-20-3440-7620Services Limited Don Hall, Hall Communications Tel: +353-1-660-9377 http://www.kareliandiamondresources.com CHAIRMAN'S STATEMENT I have pleasure in presenting your Company's Annual Report and FinancialStatements for the year ended 31 May 2013. During the year further highlyencouraging progress has been made towards achieving your Company's objectiveof discovering a world class diamond deposit in Finland comparable to thosewhich have been found in similar geology in Russia. Further microdiamonds havebeen recovered at your Company's Seitaperä kimberlite pipe, excellent resultshave been achieved at your Company's exploration target Riihivaara, andpositive results at Kuusamo have led to new claim applications. Seitaperä Your Company has shown that the diamondiferous kimberlite pipe located atSeitaperä is, at 6.9 hectares, the largest known diamondiferous kimberlite pipein Finland. The identification during recent drilling of further potentiallydiamond bearing mantle xenolith, subsequently confirmed as diamondiferous bythe recovery of microdiamonds, is highly encouraging. The micro-diamondsobserved were white in colour, transparent and octahedral. Two of themicro-diamonds, including the largest stone, were greater than 60 per centbroken indicating the possibility of larger stone sizes. Riihivaara At Riihivaara, a till sampling programme resulted in the discovery of G9 andG10 diamondiferous indicator minerals - so called because they are formedwithin the ultramafic rocks underlying the earth's crust at the sametemperatures and pressures as diamonds. G3 and G4 garnets were also found,suggesting the presence of eclogitic mantle material which is significant as ittends to be associated with higher grades of diamonds. The Riihivaara claim reservation lies approximately 10km southeast of theCompany's Seitaperä kimberlite target. A claim reservation gives exclusiverights to apply for exploration claims within the reservation area. YourCompany's Riihivaara exploration target is in the Kuhmo municipality in EasternFinland and is bordered to the east by Russia. Kuusamo Interrogation of airborne geophysics by the Company together with till samplingand integration of data made available to Karelian under its agreement with RioTinto Mining and Exploration has led to the decision to apply for claimreservations over two areas in the Kuusamo region. Kuusamo is located in theNortheast of Finland just south of the Arctic Circle and is also bordered tothe East by Russia. In the first area at Kuusamo, 121 kimberlitic indicatorminerals were recovered, with 76 kimberlitic indicator minerals recovered inthe second area, which are very positive. Further studies including microprobeanalysis confirmed that the kimberlitic indicator minerals in both areas werealso indicating diamondiferous potential. The possibility of new discoveries in the Kuusamo area complements the positiveresults at your Company's Riihivaara target area and the confirmation of thediamondiferous nature of the Seitaperä kimberlite pipe. Other targets in theKuhmo area include the Havukkasuo and Lentiira kimberlite pipes. Agreement with Rio Tinto The agreement with Rio Tinto has led to further highly encouraging progress.Under the agreement, Rio Tinto discloses to Karelian confidential informationand physical geological samples relating to exploration in Finland for thepurpose of Karelian considering that information in relation to Karelian'spotential and existing exploration programmes in Finland. In consideration of Rio Tinto disclosing the confidential information to it,Karelian has agreed that Rio Tinto will have the option to earn a 51 per cent.interest in any project identified by Karelian in Finland by Rio Tinto payingthe direct cash expenditures incurred in developing the project subject to thefollowing conditions: 1. For diamond projects the option will be triggered if Karelian completes 10tonnes or more of bulk sampling for diamond exploration; and 2. For all other minerals the option will be triggered if Karelian discovers aresource with an in situ value that is equal to or greater than the in situvalue of 3 million ounces of gold in a JORC compliant resource calculation. Finance The loss after taxation for the year ended 31 May 2013 was €179,995 (2012: €207,980) and the net assets as at 31 May 2013 were €4,422,130 (2012: €4,526,967). As in previous years, I have supported the working capital requirements of theCompany and the balance of the loans due to me at the period end was €1,221,975. The loans have been made on normal commercial terms. The other Directors consider, having consulted with the Company's NominatedAdviser and the Company's ESM Adviser, that the terms of these loans are fairand reasonable in so far as the Company's shareholders are concerned. Auditors I would like to take the opportunity to thank the partners and staff ofDeloitte and Touche for their services to your Company during the course of theyear. Directors, Consultants and Staff I would also like to express my deep appreciation of the support and dedicationof the directors, consultants and staff, which has made possible the continuedprogress which your Company has achieved. Future Outlook Your Company has made significant progress in its diamond exploration programmein Finland and looks forward to building on these achievements. Professor Richard Conroy Chairman 12 November 2013 INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2013 2013 2012 € € Operating expenses (165,604) (194,582) Finance income - bank interest receivable - 97 Finance costs - Interest on shareholder loan (14,351) (13,495) Loss Before Taxation (179,955) (207,980) Taxation - - Loss RETAINED for the year (179,955) (207,980) Loss per ordinary share (€0.0019) (€0.0023) STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2013 2013 2012 € € Assets Non-current Assets Intangible assets 6,801,539 6,390,694 Investment in subsidiaries 4 4 Property, plant and equipment 333 501 6,801,876 6,391,199 Current Assets Trade and other receivables 11,691 47,382 Cash and cash equivalents 2,506 10,054 14,197 57,436 Total assets 6,816,073 6,448,635 Equity and Liabilities Capital and reserves Called up share capital 922,083 922,083 Share premium 4,621,158 4,621,158 Share based payments reserve 450,157 375,039 Retained earnings (1,571,268) (1,391,313) Total equity 4,422,130 4,526,967 Non-current liabilities Financial liabilities 1,171,968 1,007,214 Total non-current liabilities 1,171,968 1,007,214 Current liabilities Trade and other payables 1,221,975 914,454 Total Current Liabilities 1,221,975 914,454 Total Liabilities 2,393,943 1,921,668 Total Equity and Liabilities 6,816,073 6,448,635 Cash Flow Statement For the Year Ended 31 May 2013 2013 2012 € € Cash used in operations (50,768) (58,631) Tax paid - - Net cash used in operating activities (50,768) (58,631) Cash flows from investing activities Investment in exploration and evaluation assets (292,105) (509,687) Net cash used in investing activities (292,105) (509,687) Cash flows from financing activities Increase in accrued director's remuneration 242,325 - (Repayment)/Advances of Shareholder loans 93,000 (125,000) Interest paid - (42,633) Interest received - 97 Net cash generated from financing activities 335,325 (167,536) (Decrease)/Increase in cash and cash equivalents (7,548) (735,854) Cash and cash equivalents at beginning of year 10,054 745,908 Cash and cash equivalents at end of year 2,506 10,054 Notes to the Financial Statements 1. Publication of non-statutory accounts The financial information set out in this preliminary announcement isabbreviated from the accounts as defined in Section 19 of the Companies(Amendment) Act 1986. The financial information for the year ended 31 May 2013 have been extractedfrom the Company's financial statements to that date which have received anunqualified auditors' report but have not yet been delivered to the Registrarof Companies. 2. Earnings per share The calculation of the loss per share of €0.0019 (2012 - €0.0023) is based onthe loss for the financial year of €179,955 (2012 - €207,980) and the weightedaverage number of ordinary shares in issue on a basic and fully diluted basisduring the year of 92,208,342 (2012 - 92,208,342). The effect of share options and warrants is anti-dilutive. 3. Dividends No dividends were paid or are proposed in respect of the year ended 31 May2013. 4. Copies of Accounts A copy of the Annual Report and Financial Statements will be available on theCompany's website www.kareliandiamondresources.com and will be available fromthe Company's registered office, 10 Upper Pembroke Street, Dublin 2. It willalso be forwarded to shareholders who requested a hard copy. Notice of theAnnual General Meeting to be held on 9 December 2013 and Proxy Form was sent toshareholders on 13 November 2013 and are also available on the website.