The information contained within this
announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR").
17 November 2016
Karelian Diamond
Resources Plc
(“KDR” or the “Company”)
Final results for
the year ended 31 May 2016
Excellent
Progress
Karelian (AIM: KDR, ESM: KDRI), the diamond exploration company
focused on Finland, announces its
results for the year ended 31 May
2016, a year in which highly encouraging progress has been
made towards achieving its objective to discover, or acquire, and
develop diamond deposits in Finland.
Highlights:
- Acquisition of Lahtojoki Diamond Deposit
- Mining Permit for Lahtojoki Diamond Deposit Granted
- Potential to become Profitable Open Pit Diamond Mine
- Riihivaarä Kimberlite Body discovered by Company likely
to be Diamondiferous
- Rio Tinto Agreement Extended to 2020
Professor Richard Conroy, Chairman, stated:
“I am delighted that the Company has
made such excellent progress during the year both by the
acquisition of the Lahtojoki diamond deposit which could
become the first diamond mine in Europe (outside Russia) and by the exploration results. The
diamond potential in the Lahtojoki area has been enhanced, post the
acquisition, and mineral analysis of the Riihivaarä indicator
minerals increases the likelihood that the Riihivaarä
kimberlite body is likely to be diamondiferous.”
Further Information:
Professor Richard
Conroy, Chairman, Karelian Diamond Resources plc |
Tel:
+353-1-661-8958 |
David Hart / Nick
Harriss/ James Thomas, Allenby Capital Limited (Nomad) |
Tel:
+44-20-33285656 |
Ger Heffernan, IBI
Corporate Finance Limited (ESM Adviser) |
Tel:
+353-7662-34800 |
Jon Belliss/ Elliot
Hance Beaufort Securities Plc (Broker) |
Tel:
+44-20-7382-8300 |
Michael Padley
Lothbury Financial Services Limited |
Tel:
+44-20-3290-0707 |
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
Financial Statements for the financial year ended 31 May
2016. The year has been an excellent one for your
Company. The Lahtojoki diamond deposit was acquired, together
with a Mining Permit from the Finnish authorities for its
development and your Company’s diamond exploration programme showed
further success with mineral analysis indicating that the
Riihivaarä kimberlite body discovered by your Company is likely to
be diamondiferous.
The Lahtojoki diamond deposit and your Company’s diamond
exploration programme are both located in the Karelian Craton in
Finland. The diamond prospectivity of this Craton, which lies
across Northern Finland and
Russia, has been demonstrated by
the discovery and development of the world class Lomonosova and
Grib Pipe diamond deposits in the
Russian sector of the Craton. Your Company’s objective is to
discover, or acquire, and develop diamond deposits in the Finnish
sector of the Craton.
ACQUISITION OF THE LAHTOJOKI
DIAMOND ORE BODY IN CENTRAL FINLAND
The Lahtojoki diamond ore body was acquired from A & G
Mining Oy (“AGM”), a private Finnish company. The ore body is
situated in the Kuopio - Kaavi region in Finland. The
location is highly favourable for development with excellent
infrastructure including good road access and power distribution
and local technical and logistics availability.
An extensive database of information has been received from AGM,
including drilling and bulk sampling reports, consultant reports
and other technical reports. This has enabled Karelian to
expedite its overall assessment of Lahtojoki diamond deposit and to
commence planning a development programme including targeting
locations for any further drilling or bulk sampling that may be
required.
The Lahtojoki diamond ore body has, we believe, the potential to
become a profitable open pit diamond mine. As well as
acquiring the property, we have received a Mining Permit for its
development from the Finnish Safety and Chemical Agency
(“TUKES”).
The acquisition of the Lahtojoki diamond ore body, together with
a Mining Permit, allows the Company, subject to any relevant
environmental assessments or requirements, to proceed through to
full development of the property as a mine.
Under the terms of the acquisition a royalty of 1% is payable to
AGM either in diamonds or cash on cumulative diamond production
above 2.5 million carats, in addition to a purchase price of
€150,000 (comprising an initial purchase price of €50,000 plus a
further €100,000 after twenty four (24) months unless Karelian
decides not to develop the project).
Finland is recognised by the
prestigious Fraser Institute as one of the most attractive
jurisdictions in the world for mining investment and the mine would
be the first diamond mine in Europe (outside Russia).
ADDITIONAL POTENTIAL AT LAHTOJOKI
As well as the Lahtojoki diamond ore body, a series of high
interest geophysical and kimberlite indicator mineral anomalies
have been identified in the immediate area. The anomalies were
outlined following an analysis by your Company of the extensive
geophysical data acquired from AGM, including image processed
magnetic and electromagnetic data together with compilation maps of
previous kimberlite indicator mineral till sampling information in
the area.
The presence of additional diamond resource potential in the
area adjacent to Lahtojoki would, if confirmed, further add to the
financial and technical attractiveness of the Lahtojoki diamond
deposit.
RIIHIVAARÄ – NEW KIMBERLITE BODY
In the Kuhmo region of Finland
where, at Seitaperä, your Company has defined the largest (at 6.9
hectares) diamondiferous kimberlite pipe discovered to date in
Finland, your Company has, at
Riihivaarä, discovered a new kimberlite body.
Indicator mineral analysis indicates that the Riihivaarä
kimberlite is likely to be diamondiferous. The geotherm is
prospective for diamonds and the kimberlite has been sampled to a
modelled depth of greater than 200km, within the diamond stability
field.
During the year, 355 garnet analyses on samples provided by
Karelian from Riihivaarä were carried out by Rio Tinto in their
Melbourne laboratories in
Australia. The samples provided were from outcrop and
till. The garnet analysis comprised kimberlite indicator
methods of MLA (Mineral Liberation Analysis) screening followed by
laser-ablation ICP-MS (Inductively Coupled Plasma – Mass
Spectrometry) analysis.
Lherzolitic (“G9”) garnets were dominant but scattered high
interest Harzburgitic (“G10”) garnets were also present. Some
evidence of metasomatism was associated with the G9 and G10
populations. Ecologitic garnets, with restricted range in
chemical composition of potential diamond-association, were
reported from the outcrop sample.
Garnet thermobarometry was also calculated to estimate the
geotherm in the Riihivaarä area. The results indicated that the
geotherm is prospective for diamonds. The geotherm in
Riihivaarä is similar to that in the Kaavi-Kuopio kimberlite field
in Finland where your Company has
acquired the Lahtojoki diamond deposit, and to kimberlite fields in
Southern Africa.
AGREEMENT WITH RIO TINTO
Your Company has a Confidentiality Agreement (with Back in
Rights) with Rio Tinto Mining and Exploration Limited (“Rio
Tinto”). I am delighted that this agreement with Rio Tinto
has been extended to 2020.
Under the agreement, Rio Tinto discloses to Karelian
confidential information and physical geological samples relating
to exploration in Finland for the
purpose of Karelian considering that information in relations to
Karelian’s potential and existing exploration programmes in
Finland.
In consideration of 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
paying the direct cash expenditures incurred in developing the
project.
FINANCE
The loss after taxation for the year ended 31 May 2016 was €268,334 (2015: €121,551) and the
net assets as at 31 May 2016 were
€8,461,373 (2015: €8,330,073).
On 17 May 2016, the Company raised
£250,000 through the issue of 31,250,000 shares at 0.8p each.
AUDITORS
I would like to take this opportunity to thank the partners and
staff of Deloitte for their services to your Company during the
course of the financial year.
DIRECTORS
I would like to express my deep appreciation of support and
dedication of all the directors, consultants and staff, which has
made possible the continued progress and success, which your
Company has achieved.
FUTURE OUTLOOK
Your Company has continued to make excellent progress in what is
now a combined diamond exploration and development programme.
We look forward to building rapidly on this success in the coming
year.
Professor Richard Conroy
Chairman
16 November 2016
INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2016
|
2016 |
2015 |
|
|
|
€ |
€ |
|
|
|
|
|
|
|
Operating expenses |
(268,504) |
(124,488) |
|
|
|
|
|
|
|
Finance income – bank interest
receivable |
170 |
2,937 |
|
|
|
|
|
|
|
Finance costs – Interest on
shareholder loan |
- |
- |
|
|
|
|
|
|
|
Loss Before Taxation |
(268,334 |
(121,551) |
|
|
|
|
|
|
|
Taxation |
- |
- |
|
|
|
|
|
|
|
Loss RETAINED for the
year |
(268,334) |
(121,551) |
|
|
|
|
|
|
|
Loss per ordinary share |
(0.0008) |
(€0.0004) |
|
|
STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY
2016
|
2016 |
2015 |
|
|
€ |
€ |
|
Assets |
|
|
|
Non-current Assets |
|
|
|
Intangible assets |
8,703,353 |
8,029,132 |
|
Investment in subsidiaries |
4 |
4 |
|
Property, plant and equipment |
- |
- |
|
|
|
|
|
|
8,703,357 |
8,029,136 |
|
|
|
|
|
Current Assets |
|
|
|
Trade and other receivables |
211,368 |
402,122 |
|
Cash and cash equivalents |
341,737 |
474,026 |
|
|
|
|
|
|
553,105 |
876,148 |
|
|
|
|
|
Total assets |
9,256,462 |
8,905,284 |
|
|
|
|
|
Equity and Liabilities |
|
|
|
Capital and reserves |
|
|
|
Called up share capital |
3,177,850 |
2,865,350 |
|
Share premium |
6,791,581 |
6,786,177 |
|
Share based payments reserve |
665,127 |
570,256 |
|
Retained earnings |
(2,173,185) |
(1,891,710) |
|
|
|
|
|
Total equity |
8,461,373 |
8,330,073 |
|
|
|
|
|
Non-current liabilities |
|
|
|
Financial liabilities |
309,589 |
309,589 |
|
|
|
|
|
Total non-current
liabilities |
309,589 |
309,589 |
|
|
|
|
|
Current liabilities |
|
|
|
Trade and other
payables |
485,500 |
265,622 |
|
|
|
|
|
Total Current
Liabilities |
485,500 |
265,622 |
|
|
|
|
|
Total Liabilities |
795,089 |
575,211 |
|
|
|
|
|
Total Equity and
Liabilities |
9,256,462 |
8,905,284 |
|
Cash Flow Statement
For the Year Ended 31 May 2016
|
2016 |
2015 |
|
|
€ |
€ |
|
Cash generated by/(used in)
operations |
160,429 |
(971,118) |
|
|
|
|
|
|
|
|
|
Net cash generated by/(used in)
operating activities |
160,429 |
(971,118) |
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
Investment in exploration and
evaluation assets |
(597,651) |
(662,834) |
|
|
|
|
|
Net cash used in investing
activities |
(597,651) |
(662,834) |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
Issue of share capital
(net of share issue expenses)
Share issue costs |
317,904
(13,141) |
-
- |
|
Interest received |
170 |
2,937 |
|
|
|
|
|
Net cash generated from financing
activities |
304,933 |
2,937 |
|
|
|
|
|
Increase/(decrease) in cash and
cash equivalents |
(132,289) |
(1,631,015) |
|
Cash and cash equivalents at
beginning of year |
474,028 |
2,105,041 |
|
|
|
|
|
Cash and cash equivalents at end
of year |
341,737 |
474,026 |
|
Notes to the Financial Statements
1. Publication of non-statutory
accounts
The financial information set out in this preliminary
announcement is abbreviated from the accounts as defined in Section
1119 of the Companies Act 2014.
The financial information for the year ended 31 May 2016 have been extracted from the
Company's financial statements to that date which have received an
unqualified auditors' report but have not yet been delivered to the
Registrar of Companies.
2. Earnings per share
The calculation of the loss per share of €0.0008 (2015 -
€0.0004) is based on the loss for the financial year of €268,334
(2015 – €121,551) and the weighted average number of ordinary
shares in issue on a basic and fully diluted basis during the year
of 287,819,281 (2015 – 286,535,034).
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 May 2016.
4. Copies of Accounts
A copy of the Annual Report and Financial Statements will be
available on the Company’s website www.kareliandiamondresources.com
and will be available from the Company's registered office, 9
Merrion Square North, Dublin
2. It will also be forwarded to shareholders who requested a
hard copy. Notice of the Annual General Meeting to be held on
9 December 2016 and Proxy Form were
sent to shareholders on 16 November
2016 and are also available on the website.