Statement re Exploration Programme

20 Oct 2005 10:06

For immediate release 20 October 2005 Karelian Diamond Resources Plc ("KDR") KARELIAN FOLLOWS SUCCESSFUL AIM LISTING WITH FIRST DRILLING TARGETS IN FINNISH DIAMOND SEARCH * Company's Initial Exploration Programme Will Focus On Kuhmo Claim Block * Significance Of Seitapera Pipe Enhanced By Other Untested Mineral Anomalies * Evidence Suggests Multiple Sources Of Diamonds May Be Present At Kuhmo Since its shares were admitted to trading on AIM, Karelian Diamond Resourcesplc has made encouraging progress in its Finnish diamond search, recentlyannouncing that several drilling targets have been identified on its Kuhmoclaim block in eastern Finland. These targets were picked out following aground magnetic survey over one of 16 diamond indicator mineral (DIM) anomaliesthat KDR previously outlined by till sampling.Trading on AIM commenced at the beginning of September when 10m shares wereplaced at 5p each to raise ‚£500,000 (before expenses) for diamond explorationon its claims in the Finnish sector of the Karelian Craton. This block ofancient crustal rocks occupies much of eastern and northern Finland, extendingover the border into Russia where it hosts a number of significant diamonddeposits, including the world-class Lomonosova and Grib discoveries.In the annual report for the 14 months ended May 31, 2005, KDR chairman,Professor Richard Conroy, says that the company believes that the Finnishsector of the Craton has the potential to host similar world-class depositsand, given its size and potential, it is under-explored by comparison withother diamond producing regions of the world. He also points out that Finland'sclimate and terrain are amenable to year-round mining and exploration.In selecting exploration areas, KDR has made use of the extensive aeromagneticand electromagnetic data publicly available in Finland to identify geophysicalanomalies that might represent kimberlite pipes. Interpretation of thegeophysical data has been followed by regional till sampling in the targetsareas, some of which yielded kimberlitic and diamond indicator minerals,including G9 and G10 garnets which form at similar temperatures and pressuresto diamonds.KDR now holds 58 diamond claims in Finland, mostly over targets which wereidentified using this strategy. Of this total, 37 claims have been awardedsince July 2004, when the Finnish diamond interests of Conroy Diamonds and GoldPlc and Conroy Plc were transferred to KDR. The claims are groupedgeographically into four blocks, each of which has been independently assessedas "highly prospective for diamonds". The Kuhmo block is the largest with 49claims, including those covering a known diamondiferous pipe at Seitapera andthe 16 other DIM anomalies found by KDR following till sampling.The presence of the Seitapera kimberlite pipe shows that the right geochemicalconditions to host diamonds occur in the Kuhmo area. Furthermore, because KDRhas identified other DIM anomalies elsewhere on the claim block, thesignificance of this pipe is now much greater than at the time of itsdiscovery. When linked to the fact that kimberlite pipes typically occur inclusters, KDR says this suggests that multiple sources of diamonds may bepresent at Kuhmo. For this reason, it is the focus of the company's initialexploration programme.In the coming year this programme will include further drilling of theSeitapera pipe which has a surface area of 4 hectares, and systematicevaluation of the 15 other known DIM anomalies to determine if they warrantdrilling. Till sampling will also continue, as will work on KDR's three otherhighly prospective claim blocks, the company states.KDR management has established a close working relationship with the GeologicalSurvey of Finland (GTK) and is able to draw on its expertise, extensiveknowledge of the country's geology and its excellent technical and laboratoryservices. Karelian employs GTK staff as local consultants and to undertakefieldwork, and it has benefited greatly from this relationship. KDR can alsocall on its senior consultant, Dr Bert Gerryts, an internationally respecteddiamond geologist who pioneered the use of indicator minerals and geophysics indiamond exploration."SIGNIFICANT ADVANTAGE" SAYS INDEPENDENT REPORTKDR's admission document included an independent assessment of its diamondexploration properties and information portfolio prepared by the CSA Group.Amongst other things, this noted that Conroy Diamonds and Gold Plc and ConroyPlc (whose Finnish diamond interests were transferred into KDR) had been activein diamond exploration in the Karelian Craton since 1994. These companies hadcarried out a large amount of work and gained extensive exploration experiencein the region, and the comprehensive data package, exclusive survey results andsignificant portfolio of claims transferred into Karelian "will provide it witha significant advantage in its future operations", CSA commented.Annual Meeting: Dublin, November 14.COPIES OF THE ANNUAL REPORT ARE AVAILABLE ON REQUESTFurther Information:Professor Richard Conroy, Chairman Karelian Diamond Tel: +353-1-661-8958 Resources Plc Charles Dampney, City Capital Securities Limited Tel: +20-7822-7107 Jeffrey Coburn, John East & Partners Limited Tel: +20-7628-2200 Ron Marshman/John Greenhalgh, City of London PR Limited Tel: +20-7628-5518 ENDKARELIAN DIAMOND RESOURCES PLC