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Karelian Diamond Res. PLC  -  KDR   

Final Results

Released 07:00 30-Nov-2012

Final Results

30 November 2012

                                                                               
                        Karelian Diamond Resources Plc                         

                           ("KDR" or the "Company")                            

                 Final results for the year ended 31 May 2012                  

Karelian (AIM: KDR, ESM: KDRI), the diamond exploration company focused on
Finland, announces its results for the year ended 31 May 2012, a year of
significant progress with continued drilling success.

Highlights:

  * Exploration programme in Finland continued to show highly encouraging
    progress
   
  * Identification during the drilling of further potentially diamond bearing
    mantle xenolith, subsequently confirmed
   
  * Basal till sampling programme at Riihivaara resulted in the recovery of 12
    garnet indicator minerals
   
  * Results add both to the potential of the Seitaperä pipe itself and to the
    overall diamond potential of the Kuhmo area
   
  * Two further licences have been acquired and additional licences in the area
    are under application.
   
  * The information arising from the extensive database made available by Rio
    Tinto has led to your Company also making applications for licences in
    locations outside the Kuhmo area
   
  * The loss after taxation for the year ended 31 May 2012 was €207,980 (2011:
    €187,261) in line with expectations
   
Professor Richard Conroy, Chairman, stated:

"During the course of the year the Company made encouraging progress; with a
further new large zone of diamond bearing mantle xenoliths in kimberlite
identified at Seitaperä, a positive till sampling programme at Riihivaara,
additional licences applied for and excellent results from the Rio Tinto data
we are integrating. We look forward to building on these achievements."

Further Information:

Professor Richard Conroy, Chairman, Karelian       Tel: +353-1-661-8958        
Diamond Resources plc                                                          
                                                                               
Simon Clements/Virginia Bull, Merchant Securities  Tel: +44-20-7628-2200       
Limited (Nomad)                                                                
                                                                               
Brian Farrell, IBI Corporate Finance Limited (ESM  Tel +353-1-637-7800         
Adviser)                                                                       
                                                                               
John Grant/Karen Kelly/David Lawman , XCAP         Tel: +44-20-7101-7070       
Securities PLC (Broker)                                                        
                                                                               
Michael Padley/Michael Spriggs, Lothbury Financial Tel: +44-20-3440-7620       
Services Limited                                                               
                                                                               
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 year ended 31 May 2012. Your Company's exploration programme
in Finland continued to show highly encouraging progress during the course of
the year with a further new large zone of diamond bearing mantle xenoliths in
kimberlite identified at Seitaperä, a positive till sampling programme at
Riihavaara, additional licences applied for, and further integration and
analysis of the results from over 53,000 till samples which Rio Tinto has made
available to the Company under the terms of the confidentiality agreement
entered into with your Company in July 2010.

The Seitaperä diamondiferous kimberlite pipe is, at 6.9 hectares, the largest
known kimberlite pipe in Finland. Drilling by your Company has confirmed the
presence of diamonds in the pipe. The identification during this year's
drilling of further potentially diamond bearing mantle xenolith subsequently
confirmed as diamondiferous by the recovery of microdiamonds is highly
encouraging. The micro-diamonds observed were white in colour, transparent and
octahedral. Two of the micro-diamonds including the largest stone were greater
than 60 per cent. broken indicating the possibility of larger stone sizes.

A basal till sampling programme at Riihivaara resulted in the recovery of 12
garnet indicator minerals, comprising three G10's, five G9's, one G4, one G3
and two G1's. Six of the positive results, including the G4 pyroxenitic garnet
occurred within a single till sample. The adjacent sample had two positive
results, including the eclogitic G3 garnet.

These garnets and other mantle-derived minerals are used to locate kimberlites
and are referred to as kimberlite indicator minerals. Some of these garnets,
the G10's and certain G9's, are created under similar conditions to diamonds
within the ultramafic mantle rocks underlying the crust and are therefore used
as predictors of the presence of diamonds. There is a strong statistical
correlation between G10 and certain G9 garnets, like those found in Riihivaara,
and the presence of diamonds.

The sampling programme was undertaken on Karelian's behalf by the Geological
Survey of Finland ("GTK") in conjunction with the Company's technical staff.
Sample analysis was undertaken in the GTK laboratories.

Eclogite mantle material is significant as it tends to be associated with a
much higher grade of diamonds than peridotite mantle material.

These results add both to the Seitaperä pipe itself and to the overall diamond
potential of the Kuhmo area in which Seitaperä is located and indicate that
there is more than one source of diamonds in the area. Two further licences
have therefore been acquired and additional licences in the area are under
application.

The information arising from the continuing review and integration of the
extensive database made available by Rio Tinto has led to your Company also
making applications for licences in locations outside the Kuhmo area.

Under the terms of the agreement with Rio Tinto, in consideration of Rio Tinto
disclosing 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, Rio Tinto will be expected to pay the direct cash
expenditures incurred in developing an identified project subject to the
following conditions:

 1. For diamond projects the option will be triggered if Karelian completes 10
    tons or more of bulk sampling for diamond exploration; and
   
 2. For all other minerals the option will be triggered if Karelian discovers a
    resource with an in situ value that is equal to or greater than the in situ
    value of 3 million ounces of gold in a JORC compliant resource calculation.
   
Your Company's diamond exploration programme in Finland is directed towards
making comparable discoveries in the Finnish sector of the Karelian Craton to
the world class discoveries made in the Russian sector of the Karelian Craton.

Finance

The loss after taxation for the year ended 31 May 2012 was €207,980 (2011: €
187,261) and the net assets as at 31 May 2011 were €4,526,967 (2011: €
4,652,829).

As in previous years, I have supported the working capital requirements of the
Company and the balance of the loans due to me at the period end was €
1,007,214. The loans have been made on normal commercial terms.

The other Directors consider, having consulted with the Company's Nominated
Adviser and the Company's ESM Adviser, that the terms of these loans are fair
and reasonable in so far as the Company's shareholders are concerned.

Auditors

I would like to take the opportunity to thank the partners and staff of
Deloitte and Touche for their services to your Company during the course of the
year.

Directors, Consultants and Staff

I would also like to express my deep appreciation of the support and dedication
of the directors, consultants and staff, which has made possible the continued
progress which your Company has achieved.

Future Outlook

Your Company has made significant progress in its diamond exploration programme
in Finland and looks forward to build on these achievements.

Professor Richard Conroy
Chairman
30 November 2012



INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2012

                                                             2012          2011
                                                                               
                                                                €             €
                                                                               
Operating expenses                                      (194,582)     (171,813)
                                                                               
Finance income - bank interest receivable                      97             -
                                                                               
Finance costs - Interest on shareholder loan             (13,495)      (15,448)
                                                                               
Loss Before Taxation                                    (207,980)     (187,261)
                                                                               
Taxation                                                        -             -
                                                                               
Loss RETAINED for the year                              (207,980)     (187,261)
                                                                               
Loss per ordinary share                                 (€0.0023)     (€0.0028)



STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2012

                                                             2012          2011
                                                                               
                                                                €             €
                                                                               
Assets                                                                         
                                                                               
Non-current Assets                                                             
                                                                               
Intangible assets                                       6,390,694     5,760,090
                                                                               
Investment in subsidiaries                                      4             4
                                                                               
Property, plant and equipment                                 501           669
                                                                               
                                                        6,391,199     5,760,763
                                                                               
Current Assets                                                                 
                                                                               
Trade and other receivables                                47,382        12,536
                                                                               
Cash and cash equivalents                                  10,054       745,908
                                                                               
                                                           57,436       758,444
                                                                               
Total assets                                            6,448,635     6,519,207
                                                                               
Equity and Liabilities                                                         
                                                                               
Capital and reserves                                                           
                                                                               
Called up share capital                                   922,083       922,083
                                                                               
Share premium                                           4,621,158     4,621,158
                                                                               
Share based payments reserve                              375,039       292,921
                                                                               
Retained earnings                                     (1,391,313)   (1,183,333)
                                                                               
Total equity                                            4,526,967     4,652,829
                                                                               
Non-current liabilities                                                        
                                                                               
Financial liabilities                                   1,007,214     1,107,373
                                                                               
Total non-current liabilities                           1,007,214     1,107,373
                                                                               
Current liabilities                                                            
                                                                               
Trade and other payables                                  914,454       759,005
                                                                               
Total Current Liabilities                                 914,454       759,005
                                                                               
Total Liabilities                                       1,921,668     1,866,378
                                                                               
Total Equity and Liabilities                            6,448,635     6,519,207



CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2012

                                                             2012          2011
                                                                               
                                                                €             €
                                                                               
Cash used in operations                                  (58,631)      (23,244)
                                                                               
Tax paid                                                        -             -
                                                                               
Net cash used in operating activities                    (58,631)      (23,244)
                                                                               
Cash flows from investing activities                                           
                                                                               
Investment in exploration and evaluation assets         (509,687)     (381,343)
                                                                               
Net cash used in investing activities                   (509,687)     (381,343)
                                                                               
Cash flows from financing activities                                           
                                                                               
Issue of share capital                                          -     1,136,623
                                                                               
(Repayment)/Advances of Shareholder loans               (125,000)        42,424
                                                                               
Interest paid                                            (42,633)      (46,259)
                                                                               
Interest received                                              97             -
                                                                               
Net cash generated from financing activities            (167,536)     1,132,788
                                                                               
(Decrease)/Increase in cash and cash equivalents        (735,854)       728,201
                                                                               
Cash and cash equivalents at beginning of year            745,908        17,707
                                                                               
Cash and cash equivalents at end of year                   10,054       745,908



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 19 of the Companies
(Amendment) Act 1986.

The financial information for the year ended 31 May 2012 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 €0.0023 (2010 - €0.0027) is based on
the loss for the financial year of €207,980 (2011 - €187,261) and the weighted
average number of ordinary shares in issue on a basic and fully diluted basis
during the year of 92,308,242 (2011 - 68,805,565).

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 2012

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, 10 Upper Pembroke Street, Dublin 2. It will
also be forwarded to shareholders who requested a hard copy. Notice of the
Annual General Meeting to be held on 13 December 2012 and Proxy Form was sent
to shareholders on 21 November 2012 and are also available on the website.

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Final Results - RNS