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").
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 Tel: +353-1-661-8958
Resources plc
David Hart / Nick Harriss/ James Thomas, Allenby Tel: +44-20-33285656
Capital Limited (Nomad)
Ger Heffernan, IBI Corporate Finance Limited (ESM Tel: +353-7662-34800
Adviser)
Jon Belliss/ Elliot Hance Beaufort Securities Plc Tel:
(Broker) +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 EUR150,000 (comprising an initial purchase price
of EUR50,000 plus a further EUR100,000 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 EUR268,334 (2015: EUR
121,551) and the net assets as at 31 May 2016 were EUR8,461,373 (2015: EUR
8,330,073).
On 17 May 2016, the Company raised GBP250,000 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 YEARED 31 MAY 2016
2016 2015
EUR EUR
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) (EUR0.0004)
STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2016
2016 2015
EUR EUR
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
EUR EUR
Cash generated by/(used in) operations 160,429 (971,118)
Net cash generated by/(used in) operating 160,429 (971,118)
activities
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 317,904 -
expenses) (13,141) -
Share issue costs
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 EUR0.0008 (2015 - EUR0.0004) is based on
the loss for the financial year of EUR268,334 (2015 - EUR121,551) 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.
END
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