TIDMKDR
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").
Karelian Diamond Resources plc
("Karelian Diamonds" or "the Company")
28 February 2018
Half-yearly results for the six months ended 30 November 2017
Karelian Diamond Resources plc (AIM: KDR), the diamond exploration company
focused on Finland, announces its results for the six months ended 30 November
2017.
Highlights of the Half-year:
* Very close proximity to the source of the diamond discovery by the Company
in the Kuhmo region of Finland suggested by indicator mineral sampling
results.
* Lahtojoki diamond deposit - PEA completed - 5m tonnes, microdiamond data
suggest grade of 40 carats per hundred tonnes (cpht) and high percentage of
gem quality stones
* Riihivaarä - kimberlite body follow up work shows geotherm prospective for
diamonds
Commenting, Chairman, Professor Richard Conroy said:
"I am delighted that over the period the search for the source for the green
diamond has been so encouraging with the recent sampling results suggesting
close proximity to source. I am also very pleased that the PEA on the
Lahtojoki diamond deposit has been so positive."
Further Information:
Professor Richard Conroy, Chairman, Karelian Diamond Tel: +353-1-479-6180
Resources plc
Virginia Bull / Nick Harriss, Allenby Capital Tel: +44-20-3328-5656
Limited (Nomad)
Jon Belliss / Elliot Hance, Beaufort Securities Tel: +44-20-7382-8300
Limited (Broker)
Michael Padley, Lothbury Financial Services Limited Tel: +44-20-3290-0707
Don Hall, Hall Communications Tel: +353-1-660-9377
www.kareliandiamondresources.com
Chairman's statement
Dear Shareholder,
I have great pleasure in presenting your Company's Half-Yearly results for the
six month period ended 30 November 2017. The discovery of a green diamond in a
till sample in the Kuhmo region of eastern Finland has been followed up by an
intensive pitting programme designed to find the kimberlite source of the
diamond. The latest results suggest that we are now very close to the source.
Work has also continued at Riihivaarä, where we have discovered a kimberlite
body, and at the Lahtojoki diamond deposit, over which we hold a mining
concession and on which a Preliminary Economic Assessment has been completed
during the period with highly encouraging results.
Principal activities and business review
Diamond Discovery
Following the discovery by the Company of a green diamond in January 2016, we
have been engaged in an intensive exploration programme to discover the source
of the diamond. The programme has included airborne geophysics and an extensive
pitting programme up-ice from the site of the discovery. The work programme was
designed to identify the kimberlite train arising from the kimberlite source
and to trace it back to source.
Sampling results (as announced on 14 November 2017) indicated that the source
was within two hundred metres of some of the samples taken in the pitting
programme. The most recent results (as announced post period on 23 January
2018) suggest that we are now in very close proximity to the source. This
success in tracing back the kimberlite train to source is a great achievement
considering that it is scarcely a year since the diamond was found.
In October 2017 we were awarded an Exploration Permit covering an area of
601.68 hectares surrounding the location where the Company discovered the
diamond.
Riihivaarä
In Eastern Finland, where your Company has discovered a kimberlite body, the
first to be discovered in Finland in over 10 years, follow up work has shown
that the geotherm there is prospective for diamonds. The kimberlite has been
sampled to a model depth of over 200km, well into the diamond stability field,
and it is therefore likely to be diamondiferous. The kimberlite body remains
open in both directions along strike and to depth and a drilling programme is
now envisaged along the known kimberlite.
Seitaperä
At Seitaperä, also in the Kuhmo region of Eastern Finland, where your Company
has outlined the largest known kimberlite body in Finland and has reported the
presence of both macro and micro diamonds, consideration is being given as to
whether or not some, or all, of these micro and macro diamonds may have
originated from a larger stone. Should this be considered to be the case, it
would have significant implications for any follow up mini bulk sampling
programme and for the diamond potential of the kimberlite.
Lahtojoki Mining Development Programme
A Preliminary Economic Assessment ("PEA") has been carried out during the
period on the Lahtojoki diamond deposit in the Kuopio-Kaavi region of Finland
over which your Company holds a Mining Concession.
I am delighted that the PEA was positive and a mining operation recommended (as
announced on 1 August 2017).
The PEA suggests a +1mm recoverable grade of 39.7 carats per hundred tonnes
(cpht) and also indicates the presence of a high percentage of gem quality
stones within the diamonds that have been recovered to date. Previous drilling
indicates 5,603,584 tonnes are present to a depth of 160 metres below surface.
For the purposes of the PEA US$100/carat was used in the economic evaluation
and mine design. A total resource (non JORC) estimate of 2,225,000 carats was
indicated in the study with plant recovery of diamonds estimated at 95 per
cent. The location of Lahtojoki is highly favourable for development and we
believe the Lahtojoki diamond deposit has the potential to become a profitable
open pit diamond mine.
Clearly much work remains to be done but the PEA Report is a major and highly
encouraging step forward in our assessment of the Lahtojoki diamond deposit.
Should the deposit be developed it would be the first diamond mine in Europe
(outside Russia).
Exploration by your Company suggests that in addition to the Lahtojoki deposit
there may also be further diamond resource potential in the immediate area.
Having considered a series of geophysical and kimberlite indicator mineral
anomalies in the area, your Company has applied for a Claim Reservation in the
area adjacent to the Lahtojoki mining concession. The Claim Reservation covers
the up-ice area of the kimberlite boulder discovery (as previously announced on
9 November 2016 and 12 January 2017) and totals an area of 8.67km². Post period
a Claim covering 28.84 hectares was granted within the Claim Reservation on 22
January 2018. The Claim surrounds the location where the kimberlite boulder
discovery was made.
Should a further significant diamond deposit be discovered close to the
Lahtojoki deposit, this would of course add greatly to the economic potential
and attractiveness of the Lahtojoki diamond deposit.
Finance
The loss after taxation for the six month period ended 30 November 2017 was EUR
211,590 (30 November 2016: EUR117,067) and the net assets as at 30 November 2017
were EUR9,281,407 (30 November 2016: EUR8,370,091).
Post period, at the Annual General Meeting on 21 December 2017, shareholders
approved the consolidation of the Company's ordinary shares into new ordinary
shares of EUR0.00025 each. Immediately following which, each existing shareholder
held 1 new ordinary share in place of each 25 existing ordinary shares. The
consolidation was considered to be in the shareholders' interests as the
existing number of shares was unwieldy and the bid-offer range was too large as
a proportion of the share price. Following the consolidation of the ordinary
shares on 21 December 2017, the warrants in issue were consolidated into one
consolidated warrant for every 25 existing warrants. The exercise price in
relation to the warrants was also adjusted at this time.
Directors and Staff
I would like to thank my fellow directors, staff and consultants for their
support and dedication.
Outlook
The Company has made outstanding progress in the period under review and I look
forward with confidence to further success during the coming period.
Yours faithfully,
Professor Richard Conroy
Chairman
27 February 2018
Condensed income statements and condensed statement of comprehensive income for
the six month period ended 30 November 2017
Condensed income statement
Note Six month Six month Year ended 31
period ended period ended 30 May 2017
30 November November 2016
2017 (Unaudited) EUR (Audited) EUR
(Unaudited) EUR
Continuing operations
Operating expenses (211,590) (117,067) (410,814)
Loss before taxation (211,590) (117,067) (410,814)
Income tax expense - - -
Loss for the financial period/ (211,590) (117,067) (410,814)
year
Loss per share
Basic and diluted loss per 2 (EUR0.0091) (EUR0.0050) (EUR0.0176)
share
Condensed statement of comprehensive income
Six month Six month Year ended 31
period ended period ended May 2017
30 November 30 November
2017 2016 (Audited) EUR
(Unaudited) EUR (Unaudited) EUR
Loss for the financial period/ (211,590) (117,067) (410,814)
year
Income/expense recognised in
other comprehensive income - - -
Total comprehensive expense for
the financial period/year (211,590) (117,067) (410,814)
Condensed statement of financial position as at 30 November 2017
Note 30 November 30 November Year ended
2017 2016 31 May 2017
(Unaudited) (Unaudited) (Audited)
EUR EUR EUR
Assets
Non-current assets
Intangible assets 3 9,607,634 9,014,182 9,276,955
Financial assets 4 4 4
Total non-current assets 9,607,638 9,014,186 9,276,959
Current assets
Cash and cash equivalents 44,347 49,224 523,324
Other receivables 386,848 161,503 292,562
Total current assets 431,195 210,727 815,886
Total assets 10,038,833 9,224,913 10,092,845
Equity
Capital and reserves
Called up share capital 5,844 3,177,850 5,844
Called up deferred share 3,174,672 - 3,174,672
capital
Share premium 8,201,664 6,791,581 8,201,664
Share based payments reserve 802,939 681,312 765,977
Retained losses (2,903,712) (2,280,652) (2,692,122)
Total equity 9,281,407 8,370,091 9,456,035
Liabilities
Non-current liabilities
Trade and other payables: amounts
falling due after more than one 5 158,088 309,589 158,008
year
Total non-current liabilities 158,088 309,589 158,008
Current liabilities
Trade and other payables:
amounts falling due within one 599,338 545,233 478,802
year
Total current liabilities 599,338 545,233 478,802
Total liabilities 757,426 854,822 636,810
Total equity and liabilities 10,038,833 9,224,913 10,092,845
Condensed statement of cash flows for the six month period ended 30 November
2017
Six month Six month Year ended 31 May 2017
period period (Audited)
ended 30 ended 30
November November EUR
2017 2016
(Unaudited) (Unaudited)
EUR EUR
Cash flows from operating activities
Loss for the financial period/year (211,590) (117,067) (410,814)
Adjustments for:
Expense recognised in income statement in 6,810 2,900 74,280
respect of equity settled share based
payments
Increase/(decrease) in trade and other 120,536 59,733 (6,698)
payables
(Increase)/decrease in other receivables (94,633) 49,865 (81,194)
Net cash used in operating activities (178,877) (4,569) (424,426)
Cash flows from investing activities
Investment in exploration and evaluation (300,527) (287,944) (537,432)
Net cash used in investing activities (300,527) (287,944) (537,432)
Cash flows from financing activities
Issue of share capital - - 1,412,749
Share issue costs - - (117,723)
Shareholders loan repayment - - (151,581)
Shareholders loan reclassified 80 - -
Advances made to related parties (143,339) - -
Repayments from related parties 143,686 - -
Net cash provided by financing activities 427 - 1,143,445
(Decrease)/increase in cash and cash (478,977) (292,513) 181,587
equivalents
Cash and cash equivalents at beginning of
financial period/year 523,324 341,737 341,737
Cash and cash equivalents at end of 44,347 49,224 523,324
financial period/year
Condensed statement of changes in equity for the six month period ended 30
November 2017
Share Share Share-based Retained Total equity
capital premium payment losses
reserve
EUR EUR EUR EUR EUR
Balance at 1 June 3,180,516 8,201,664 765,977 (2,692,122) 9,456,035
2017
Share-based - - 36,962 - 36,962
payments
Loss for the - - - (211,590) (211,590)
financial period
Balance at 30 3,180,516 8,201,664 802,939 (2,903,712) 9,281,407
November 2017
Balance at 1 June 3,177,850 6,791,581 665,127 (2,163,585) 8,470,973
2016
Share-based - - 16,185 - 16,185
payments
Loss for the - - - (117,067) (117,067)
financial period
Balance at 30 3,177,850 6,791,581 681,312 (2,280,652) 8,370,091
November 2016
Share capital
The share capital comprises the nominal value share capital issued for cash and
non-cash consideration. The share capital also comprises deferred share
capital. The deferred share capital* arose through the restructuring of share
capital which was approved at the Annual General Meeting held on 9 December
2016.
Authorised share capital:
The authorised share capital at 30 November 2017 compromised 182,532,751,034
ordinary shares of EUR0.00001 each, and 317,785,034 deferred shares of EUR0.00999
each* (EUR5,000,000), (30 November 2016: 500,000,000 ordinary shares of EUR0.01
each (EUR5,000,000)).
*Capital reorganisation:
Following approval at the Annual General Meeting held on 9 December 2016, the
Company reorganised its share capital by subdividing and reclassifying each
issued ordinary share of EUR0.01 as one ordinary share of EUR0.00001 each and one
deferred share of EUR0.00999 each. The Deferred Shares have no right to vote,
attend or speak at general meetings of the Company and have no right to receive
any dividend or other distribution, and have only limited rights to participate
in any return of capital on a winding-up or liquidation of the Company, which
will be of no material value. No application was made to the London Stock
Exchange for admission of the Deferred Shares to trading on the AIM.
Post period end:
After the period end, on 21 December 2017, the Company passed a Special
Resolution at the Company's AGM, that all of the ordinary shares of EUR0.00001
each in the capital of the Company, whether issued or unissued were
consolidated into New Ordinary Shares of EUR0.00025 each in the capital of the
Company ("consolidated shares") on the basis of one consolidated share for
every 25 existing ordinary shares. Following the consolidation of the ordinary
shares on 21 December 2017, the warrants in issue were consolidated into one
consolidated warrant for every 25 existing warrants. The exercise price in
relation to the warrants was also adjusted at this time (see Note 2).
Share premium
The share premium reserve comprises the excess consideration received in
respect of share capital over the nominal value of the shares issued.
Share based payment reserve
The share based payment reserve represents the amount expensed to the condensed
income statement in addition to the amount capitalised as part of intangible
assets of share-based payments granted which are not yet exercised and issued
as shares.
Retained losses
This reserve represents the accumulated losses absorbed by the Company to the
condensed statement of financial position date.
Notes to and forming part of the condensed financial statements for the six
month period ended 30 November 2017
1. Accounting policies
Reporting entity
Karelian Diamond Resources plc (the "Company") is a company domiciled in
Ireland.
Basis of preparation and statement of compliance
The condensed financial statements for the six months ended 30 November 2017
are unaudited.
The condensed financial statements have been prepared in accordance with
International Accounting Standard ("IAS") 34: Interim Financial Reporting.
The condensed financial statements do not include all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the Company's annual financial statements as at 31 May 2017,
which are available on the Company's website - www.kareliandiamondresources.com
. The accounting policies adopted in the presentation of the condensed
financial statements are consistent with those followed in the preparation of
the Company's annual financial statements for the year ended 31 May 2017. There
are no new standards, amendments to published standards or interpretations
which are effective for the first time in the current period that have a
material effect on the condensed financial statements.
The condensed financial statements have been prepared under the historical cost
convention, except for derivative financial instruments which are measured at
fair value at each reporting date.
The condensed financial statements are presented in Euro ("EUR"). EUR is the
functional currency of the Company.
The preparation of condensed financial statements requires the Board of
Directors and management to use judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets, liabilities,
income and expenses. Actual results may differ from those estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the financial period in which the
estimate is revised and in any future financial periods affected. Details of
critical judgements are disclosed in the accounting policies detailed in the
annual financial statements.
The financial information presented herein does not amount to statutory
financial statements that are required by Chapter 4 part 6 of the Companies Act
2014 to be annexed to the annual return of the Company. The statutory financial
statements for the financial year ended 31 May 2017 were annexed to the annual
return and filed with the Registrar of Companies. The audit report on those
financial statements was unqualified.
These Condensed Financial Statements were authorised for issue by the Board of
Directors on 27 February 2018.
Going concern
The Company incurred a loss of EUR211,590 (30 November 2016: EUR117,067) for the
six month period ended 30 November 2017. The Company had net current
liabilities of EUR168,143 (30 November 2016: EUR334,506) at that date.
The Board of Directors have considered carefully the financial position of the
Company and in that context, have prepared and reviewed cash flow forecasts for
the period to 30 November 2018. As set out in the Chairman's statement, the
Company expects to incur material levels of capital expenditure in 2018,
consistent with its strategy as an exploration company. In reviewing the
proposed work programme for exploration and evaluation assets and on the basis
of the equity raised during the year to 31 May 2017, the results obtained from
the exploration programme and the prospects for raising additional funds as
required, the Board of Directors are satisfied that it is appropriate to
prepare the condensed financial statements on a going concern basis.
Standards, interpretations and amendments issued but not yet effective
The following new standards, amendments to standards and interpretations have
been issued to date and are not yet effective for the financial period ended 30
November 2017, and have not been applied nor early adopted, where applicable,
in preparing these condensed financial statements:
* IFRS 9: Financial Instruments; Classification and Measurement - effective
for periods beginning 1 January 2018
* IFRS 15: Revenue from Contracts with Customers - effective for periods
beginning 1 January 2018
* IFRS 2: Classification and Measurement of Share-based Payment Transactions
(Amendment) - effective for periods beginning 1 January 2018
* IFRS 1: Annual Improvements to IFRS 2014-2016 Cycle (Amendments to IFRS 1)
- effective for periods beginning 1 January 2018
* IAS 28: Annual Improvements to IFRS 2014-2016 Cycle (Amendments to IAS 28)
- effective for periods beginning 1 January 2018
* IFRS 16: Leases - effective for periods beginning 1 January 2019
* IFRS 17: Insurance Contracts - effective for periods beginning 1 January
2021
* IFRS10/IAS28: Sale or contribution of an asset between an investor and its
Associate of Joint Venture (Amendment) - Deferred indefinitely by
amendments made in December 2015.
The Board of Directors anticipate that the adoption of new standards,
interpretations and amendments that were in issue at the date of authorisation
of these condensed financial statements, but not yet effective, will have no
material impact on the condensed financial statements in the period of initial
application.
2. Loss per share
Basic earnings per share
Six month Six month Year ended
period period ended 31 May 2017
ended 30 30 November
November 2016
2017 (Unaudited) (Audited) EUR
(Unaudited) EUR
EUR
Loss for the financial period/year
attributable to equity holders of (211,590) (117,067) (410,814)
the Company
Number of ordinary shares for the
purposes of earnings per share¥ 23,378,067 23,378,067 23,378,067
Loss per ordinary share (EUR0.0091) (EUR0.0050) (EUR0.0176)
¥ On 21 December 2017, the Company passed a Special Resolution at the Company's
AGM, that all of the ordinary shares of EUR0.00001 each in the capital of the
Company, whether issued or unissued were consolidated into new ordinary shares
of EUR0.00025 each in the capital of the Company ("consolidated shares") on the
basis of one consolidated share for every 25 existing ordinary shares. (In line
with IAS 33: Earnings per share, the calculation of basic and diluted EPS for
all periods presented is adjusted retrospectively when the number of ordinary
or potential ordinary shares outstanding increases as a result of a reverse
share split).
Diluted earnings per share
The effect of share options and warrants is anti-dilutive.
Following the consolidation of the ordinary shares on 21 December 2017, the
warrants in issue were consolidated into one consolidated warrant for every 25
existing warrants. The exercise price in relation to the warrants was also
adjusted at that time, to the following:
* Expiry date : 29 December 2018 - 20p sterling;
* Expiry date : 28 April 2019 - 20p sterling;
* Expiry date : 19 November 2022 - GBP2.20 sterling.
3. Intangible assets
Exploration and evaluation assets
Cost 30 November 30 November 31 May 2017
2017 2016
(Unaudited) (Unaudited) EUR (Audited) EUR
EUR
At 1 June 9,276,955 8,712,953 8,712,953
Expenditure during the financial
period/year
* Licence and appraisal costs 136,002 148,320 255,962
* Other operating expenses 164,525 139,625 281,470
* Equity settled share based 30,152 13,284 26,570
payments
At 30 November/31 May 9,607,634 9,014,182 9,276,955
Exploration and evaluation assets relate to expenditure incurred in the
development of mineral exploration opportunities. These assets are carried at
historical cost and have been assessed for impairment in particular with regard
to the requirements of IFRS 6: Exploration for and Evaluation of Mineral
Resources relating to remaining licence or claim terms, likelihood of renewal,
likelihood of further expenditure, possible discontinuation of activities as a
result of specific claims and available data which may suggest that the
recoverable value of an exploration and evaluation asset is less than its
carrying amount.
The Board of Directors have considered the proposed work programmes for the
underlying mineral resources. They are satisfied that there are no indications
of impairment.
The Board of Directors note that the realisation of the intangible assets is
dependent on further successful development and ultimate production of the
mineral resources and the availability of sufficient finance to bring the
resources to economic maturity and profitability.
4. Commitments and Contingencies
At 30 November 2017, there were no capital commitments or contingent
liabilities (31 May 2017: No capital commitments or contingencies liabilities).
Should the Company decide to develop the Lahtojoki project, an amount of EUR
100,000 is payable by the Company.
5. Related party transactions
(a) Shareholders loans 30 November 30 November 31 May 2017
2017 2016
(Unaudited) (Unaudited) (Audited) EUR
EUR EUR
Opening balance 1 June 158,008 309,589 309,589
Reclassification of loan balance 80 - -
Loan repayment - - (151,581)
Closing balance 30 November/31 May 158,088 309,589 158,008
Prior to the various placings of shares, the immediate funding requirements of
the Company had been financed by advances from Professor Richard Conroy
(executive chairman and major shareholder).
(b) Apart from Directors remuneration, and loans from shareholders, (who
are also Directors), there here have been no contracts or arrangements entered
into during the six month period in which a Director of the Company had a
material interest.
(c) The Company shares accommodation with Conroy Gold and Natural
Resources plc which have certain common Directors and shareholders. For the six
month period ended 30 November 2017, Conroy Gold and Natural Resources plc
incurred costs totalling EUR143,686 (30 November 2016: EUR126,057) on behalf of the
Company. These costs were recharged to the Company by Conroy Gold and Natural
Resources plc. At 30 November 2017, Conroy Gold and Natural
Resources plc owed EUR273,453 to the Company. Amounts owed from Conroy Gold and
Natural Resources plc are included within other receivables in the current and
previous financial periods/years.
6. Post balance sheet events
Mr. James P. Jones resigned as the Secretary of the Company on the 18 December
2017, and was replaced by Maureen T.A. Jones at that time. Mr. James P. Jones
also retired as a director by rotation at the AGM on 21 December 2017, and did
not offer himself for re-election at that time.
On 21 December 2017, the Company passed a Special Resolution at the Company's
AGM, that all of the ordinary shares of EUR0.00001 each in the capital of the
company, whether issued or unissued were consolidated into new ordinary shares
of EUR0.00025 each in the capital of the Company ("consolidated shares") on the
basis of one consolidated share for every 25 existing ordinary shares.
Following the consolidation of the ordinary shares on 21 December 2017, the
warrants in issue were consolidated into one consolidated warrant for every 25
existing warrants. The exercise price in relation to the warrants was also
adjusted as detailed in Note 2.
7. Approval of the Condensed Financial Statements
These Condensed Financial Statements were approved by the Board of Directors on
27 February 2018. A copy of the Condensed Financial Statements will be
available on the Company's website www.kareliandiamondresources.com on 28
February 2018.
END
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