REG-Karelian Diamond Res.: Final Results
30/11/2020 18:05
Karelian Diamond Resources plc
(“Karelian Diamonds” or “the Company”)
30 November 2020
FINAL RESULTS FOR THE YEAR TO 31 MAY 2020
NOTICE OF ANNUAL GENERAL MEETING
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 2020.
Highlights:
* Additional reservations granted, adjacent to already held and known
kimberlite bodies.
* Formal right of way granted giving vehicular access to Lahtojoki diamond
deposit and surrounding areas.
* Analysis of available data and reports in relation to Lahtojoki suggest that
coloured stones could amount to as much as seven per cent of the diamond
content of the deposit.
* Howard Bird appointed as non-executive director.
* Additional funds raised both during and post period.
Professor Richard Conroy, Chairman, stated:
“Despite the distraction and cost of the EGMs called, the Company has
moved closer to the development of the diamond mine at Lahtojoki, and based on
the data available we are confident that it has a significant proportion of
high value coloured stones within the deposit.”
Final Results for the Year to 31 May 2020
The full audited annual report and accounts for the year to 31 May 2020
(“Annual Report”) can be viewed below:
“ANNUAL REPORT”
(https://mma.prnewswire.com/media/1344954/KDR_Annual_Report_2020_FINAL.pdf)
The Annual Report will be posted to shareholders today and will be published
on the Company’s website (www.kareliandiamondresources.com) 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 2.30pm
on 23 December 2020 at the Company’s office 3300 Lake Drive, Citywest
Business Campus, Dublin 24 D24 TD21. A copy of the notice of AGM, which has
been posted to shareholders, will be able to be viewed shortly on the
Company’s website.
Coronavirus (COVID-19) Impact on the AGM
Given the current situation in relation to COVID-19, this year's AGM format
will be a closed meeting and purely procedural in format. In addition, all
resolutions will be taken on a poll (with votes cast by proxy). Shareholders
should therefore not attend the AGM in person this year as to do so would be
inconsistent with current government guidelines relating to COVID-19.
Shareholders will still be able to vote by proxy using the usual online and
postal facilities and further details on how to vote are set out in the Notice
of AGM.
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
Nick Athanas/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
Key Information Extracted from Annual Report
Chairman’s statement
I have great pleasure in presenting your Company’s annual report and
financial statements for the year ended 31 May 2020. The year has been one of
further progress at the Company’s two major diamond projects in Finland.
Business Development
One is the development of the Lahtojoki diamond deposit, in the Kuopio Kaavi
region of Finland, over which the Company has been granted a mining
concession. The Directors believe that the Lahtojoki deposit is one of the few
diamond deposits in the world at a relatively advanced stage of development.
It is situated in a highly favourable location with excellent infrastructure
including good road access and power distribution, combined with local
technical and logistics availability, thereby significantly reducing the
potential mine capital and operating costs. A Preliminary Economic Assessment
(“PEA”) of the deposit was completed by the Company in 2017 and is
technically and financially positive with a projected 2.11M carats recoverable
over a 9 year mine life.
The Company’s other major project is its diamond exploration programme in
the emerging kimberlite field in the Kuhmo region of Finland. Again, the
location allows exploration to be conducted at a far lower cost than were it,
for example, to be high up in a Canadian Arctic setting, in the Australian
outback or elsewhere in the world without supporting infrastructure. Equally
should a discovery be made in the Kuhmo area it too will have similar
infrastructural advantages as at Lahtojoki.
The Company’s main diamond projects are located in the Finnish section of
the Karelian Craton. The Archean-aged Karelian Craton stretches across Eastern
Russia and Northern Finland and is highly prospective for diamonds. The world
class Lomonosov and Grib Pipe diamond deposits have been discovered in the
Russian sector of the Craton and ALROSA, the major Russian diamond company,
has indicated that this region is expected to represent most of its future
growth. The Finnish section of the Craton, covering an area of over 180,000
sq. km., is comparable in size to the diamond rich Slave Lake Craton in
Canada.
Finland has an established mining tradition and is politically and
economically stable. There is security of tenure and fiscal framework and
Finland regularly ranks in the top ten in the prestigious Fraser Institute
Mining ratings.
I am very pleased that Howard Bird, who was previously a geoscience consultant
to the Company, joined the Board as a non-executive director in September
2019. Howard has extensive experience in both diamond exploration and
development. He was Senior Vice President of Global Exploration for TSX and
AIM listed SouthernEra Diamonds Ltd., where he spent over 15 years in the
diamond industry. He managed and was involved in programmes that have led to
the discovery of over 100 kimberlites working in Canada, Australia, Brazil,
South Africa, Angola, Zimbabwe, Democratic Republic of Congo, Botswana and
Gabon.
Mr. Bird was involved in the discovery to production success of several new
economic diamond deposits while at SouthernEra, including the Marsfontein
pipe, Sugerbird Blow and Klipspringer mine in South Africa, and he worked on
one of the world’s largest pipes, the Camafuca kimberlite in Angola. Howard
will continue to act as a geoscience consultant to the Company.
Lahtojoki Diamond Deposit
During the year the regulatory processes of obtaining a full mining permit
over the Lahtojoki diamond deposit have reached an advanced stage despite the
inevitable delays caused by the COVID-19 pandemic.
The mining concession over the Lahtojoki diamond deposit has already been
approved by TUKES (The Finnish Mining Authority). The National Land Survey, on
the order of TUKES, is currently undertaking the process of establishing the
mining concession for the applied area. This has to be completed prior to
TUKES issuing a full mining permit. This process by the National Land Survey
has involved a series of public meetings and also submissions by the relevant
landowners and the Company. It is now in its final stages but due to
COVID-19, it will not be completed by the National Land Survey until 2021.
Also, in July 2020, the National Land Survey of Finland formally granted to
the Company rights of way to the entire Nariskangas private forest road,
together with a side road, giving vehicular access to the deposit, the
adjacent Lahtojoki South exploration permit area and the surrounding
reservation in the Kaavi region of Finland. The granting of vehicular rights
of way will facilitate the Company in its technical assessment of the deposit.
The grant of vehicular rights gained legal force in August 2020.
A further and possibly highly important feature of the Lahtojoki deposit which
has been receiving particular attention during the year is the presence of
coloured stones and especially, the occurrence of pink diamonds in the
deposit. The importance of pink diamonds may be put into context when one
considers that pink diamonds, although accounting for less than five per cent
of the diamond production of what was the world’s biggest diamond mine, the
Argyle diamond mine in Western Australia, accounted for nearly fifty per cent
of its revenue.
Analysis of available data and reports in relation to Lahtojoki suggest that
coloured stones could amount to as much as seven per cent of the diamond
content of the deposit and that perhaps three per cent could be pink diamonds.
Additionally, examination of a pink diamond from the Lahtojoki deposit made
available for inspection by the Company, together with photographs of diamonds
from the deposit, indicates that the pink diamonds in the Lahtojoki deposit
are of high quality.
Coloured diamonds, especially pink diamonds, which have recently been
achieving very high prices, are expected to increase further in price due to
the closure of the Argyle Mine which has been the main global source of high
quality pink diamonds.
Diamond Exploration Programmes
Lahtojoki
Kimberlite boulders discovered to the south of the Lahtojoki diamond deposit
are comprised of material which does not appear to be derived from the
Lahtojoki kimberlite. This suggests that these boulders may come from an
undiscovered kimberlite up ice. The Company, therefore, applied for and has
been granted an exploration permit over the relevant area.
The possible existence of a further diamondiferous kimberlite nearby, if
confirmed, would, in the Board’s view, further increase the attractiveness
of the Lahtojoki diamond deposit. The Company has therefore commenced an
exploration programme in the area.
Kuhmo
The Company’s exploration programme in the Kuhmo region of eastern Finland,
close to the Russian border, has already led to the discovery of a new
kimberlite body, at Riihivaara, and a series of kimberlite anomalies. On one
of these, Anomaly 5, a green diamond has been discovered by the Company in
till. Such a discovery is a very rare event.
The Company has applied for, and been granted by TUKES, two diamond
reservations around the Company’s Riihivaara kimberlite discovery and also
around the Anomaly 5 diamond discovery. These reservations secure the adjacent
ground to licences already held by the Company over known kimberlite bodies.
The relevance of this is that kimberlites tend to occur in clusters and in
both of these areas there are indications of the possible presence of
additional kimberlites.
The results to date encourage the Company to believe that the Kuhmo region in
Eastern Finland, could be part of a new kimberlite province.
Ireland
The historic discovery of the Brookeborough diamond in Ireland together with
more recent reports of the presence of indicator minerals has led the Company
to apply for and obtain an exploration licence over the area. Preliminary
assessment is underway.
COVID-19 Update
Since the outbreak of the COVID-19 pandemic, the Company has taken necessary
measures in accordance with Government guidelines to protect the health,
safety and wellbeing of its employees, contractors and partners in Finland and
Ireland. COVID-19 continues to limit field and laboratory work given the
restrictions on operations and movement and other work also continues in
relation to the Company’s exploration and development programme.
Directors and executives took a 50% reduction in fees and salaries while
technical and field staff took a 25% reduction in salaries.
Extraordinary General Meetings
During the year under review, the Company has had to contend with a series of
actions by a group of shareholders which have hindered the Board of Directors
and management from pursuing the Company’s business objectives as planned
during the year.
These actions culminated in the holding of two separate Extraordinary General
Meetings (“EGM”) in July 2019 and October 2019 following requisitions
being received from these shareholders. The requisitionists, in association
with a former employee/consultant to the Company, endeavoured to gain control
of the Company by removing all but two of the current members of the Board and
electing four replacements, nominated by them, to the Board.
The resolutions were rejected by shareholders of the Company at the first EGM
and the same resolutions were defeated by an even larger majority at the
second EGM.
Finance
The loss after taxation for the financial year ended 31 May 2020 was
€446,710 (2019: €370,654) and the net assets as at 31 May 2020 were
€9,126,781 (2019: €9,189,779).
During the year the Company raised €167,777 (£150,000) in two separate
tranches through subscriptions for 3,928,571 ordinary shares in the capital of
the Company. 2,500,000 of these shares were subscribed for at a price of 4
pence per share, while 1,428,571 shares were subscribed for at a price of 3.5
pence per share. The Company raised a further £240,000 through a subscription
for £120,000 at a price of 4 pence per share and a convertible loan of
£120,000 convertible at a price of 10 pence per share.
Subsequent to the year-end the Company also raised €465,761 (£420,000)
through a placing of 10,500,000 ordinary shares at a price of 4 pence per
ordinary share.
Directors and Staff
I would also 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.
Future Outlook
I look forward to continued success and in particular to progress in the
development of a mine at Lahtojoki and further exploration success.
Professor Richard Conroy
Chairman
30 November 2020
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 relating to going concern
We draw your attention to Note 1 in the financial statements, which indicates
that the Company incurred a net loss of €466,710 during the financial year
ended 31 May 2020 and, as of that date, the Company had net current
liabilities of €1,247,702.
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 determined the implementation of these controls;
• Evaluated directors’ plans and their feasibility by challenging the key
assumptions used in the cash flow forecast provided by agreeing the inputs to
expenditure commitments and other supporting documentation;
• Obtained an understanding of directors’ plans to enable the Company to
raise the funds required to meet the expenditure commitments of the Company;
• 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;
• Assessed the mechanical accuracy of the cash flow forecast model; and
• Assessed the adequacy of the disclosures made in the financial statements.
We obtained evidence of the post year end share issues supporting the cash
flow projections for the Company.
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 2020
2020 2019
€ €
Continuing operations
Operating expenses (446,710) (370,654)
Loss before taxation (446,710) (370,654)
Income tax expense - -
Loss for the financial year (446,710) (370,654)
Loss per share
Basic and diluted loss per share (0.0111) (0.0109)
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 2020
2020 2019
€ €
Loss for the financial year (446,710) (370,654)
Income recognised in other comprehensive income - -
Total comprehensive loss for the financial year (446,710) (370,654)
The total comprehensive loss for the financial year is entirely attributable
to equity holders of the Company.
Statement of Financial Position as at 31 May 2020
31 May 31 May
2020 2019 As restated
€ €
Assets
Non-current assets
Intangible assets 10,523,570 10,152,733
Financial assets 4 4
Total non-current assets 10,523,574 10,152,737
Current assets
Cash and cash equivalents 15,942 30,833
Other receivables 118,991 102,989
Total current assets 134,933 133,822
Total assets 10,658,507 10,286,559
Equity
Capital and reserves
Share capital presented as equity 3,185,432 3,183,294
Share premium 9,150,829 8,768,276
Share-based payments reserve 456,624 456,624
Retained deficit (3,666,104) (3,218,415)
Total equity 9,126,781 9,189,779
Liabilities
Non-current liabilities
Convertible loan 148,945 -
Derivative liability 146 -
Total non-current liabilities 149,091 -
Current liabilities
Trade and other payables 1,288,973 938,693
Related party loans 93,662 158,087
Total current liabilities 1,382,635 1,096,780
Total liabilities 1,531,726 1,096,780
Total equity and liabilities 10,658,507 10,286,559
The financial statements were approved by the Board of Directors on 30
November 2020 and authorised for issue on 30 November 2020.
Statement of changes in equity for the financial year ended 31 May 2020
Share capital Share premium Share-based payment reserve Retained deficit Total equity
€ € € € €
Balance at 1 June 2019 3,183,294 8,768,276 456,624 (3,218,415) 9,189,779
Share issue 2,138 382,553 - - 384,691
Share issue costs - - - (979) (979)
Loss for the financial year - - - (446,710) (446,710)
Balance at 31 May 2020 3,185,432 9,150,829 456,624 (3,666,104) 9,126,781
Balance at 1 June 2018 3,180,516 8,201,664 519,159 (2,884,872) 9,016,467
Share issue 2,778 566,612 - - 569,390
Share issue costs - - - (31,390) (31,390)
Share-based payments - - 5,966 - 5,966
Transfer from share-based payment reserve to retained deficit - - (68,501) 68,501 -
Loss for the financial year - - - (370,654) (370,654)
Balance at 31 May 2019 3,183,294 8,768,276 456,624 (3,218,415) 9,189,779
Statement of Cash Flows for the financial year ended 31 May 2020
2020 2019
€ €
Cash flows from operating activities
Loss for the financial year (446,710) (370,654)
Adjustments for:
Expense recognised in income statement in respect of equity settled share-based payments - 5,966
Interest expense 3,262 -
(443,448) (364,688)
Increase in trade and other payables 350,280 225,524
(Increase)/decrease in other receivables (11,774) 79,974
Net cash used in operating activities (104,942) (59,190)
Cash flows from investing activities
Investment in exploration and evaluation (370,837) (491,174)
Repayments from Conroy Gold and Natural Resources P.L.C. 40,818 148,293
Payments to Conroy Gold and Natural Resources P.L.C. (45,046) (89,397)
Net cash used in investing activities (375,065) (432,278)
Cash flows from financing activities
Issue of share capital 320,266 534,988
Share issue costs (979) (31,390)
Proceeds from convertible loan issue 145,829 -
Net cash provided by financing activities 465,116 503,598
(Decrease)/increase in cash and cash equivalents (14,891) 12,130
Cash and cash equivalents at beginning of financial year 30,833 18,703
Cash and cash equivalents at end of financial year 15,942 30,833
Notes to the consolidated financial statements for the financial year ended 31
May 2020
1. Accounting policies
Reporting entity
Karelian Diamond Resources P.L.C. (the “Company”) is a company domiciled
in Ireland. The Company is a public limited company incorporated in Ireland
under registration number 382499. The registered office is located at 3300
Lake Drive, Citywest Business Campus, Dublin 24, D24 TD21, Ireland.
Basis of preparation
The financial statements are presented in Euro (“€”). The € is the
functional currency of the Company. The financial statements are prepared
under the historical cost basis except for derivative financial instruments
which, if any, are measured at fair value at each reporting date.
The preparation of 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 period in which the estimate is
revised and in any future periods affected. Details of significant judgements
are disclosed in the accounting policies.
The financial statements were authorised for issue by the Board of Directors
on 30 November 2020.
Going concern
The Company incurred a loss of €446,710 (2019: a loss of €370,654) for the
financial year ended 31 May 2020. The Company had net assets of €9,126,781
(2019: €9,189,779) at that date. The Company had net current liabilities
of €1,247,702 (2019: net current liabilities of €962,958) at the statement
of financial position date.
The Directors, Professor Richard Conroy, Séamus P. FitzPatrick, Maureen T.A.
Jones, Dr. Sor?a Conroy, Brendan McMorrow, Howard Bird and former directors
James P. Jones and Louis J. Maguire, have confirmed that they will not seek
repayment of amounts owed to them by the Company of €902,805 (2019:
€738,429) within 12 months of the date of approval of the financial
statements, unless the Company has sufficient funds to repay.
Subsequent to the year-end, the Company raised a total of €465,761
(£420,000) through subscriptions for 10,500,000 ordinary shares in the
capital of the Company (please see Note 18 for details).
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 November 2021. As set out further in the Chairman’s
statement, the Company expects to incur capital expenditure in 2021,
consistent with its strategy as an exploration company. The Directors
recognise that net current liabilities of €1,247,702 is a material
uncertainty that may cast significant doubt on the Company’s ability to
continue as a going concern and, therefore, that it may be unable to realise
its assets and discharge its liabilities in the normal course of business. In
reviewing the proposed work programme for exploration and evaluation assets
and, on the basis of the equity raised during the financial year, 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 financial statements on a going concern basis.
The financial statements do not include any adjustments to the carrying value
and classification of assets and liabilities that would arise if the Company
was unable to continue as going concern.
Statement of compliance
The Company’s financial statements have been prepared in accordance with
IFRS as adopted by the European Union (“EU”).
Recent accounting pronouncements
The following new standards, amendments to standards and interpretations
adopted and endorsed by the EU have been issued to date and are not yet
effective for the financial year from 1 June 2019:
* Amendments to references to the Conceptual Framework in IFRS Standards –
Effective date 1 January 2020
* Amendments to IFRS 3 Business Combinations – Definition of a Business –
Effective date 1 January 2020
* Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest Rate Benchmark Reform
– Effective date 1 January 2020
* Amendment to IFRS 16 about providing lessees with an exemption from
assessing whether a COVID-19-related rent concession is a lease modification
– Effective date 1 June 2020
The adoption of the above amendments to standards and interpretations is not
expected to have a significant impact on the financial statements either due
to being not applicable or immaterial.
The following new standard and amendments to standards have been issued by the
International Accounting Standards Board but have not yet been endorsed by the
EU, accordingly none of these standards have been applied in the current year.
The Board of Directors are currently assessing whether these standards once
endorsed by the EU will have any impact or a material impact on the financial
statements.
* Amendments to IFRS 10 and IAS 28: Sale or contribution of assets between an
investor and its associate or joint venture – Postponed indefinitely
* IFRS 1 amendments resulting from Annual Improvements to IFRS Standards
2018–2020 (subsidiary as a first-time adopter) – Effective date 1 January
2022
* IFRS 3 amendments updating a reference to the Conceptual Framework –
Effective date 1 January 2022
* IFRS 4 amendments regarding the expiry date of the deferral approach –
Effective date 1 January 2023
* Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16, and IAS 39 regarding
replacement issues in the context of the IBOR reform – Effective date 1
January 2021
* IFRS 9 amendments resulting from Annual Improvements to IFRS Standards
2018–2020 (fees in the ‘10 per cent’ test for derecognition of financial
liabilities) – Effective date 1 January 2022
* IFRS 17: Insurance contracts – Effective date deferred to 1 January 2023
* IAS 1 amendments regarding the classification of liabilities - Effective
date 1 January 2023
* IAS 16 amendments prohibiting a company from deducting from the cost of
property, plant and equipment amounts received from selling items produced
while the company is preparing the asset for its intended use – Effective
date 1 January 2022
* IAS 37 amendments regarding the costs to include when assessing whether a
contract is onerous – Effective date 1 January 20222. Loss per share
Basic loss per share
2020 2019
€ €
Loss for the year attributable to equity holders of the Company (446,710) (370,654)
Number of ordinary shares at start of the financial year 34,489,178 23,378,067
Number of ordinary shares issued during the financial year 8,553,571 11,111,111
Number of ordinary shares at end of the financial year 43,042,749 34,489,178
Weighted average number of ordinary shares for the purposes of basic loss per share 40,243,826 34,154,324
Basic and diluted loss per ordinary share (0.0111) (0.0109)
Diluted loss per share
The effect of share options and warrants is anti-dilutive.
3. Intangible assets
Exploration and evaluation assets
Finland 31 May 31 May
Cost 2020 2019
€ €
At 1 June 10,152,733 9,661,559
Expenditure during the financial year:
* Licence and appraisal costs 208,378 298,829
* Other operating expenses (Note 2) 162,459 192,345
At 31 May 10,523,570 10,152,733
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. Cash and cash equivalents
31 May 2020 31 May 2019
€ €
Cash held in bank accounts 15,942 30,833
15,942 30,833
5. Non-current liabilities – as restated
Convertible loan
On 10 December 2019, the Company has entered into a convertible loan note
agreement for a total amount of €145,829 (£120,000) with one of its
shareholders. The convertible loan note is unsecured, has a term of three
years and attracts interest at a rate of 5% per annum which is payable on the
maturity or conversion of the convertible loan. The conversion price is 10
pence. The shareholder has the right to seek conversion of the principal
amount outstanding on the convertible loan note and all interest accrued at
any time during the term. Any conversion of the convertible loan note will be
a for a minimum of €60,761 (£50,000) of loan notes. The amount of €146
relates to derivative liability attached to the convertible loan note.
Interest incurred on this convertible loan note is €3,262 for the period.
6. Current liabilities - as restated
Trade and other payables
31 May 2020 31 May 2019
€ €
Accrued Directors’ remuneration
Fees and other emoluments 639,555 475,179
Pension contributions 263,250 263,250
Other creditors and accruals 386,168 200,264
1,288,973 938,693
It is the Company’s practice to agree terms of transactions, including
payment terms with suppliers. It is the Company’s policy that payment is
made according to the agreed terms. The carrying value of the trade and other
payables approximates to their fair value.
Related party loans
31 May 2020 31 May 2019
€ €
Opening balance 1 June 158,087 192,489
Loan conversion into shares* (71,425) (34,402)
Loan advances** 7,000 -
Closing balance 31 May 93,662 158,087
Prior to the various placings of shares, the immediate funding requirements of
the Company had been financed by advances from Professor Richard Conroy
(Director, executive chairman and major shareholder) and Maureen T.A. Jones
(Director, managing director and shareholder). The Directors’ have confirmed
that they will not seek repayment of amounts owed by the Company at 31 May
2020 within 12 months of the date of approval of the financial statements,
unless the Company has sufficient funds to repay. There is no interest payable
in respect of these loans, no security has been attached to these loans and
there is no repayment or maturity terms.
*On 3 September 2019, Professor Richard Conroy capitalised loans amounting to
€71,425 (£65,000) into 1,625,000 new ordinary shares of nominal value
€0.00025 each.
**This amount relates to a loan provided by Maureen T.A. Jones to the Company.
7. Commitments and contingencies
At 31 May 2020, there were no capital commitments or contingent liabilities
(2019: €Nil) recognised at the reporting date. Should the Company decide to
further develop the Lahtojoki project, an amount of €60,000 is payable by
the Company to the vendors of the Lahtojoki mining concession.
8. Post balance sheet events
Subsequent to the year-end, the Company raised a total of €465,761
(£420,000) through subscriptions for 10,500,000 ordinary shares in the
capital of the Company. 10,500,000 of these shares were subscribed for at a
price of £0.04 per share. In addition, the Company broker, Brandon Hill
Capital Ltd, will be granted warrants to subscribe for 525,000 new ordinary
shares in the Company at an exercise price of 4 pence per Ordinary Share for a
period of 30 months from admission date.
COVID-19 continues to limit field and laboratory work given the restrictions
on operations and movement and other work also continues in relation to the
Company’s exploration and development programme.
There were no other material events subsequent to the reporting date which
necessitate revision of the figures or disclosures included in the financial
statements.
9. Prior year adjustment
The Statement of Financial Position as at 31 May 2019 previously presented
related party loans amounting to €158,087 within non-current liabilities.
Following a review of the applicable terms and conditions, the Directors
determined that these amounts should, more appropriately, be classified within
current liabilities. The Statement of Financial Position as at 31 May 2019
have therefore been adjusted to reflect the impact of this reclassification.
In line with the requirements of IAS 8 Accounting policies, changes in
accounting estimates and errors, the comparative figures for the year ended 31
May 2019 have been restated as follows:
Balance Sheet As previously stated 31 May 2019 Effect of restatement 31 May 2019 As restated 31 May 2019
€ € €
Non-current liabilities
Related party loans 158,087 (158,087) -
Total non-current liabilities 158,087 (158,087) -
Current liabilities
Trade and other payables 938,693 - 938,693
Related party loans - 158,087 158,087
Total current liabilities 938,693 158,087 1,096,780
There is no impact on Net Assets, Total equity and liabilities or the
Statement of Comprehensive Income.
10. Approval of the audited financial statements for the financial year ended
31 May 2020
These audited financial statements were approved by the Board of Directors on
30 November 2020. A copy of the audited financial statements will be available
on the Company’s website www.kareliandiamondresources.com and will be
available from the Company’s registered office at 3300 Lake Drive, Citywest
Business Campus, Dublin 24, D24 TD21, Ireland.
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