Statement re Magnetic Survey

4 Oct 2005 06:00

4 October 2005 Karelian Diamond Resources Plc ("KDR") KARELIAN IDENTIFIES FIRST DRILLING TARGETS ON ITS KUHMO CLAIM BLOCK IN EASTERN FINLAND * Ground Geophysics Highlights Drill Targets Within Indicator Mineral Anomaly * Further 15 Similar Anomalies Scheduled For Systematic Evaluation * Evidence Of Possible Multiple Diamondiferous Kimberlite Sources In Kuhmo Area AIM-quoted Karelian Diamond Resources plc is pleased to announce that it hasidentified several drilling targets on its diamond exploration acreage in theFinnish sector of the highly prospective Karelian Craton. This follows a groundmagnetic survey over one of the 16 separate indicator mineral anomaliespreviously outlined by the company on its Kuhmo claim block in eastern Finland.This magnetic survey is part of the Company's programme of systematicallyevaluating these anomalies by ground geophysics to determine if they representpotential drill targets. The ground geophysics has been carried out on KDR'sbehalf by the Geological Survey of Finland (GTK), with whom KDR has along-standing working relationship.KDR's claims in Finland are grouped on a geographical basis into four blocks,all of which lie within the Karelian Craton. The Kuhmo block is the largest andincludes claims covering a proven diamondiferous kimberlite pipe at Seitaperƒ¤.The presence of the pipe shows that the right geochemical conditions to hostdiamonds occur at Seitaperƒ¤. This, coupled with the 16 separate indicatormineral anomalies in the same general area, and the fact that kimberlite pipestypically occur in clusters, suggests that multiple sources of diamonds mayexist in the Kuhmo area. For this reason, it is the focus of KDR's initialexploration programme.Diamondiferous kimberlites are largely confined to ancient stable cratons wherethe thickness of the earth's crust is sufficient to minimise heat loss andpreserve the high temperatures necessary for diamond formation. The Kuhmo areaof Finland is characterised by a particularly thick crustal zone.The potential of the Karelian Craton to host diamonds is indicated bydiscoveries in the Russian sector of the Craton. These include two world-classdeposits: De Beers Grib pipe which is estimated to contain a resource of 98million tonnes at an average grade of 69 carats per hundred tonnes (cpht) withan estimated in situ value of US$3.7 billion, and Alrosa's Lomonosova depositwhere diamond reserves are estimated to be worth US$12.0 billion.KDR believes that the Finnish sector of the Craton, given its size andpotential, is under-explored and, by analogy with Russian sector, has thepotential to host similar world-class diamond deposits.Further Information:Professor Richard Conroy, Chairman Karelian Diamond Resources plc. Tel:+353-1-661-8958Charles Dampney, City Capital Securities Limited. Tel: +44-20-7822-7107Jeffrey Coburn, John East & Partners Limited. Tel: +44-20-7628-2200Ron Marshman/John Greenhalgh, City of London PR Limited. Tel: +44-20-7628-5518ENDKARELIAN DIAMOND RESOURCES PLC