Last checked at 28 Feb 2012 07:00
28 February 2012 Karelian Diamond Resources plc ("Karelian" or "the Company") Half-year results for the six months ended 30 November 2011 FURTHER ENCOURAGING RESULTS FROM DIAMOND EXPLORATION PROGRAMME IN FINLAND
Karelian Diamond Resources plc (AIM: KDR; ESM: KDR.I), announces its results for the six months ended 30 November 2011.
Highlights:
* Five further holes drilled at Seitaper¤ all intersect kimberlite. * Till sampling programme at nearby Riihivaara suggests possibility of another diamondiferous pipe or dyke. * Integration and assessment of data received from Rio Tinto Mining and Exploration continues. * Additional exploration licence applications submitted.
Professor Richard Conroy, Chairman, said:
"Drilling at Seitaper¤ and till sampling at Riihivaara together with integration of Rio Tinto data all aid our diamond exploration programme and encourage application for further licences."
Further Information:
Professor Richard Conroy, Chairman/Karelian Diamond Tel: +353-1-661-8958 Resources plc
Simon Clements/Virginia Bull/Merchant Securities Limited Tel: (Nomad) +44-20-7628-2200 John Grant/Karen Kelly/David Lawman/XCAP Securities PLC Tel: (Broker) +44-20-7101-7070
Brian Farrell/IBI Corporate Finance Limited (ESM Adviser) Tel +353-1-637-7800
Michael Padley/Michael Spriggs/Lothbury Financial Services Tel: +44-20-7868-2010 Don Hall/ Hall Communications Tel: +353-1-660-9377
Visit the website at: www.kareliandiamondresources.com
Dear Shareholder,
I have great pleasure in presenting your Company's interim results for the six months ended 30 November 2011, a period of continued progress by your Company.
During the period covered by the report the price of diamonds remained high with increased demand particularly from China.
Your Company has continued its exploration programme in the Karelian Craton in Finland which is based on your Board's belief that one or more diamond finds of similar magnitude to the major finds made in the Russian area of the Karelian Craton may be made in that part of the Craton which lies in Finland.
Your Company has outlined in the Kuhmo area of Eastern Finland, the largest diamondiferous kimberlite pipe to be found so far in Finland. This is the Seitaper¤ kimberlite pipe, which covers approximately 6.9 hectares. 67 diamonds have been recovered from the pipe during your Company's exploration programme including six macrodiamonds and 61 microdiamonds. Some of these may be fragments of a larger diamond or diamonds which were present in the mantle xenoliths and broke apart during processing. These findings suggest that there is the possibility of larger diamonds in the pipe with much of the kimberlite remaining untested.
Recent drilling by your Company of the pipe encountered kimberlite in all five holes drilled including a new large (52 metre) zone of mantle bearing kimberlite. The new zone is approximately 120 metres from where mantle xenolith material was previously encountered and is in a mica rich brown kimberlite whereas the previous zone was black serpentinized kimberlite. There are also a number of sections in the hole that had olivine xenocrysts present in the core which are also derived from the diamond forming mantle.
The drilling programme has added substantial further information on the scope and extent of this diamondiferous pipe and to our understanding of the potential of the Kuhmo area in general for diamonds.
Positive results from a basal till sampling programme near the Seitaper¤ pipe suggest that another diamondiferous kimberlite pipe or dyke may exist in the nearby Riihivaara area of Eastern Finland.
The till sampling programme at Riihivaara resulted in the recovery of twelve garnet indicator minerals, comprising three G10's, five G9's, one G4, one G3 and two G1's. Six of the positive results, including the G4 pyroxenitic garnet occurred within a single till sample. The adjacent sample had two positive results, including the eclogitic G3 garnet. These garnets and other mantle-derived minerals are used to locate kimberlites and are referred to as kimberlite indicator minerals. Some of these garnets, the G10's and certain G9's, are created under similar conditions to diamonds within the ultramafic mantle rocks underlying the crust and are therefore used as predictors of the presence of diamonds. There is a strong statistical correlation between G10 and certain G9 garnets, like those found in Riihivaara, and the presence of diamonds.
The sampling programme was undertaken on Karelian's behalf by the Geological Survey of Finland (GTK) in conjunction with the Company's technical staff. Sample analysis was undertaken in the GTK laboratories.
Dr. Hugh O'Brien, a diamond specialist with the GTK stated: "G3 (eclogitic) and G4 (pyroxenitic) garnets are very unusual for eastern Finland. It is surprising to find eclogitederived grains in this area, because the kimberlites found to date in the Kuhmo-Lentiira Kostomuksha area are very poor in eclogite component, being rather much more dominated by peridotite indicators."
Eclogite mantle material is significant as it tends to be associated with a much higher grade of diamonds than peridotite mantle material.
We are very pleased with these latest sample results at Riihivaara which show a strong correlation with the possible presence of diamonds together with the discovery of eclogitic material which tends to be associated with higher diamond grades. Arising from these results applications have been made for further exploration acreage in the Riihivaara area.
The review and integration of the extensive data on Finland made available to your Company by Rio Tinto Mining and Exploration Limited continues. Arising from this review, applications have been made for additional exploration licences.
Finance
The results for the six months ended 30 November 2011 are set out below. The loss for the period was €84,692 (2010: loss €88,124).
Outlook
Finland clearly has potential for diamonds and we look forward to continuing with our objective of making a diamond discovery in the Karelian Craton in Finland comparable to the major discoveries on the Russian side of the Craton.
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.
Yours faithfully,Professor Richard ConroyChairman28 February 2012 INCOME STATEMENT FOR HALF-YEAR ENDED 30 NOVEMBER 2011 Six months Six months Year ended ended ended 30 November 30 November 31 May 2011 2010 2011 (Unaudited) (Unaudited) (Audited) € € € OPERATING EXPENSES (77,907) (80,605) (171,813) Finance income - bank interest 5 - -receivable Operating loss (77,902) (80,605) (171,813) Finance costs - interest on (6,790) (7,519) (15,448)shareholder loan LOSS BEFORE TAXATION (84,692) (88,124) (187,261) Taxation - - - LOSS FOR THE YEAR (84,692) (88,124) (187,261) Loss per ordinary share - basic (€0.0009) (€0.0015) (€0.0027)and diluted STATEMENT OF COMPREHENSIVE INCOME FOR HALF-YEAR ENDED 30 NOVEMBER 2011 Six months Six months Year ended ended ended 30 November 30 November 31 May 2011 2010 2011 (Unaudited) (Unaudited) (Audited) € € € LOSS FOR PERIOD (84,692) (88,124) (187,261) Total income and expense - - -recognised in other comprehensive income
TOTAL COMPREHENSIVE INCOME FOR THE (84,692) (88,124) (187,261) PERIOD - ENTIRELY ATTRIBUTABLE TO
EQUITYHOLDERS STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2011 30 November 30 November 31 May 2011 2010 2011 (Unaudited) (Unaudited) (Audited) ASSETS € € € Non-current Assets Intangible assets 6,154,525 5,456,424 5,760,090 Investment in Subsidiary 4 4 4 Property, plant and equipment 585 753 669 6,155,114 5,457,181 5,760,763 Current Assets Trade and other receivables 8,551 5,804 12,536 Cash and cash equivalents 203,917 4,635 745,908 212,468 10,439 758,444 Total Assets 6,367,582 5,467,620 6,519,207 EQUITY AND LIABILITIES Capital and Reserves Called up share capital 922,083 605,416 922,083 Share premium 4,621,158 3,801,202 4,621,158 Share based payments reserve 333,981 273,957 292,921 Retained losses (1,268,025) (1,084,196) (1,183,333) Total Equity 4,609,197 3,596,379 4,652,829 Non-current Liabilities Financial Liabilities 812,665 895,241 937,665 Total Non-current Liabilities 812,665 895,241 937,635 Current Liabilities Trade and other payables 945,720 976,000 928,713 Total Current Liabilities 945,720 976,000 928,713 Total Liabilities 1,758,385 1,871,241 1,866,378 Total Equity and Liabilities 6,367,582 5,467,620 6,519,207 Statement OF CHANGES IN EQUITY For the HALF-Year Ended 30 NOVEMBER 2011 Share-based Retained Share Share Payment Earnings Total Capital Premium Reserve (Deficit) Equity € € € € € At 1 June 2010 605,416 3,801,202 210,803 (996,072) 3,621,349 Share-based payments - - 63,154 - 63,154 Loss for the period - - - (88,124) (88,124) At 30 November 2010 605,416 3,801,202 273,957 1,084,196 3,596,379 At 1 December 2010 605,416 3,801,202 273,957 (1,084,196) 3,596,379 Share issue 316,667 - - - 316,667 Share premium - 819,956 - - 819,956 Share-based payments - - 18,964 - 18,964 Loss for period - (99,137) (99,137) At 31 May 2011 922,083 4,621,158 292,921 (1,183,333) 4,652,829 At 1 June 2011 922,083 4,261,158 292,921 (1,183,333) 4,652,829 Share-based payments - - 41,060 - 41,060 Loss for the period - - - (84,692) (84,692) At 30 November 2011 922,083 4,621,158 333,981 (1,268,025) 4,609,197 CASh Flow Statement For the HALF-Year Ended 30 NOVEMBER 2011 Six months Six months Year ended ended ended 30 November 30 November 31 May 2011 2010 2011 (Unaudited) (Unaudited) (Audited) € € Cash flows from operating activities
Cash (used in)/generated by operations (56,031) 150,912 38,549
Tax paid - - - Net cash (used in)/ generated by (56,031) 150,912 38,549operating activities Cash flows from investing activities Investment in exploration and (360,965) (206,408) (443,136)evaluation
Net cash used in investing activities (360,965) (206,408) (443,136)
Cash flows from financing activities Issue of share capital - - 1,136,623 Advances of shareholder loan - 42,424 42,424 Repayment of shareholder loan (125,000) - - Bank interest received 5 - - Interest paid on shareholder loan - - (46,259) Net cash (used in)/generated from (124,995) 42,424 1,132,788financing activities
(Decrease)/Increase in cash and cash (541,991) (13,072) 728,201 equivalents
Cash and cash equivalents at beginning 745,908 17,707 17,707 of period
Cash and cash equivalents at end of 203,917 4,635 745,908period NOTES TO THE FINANCIAL StatementS For the HALF-Year Ended 30 NOVEMBER 2011
1. Basis of preparation
The half-yearly financial statements have been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), and their interpretations adopted by the International Accounting Standards Board (IASB). The accounting policies used in the preparation of the half-yearly financial information are the same as those used in the Company's audited financial statements for the year ended 31 May 2011.
2. Earnings per share
The calculation of the loss per ordinary share of €0.0009 (2010 - €0.0015) is based on the loss for the financial year of €84,692 (2010 - €88,124) and the weighted average number of ordinary shares in issue during the year of 92,208,342 (2010 - 60,541,676).
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 30 November, 2011.
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.
XLON