REG-Karelian Diamond Res.: Half-year Report
28/02/2022 07:15
28 February 2022
Karelian Diamond Resources plc
(“Karelian” or “the Company”)
Half-yearly results for the six months ended 30 November 2021
Karelian Diamond Resources plc (AIM: KDR), the diamond exploration company
focused on Finland, announces its unaudited results for the six months ended
30 November 2021. Details of these can be found below and a full copy of the
statement can be viewed on the Company’s website. The Company continued to
make positive progress in the period under review despite inevitable delays
caused by COVID-19.
Highlights of the half-year period included:
* Samples from a kimberlite boulder recovered from the Company’s Lahtojoki
South exploration area indicate potential for the presence of diamonds.
* Results from a detailed high resolution magnetic survey over the Company’s
Anomaly 5 are being integrated with the Company’s existing Kimberlite
Indicator Minerals (KIMs) data.
* Results from a sampling programme in Northern Ireland showed highly
anomalous amounts of chromite raising the possibility of the presence of
Nickel-Copper-Platinum mineralisation.
* Post period the Company was informed that that the proceedings in relation
to the Lahtojoki diamond deposit are expected to be completed by June 2022. A
Mining Concession has already been approved.
Professor Richard Conroy, Chairman of Karelian, said:
“I am very pleased that progress towards completion of the National Land
Survey’s procedures regarding the Lahtojoki diamond deposit is underway and
that we now have a definitive timeline to work to. We look forward to
obtaining a Full Mining Permit, in due course, and moving ahead with the
development of the mine. I also expect further exploration success in both
Finland and Ireland.”
Further Information:
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
Dear Shareholder,
I have great pleasure in presenting the Company's Half-Yearly Report and
Condensed Financial Statements for the six-month period ended 30(th) November
2021. The Company continued to make positive progress in the period under
review despite inevitable delays caused by the COVID-19 pandemic.
Exploration results reported during the period included indications of the
possibility of additional diamond potential in the vicinity of the Company's
Lahtojoki diamond deposit. Additionally a geophysics survey in the Kuhmo
region of Finland, where the Company has discovered a green diamond, appears
likely to lead to a series of targets in the area. Post the end of the
half-year, the Company was informed that the long awaited final public meeting
of the National Land Survey in relation to the Lahtojoki diamond deposit,
which had been held up due to the COVID-19 pandemic, is now scheduled to be
held during the Spring 2022 and that the proceedings are expected to be
completed by June 2022.
In addition, potential for nickel, copper and platinum group metals was
observed during the course of a diamond exploration programme in Northern
Ireland.
Exploration Results
As announced by the Company on 6 October 2021, results from analysis
undertaken by the Geological Survey of Finland (the “GTK”) of thin
sections from a kimberlite boulder recovered from the Company’s Lahtojoki
South exploration area indicate potential for the presence of diamonds from
the kimberlite source. The GTK report also states that the compositional
data of picroilmenite grains from the boulder are “outstanding” and “an
important indicator for good potential diamond survival”.
A detailed high resolution magnetic survey, using an unmanned aerial vehicle
(UAV) has been conducted by Radai Oy, on behalf of Karelian Diamonds, over the
Company’s Anomaly 5 (Tervavaara) target in the Kuhmo region of Eastern
Finland. This is the area where the Company has previously reported the
discovery of a green diamond in till (as announced by the Company on 31
January 2017) and which in the Board’s view has the potential to be a new
diamond province.
The results, comprising maps of total magnetic intensity, are now being
integrated with the Company’s existing Kimberlite Indicator Minerals (KIMs)
data and drilling information for the area, to aid in the identification of
kimberlite bodies, including the possible source of the green diamond and/or
other diamondiferous kimberlite bodies in the area.
Results from a sampling programme in Northern Ireland showed highly anomalous
amounts of chromite raising the possibility of the presence of
Nickel-Copper-Platinum mineralisation.
Development of the Lahtojoki Diamond Project
The Company has been informed that that the final public meeting of the
National Land Survey in Finland in relation to the Lahtojoki diamond deposit
is scheduled to be held during Spring 2022 and the proceedings are expected to
be completed by June 2022. A 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 undertaking the process in
relation to compensation for landowners. This process has involved a series
of public meetings and also submissions by the relevant landowners and the
Company. By early 2020 the process had reached an advanced stage but was
delayed by the onset of the COVID-19 pandemic and consequent restrictions on
holding public meetings.
The Lahtojoki diamond deposit, located in the Kuopio Kaavi region of Finland,
is, in the Board’s view, one of the few diamond deposits in the world at a
relatively advanced stage of development. The location of the deposit is
highly favourable with excellent infrastructure, including good road access
and power distribution, together with local technical and logistics
availability.
The Board believe the coloured stones that are expected to occur within the
deposit, in particular the presence of pink diamonds, which can achieve very
high prices, add significantly to the financial attractiveness of the
deposit. The mine, when opened, will be the first diamond mine in Europe
(outside Russia).
I am very pleased that progress towards completion of the National Land
Survey’s procedures is underway and that we now have a definitive timeline
to work to. We look forward to obtaining a Full Mining Permit, in due
course, and moving ahead with the development of the Lahtojoki diamond
deposit.
COVID-19
Since the outbreak of the COVID-19 pandemic, the Company has taken necessary
measures in both Ireland and Finland in accordance with Government guidelines
to protect the health, safety and wellbeing of its employees, contractors and
partners in Ireland and Finland. The Company is looking forward to the gradual
removal of restrictions over the coming six to twelve months enabling the
Company to progress its objectives with increased expedition.
Finance
The profit after taxation for the half-year ended 30 November 2021 was
€99,165 (for the six month period ended 30 November 2020: loss of
€193,243) and the net assets as at 30 November 2021 were €9,566,375 (30
November 2020: €9,393,315).
Directors and Staff
I would like to thank my fellow directors, staff and consultants for their
support and dedication, which has enabled the continued success of the
Company.
Future Outlook
I look forward to the Company obtaining a Full Mining Permit for the Lahtojoki
diamond deposit and to further exploration success.
Yours faithfully,
______________________
Professor Richard Conroy
Chairman
28 February 2022
Condensed income statement and condensed statement of comprehensive income for
the six month period ended 30 November 2021
Condensed income statement
Note Six month period ended 30 November 2021 (Unaudited) € Six month period ended 30 November 2020 (Unaudited) € Year ended 31 May 2021 (Audited) €
Continuing operations
Operating expenses (167,685) (187,966) (416,889)
Movement in fair value of warrants 5 270,496 - 5,250
Operating profit/(loss) 102,811 (187,966) (411,639)
Interest expense (3,646) (5,277) (10,553)
Profit/(Loss) before taxation 99,165 (193,243) (422,192)
Income tax expense - - -
Profit/(Loss) for the financial period/year 99,165 (193,243) (422,192)
Profit/(loss) per share
Basic and diluted earnings/(loss) per share 2 €0.0014 (€0.0039) (€0.0082)
Six month period ended 30 November 2021 (Unaudited) € Six month period ended 30 November 2020 (Unaudited) € Year ended 31 May 2021 (Audited) €
Profit/(loss) for the financial period/year 99,165 (193,243) (422,192)
Income/(expense) recognised in other comprehensive income - - -
Total comprehensive income/(expense) for the financial period/year 99,165 (193,243) (422,192)
Condensed statement of financial position as at 30 November 2021
Note 30 November 2021 (Unaudited) 30 November 2020 (Unaudited) Year ended 31 May 2021 (Audited)
€ € €
Assets
Non-current assets
Intangible assets 3 10,907,401 10,710,335 10,766,576
Financial assets 4 4 4
Total non-current assets 10,907,405 10,710,339 10,766,580
Current assets
Cash and cash equivalents 275,141 108,393 61,778
Other receivables 90,255 26,304 652,957
Total current assets 365,396 134,697 714,735
Total assets 11,272,801 10,845,036 11,481,315
Equity
Capital and reserves
Called up share capital 17,135 13,385 17,135
Called up deferred share capital 3,174,672 3,174,672 3,174,672
Share premium 9,959,181 9,613,965 9,959,181
Share based payments reserve 450,658 474,090 450,658
Retained losses (4,035,271) (3,882,797) (4,105,780)
Total equity 9,566,375 9,393,315 9,495,866
Liabilities
Non-current liabilities
Convertible loan 163,144 154,222 159,498
Warrant liabilities 5 119,395 - 389,904
Derivative liability 146 146 146
Total non-current liabilities 282,685 154,368 549,548
Current liabilities
Trade and other payables: amounts falling due within one year 1,423,741 1,203,691 1,435,901
Related party loans 6 - 93,662 -
Total current liabilities 1,423,741 1,297,353 1,435,901
Total liabilities 1,706,426 1,451,721 1,985,449
Total equity and liabilities 11,272,801 10,845,036 11,481,315
Condensed statement of cash flows for the six month period ended 30 November
2021
Six month period ended 30 November 2021 (Unaudited) € Six month period ended 30 November 2020 (Unaudited) € Year ended 31 May 2021 (Audited) €
Cash flows from operating activities
Profit/(Loss) for the financial period/year 99,165 (193,243) (422,192)
Adjustments for:
Expense recognised in income statement in respect of equity settled share based payments - 17,466 46,519
Interest expenses 3,646 5,277 10,553
Movement in fair value of warrants (270,496) - (5,250)
(Decrease)/increase in trade and other payables 38,266 (154,744) 146,927
Decrease/(increase) in other receivables 562,702 92,687 (762,367)
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C - - 228,402
Net cash provided by/(used in) operating activities 433,283 (232,557) (757,408)
Cash flows from investing activities
Investment in exploration and evaluation (140,825) (186,765) (243,006)
Repayments from Conroy Gold and Natural Resources P.L.C - - -
Payments to Conroy Gold and Natural Resources P.L.C - - -
Net cash used in investing activities (140,825) (186,765) (243,006)
Cash flows from financing activities
Issue of share capital - 465,761 1,068,988
Share issue costs (28,656) (23,450) (23,450)
Shareholder’s loan advances/(repayments) - - 712
Shareholder’s loan converted - - -
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C. (50,439) 69,462 -
Net cash (used in)/provided by financing activities (79,095) 511,773 1,046,250
Increase in cash and cash equivalents 213,363 92,451 45,836
Cash and cash equivalents at beginning of financial period/year 61,778 15,942 15,942
Cash and cash equivalents at end of financial period/year 275,141 108,393 61,778
Condensed statement of changes in equity for the six month period ended 30
November 2021
Share capital (including deferred share capital) Share premium Share-based payment reserve Retained losses Total equity
€ € € € €
Balance at 1 June 2021 3,191,807 9,959,181 450,658 (4,105,780) 9,495,866
Issue of share capital - - - - -
Share issue costs - - - (28,656) (28,656)
Share based payments - - - - -
Profit for the financial period - - - 99,165 99,165
Balance at 30 November 2021 3,191,807 9,959,181 450,658 (4,035,271) 9,566,375
Balance at 1 June 2020 3,185,432 9,150,829 456,624 (3,666,104) 9,126,781
Issue of share capital 2,625 463,136 - - 465,761
Share issue costs - - - (23,450) (23,450)
Share based payments - - 17,466 - 17,466
Loss for the financial period - - - (193,243) (193,243)
Balance at 30 November 2020 3,188,057 9,613,965 474,090 (3,882,797) 9,393,315
Share capital
The share capital comprises the nominal value share capital issued for cash
and non-cash consideration. The share capital also comprises deferred share
capital. The deferred share capital* arose through the restructuring of share
capital which was approved at an Annual General Meeting held on 9 December
2016.
Authorised share capital:
The authorised share capital at 30 November 2021 compromised 7,301,301,041
ordinary shares of €0.00025 each, and 317,785,034 deferred shares of
€0.00999 each* (€5,000,000), (30 November 2020: 7,301,301,041 ordinary
shares of €0.00025 each, and 317,785,034 deferred shares of €0.00999 each*
(€5,000,000)).
*Capital reorganisation:
Following approval at an Annual General Meeting (“AGM”) held on 9 December
2016, the Company reorganised its share capital by subdividing and
reclassifying each issued ordinary share of €0.01 as one ordinary share of
€0.00001 each and one deferred share of €0.00999 each. The Deferred
Shares have no right to vote, attend or speak at general meetings of the
Company and have no right to receive any dividend or other distribution, and
have only limited rights to participate in any return of capital on a
winding-up or liquidation of the Company, which will be of no material value.
No application was made to the London Stock Exchange for admission of the
Deferred Shares to trading on the AIM.
Consolidated shares:
On 21 December 2017, the Company passed a Special Resolution at the
Company’s AGM, that all of the ordinary shares of €0.00001 each in the
capital of the Company, whether issued or unissued were consolidated into New
Ordinary Shares of €0.00025 each in the capital of the Company
(“consolidated shares”) on the basis of one consolidated share for every
25 existing ordinary shares. Following the consolidation of the ordinary
shares on 21 December 2017, the warrants in issue were consolidated into one
consolidated warrant for every 25 existing warrants. The exercise price in
relation to the warrants was also adjusted at this time (see Note 2).
Share issues during the period:
During the period ended 30 November 2021, the Company did not issue any
shares.
On 27 May 2021, the Company raised €604,651 (£520,000), through the issue
of 13,000,000 ordinary shares of €0.00025 in the capital of the Company at a
price of £0.04 per Subscription Share. 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.
On 25 August 2020, the Company raised €465,761 (£420,000), (before
expenses), through the issue of 10,500,000 ordinary shares of €0.00025 in
the capital of the Company at a price of £0.04 per Subscription Share.
Share premium
The share premium reserve comprises the excess consideration received in
respect of share capital over the nominal value of the shares issued.
Share based payment reserve
The share based payment reserve comprises of the fair value of all share
options and warrants which have been charged over the vesting period, net of
amounts relating to share options and warrants forfeited, exercised or lapsed
during the period, which are reclassified to retained earnings.
Retained losses
This reserve represents the accumulated losses incurred by the Company up to
the condensed statement of financial position date.
The accompanying notes form an integral part of these condensed financial
statements.
1. Accounting policies
Reporting entity
Karelian Diamond Resources plc (the “Company”) is a company domiciled in
Ireland.
Basis of preparation and statement of compliance
The condensed financial statements for the six months ended 30 November 2021
are unaudited.
The condensed financial statements have been prepared in accordance with
International Accounting Standard (“IAS”) 34: Interim Financial Reporting.
The condensed financial statements do not include all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the Company’s annual financial statements as at 31 May
2021, which are available on the Company’s website -
www.kareliandiamondresources.com. The accounting policies adopted in the
presentation of the condensed financial statements are consistent with those
followed in the preparation of the Company’s annual financial statements for
the year ended 31 May 2021.
The condensed financial statements have been prepared under the historical
cost convention, except for derivative financial instruments which are
measured at fair value at each reporting date.
The condensed financial statements are presented in Euro (“€”). € is
the functional currency of the Company.
The preparation of condensed 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 financial
period in which the estimate is revised and in any future financial periods
affected. Details of critical judgements are disclosed in the accounting
policies detailed in the annual financial statements.
The financial information presented herein does not amount to statutory
financial statements that are required by Chapter 4 part 6 of the Companies
Act 2014 to be annexed to the annual return of the Company. The statutory
financial statements for the financial year ended 31 May 2021 were annexed to
the annual return and filed with the Registrar of Companies. The audit report
on those financial statements was unqualified.
These condensed financial statements were authorised for issue by the Board of
Directors on 28 February 2022.
Going concern
The Company recorded a profit of €99,165 (30 November 2020: loss of
€193,243) for the six month period ended 30 November 2021. The Company had
net current liabilities of €1,058,345 (30 November 2020: €1,162,656) at
that date.
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 28 February 2023. As set out further in the Chairman’s
statement, the Company expects to incur capital expenditure in 2022,
consistent with its strategy as an exploration company. In reviewing the
proposed work programme for exploration and evaluation assets, 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.
Statement of compliance
Recent accounting pronouncements
The Company’s financial statements have been prepared in accordance with
IFRS as adopted by the European Union (“EU”).
Recent accounting pronouncements
The Company has adopted the following amendments to standards for the first
time for its interim reporting period commencing from 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.
The adoption of the above amendments to standards and interpretations has been
considered for the purposes of these interim financial statements and is not
considered material.
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 interim period 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.
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.
1. Earnings per share
Basic earnings per share
Six month period ended 30 November 2021 (Unaudited) € Six month period ended 30 November 2020 (Unaudited) € Year ended 31 May 2021 (Audited) €
Profit/(loss) for the financial period/year attributable to equity holders of the Company 99,165 (193,243) (422,192)
Number of ordinary shares for the purposes of earnings per share 68,542,749 49,042,750 51,434,530
Basic earnings/(loss) per ordinary share €0.0014 (€0.0039) (€0.0082)
1. Intangible Assets
Exploration and evaluation assets
Cost 30 November 2021 (Unaudited) € 30 November 2020 (Unaudited) € 31 May 2021 (Audited) €
At 1 June 10,766,576 10,523,570 10,523,570
Expenditure during the financial period/year
* License and appraisal costs 32,233 56,195 163,705
* Other operating expenses 108,592 130,570 79,301
* Equity settled share based payments - - -
At 30 November/31 May 10,907,401 10,710,335 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.
1. Commitments and Contingencies
At 30 November 2021, there were no capital commitments or contingent
liabilities (31 May 2021: No capital commitments or contingencies
liabilities). Should the Company decide to develop the Lahtojoki project, an
amount of €40,000 is payable by the Company to the vendors of the Lahtojoki
mining concession.
5 Warrant liabilities
The Company holds Euro and Sterling based warrants. The Company estimates the
fair value of the sterling based warrants using the Binomial Lattice Model.
The determination of the fair value of the warrants is affected by the
Company’s share price along with other assumptions. The fair value of the
warrants in issue at 30 November 2021 was €119,395. The movement in fair
value for the six month period to 30 November 2021 resulted in a non-cash gain
of €270,496. There were no new warrants issued during the period and none
were exercised or lapsed.
6 Related party transactions
(a) Shareholders’ loans 30 November 2021 (Unaudited) € 30 November 2020 (Unaudited) € 31 May 2021 (Audited) €
Opening balance 1 June - 93,662 93,662
Loan advances - - -
Loan converted into shares - - (92,950)
Loan Repayment - - (712)
Closing balance 30 November/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
(executive chairman and major shareholder).
1. Apart from Directors’ remuneration, and loans from shareholders, (who are
also Directors), there here have been no contracts or arrangements entered
into during the six month period in which a Director of the Company had a
material interest.
1. The Company shares accommodation and staff with Conroy Gold and Natural
Resources plc which have certain common Directors and shareholders. For the
six month period ended 30 November 2021, Conroy Gold and Natural Resources plc
incurred costs totalling €50,311 (30 November 2020: €39,388) on behalf of
the Company. These costs were recharged to the Company by Conroy Gold and
Natural Resources plc. At 30 November 2021, Conroy Gold and Natural Resources
plc was owed €169,804 (30 November 2020: €50,381) by the Company.
7 Subsequent events
There were no material events subsequent to the reporting date which
necessitate revision of the figures or disclosures included in the financial
statements.
8 Approval of the condensed financial statements
These condensed financial statements were approved by the Board of Directors
on 28 February 2022. A copy of the condensed financial statements will be
available on the Company’s website www.kareliandiamondresources.com on 28
February 2022.
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