Karelian Regulatory News (KDR)

28 Feb 2006 07:01

To be released at 7.00 a.m. on 28 February 2006 Karelian Diamonds Resources plc ("the Company") Interim Results for the six months ended 30 November 2005 Chairman's StatementI have great pleasure in presenting your Company's report for the six monthsended November 2005. Your Company made excellent progress during the periodcovered by this report, successfully applying for admission to AIM andadvancing its diamond exploration programme in Finland.Trading on your Company's shares on AIM commenced at the beginning ofSeptember, 2005.Your Company's exploration programme is focussed on discovering potentialworld-class diamond deposits in the Finnish sector of the Karelian Craton. Thisis a block of ancient crustal rocks which occupies much of eastern and northernFinland, extending over the border into Russia where it hosts a number ofworld-class diamond deposits.Your Company believes that the Finnish sector of the Craton, given its size andpotential, is under explored and, by analogy with the Russian sector, has thepotential to host similar deposits.Your Company's claims in Finland are grouped on a geographical basis into fourblocks, all of which lie within the Karelian Craton. The Kuhmo block is thelargest and includes claims covering a proven diamondiferous kimberlite pipe atSeitapera.This pipe, which has a surface area of approximately 4 hectares, was discoveredby Malmikaivos Oy in 1993 but never fully explored. Only a very limited numberof shallow vertical drill holes were completed by Malmikaivos Oy and itspartner Ashton before the latter withdrew from the area to focus on otherFinnish claims some 120km away. However, a 13.3t composite sample from theSeitapera pipe was reported to have returned a grade of 1.09 carats per hundredtonnes.The Seitaperƒ¤ pipe shows that the right geochemical conditions exist to hostdiamonds in the Kuhmo area. Karelian has discovered 16 separate indicatormineral anomalies in the same general area as the pipe and also encounteredkimberlitic material in a preliminary trenching programme in Riihivaara thatfollowed a detailed magnetic survey of one of those anomalies.Karelian believes that these developments, together with the fact thatkimberlites typically occur in clusters, suggest that multiple sources ofdiamonds may exist in the Kuhmo area.The objective of Karelian's current follow-up drilling programme on theSeitaperƒ¤ pipe is to re-assess the geology, diamond potential and extent of thepipe as well as its significance in relation to other potential sources ofkimberlitic pipes found by your Company in the Kuhmo area.Your Company has developed a close working relationship with the GeologicalSurvey of Finland (GTK) and is able to draw on its expertise, its extensiveknowledge of Finnish geology and its excellent technical and laboratoryservices. Your Company employs GTK staff under contract as local consultantsand to undertake fieldwork and has benefited greatly from this relationship. Inaddition, your Company's senior consultant, Dr Bert Gerryts, is aninternationally respected diamond geologist who pioneered the use of indicatorminerals and geophysics in diamond exploration.FinanceOn admission to AIM your Company raised ‚£500,000 (before expenses) through aplacing of 10,000,000 ordinary shares at 5p each, which together with thefacilities available to the Company, is financing the current phase of yourCompany's activities. Your directors are considering the various options forfinancing its future exploration and development programmes. These may includebringing in a joint venture partner or the raising of further capital.Directors and StaffI would like to thank my fellow directors, staff and consultants for theirsupport and dedication. They have made the success of the Company possible. Ilook forward to the future with confidenceProfessor Richard ConroyChairman28 February 2006PROFIT AND LOSS ACCOUNTFor the six months ended 30 November 2005 Note Six months Year ended ended 31 May 30 November 2005 2005 ¢â€š¬ ¢â€š¬ Operating expenses (76,366) (98,941) Other income 2,074 - Loss for the financial period (74,292) (98,941) Profit and loss account at beginning of (98,941) -period Profit and Loss account at end of period (173,233) (98,941) Loss per share ¢â€š¬0.002 ¢â€š¬0.003BALANCE SHEETAt 30 November 2005 At At 30 November 31 May 2005 2005 ¢â€š¬ ¢â€š¬ Fixed Assets Mineral interests 3,167,141 2,885,831 Tangible assets 1,593 - Financial assets 4 4 3,138,738 2,885,835 Current Assets Debtors 10,438 660 Cash at bank and in hand 309,721 3 320,159 663 Creditors: amounts failing due within one year (575,097) (397,747) Net Current Liabilities (254,938) (397,084) Net Assets 2,913,800 2,488,751 Capital and Reserves Called up share capital 447,716 347,716 Share premium account 2,639,317 2,239,976 Profit and loss account (173,233) (98,941) Shareholders' Funds 2,913,800 2,488,751CASH FLOW STATEMENTFor the six months ended 30 November 2005 Six months Year ended ended 31 May 30 November 2005 2005 ¢â€š¬ ¢â€š¬ Net Cash Inflow from Operating Activities 93,364 139,978 Capital Expenditure and Financial Investments (282,987) (225,835) Net Cash Outflow before financing (189,623) (85,857) Financing 499,341 85,860 Increase in Cash 309,718 3Notes to the Financial Statements1. Publication of non-statutory accountsThe financial information set out in this document does not comprise thestatutory accounts of the Company.2. Loss per shareThe calculation of the loss per ordinary share of ¢â€š¬0.002 is based on the lossfor the half year of ¢â€š¬74,292 and the weighted average number of ordinary shareson a basic and fully diluted basis during the year of 39,771,676. Share optionsand warrants are not included in the calculation of fully diluted shares sincethe Company incurred a loss which results in these potential shares beinganti-dilutive.3. DividendsNo dividends were paid or are proposed in respect of the period ended 30November, 2005.4. A copy of the Interim Report will be sent to all shareholders shortly andwill be available from the Company's registered office, 10 Upper PembrokeStreet, Dublin 2.ENDKARELIAN DIAMOND RESOURCES PLC