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"). With the publication of this
announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
16 November 2018
Karelian Diamond Resources
plc
(“Karelian Diamonds” or “the Company”)
FINAL RESULTS FOR
THE YEAR TO 31 MAY 2018
NOTICE OF ANNUAL
GENERAL MEETING
DIRECTORATE
CHANGE
Karelian Diamond Resources plc (“Karelian Diamonds”) (AIM: KDR),
the diamond exploration and development company focused on
Finland, is pleased to report its
audited accounts for the year to 31 May
2018.
Highlights:
- Preliminary economic assessment (“PEA”) on the Lahtojoki
diamond deposit completed, large Eastern lobe of the deposit
tested, with positive results, and adjacent exploration acreage
acquired.
- Lahtojoki mining concession granted.
- Exploration programme to discover the source of the green
diamond carried out. This led to the discovery of kimberlite
indicator train.
Post Period
- Results on sample material taken up ice from the green diamond
site confirmed that the sample material contains indicator minerals
derived from the diamond stability field.
- Recent drill core sampling at depth has intersected orangeite
(Group II Kimberlite), a potentially diamondiferous host rock, in
drill holes up-ice of the green diamond.
Professor Richard Conroy, Chairman, stated:
“After a year of exploration success,
we have built on that with significant progress towards identifying
the source of the green diamond and, post period, the discovery of
Orangeite (Group II Kimberlite) and importantly we are accelerating
work towards possible mine development at the Lahtojoki diamond
deposit, having received a positive PEA and excellent assay results
from the large Eastern lobe.”
Final Results for the Year to
31 May 2018
The full audited annual report and accounts for the year to
31 May 2018 (“Annual Report”) can be
viewed below:
ANNUAL REPORT
The Annual Report will be posted to shareholders today and will
be published on the Company’s website today. Key elements can
also be viewed at the bottom of this announcement.
Annual General Meeting
The annual general meeting of the Company (“AGM”) will be held
at The Davenport Hotel, Gandon Suite, 8-10 Merrion Street,
Dublin 2 at 12.00 noon on 7
December 2018. A copy of the notice of AGM, which has been
posted to shareholders, can be viewed on the Company’s website.
Directorate Change
The Board is pleased to announce the appointment of Mr
Brendan McMorrow as a non-executive
Director of the Company with immediate effect.
Brendan McMorrow has over 25
years’ experience in a number of public companies in the oil and
gas and base metals mining sectors listed in London, Toronto and Dublin where he held senior executive finance
roles. He is currently Finance Director of Dunraven Resources PLC,
an Oil and gas exploration and development company. Prior to that
he was Chief Financial Officer of Circle Oil PLC from 2005 to 2015,
an AIM oil and gas development and production company with
operations in North Africa and the
Middle East where he was
responsible for all corporate financial and funding matters.
He was appointed as a non-executive director of Conroy Gold and Natural Resources plc in
August 2017.
Prior to joining Circle Oil Plc Brendan was Chief Financial
Officer / Group Finance Manager of Ivernia Inc from 2001 to 2005, a
Toronto listed (TSX) base metals
mining company which developed and brought into production the
Paroo Station lead mine in Western
Australia one of the largest lead carbonate mines in the
world at the time. From 1988 to 2001 he was Group Finance Manager
of Ivernia West PLC, a Dublin
listed (ESM) base metals mining company which discovered and
brought into production along with Anglo American Plc the world
class Lisheen zinc mine in Ireland.
Brendan is a business graduate of Sligo Institute of Technology
and a Fellow of the Chartered Association of Certified
Accountants.
Chairman,
Professor Richard Conroy
commented:
“I am delighted that Brendan
McMorrow has been appointed to the Board. His depth of
financial and corporate expertise allied with his knowledge of the
mining industry in Ireland and
internationally will, I believe, contribute greatly to the Company
as it progresses with its diamond exploration in Finland and its Lahtojoki diamond deposit in
Eastern Finland which, if
developed, would be the first diamond mine in Europe, outside Russia.”
For further information please contact:
Karelian Diamond
Resources plc |
Tel:
+353-1-479-6180 |
Professor Richard
Conroy, Chairman |
|
Allenby Capital
Limited (Nomad) |
Tel:
+44-20-3328-5656 |
Virginia Bull/Nick
Harriss |
|
Brandon Hill
Capital Limited (Broker) |
Tel:
+44-20-3463-5000 |
Jonathan Evans |
|
Lothbury Financial
Services |
Tel:
+44-20-3290-0707 |
Michael Padley |
|
Hall
Communications |
Tel:
+353-1-660-9377 |
Don Hall |
|
www.kareliandiamondresources.com
Disclosures under Schedule 2 of the
AIM Rules
Name / Age:
Brendan McMorrow – 66
Current
directorships:
Conroy Gold and Natural Resources
plc
Dunraven Resources plc
Circle Oil Tunisia Limited
M & C Financial Services Limited
Greenfield Park Management Company Limited
Former directorships:
Circle Oil Egypt Limited
Circle Oil Maroc
Limited
Circle Oil Tunisia Limited
Circle Oil Oman Limited
Circle Oil Oman Offshore Limited
Key Information Extracted from Annual
Report
CHAIRMAN’S STATEMENT
I have pleasure in presenting your Company’s Annual Report and
Financial Statements for the financial year ended 31 May 2018.
The year has been a very positive one, during which the Company
has followed up on its exploration successes, including the
discovery of a green diamond and a new kimberlite pipe and has
carried out a Preliminary Economic Assessment (“PEA”), of the
Lahtojoki diamond deposit in Kuopio-Kaavi, over which it has been
granted a mining concession.
Business Development
Your Company’s diamond exploration and development programmes
are 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.
Your Company has acquired a diamond deposit at Lahtojoki in the
Kuopio–Kaavi region of Finland,
discovered a diamond in a till sample taken on its Anomaly 5
exploration area near Kuhmo in Eastern
Finland, discovered a new kimberlite body at Riihivaara,
also in the Kuhmo region, and demonstrated that the Seitapera
diamondiferous kimberlite is the largest kimberlite body discovered
to date in Finland.
During the year, the Company completed a PEA on the Lahtojoki
diamond deposit and also tested the large Eastern lobe of the
deposit, with positive results. In addition, exploration acreage
adjacent to Lahtojoki has been acquired and exploration accelerated
at Riihivaara and Anomaly 5, where the green diamond was
discovered.
The Lahtojoki Diamond Deposit
The Lahtojoki diamond deposit was acquired from A & G Mining
Oy (“AGM”), a private Finnish company. The deposit is situated in
the Kuopio–Kaavi region in Finland. The location is highly favourable for
development with excellent infrastructure, including good roads,
power distribution and local technical and logistic
availability.
Your Company has been granted a mining concession over the
deposit. A PEA carried out during the year has been very positive,
both technically and financially. In excess of 2M carats appear to be recoverable with an
in–situ value of US$211M. An
open/vertical pit mining operation is recommended with a 9+ year
life-of mine, with payback by year two, an IRR of 55% and an NPV
(8%) of circa US$39.1M.
Microdiamond analysis of drillcore from the previously untested
Eastern lobe, which represents the largest part of the Lahtojoki
diamond deposit and has a high proportion of the overall tonnage of
the deposit, has yielded results comparable to those in the smaller
Western and Central portions of the deposit. These results have
given increased confidence for the economics of the deposit and
indicated the potential for high quality diamonds of good colour
and shape.
The general quality of the micro diamonds in the Eastern lobe is
good. Inclusions in the crystals are either absent or very slight
and the majority (90%) of the stones are white/colourless. While
microdiamond characteristics are not guaranteed to be similar in
the commercial sized diamond population, their attributes do
indicate the potential for high quality diamonds.
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).
The Company acts in close association with consultants from the
Geological Survey of Finland
(“GTK”).
Diamond Exploration around
Lahtojoki
Exploration in the vicinity of the Lahtojoki diamond deposit has
identified kimberlite boulder fragments. The location of these
fragments does not coincide with either of the known ice flow
directions from the Lahtojoki deposit in the area; also the
kimberlite in the boulder fragments is classified as cohesive
(hypabyssal) kimberlite which is an extremely rare kimberlite
facies in the Lahtojoki Kimberlite pipe. These findings suggest
that another kimberlite body may be present. Your Company has
therefore applied for exploration acreage in the area.
The presence of additional diamond resource potential in the
area adjacent to Lahtojoki would, if confirmed, add further to the
financial and technical attractiveness of the Lahtojoki diamond
deposit.
Green Diamond Discovery
The sparkling clear crystal, greenish in colour and 0.8mm in
diameter, forming a 12-sided, curved and twinned dodecahedron
diamond which your Company discovered in a till exploration sample
taken on its Anomaly 5 exploration area near Kuhmo in eastern
Finland. Such a discovery in
diamond exploration is an extremely rare event.
The Company has since been actively engaged in an exploration
programme to discover the source of the diamond. The programme has
included airborne and ground geophysics and an extensive pitting
programme up-ice from the site of the discovery and has led to the
discovery of kimberlite indicator trains, suggesting that the
diamond source may be close.
During the year, drilling and further laboratory analyses have
been carried out directed towards narrowing down the source of the
diamond with, post year end, the discovery of an orangeite (Group
II kimberlite) a potentially diamondiferous host rock, in drillcore
samples from three drill holes.
Also post period Electron Probe Microanalyser results on sample
material taken up-ice from where the Company discovered the green
diamond has confirmed that the sample material contains indicator
minerals derived from the diamond stability field of the Earth’s
mantle.
The Riihivaara Kimberlite
The discovery by the Company of a kimberlite body at Riihivaara
in the Kuhmo region of Finland,
the first new kimberlite to be discovered in Finland in over 10 years, was made through a
combination of till sampling and ground geophysics. The kimberlite
body has, to date, been intersected by five trenches and is still
open along strike and at depth.
Agreement with Rio Tinto
Karelian has a Confidentiality Agreement (with Back in Rights)
with Rio Tinto Mining and Exploration Limited (“Rio Tinto”). This
agreement with Rio Tinto has been extended to 2020.
Under the agreement, Rio Tinto discloses confidential
information and physical geological samples relating to exploration
in Finland, for the purpose of
your Company considering that information in relation to its
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% 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 financial year ended
31 May 2018 was €439,568 (2017:
€410,814) and the net assets as at 31 May
2018 were €9,016,467 (2017: €9,456,036).
During the year the Company cancelled the admission of its
ordinary shares to trading on ESM. The Company’s ordinary shares
continue to be admitted to trading on AIM.
On 11 June 2018, the Company
raised £500,000 (€569,390) before expenses through the issue of
11,111,111 new ordinary shares at 0.45p sterling for each ordinary
share. 388,889 broker warrants were issued in conjunction with this
share placing. These warrants have an exercise price of £0.045
sterling and are exercisable until 11
December 2020.
Share Consolidation
At the Annual General Meeting held on 21
December 2017, the Directors proposed that the issued and
unissued ordinary shares would be consolidated into new ordinary
shares (“Consolidated Shares”) of €0.00025 each. This proposal was
accepted by the shareholders and thereafter each existing
shareholder held 1 new ordinary share in place of each 25 existing
shares.
Directors and Staff
I would like to express my deep appreciation of the support and
dedication of all the directors, consultants and staff, which has
made possible the continued progress and success which the Company
has achieved.
I would especially like to pay tribute to James P. Jones who did not go forward at the
last AGM. James was a founder director of the Company and has
played an outstanding role in the overall progress and success of
the Company, particularly in relation to its financial affairs, as
Financial Director.
Future Outlook
The Company has continued to make excellent progress in its
exploration and development programme. I look forward to this
continuing on an accelerated basis as we move to mine development
at Lahtojoki and target the discovery of a diamond deposit in the
Kuhmo region.
Professor Richard Conroy
Chairman
Extract from the
Independent Auditor’s Report
The following section is extracted from the Independent
Auditor’s Report, but shareholders should read in full the
Independent Auditor’s Report contained in the Annual Report.
Material uncertainty related to going
concern
We draw your attention to Note 1 in the financial statements,
which indicates that the Company incurred a net loss of €439,568
during the year ended 31 May 2018
and, as of that date, the Company had net current liabilities of
€452,607.
In response to this, we:
- Obtained an understanding of the company’s controls over the
preparation of cash flow forecasts and approval of the projections
and assumptions used in cash flow forecasts to support the going
concern assumption and assessed the design and implementation of
these controls;
- We evaluated management’s plans and their feasibility by
testing the key assumptions used in the cash flow forecast provided
by agreeing the inputs to historical run rates, expenditure
commitments and other supporting documentation;
- Inspected confirmations received by the Company from the
Directors and former Directors that they will not seek repayment of
amounts owed to them by the Company within 12 months of the date of
approval of the financial statements, unless the Company has
sufficient funds to repay;
- Tested the clerical accuracy of the cash flow forecast
model;
- Assessed the adequacy of the disclosures made in the financial
statements.
As stated in Note 1, these events or conditions along with other
matters as set forth in Note 1 indicate that a material uncertainty
exists that may cast significant doubt on the Company’s ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
Income Statement for the financial
year ended 31 May 2018
|
Note |
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
€ |
|
|
€ |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
Operating expenses |
2 |
(439,568) |
|
|
(410,814) |
|
|
|
|
|
|
Loss before taxation |
3 |
(439,568) |
|
|
(410,814) |
|
|
|
|
|
|
Income tax expenses |
5 |
- |
|
|
- |
|
|
|
|
|
|
Loss for the financial
year |
|
(439,568) |
|
|
(410,814) |
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
Basic and diluted loss per
share |
6 |
(€0.0188) |
|
|
(€0.0268) |
The total loss for the financial year is entirely attributable
to equity holders of the Company.
Statement of Comprehensive Income for
the financial year ended 31 May
2018
|
|
2018 |
|
|
2017 |
|
|
€ |
|
|
€ |
|
|
|
|
|
|
Loss for the financial
year |
|
(439,568) |
|
|
(410,814) |
|
|
|
|
|
|
Income/expense recognised in
other comprehensive income |
|
- |
|
|
- |
|
|
|
|
|
|
Total comprehensive income for
the financial year |
|
(439,568) |
|
|
(410,814) |
The total comprehensive income for the financial year is
entirely attributable to equity holders of the Company.
Statement of Financial Position as at
31 May 2018
|
|
31 May |
|
31 May |
|
Note |
2018 |
|
2017 |
|
|
€ |
|
€ |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
7 |
9,661,559 |
|
9,276,955 |
Financial assets |
8 |
4 |
|
4 |
Total non-current assets |
|
9,661,563 |
|
9,276,959 |
|
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
10 |
18,703 |
|
523,324 |
Other receivables |
11 |
241,859 |
|
292,562 |
Total current assets |
|
260,562 |
|
815,886 |
|
|
|
|
|
Total assets |
|
9,922,125 |
|
10,092,845 |
|
|
|
|
|
Equity |
|
|
|
|
Capital and reserves |
|
|
|
|
Called up share capital |
14 |
5,844 |
|
5,844 |
Called up deferred share
capital |
14 |
3,174,672 |
|
3,174,672 |
Share premium |
14 |
8,201,664 |
|
8,201,664 |
Share-based payments reserve |
17 |
519,159 |
|
765,977 |
Retained losses |
|
(2,884,872) |
|
(2,692,122) |
Total equity |
|
9,016,467 |
|
9,456,035 |
|
|
|
|
|
Liabilities |
|
|
|
|
Non-current liabilities |
|
|
|
|
Trade and other payables: amounts
falling due after more than one year |
12 |
192,489 |
|
158,008 |
Total non-current
liabilities |
|
192,489 |
|
158,008 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables: amounts
falling due within one year |
13 |
713,169 |
|
478,802 |
Total current
liabilities |
|
713,169 |
|
478,802 |
|
|
|
|
|
Total liabilities |
|
905,658 |
|
636,810 |
|
|
|
|
|
Total equity and
liabilities |
|
9,922,125 |
|
10,092,845 |
The financial statements were approved by the Board of Directors
on 15 November 2018 and authorised
for issue on 15 November 2018.
Statement of Cash Flows for the
financial year ended 31 May 2018
|
2018 |
|
|
2017 |
|
€ |
|
|
€ |
Cash flows from operating
activities |
|
|
|
|
Loss for the financial year |
(439,568) |
|
|
(410,814) |
Adjustments for: |
|
|
|
|
Expense recognised in income
statement in respect of equity settled share-based payments |
- |
|
|
74,280 |
Increase/(decrease) in trade and
other payables |
234,367 |
|
|
(6,698) |
(Increase)/decrease in other
receivables |
(109,960) |
|
|
23,841 |
Net cash used in operating
activities |
(315,161) |
|
|
(319,391) |
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Investment in exploration and
evaluation |
(384,604) |
|
|
(537,432) |
Cash used in investing
activities |
(384,604) |
|
|
(537,432) |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Repayments/(advances) from Conroy
Gold and Natural Resources P.L.C. |
160,663 |
|
|
(105,035) |
Shareholder
advances/(repayments) |
34,481 |
|
|
(151,581) |
Issue of share capital |
- |
|
|
1,412,749 |
Share issue costs |
- |
|
|
(117,723) |
Net cash provided by financing
activities |
195,144 |
|
|
1,038,410 |
|
|
|
|
|
(Decrease)/increase in cash and
cash equivalents |
(504,621) |
|
|
181,587 |
Cash and cash equivalents at
beginning of financial year |
523,324 |
|
|
341,737 |
Cash and cash equivalents at end
of financial year |
18,703 |
|
|
523,324 |