Karelian Regulatory News (KDR)

21 November 2014 Karelian Diamond Resources Plc ("KDR" or the "Company") Final results for the year ended 31 May 2014 Highly Encouraging Progress Made Karelian (AIM: KDR, ESM: KDRI), the diamond exploration company focused onFinland, announces its results for the year ended 31 May 2014, a year in whichhighly encouraging progress has been made towards achieving the aim ofdiscovering a world class diamond deposit in Finland. Highlights: * Riihivaara - Excellent results achieved both during the year and since * recovery of high concentrations of kimberlitic indicator minerals suggests the presence nearby of a kimberlite source * results include 48 purple to red peridotitic garnets (G9/10 Cr-pyrope) and 46 orange mantle garnets between 0.25 and 0.5mm in size * indicator minerals have recently been sent for analysis by scanning electron microscopy for precise classification * Results indicate presence of new kimberlite source close to Seitaperä - the largest diamondiferous kimberlite pipe yet discovered in Finland Post Period: * Three further exploration Claim Reservations located in the Kuhmo and Kuopio-Kaavi regions granted - five kimberlite bodies known to be present * Agreement with Rio Tinto extended to 2020 Finance: * The loss after taxation for the year ended 31 May 2014 was €198,891 (2013: €179,955) * A series of Placings raised a total of £2,725,000 * Net Assets as at 31 May 2014 were €8,406,643 (2013: €4,422,130) Professor Richard Conroy, Chairman, stated: "The Company has made significant progress in its diamond exploration programmein Finland and this has continued into the current financial year. The resultsfrom Riihivaara are particularly pleasing. We have had excellent sample resultsand are hopefully getting very close to a kimberlite source." Further Information: Professor Richard Conroy, Chairman, Karelian Tel: +353-1-661-8958Diamond Resources plc Virginia Bull / Simon Clements, Sanlam Securities Tel: +44-20-7628-2200UK Limited (Nomad) Ger Heffernan, IBI Corporate Finance Limited (ESM Tel: +353-7662-34800Adviser) Jon Belliss / Abigail Wayne, Hume Capital Tel: +44-20-3693-1493Securities Plc (Broker) Michael Padley / Gary Middleton, Lothbury Tel: +44-20-3440-7620Financial Services 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 2014. 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 nearby in Russia. Excellent resultshave been achieved at your Company's exploration target at Riihivaara, bothduring the year to 31 May and since. Positive results at other targets have ledto several new claim applications. Financially a series of successful Placings raised in total £2,725,000. Also,your Company's Confidentiality Agreement (with Back in Rights) with Rio Tintohas been extended to 2020, post period. The recovery of high concentrations, for the Karelian Craton, of kimberliticindicator minerals ("KIMs") in Riihivaara indicates the nearby presence of anew kimberlite source in the Kuhmo region of Finland. Laboratory results from a sample collected on the Company's Riihivaara targetin the Kuhmo region show high concentrations of over 100 kimberlitic indicatorminerals. The results included 48 purple to red peridotitic garnets (G9/10Cr-pyrope) and 46 orange mantle garnets which are between 0.25 and 0.5mm insize, plus 5 purple to red peridotitic garnets (G9/10 Cr-pyrope) and 3 orangemantle garnets in the 0.5 to 1.0mm size range. G9/10 garnets are consideredsignificant as they are formed at the same temperatures and pressures asdiamonds. Orange mantle garnets can include eclogitic pyrope-almandine garnets (G3) andif eclogite mantle materials are present it is significant, as it tends to beassociated with richer diamond grades. The garnets will be tested to establishwhether eclogite mantle materials are present. In the Kuhmo region of Finland,high numbers of kimberlitic indicator minerals are typically only seen eitherdirectly over or within a hundred metres of a kimberlite source. The indicator minerals have recently been sent for analysis by scanningelectron microscopy for precise classification which will determine whether anyof the sample material is derived from the diamond stability field. Your Company has for some time been following up the diamondiferous kimberliticindicator mineral trains that we have discovered on our Riihivaara target. Theboard is hopeful that we are getting very close to or immediately over thesource. The Riihivaara claim reservation lies approximately 10km southeast of theCompany's Seitaperä kimberlite target in the Kuhmo municipality in EasternFinland where your Company has outlined the largest diamondiferous pipe yetdiscovered in Finland. Claims Reservations Granted After year-end TUKES (The Finnish Mining Authority) granted Karelian threefurther exploration Claim Reservations located in the Kuhmo and Kuopio-Kaaviregions. The Claim Reservation in the Kuhmo region is up ice from kimberlitic indicatorminerals recovered previously by your Company at its Rihiivaara diamondexploration target. The possibility of new discoveries in the Kuusamo area complements the positiveresults at your Company's Riihivaara target area. Other targets in the Kuhmoarea include the Havukkasuo and Lentiira kimberlite pipes. Kuopio-Kaavi is situated in Central Finland and is an establisheddiamondiferous region. In both of the Claim Reservations granted in theKuopio-Kaavi region, diamondiferous kimberlite bodies have been reported. TheseClaim Reservations were applied for with a view to re-evaluating knownkimberlite bodies and following up on indicator mineral trains. Five kimberlite bodies are known to be present in the Claim Reservation areas.Malmikaivos oy reported that four of these bodies contain diamonds, includingKimberlite body 21, a sample containing 128 diamonds of greater than 0.8 mm andalso a large single stone of 1.126 ct. We are delighted that we have secured these diamond bearing kimberlite bodiesas part of our ongoing diamond exploration programme in Finland and ourre-evaluation of the Kuopio-Kaavi area. Agreement with Rio Tinto The Company's agreement with Rio Tinto has been extended to 2020. Under theagreement, Rio Tinto discloses to Karelian confidential information andphysical geological samples relating to exploration in Finland for the purposeof Karelian considering that information in relation to Karelian's potentialand existing exploration programmes in Finland. As consideration for 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 10tons 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 2014 was €198,891 (2013: €179,955) and the net assets as at 31 May 2014 were €8,406,643 (2013: €4,422,130). As in previous years, I have supported the working capital requirements of theCompany. The balance of the loans and interest due to me at the period end was€309,589. The loans have been made on standard 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 we look forward to building on these achievements. We have hadexcellent sample results and are hopefully getting very close to a kimberlitesource. Professor Richard ConroyChairman 21 November 2014 INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2014 2014 2013 € € Operating expenses (191,139) (165,604) Finance income - bank interest receivable 699 - Finance costs - Interest on shareholder loan (8,451) (14,351) Loss Before Taxation (198,891) (179,955) Taxation - - Loss RETAINED for the year (198,891) (179,955) Loss per ordinary share (€0.0013) (€0.0019) STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2014 2014 2013 € € Assets Non-current Assets Intangible assets 7,329,228 6,801,539 Investment in subsidiaries 4 4 Property, plant and equipment 165 333 7,329,397 6,801,876 Current Assets Trade and other receivables 55,779 11,691 Cash and cash equivalents 2,105,041 2,506 2,160,820 14,197 Total assets 9,490,217 6,816,073 Equity and Liabilities Capital and reserves Called up share capital 2,865,350 922,083 Share premium 6,786,177 4,621,158 Share based payments reserve 525,275 450,157 Retained earnings (1,770,159) (1,571,268) Total equity 8,406,643 4,422,130 Non-current liabilities Financial liabilities 309,589 1,171,968 Total non-current liabilities 309,589 1,171,968 Current liabilities Trade and other payables 773,985 1,221,975 Total Current Liabilities 773,985 1,221,975 Total Liabilities 1,083,574 2,393,943 Total Equity and Liabilities 9,490,217 6,816,073 Cash Flow Statement For the Year Ended 31 May 2014 2014 2013 € € Cash used in operations (147,489) (50,768) Tax paid - - Net cash used in operating activities (147,489) (50,768) Cash flows from investing activities Investment in exploration and evaluation assets (432,548) (292,105) Net cash used in investing activities (432,548) (292,105) Cash flows from financing activities Issue of share capital (net of share issue expenses) 3,025,788 - Increase in accrued director's remuneration - 242,325 (Repayment)/Advances of Shareholder loans (343,915) 93,000 Interest received 699 - Net cash generated from financing activities 2,682,572 335,325 Increase/(decrease) in cash and cash equivalents 2,102,535 (7,548) Cash and cash equivalents at beginning of year 2,506 10,054 Cash and cash equivalents at end of year 2,105,041 2,506 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 2014 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 €0.0013 (2013 - €0.0019) is based onthe loss for the financial year of €198,891 (2013 - €179,955) and the weightedaverage number of ordinary shares in issue on a basic and fully diluted basisduring the year of 157,942,015 (2013 - 92,308,242). 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 May2014. 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 15 December 2014 and Proxy Form will besent to Shareholders in due course.