REG - Karelian Diamond Res - Final Results
29/11/2022 07:00
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RNS Number : 8537H Karelian Diamond Resources PLC 29 November 2022
Karelian Diamond Resources plc
("Karelian Diamonds" or "the Company")
29 November 2022
FINAL RESULTS FOR THE YEAR TO 31 MAY 2022
NOTICE OF ANNUAL GENERAL MEETING
Karelian Diamond Resources plc ("Karelian Diamonds") (AIM: KDR) is pleased to
report its audited accounts for the year to 31 May 2022.
Highlights:
· The Company's exploration programmes during the year yielded
excellent results in both Finland and Ireland including:
o Samples from a kimberlite boulder recovered from the Company's Lahtojoki
South exploration area indicated potential for the presence of diamonds.
o A drone based geophysical survey in Finland resulted in the announcement
post period end of the identification of twenty-three kimberlite targets in
the Kuhmo area, where the Company has previously discovered a diamond in till.
Many of the targets are extensive in size, ranging from 0.5 hectares to over
4.5 hectares, and appear highly prospective.
o In Ireland, during a stream sediment survey, nickel, copper and platinum
group metal indicators were discovered.
· On the diamond mining development side, the Company has, post period
end, received confirmation that the required public meeting in relation to the
land valuation proceedings for the Lahtojoki diamond deposit will be held in
December 2022
Professor Richard Conroy, Chairman, stated:
"I am delighted that the required public meeting in relation to the land
valuation proceedings, which had been severely delayed by Covid, will be held
shortly and that we may now look forward to progressing the mining concession
in relation to the Lahtojoki diamond deposit.
I am also very pleased that work has continued on the exploration acreage in
both Finland and Ireland with excellent results. We have new targets in the
Kuhmo area of Finland, whilst in County Fermanagh in Ireland, the highly
anomalous numbers of indicators discovered add a new and very exciting
dimension to the Company's mineral exploration interests."
Annual Report and Accounts for the year to 31 May 2022
The full audited annual report and accounts for the year to 31 May 2022
("Annual Report") will be posted to shareholders today and will be published
on the Company's website (www.kareliandiamondresources.com
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.kareliandiamondresources.com%2F&data=04%7C01%7C%7C01ed03a2f464418c7ea308d9b36ff8b7%7Cfc69750aedcc43bebd5b2cbe6f8d8c37%7C0%7C0%7C637738115751124421%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=uWpoIj45eg8968TZeBtsvF%2ButJpTZmzYTjj54VslcMk%3D&reserved=0)
) shortly. 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 Conrad
Dublin Hotel, Earlsfort Terrace Dublin, on 20(th) December 2022 at 10.30 am. 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
(http://www.kareliandiamondresources.com)
Key Information Extracted from Annual Report
Chairman's statement
Dear Shareholder,
I have pleasure in presenting the Company's Annual Report and Financial
Statements for the year ended 31 May 2022.
The Company's exploration programmes during the year yielded excellent results
in both Finland and Ireland.
A drone based geophysical survey in Finland resulted in the identification of
twenty-three kimberlite targets in the Kuhmo area, where the Company has
previously discovered a diamond in till, while in Ireland, during the course
of a stream sediment survey to investigate the historically reported discovery
of a diamond, nickel, copper and platinum group metal indicators were
discovered.
Diamond Exploration and Development in Finland
Diamond deposits only form beneath areas of the earth's crust known as
Cratons. The Karelian Craton stretches across Finland and north-western Russia
and is one of the largest Cratons in the world. In the Russian sector of the
Craton, two world class diamond deposits - Lomonosova and the Grib Pipe, have
been found. Both are now in production as major diamond mines. The Company's
objective is to find comparable deposits in the similar geology which is
present in the Finnish sector of the Karelian Craton. The identification of a
large number of kimberlite targets close to where the Company discovered a
diamond in till is a significant step towards achieving this objective.
Kimberlite pipes enable diamonds, which are formed deep under the earth's
crust, to reach the surface. There is of course no guarantee that a kimberlite
pipe will contain diamonds, most kimberlites are in fact not diamondiferous.
However, the presence of the diamond discovered by the Company down-ice of
the kimberlite targets is a very positive sign that the
kimberlites which have been identified by the Company in the Kuhmo area of
Finland may be diamondiferous.
The newly discovered kimberlite targets followed from a high resolution, drone
based, magnetic survey. The survey was carried out up-ice of the location
where the Company has previously discovered a diamond in till. During the
survey over eighty flight lines (250km) were flown. Interpretation of
the resultant data from the survey has led to the identification of the
twenty-three kimberlite targets. Many of the targets are extensive in size,
ranging from 0.5 hectares to over 4.5 hectares, and appear highly prospective.
On the diamond mining development side, it is very much to be hoped in
relation to the Lahtojoki diamond deposit, which the Company has acquired, and
which is known to contain a percentage of the very valuable pink diamonds,
that the Company will soon receive its long awaited land valuation decisions.
These decisions are required under Finnish law for mine permitting but have
been greatly delayed by the Covid - 19 pandemic. The Company has just been
notified that the required public meeting will be held in December 2022.
Ireland - Nickel, Copper and Platinum Prospectivity
The discovery in Northern Ireland, during the course of a diamond exploration
programme by the Company on its Licence in Co Fermanagh, of highly anomalous
numbers of indicators, particularly chromites, suggestive of the presence of
nickel, copper and platinum group metals, adds a new and very exciting
dimension to the Company's mineral exploration interests and will be actively
followed up during the course of the coming year.
Ireland is already an international base metals province and significant gold
discoveries have also been made. Management has been involved in both previous
gold and base metal discoveries in Ireland.
Such discoveries of other minerals during diamond exploration programmes are
not unknown, the most famous being the Voisey Bay world class nickel
discovery in Canada.
Covid19
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 and, as described previously, has delayed permitting
at the Company's diamond deposit at Lahtojoki. Despite these restrictions on
operations, work has continued in relation to the Company's exploration and
development programmes in both Finland and Ireland.
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.
Finance
The profit after taxation from continuing operations for the financial year
ended 31 May 2022 was €13,593 (31 May 2021: loss of €422,192) and the net
assets of the Company at 31 May 2022 were €9,480,803 (31 May 2021:
€9,495,866). The profit is generated as a result of the movement in fair
value of warrants totalling €389,904.
Directors and Staff
I would like to express my 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.
Outlook
I look forward to continued success both in relation to the Company's diamond
interests in Finland, which are now at a particularly exciting stage, and
also to the Company's new exploration programme for nickel, copper and
platinum group metals in Northern Ireland. We also look forward to receiving
the necessary land valuation decisions in addition to the planned diamond
exploration work in Finland.
Professor Richard Conroy
Chairman
28 November 2022
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 attention to Note 1 in the financial statements, which indicates that
as at 31 May 2022 the company had net current liabilities of €1,429,982.
As stated in Note 1, these events or conditions 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.
Our evaluation of the directors' assessment of the company's ability to
continue to adopt the going concern basis of accounting included:
· obtaining an understanding of the company's relevant 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;
· assessing the design and determining the implementation of these
relevant controls;
· evaluating directors' plans and their feasibility by agreeing the
inputs used in the cash flow forecast to expenditure commitments and other
supporting documentation;
· challenging the reasonableness of the assumptions applied by the
directors in their going concern assessment;
· obtaining confirmations received by the company from the directors
and former directors evidencing 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;
· understanding the status of the discussions in relation to the
extension or conversion of the convertible loan note which is due to expire on
10 December 2022;
· assessing the mechanical accuracy of the cash flow forecast model;
and
· assessing the adequacy of the disclosures made in the financial
statements.
Income Statement for the financial year ended 31 May 2022
2022 2021
€ €
Continuing operations
Operating expenses (369,019) (370,370)
Share-based payment expense - (46,519)
Movement in fair value of warrants 389,904 5,250
Profit/(loss) before finance costs and taxation 20,885 (411,639)
Interest expense (7,292) (10,553)
Net finance costs (7,292) (10,553)
Profit/(loss) before taxation 13,593 (422,192)
Income tax expense - -
Profit/(loss) for the financial year 13,593 (422,192)
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share 0.0002 (0.0082)
Statement of Comprehensive Income for the financial year ended 31 May 2022
2022 2021
€ €
Profit/(loss) for the financial year 13,593 (422,192)
Income recognised in other comprehensive income - -
Total comprehensive profit/(loss) for the financial year 13,593 (422,192)
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 2022
31 May 31 May
2022 2021
€ €
Assets
Non-current assets
Intangible assets 10,910,931 10,766,576
Financial assets - 4
Total non-current assets 10,910,931 10,766,580
Current assets
Cash and cash equivalents 117,868 61,778
Other receivables 60,178 652,957
Total current assets 178,046 714,735
Total assets 11,088,977 11,481,315
Equity
Capital and reserves
Share capital presented as equity 3,191,807 3,191,807
Share premium 9,959,181 9,959,181
Share-based payments reserve 450,658 450,658
Retained deficit (4,120,843) (4,105,780)
Total equity 9,480,803 9,495,866
Liabilities
Non-current liabilities
Derivative liability 146 146
Convertible loan - 159,498
Warrant liabilities - 389,904
Total non-current liabilities 146 549,548
Current liabilities
Trade and other payables 1,441,238 1,435,901
Convertible loan 166,790 -
Total current liabilities 1,608,028 1,435,901
Total liabilities 1,608,174 1,985,449
Total equity and liabilities 11,088,977 11,481,315
The financial statements were approved by the Board of Directors on 28
November 2022 and authorised for issue on 29 November 2022.
Statement of changes in equity for the financial year ended 31 May 2022
Share Share premium Share-based payment reserve Retained Total
capital deficit equity
€ € € € €
Balance at 1 June 2021 3,191,807 9,959,181 450,658 (4,105,780) 9,495,866
Share issue costs - - - (28,656) (28,656)
Profit for the financial year - - - 13,593 13,593
Balance at 31 May 2022 3,191,807 9,959,181 450,658 (4,120,843) 9,480,803
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
Statement of Cash Flows for the financial year ended 31 May 2022
2022 2021
€ €
Cash flows from operating activities
Profit/(loss) for the financial year 13,593 (422,192)
Adjustments for:
Movement in fair value of warrants (389,904) (5,250)
Interest expense 7,292 10,553
Expense recognised in income statement in respect of - 46,519
equity settled share-based payments
(369,019) (370,370)
Increase in trade and other payables 75,340 146,927
Increase in other receivables (11,872) (762,367)
(Repayment to)/advances from Conroy Gold and Natural Resources P.L.C. (70,000) 228,402
Net cash used in operating activities (375,550) (757,408)
Cash flows from investing activities
Investment in exploration and evaluation (144,355) (243,006)
Net cash used in investing activities (144,355) (243,006)
Cash flows from financing activities
Issue of share capital* 604,651 1,068,988
Share issue costs* (28,656) (23,450)
Repayment on loans - 712
Net cash provided by financing activities 575,995 1,046,250
Increase in cash and cash equivalents 56,090 45,836
Cash and cash equivalents at beginning of financial year 61,778 15,942
Cash and cash equivalents at end of financial year 117,868 61,778
* On 27 May 2021, the Company completed a share placing and subscription
raising funds amounting to €604,651 with share issue costs of €28,656
being incurred. These funds were received in early June 2021 while the share
issue costs were paid in the same period.
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 28 November 2022.
Going concern
The Company recorded a profit of €13,593 (31 May 2021: a loss of €422,192)
for the financial year ended 31 May 2022. The Company had net assets of
€9,480,803 (31 May 2021: €9,495,866) at that date. The Company had net
current liabilities of €1,429,982 (31 May 2021: net current liabilities of
€721,166) at the statement of financial position date.
The Directors, Professor Richard Conroy, Séamus P. FitzPatrick, Maureen T.A.
Jones, Dr. Sorċa Conroy, Brendan McMorrow, Howard Bird and former Director
James P. Jones, have confirmed that they will not seek repayment of amounts
owed to them by the Company of €1,106,970 (31 May 2021: €921,969) within
12 months of the date of approval of the financial statements, unless the
Company has sufficient funds to repay.
Conroy Gold and Natural Resources P.L.C. have confirmed that it will not seek
repayment of amounts owed to it by the Company of €199,806 (31 May 2021:
€169,933) for a minimum period of 12 months from the date of approval of the
financial statements, unless the Company has sufficient funds to repay.
The Directors are aware that the term of the convertible loan note expires on
10 December 2022 and have started discussions with the loan note holder in
relation to extension or conversion. The directors are confident that these
discussions will be satisfactorily concluded.
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 2023. As set out further in the Chairman's
statement, the Company expects to incur capital expenditure in 2022 and 2023,
consistent with its strategy as an exploration company. The Directors
recognise that net current liabilities of €1,429,982 (31 May 2021:
€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, 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
(i) New and amended standards adopted by the Company
The Company has adopted the following amendments to standards for the first
time for its annual reporting year commencing 1 June 2021:
· 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;
· Amendments to IFRS 4 Insurance Contracts- deferral of IFRS 9 -
Effective 1 January 2021;
The adoption of the above amendments to standards had no significant impact on
the financial statements of the Company either due to being not applicable or
immaterial.
(ii) New standards and interpretations not yet adopted by the Company
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 May 2022 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 2021. 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.
· IFRS 4 amendments regarding the expiry date of the deferral approach
- Effective date 1 January 2023;
· IAS 8 amendments regarding the definition of accounting estimates -
Effective date 1 January 2023;
· IAS 1 amendments regarding the disclosure of accounting policies -
Effective date 1 January 2023;
· IFRS 17 Insurance contracts - Effective date deferred to 1 January
2023.
· 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 3 amendments updating a reference to the Conceptual Framework -
Effective date 1 January 2022;
· 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 2022.
· IFRS 1 amendments resulting from Annual Improvements to IFRS
Standards 2018-2020 (subsidiary as a first-time adopter) - Effective date 1
January 2022; and
· 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;
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;
· Amendments to IAS 12 Income taxes: Deferred tax related to assets and
liabilities arising from a single transaction - Effective date 1
January 2023.
· Amendments to IFRS 16 Leases: Lease liability in a sale and leaseback
- Effective date 1 January 2024; and
· Amendments to IAS 1 Presentation of Financial Statements:
Classification of liabilities as current or non-current - Effective date 1
January 2024.
2. Profit/(loss) per share
Basic profit/(loss) per share
2022 2021
€ €
Profit/(loss) for the year attributable to equity holders of the Company 13,593 (422,192)
Number of ordinary shares at start of the financial year 68,542,749 43,042,749
Number of ordinary shares issued during the financial year - 25,500,000
Number of ordinary shares at end of the financial year 68,542,749 68,542,749
Weighted average number of ordinary shares for the purposes of basic and 68,542,749 51,434,530
diluted loss per share
Basic and diluted profit/(loss) per ordinary share 0.0002 (0.0082)
Diluted profit/(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 2022 2021
€ €
At 1 June 10,766,576 10,523,570
Expenditure during the financial year:
· Licence and appraisal costs 10,114 163,705
· Other operating expenses 134,241 79,301
At 31 May 10,910,931 10,766,576
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 31 May
2022 2021
€ €
Cash held in bank accounts 117,868 61,778
117,868 61,778
During the year ended 31 May 2022, four new Nordea Bank accounts were opened
for the purpose of holding collateral deposits related to the Finnish
licenses. As at 31 May 2022, a total amount of €24,500 (31 May 2021: €Nil)
relates to these collateral deposits and are treated as restricted cash
balances.
5. Non-current liabilities
Warrant liabilities
During the year ended 31 May 2022, no new warrants were issued. During the
prior year, 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 2022,
the warrants in issue were fair valued with the movement in fair value being
recorded in the income statement. See Note 16 of the financial statements for
further details.
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 (31 May 2021: €146)
relates to derivative liability attached to the convertible loan note. The
convertible loan amounted to €166,790 (31 May 2021: €159,498) at 31 May
2022 and is classified as a current liability.
31 May 31 May
2022 2021
€ €
Opening Balance - 148,945
Interest payable - 10,553
Derivative liability element - -
- 159,498
6. Current liabilities
Trade and other payables
31 May 31 May
2022 2021
€ €
Accrued Directors' remuneration
Fees and other emoluments 843,720 658,720
Pension contributions 263,250 263,250
Amount due to related party (see note 8 (c)) 199,806 169,933
Other creditors and accruals 134,462 343,998
1,441,238 1,435,901
As at 31 May 2022, director fees amounting to €34,167 (31 May 2021: €
24,167) due to Brendan McMorrow is included in Fees and other emoluments. As
at 31 May 2022, an amount of €2,500 (31 May 2021: €13,700) payable to
Brendan McMorrow for other services rendered by him is included in other
creditors and accruals.
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.
Convertible loan
See note 11 of the financial statements for details. The convertible loan is
classified as a current liability for the year ended 31 May 2022.
31 May 31 May
2022 2021
€ €
Opening Balance 159,498 -
Interest payable 7,292 -
Derivative liability element - -
166,790 -
The Directors are aware that the term of the convertible loan note expires on
10 December 2022 and are in regular contact with the loan note holder who is
both supportive and a significant shareholder in the Company. A number of
options are available to deal with this matter including, full or part
repayment of amounts due, conversion of the principal and interest on the loan
or extension of the loan note term.
Related party loans
31 May 31 May
2022 2021
€ €
Opening balance 1 June - 93,662
Loan conversion to equity* - (92,950)
Loan repayment - (712)
Closing balance 31 May - -
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.
7. Commitments and contingencies
At 31 May 2022, there were no capital commitments or contingent liabilities
(31 May 2021: €Nil) recognised at the balance sheet 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.
8. Related party transactions
a) Details of Directors' loans previously 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 2022, Conroy Gold and Natural Resources P.L.C.
incurred costs totalling €100,313 (31 May 2021: €54,872) 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:
2022 2021
€ €
Office salaries 72,469 49,048
Rent and rates 15,850 -
Other operating expenses 11,994 5,824
100,313 54,872
c) At 31 May 2022, the Company owed €199,806 to Conroy Gold and
Natural Resources P.L.C. (31 May 2021: €169,933 owed to). Amounts owed to
Conroy Gold and Natural Resources P.L.C. were included within trade and other
payables during the current year. During the financial year ended 31 May 2022,
the Company paid €70,000 to (31 May 2021: €173,530 was received from)
Conroy Gold and Natural Resources P.L.C. During the financial year ended 31
May 2022, the Company was charged €99,873 (31 May 2021: €54,872) by Conroy
Gold and Natural Resources P.L.C. in respect of the allocation of
certain costs as detailed in Note 8(b).
d) At 31 May 2022, Brendan McMorrow was owed €34,167 (31 May 2021:
€24,167) in respect of his services as a director and also an amount of
€2,500 (31 May 2021: €13,700) 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) Refer Note 2 of the financial statements for an analysis of
remuneration for each Director of the Company.
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 of
the financial statements), loans from two shareholders (who are also Directors
which is detailed in Note 6), convertible loan from a shareholder (which is
detailed in Note 7) 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.
9. Post balance sheet events
Post year end, the Company announced that the geophysical interpretation of
drone based aeromagnetic data has identified twenty three Kimberlite targets
in the area surveyed.
The Company's application for two additional mineral prospecting licences in
Northern Ireland were granted.
The final meeting in relation to the Company's diamond mine development at
Lahtojoki with the National Land Survey of Finland was postponed from June
2022 until December 2022.
There were no further material events subsequent to the reporting date which
necessitate revision of the figures or disclosures included in the financial
statements.
10. Approval of the audited financial statements for the financial year
ended 31 May 2022
These audited financial statements were approved by the Board of Directors on
28 November 2022. A copy of the audited financial statements will be available
on the Company's website www.kareliandiamondresources.com
(http://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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