REG-Karelian Diamond Res.: Final Results
11/12/2021 19:15
The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Regulation 11 of the Market
Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon the publication of this
announcement via a Regulatory Information Service ("RIS"), this inside
information is now considered to be in the public domain.
Karelian Diamond Resources plc
(“Karelian Diamonds” or “the Company”)
30 November 2021
FINAL RESULTS FOR THE YEAR TO 31 MAY 2021
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 2021.
Highlights:
* Lahtojoki diamond mine: * Work regarding ground rental compensation on
behalf of TUKAS (The Finnish Mining Authority) is now in its final stage
* The presence of pink diamonds in the Lahtojoki diamond deposit could
substantially increase the potential profitability of any future mining
operation
* Process of gaining a full mining permit to develop the diamond deposit
remains ongoing
* Exploration has continued on the Company’s exploration acreage in the
Kuhmo region, Finland
* Further diamondiferous kimberlites may exist adjacent to Lahtojoki
* In Ireland, sediment samples from Brookeborough showed highly anomalous
amount of chromite
* Initial interpretation suggests a non-kimberlite source rock which is
indicative of additional targets for mineralisation – nickel, copper and
platinum
* Financing of £600,000 announced in late May 2021 with funds received post
period end
Post period highlights:
* Amended Lahtojoki PEA, came to US$69m, representing a 77% increase on the
2017 estimate
* Initial interpretation of Brookeborough samples suggests a non-kimberlite
source rock which is indicative of additional targets for mineralisation -
nickel, copper and platinum - within Karelian’s licence area
Professor Richard Conroy, Chairman, stated:
“The focus remains on delivering the diamond mine at Lahtojoki but work has
also continued on the exploration acreage and other potential diamondiferous
areas. The presence of pink diamonds in the Lahtojoki diamond deposit could
substantially increase the potential profitability of any future mining
operation and this is reflected in the amended PEA. We have made progress
towards the development of a mine on the site with work going ahead as fast as
the official process, and Covid, will allow”.
Annual Report and Accounts for the year to 31 May 2021
The full audited annual report and accounts for the year to 31 May 2021
(“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 2.00pm
on 22(nd) December 2021 at The Alex Hotel, 41-47 Fenian Street, Dublin, D02
H678, Ireland. 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.
For further information please contact:
Karelian Diamond Resources plc Professor Richard Conroy, Chairman +353-1-479-6180
Allenby Capital Limited (Nomad) Nick Athanas / Nick Harriss +44-20-3328-5656
First Equity Limited ( Broker ) Jason Robertson +44-20-7330-1883
Lothbury Financial Services Michael Padley +44-20-3290-0707
Hall Communications Don Hall +353-1-660-9377
http://www.kareliandiamondresources.com
Key Information Extracted from Annual Report
Chairman’s statement
Dear Shareholder,
I have great pleasure in presenting your Company’s annual report and
financial statements for the year ended 31 May 2021. The year has been one of
further progress at the Company’s two major diamond projects in Finland.
The process of gaining a full mining permit to develop the company’s diamond
deposit at Lahtojoki, with its potential for pink diamond production,
continued. Work regarding ground rental compensation on behalf of TUKAS (The
Finnish Mining Authority) is now in its final stages and vehicular access to
the deposit has been granted. Post period, an amended preliminary economic
assessment (“PEA”) was compiled and showed a 77% increase on the 2017 PEA
NPV8.
Despite delays related to the COVID-19 pandemic, exploration has continued on
the Company’s exploration acreage in the Kuhmo region of Finland, which the
Company believes could be a new kimberlite province and, in Ireland, sample
results suggest the presence of nickel, copper and platinum targets within the
Karelian licence area.
During the year, as a consequence of Brexit, an extraordinary general meeting
(“EGM”) was required to ensure that the Company’s shares could continue
to be settled electronically on the AIM market.
The Lahtojoki Diamond Mining Project
The Lahtojoki diamond mining project comprises a mining concession covering 71
hectares which includes a kimberlite pipe over a surface area of 16 hectares.
A full mining permit to enable development of the deposit is currently being
processed although delays have occurred due to COVID-19 restrictions. It
appears that the deposit, as well as containing high quality colourless gem
diamonds, also contains coloured diamonds, including pink diamonds.
Pink diamonds are highly sought after and are extremely scarce, typically
commanding a price up to 20 times that of normal colourless diamonds.
The presence of pink diamonds in the Lahtojoki diamond deposit could,
therefore, substantially increase the potential profitability of any future
mining operation.
An example of the financial implications of the presence of pink diamonds is
that, although pink diamonds made up less than 5% of production volumes,
revenues from pink diamonds at the Rio Tinto-operated Argyle diamond mine in
Australia accounted for 50% of the mine’s revenue until its closure in late
2020. It is also relevant that production at the Rio Tinto-operated Argyle
diamond mine in Australia accounted for 90% of global pink diamonds, so its
closure also has had important implications on the supply side.
In relation to the Lahtojoki diamond deposit, PEA in 2017, based on a non-JORC
resource of 2.25 million carats, estimated the deposit contained a value of
$225m, with an NPV8 of $39m, with a nine year mine life. Post period, the 2017
PEA was amended by First Equity Limited, who act as broker to the Company,
assuming 3% of recovered diamonds at Lahtojoki will be pink, with a pink
diamond price 10 times that of colourless equivalents. Their unrisked NPV8, in
the amended PEA, came to $69m, representing a 77% increase on the 2017 PEA
PPV8 of $39 million.
The overall outlook for diamonds is encouraging with demand currently strong
in China and the US, the two biggest diamond markets, with supply and
inventories down. The Argyle mine is closed and the Directors are only aware
of one major new mine currently being developed (LUAXE in Angola). In the view
of ALROSA, the leading Russian diamond producer, a long term diamond deficit
is developing so it may well be a very good time for the Company to be
developing a new diamond mine in an excellent location.
Diamond Exploration Programmes
Kuhmo
The Kuhmo region of Finland, next to the border with Russia, lies within the
Karelian Craton (or Baltic Shield) which overlies north and eastern Finland,
along with the northwest tip of Russia. On the Russian side of the Craton, two
world class diamond deposits, Lomonsov and the Grib Pipe, have been discovered
and ALROSA, the world’s largest diamond miner, has indicated that, in its
view, this diamond region will represent almost all its future growth.
The Board of Karelian believes that given the similar geology on the Finnish
side of the Craton to that on the Russian side, the presence already
demonstrated in Finland of the Company’s Lahtojoki diamond deposit and the
discoveries which the Company has made, the potential exists for similar world
class diamond discoveries in Finland.
To date, Karelian has discovered a new kimberlite body at Riihivaara and a
series of kimberlite anomalies, including Anomaly 5, where the Company has
discovered a green diamond, together with numerous kimberlite indicator
minerals in till.
Immediately post year end, an Unmanned Aerial Vehicle (“UAV”) geophysical
survey was completed in the Anomaly 5 target area. The results are now
undergoing analysis and a follow up drilling programme is planned.
Lahtojoki
The Company is also carrying out exploration in the vicinity of the Lahtojoki
diamond deposit. Kimberlites tend to occur in clusters and kimberlite boulders
have been discovered to the south of Lahtojoki which cannot be derived from
the Lahtojoki kimberlite. This encourages the belief that further
diamondiferous kimberlites may exist adjacent to Lahtojoki.
Brookeborough, Ireland
The Colebrook River in County Fermanagh in Northern Ireland was the reported
location of the discovery in 1816 of a diamond which became known as the
Brookeborough diamond. No serious exploration for the source of this diamond
was carried out until 1996, when a regional heavy mineral sediment sampling
survey was carried out in Counties Fermanagh and Tyrone. The recovery of some
chromites was reported. Such chromites could indicate the possible presence of
kimberlite source rocks in the vicinity of where the Brookeborough diamond was
discovered. However, no follow up work was ever conducted.
Following a review of these regional sampling survey results, together with
analysis of airborne geophysical data from the Tellus survey in Northern
Ireland and an overall geological assessment, it was decided by the Company
that a detailed heavy mineral stream sediment survey at sample sites on the
Colebrook River around the reported discovery location of the diamond was
merited.
Sediment samples were taken and have been dispatched to Canada for mineral
concentrating, picking and analysis. The results of the sediment sample
analysis showed highly anomalous amounts of chromite in all samples.
Forsterite olivine and metamorphic massive sulphide indicator minerals
(“MMSIM’s”) were also reported.
Initial interpretation suggests a non-kimberlite source rock which is
indicative of additional targets for mineralisation – nickel, copper and
platinum, within Karelian’s licence area. Relating the results with other
sampling programmes in known areas of Nickel–Copper–Platinum
mineralisation globally indicates the Company’s data should be considered as
highly anomalous.
Platinum Group Metals are classified as critical metals. Nickel and copper are
important metals in the energy transition.
These exciting results heighten the prospectivity of the Company’s
exploration programme in Northern Ireland and add an additional dimension to
the Company’s exploration interests.
COVID-19
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 but, despite these restrictions on operations, work
has continued in relation to the Company’s exploration and development
programmes.
COVID-19 has also delayed the due process in relation to the granting of a
mining permit over the Lahtojoki diamond process. In relation to COVID-19,
Directors and executives took a reduction in salaries and fees in line with
technical and field staff taking a reduction in salaries over a 9 month
period.
Environmental, Social, and Governance issues
Great emphasis is placed by the Company on Environmental, Social and
Governance issues. The Company is committed to high standards of corporate
governance and integrity in all of its activities and operations including
rigorous health and safety compliance and environmental consciousness and
promotes a culture of good ethical values and behaviour. The Company conducts
its business with integrity, honesty and fairness and requires its partners,
contractors and suppliers to meet similar ethical standards. Individual staff
members must ensure that they apply and maintain these standards in all their
actions.
It is a requirement that the Chairman of the Board regularly monitors and
reviews the Company’s ethical standards and cultural environment and where
necessary takes appropriate action to ensure proper standards are maintained.
The Company is fully committed to complying with all relevant health, safety
and environment rules and regulations as these apply to its operations and all
individuals working for the Company are aware of their responsibilities in
providing a safe and secure working environment.
Extraordinary General Meeting and Migration to Euroclear
An EGM was held on the 17th February 2021 to maintain electronic trading in
the Company’s shares post-Brexit. The settlement system relating to the
Company’s shares needed, as a consequence of Brexit, to move from CREST in
London to Euroclear Bank in Belgium. At the EGM, the necessary resolutions
were passed enabling the Company’s shares to continue to be settled
electronically on the AIM market in London.
This will be the Company’s first AGM since migration of the holding and
settlement of uncertificated shares in the Company from CREST to the Euroclear
Bank system. The processes and timelines for submitting proxy appointments or
voting instructions for the AGM will differ from the comparable processes and
timelines that applied in CREST for previous shareholder meetings.
Additional explanatory information is included in the Notice of Annual General
Meeting, and it will be important for relevant shareholders to confirm the
procedures with their stockholder, custodian, or other intermediary as they
may vary depending on the specific arrangements that are in place for
individual shareholders.
Finance
The loss after taxation from continuing operations for the financial year
ended 31 May 2021 was €422,192 (2020: €446,710) and the net assets of the
Company at 31 May 2021 were €9,495,866 (2020: €9,126,781).
In August 2020 the Company raised £420,000 through a placing of 10,500,000
ordinary shares at a price of 4 pence per ordinary share.
In May 2021 a further financing of £600,000 was carried out through a placing
and subscription of 13,000,000 ordinary shares at a price of 4 pence per
ordinary share, to raise £520,000 and a further 2,000,000 shares were issued
at the same time in conjunction with the conversion of £80,000 of existing
debt owed to the Managing Director, Maureen Jones, and myself, also at a price
of 4 pence per ordinary share.
Directors and Staff
I would like to express my very deep appreciation of the support and
dedication of Directors, staff, and consultants which has made possible the
continued progress and success which the Company has achieved.
Future Outlook
I look forward to continued success both in relation to progress in the
development of a diamond mine at Lahtojoki and in the Company’s exploration
programmes.
Professor Richard Conroy
Chairman
30 November 2021
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.
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
We draw your attention to Note 1 in the financial statements, which indicates
that the company incurred a net loss of €422,192 during the financial year
ended 31 May 2021 and, as of that date, the Company had net current
liabilities of €721,166.
Our evaluation of the directors’ assessment of the company’s ability to
continue to adopt the going concern basis of accounting included:
* 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, 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;
* 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 2021
2021 2020
€ €
Continuing operations
Operating expenses - other (370,370) (443,448)
Operating expenses - Share-based payment expense (46,519) -
Movement in fair value of warrants 5,250 -
Loss before finance costs and taxation (411,639) (443,448)
Interest expense (10,553) (3,262)
Net finance cost (10,553) (3,262)
Loss before taxation (422,192) (446,710)
Income tax expense - -
Loss for the financial year (422,192) (446,710)
Loss per share
Basic and diluted loss per share (0.0082) (0.0111)
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 2021
2021 2020
€ €
Loss for the financial year (422,192) (446,710)
Income recognised in other comprehensive income - -
Total comprehensive loss for the financial year (422,192) (446,710)
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 2021
31 May 31 May
2021 2020
€ €
Assets
Non-current assets
Intangible assets 10,766,576 10,523,570
Financial assets 4 4
Total non-current assets 10,766,580 10,523,574
Current assets
Cash and cash equivalents 61,778 15,942
Other receivables 652,957 118,991
Total current assets 714,735 134,933
Total assets 11,481,315 10,658,507
Equity
Capital and reserves
Share capital presented as equity 3,191,807 3,185,432
Share premium 9,959,181 9,150,829
Share-based payments reserve 450,658 456,624
Retained deficit (4,105,780) (3,666,104)
Total equity 9,495,866 9,126,781
Liabilities
Non-current liabilities
Warrant liabilities 389,904 -
Convertible loan 159,498 148,945
Derivative liability 146 146
Total non-current liabilities 549,548 149,091
Current liabilities
Trade and other payables 1,435,901 1,288,973
Related party loans - 93,662
Total current liabilities 1,435,901 1,382,635
Total liabilities 1,985,449 1,531,726
Total equity and liabilities 11,481,315 10,658,507
The financial statements were approved by the Board of Directors on 30
November 2020 and authorised for issue on 30 November 2021.
Statement of changes in equity for the financial year ended 31 May 2021
Share capital Share premium Share-based payment reserve Retained deficit Total equity
€ € € € €
Balance at 1 June 2020 3,185,432 9,150,829 456,624 (3,666,104) 9,126,781
Share issue 6,375 1,156,987 - - 1,163,362
Warrant issue - (348,635) - - (348,635)
Share issue costs - - - (23,450) (23,450)
Transfer from share-based payment reserve to retained deficit - - (5,966) 5,966 -
Loss for the financial year - - - (422,192) (422,192)
Balance at 31 May 2021 3,191,807 9,959,181 450,658 (4,105,780) 9,495,866
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
Statement of Cash Flows for the financial year ended 31 May 2021
2021 2020
€ €
Cash flows from operating activities
Loss for the financial year (422,192) (446,710)
Adjustments for:
Expense recognised in income statement in respect of equity settled share-based payments 46,519 -
Movement in fair value of warrants (5,250) -
Interest expense 10,553 3,262
(370,370) (443,448)
Increase in trade and other payables 146,927 350,280
Increase in other receivables (762,367) (11,774)
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C. 228,402 (4,228)
Net cash used in operating activities (757,408) (109,170)
Cash flows from investing activities
Investment in exploration and evaluation (243,006) (370,837)
Net cashused in investing activities (243,006) (370,837)
Cash flows from financing activities
Issue of share capital 1,068,988 320,266
Share issue costs (23,450) (979)
Repayment on loans 712 -
Proceeds from convertible loan issue - 145,829
Net cash provided by financing activities 1,046,250 465,116
Increase/(decrease) in cash and cash equivalents 45,836 (14,891)
Cash and cash equivalents at beginning of financial year 15,942 30,833
Cash and cash equivalents at end of financial year 61,778 15,942
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 2021.
Going concern
The Company incurred a loss of €422,192 (2020: a loss of €446,710) for the
financial year ended 31 May 2021.The Company had net assets of €9,495,866
(2020: €9,126,781) at that date. The Company had net current liabilities of
€721,166 (2020 :net current liabilities of €1,247,702) 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 €921,969 (2020:
€902,805) within 12 months of the date of approval of the financial
statements, unless the Company has sufficient funds to repay.
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 2022. As set out further in the Chairman’s
statement, the Company expects to incur capital expenditure in 2021 and 2022,
consistent with its strategy as an exploration company. The Directors
recognise that net current liabilities of €721,166 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”) and the requirements of the
Companies Act 2014.
Recent accounting pronouncements
The Company has adopted the following amendments to standards for the first
time for its annual reporting year commencing 1 June 2020:
* 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; and
* Amendments to IAS 1 and IAS 8 regarding definition of material used in the
Conceptual Framework – Effective date 1 January 2020.
The adoption of the above amendments to standardshad no significant impact on
the financial statements of the Company either due to being not applicable or
immaterial.
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 May 2021 reporting periods and have not been early
adopted by the Company.
The following amendments to standards adopted and endorsed by the EU have been
issued by the International Accounting Standards Board to date and are not yet
effective for the financial year from 1 June 2020. The Board of Directors is
currently assessing whether these standards once adopted by the Company will
have any impact on the financial statements of the Company.
* Amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16, and IAS 39 regarding
replacement issues in the context of the IBOR reform – Phase 2 - Effective
date 1 January 2021; and
* IFRS 4 amendments regarding the expiry date of the deferral approach –
Effective date 1 January 2023.
The following new standards 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 is currently assessing whether these standards
once endorsed by the EU will have any impact on the financial statements of
the Company.
* 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 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;
* Amendment to IFRS 16 about providing lessees with an extension of one year
to exemption from assessing whether a COVID-19-related rent concession is a
lease modification – Effective date 1 April 2021;
* 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 1 amendments regarding the disclosure of accounting policies -
Effective date 1 January 2023;
* IAS 8 amendments regarding the definition of accounting estimates –
Effective date 1 January 2023;
* Amendments to IAS 12 Income taxes: Deferred tax related to assets and
liabilities arising from a single transaction – 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; and
* IAS 37 amendments regarding the costs to include when assessing whether a
contract is onerous – Effective date 1 January 2022.
Basic loss per share
2021 2020
€ €
Loss for the year attributable to equity holders of the Company (422,192) (446,710)
Number of ordinary shares at start of the financial year 43,042,749 34,489,178
Number of ordinary shares issued during the financial year 25,500,000 8,553,571
Number of ordinary shares at end of the financial year 68,542,749 43,042,749
Weighted average number of ordinary shares for the purposes of basic and diluted loss per share 51,434,530 40,243,826
Basic and diluted loss per ordinary share (0.0082) (0.0111)
Diluted loss per share
The effect of share options and warrants is anti-dilutive.
2. Intangible assets
Exploration and evaluation assets
Finland 31 May 31 May
Cost 2021 2020
€ €
At 1 June 10,523,570 10,152,733
Expenditure during the financial year:
* Licence and appraisal costs 163,705 208,378
* Other operating expenses (Note 2) 79,301 162,459
At 31 May 10,766,576 10,523,570
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.
3. Cash and cash equivalents
31 May 2021 31 May 2020
€ €
Cash held in bank accounts 61,778 15,942
61,778 15,942
4. Non-current liabilities
Warrant liabilities
During the year ended 31 May 2021, 16,775,000 warrants were issued with a
sterling exercise price and expiry of thirty months. The fair value amount at
grant date was valued using the Black Scholes Model and recorded as warrant
liabilities. At 31 May 2021, the warrants in issue were fair valued with the
movement in fair value being recorded in the income statement.
Convertible loan
On 10 December 2019, the Company 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 (2020: €146)
relates to derivative liability attached to the convertible loan note. The
convertible loan amounted to €159,498 (2020: €148,945) at 31 May 2021.
31 May 2021 31 May 2020
€ €
Opening Balance 148,945 -
Loan issued on 10 December 2019 - 145,829
Derivative liability element - (146)
Interest payable 10,553 3,262
159,498 148,945
5. Current liabilities
Trade and other payables
31 May 2021 31 May 2020
€ €
Accrued Directors’ remuneration
Fees and other emoluments 658,720 639,555
Pension contributions 263,250 263,250
Other creditors and accruals 343,998 386,168
Amount due to related party (see note 15 (c)) 169,933 -
1,435,901 1,288,973
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 2021 31 May 2020
€ €
Opening balance 1 June 93,662 158,087
Loan conversion to equity* (92,950) (71,425)
Loan repayment (712) -
Loan advances** - 7,000
Closing balance 31 May - 93,662
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). 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 27 May 2021, Professor Richard Conroy capitalised loans amounting to
€85,979 (£74,000) into 1,850,000 new ordinary shares of nominal value
€0.00025 each. On 27 May 2021, Maureen Jones capitalised loans amounting to
€6,971 (£6,000) into 150,000 new ordinary shares of nominal value
€0.00025 each.
**This amount relates to a loan provided by Maureen T.A. Jones to the Company.
6. Commitments and contingencies
At 31 May 2021, there were no capital commitments or contingent liabilities
(2020: €Nil) recognised at the reporting date. Should the Company decide to
further develop the Lahtojoki project, an amount of €40,000 is payable by
the Company to the vendors of the Lahtojoki mining concession.
7. Related party transactions
(a) Details of Directors’ loans advanced by Professor Richard Conroy and
Maureen T.A. Jones are outlined in Note 12 of the financial statements.
(b)The Company shares office accommodation with Conroy Gold and Natural
Resources P.L.C. which has certain common Directors and shareholders. For the
financial year ended 31 May 2021, Conroy Gold and Natural Resources P.L.C.
incurred costs totalling €54,872 (2020: €40,818) on behalf of the Company.
These costs were recharged to the Company by Conroy Gold and Natural Resources
P.L.C.
These costs are analysed as
follows:
2021 2020
€ €
Office salaries 49,048 80,144
Other operating expenses 5,824 9,851
Rent and rates - (49,177)*
54,872 40,818
*This amount is rechargeable to Conroy Gold and Natural Resources P.L.C.
(c) At 31 May 2021, the Company owed €169,933 to Conroy Gold and Natural
Resources P.L.C. (2020: €58,469 owed from). Amounts owed to Conroy Gold and
Natural Resources P.L.C. were included within trade and other payables during
the current year. Amounts owed from Conroy Gold and Natural Resources P.L.C.
were included within other receivables in the prior year. During the financial
year ended 31 May 2021, €173,530 was received from (2020: €45,046 was paid
to) Conroy Gold and Natural Resources P.L.C. During the financial year ended
31 May 2021, the Company was charged €54,872 (2020: €40,818) by Conroy
Gold and Natural Resources P.L.C. in respect of the allocation of certain
costs as detailed in Note 15(b).
(d) At 31 May 2021, Brendan McMorrow was owed €24,167 (2020: €20,417) in
respect of his services and also an amount of €13,700 (2020: €10,200)
payable to him for other services rendered. These amounts are included in the
trade and other payables balance in the statement of financial position.
(e) An analysis of remuneration for each Director of the Company in the
current financial year (prior to amounts transferred to intangible assets) is
as follows:
Fees € Salary € Total €
Professor Richard Conroy 12,500 40,625 53,125
Maureen T.A. Jones 6,250 31,250 37,500
Brendan McMorrow 6,250 - 6,250
Séamus P. FitzPatrick 6,250 - 6,250
Dr. Sor?a Conroy 6,250 - 6,250
Howard Bird 6,250 - 6,250
43,750 71,875 115,625
An analysis of remuneration for each Director of the Company in the prior
financial year (prior to amounts transferred to intangible assets) is as
follows:
Fees € Salary € Total €
Professor Richard Conroy 17,500 56,875 74,375
Maureen T.A. Jones 8,750 43,750 52,500
Brendan McMorrow 8,750 - 8,750
Séamus P. FitzPatrick 8,750 - 8,750
Dr. Sor?a Conroy 8,750 - 8,750
Howard Bird 5,833 - 5,833
Louis J. Maguire 5,417 - 5,417
63,750 100,625 164,375
(f) Details of share capital transactions with the Directors are disclosed in
the Directors’ Report.
(g) Apart from Directors’ remuneration (detailed in Note 2 and Note 4),
loans from two shareholders (who are also Directors which is detailed in Note
12), convertible loan from a shareholder (which is detailed in Note 11) and
share capital transactions (which are detailed within the Directors’
Report), there have been no contracts or arrangements entered into during the
financial year in which a Director of the Company had a material interest.
8. Post balance sheet events
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. Approval of the audited financial statements for the financial year ended
31 May 2021
These audited financial statements were approved by the Board of Directors on
30 November 2021. 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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