REG-Karelian Diamond Res.: Half-yearly results for the 6 months to 30 November 2022
28/02/2023 07:15
28 February 2023
Karelian Diamond Resources plc
(“Karelian” or “the Company”)
Half-yearly results for the six months ended 30 November 2022
Karelian Diamond Resources plc (AIM: KDR), the diamond exploration company
focused on Finland, announces its unaudited results for the six months ended
30 November 2022. Details of these can be found below and a full copy of the
statement can be viewed on the Company’s website. The period was one of
significant progress.
Highlights of the half-year period included:
* Date received for the crucial proceedings meeting of the National Land
Survey in respect of the Lahtojoki diamond deposit establishment of the mining
concession area and land possession.
* Post period, the meeting of the National Land Survey was held and
compensation to landowners, amounting in total €162,815, was announced.
* The Company continues to look to progress its highly exciting diamond
exploration programme in the Kuhmo region of Finland.
* Progress has also been made in relation to Karelian’s very interesting
nickel, copper and platinum mineralisation exploration project in Northern
Ireland.
* Prospecting licences extending the Company’s exploration area in Northern
Ireland were granted.
Professor Richard Conroy, Chairman of Karelian, said:
“We are very pleased that the National Land Survey’s procedures regarding
the Lahtojoki diamond deposit in Finland, which were crucial to the
development of a mine, have been concluded and that the Company now has land
possession and that in Northern Ireland Prospecting Licences have been granted
in relation to the Company’s highly interesting nickel, copper and platinum
exploration.”
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
Chairman’s Statement
Dear Shareholder,
I have great pleasure in presenting the Company’s Half-Yearly Report and
condensed Financial Statements for the half year ended 30 November 2022.
The period was one of highly significant progress as we received a date for
the crucial, and long awaited, proceedings of the National Land Survey of
Finland in relation to the Lahtojoki diamond deposit in the Kuopio-Kaavi
region of Finland. Post period, as announced by the Company on 14 December
2022, the National Land Survey proceedings were completed and the compensation
to be paid to landowners in relation to the establishment of the mining
concession area and land possession for the duration of the mine was granted.
A mining concession had already been approved by TUKES (the Finnish mining
authority) and the National Land Survey, on the order of TUKES, was carrying
out the proceedings to establish the mining concession for the applied area.
The process involved two public meetings in relation to ground rental
compensation for the local landowners and had been delayed by the onset of
Covid-19, which prevented the holding of public meetings until mid-December
2022.
At the public meeting, held in the Municipal Hall of Tuusneimi in Finland on
14 December 2022, the National Land Survey announced that the compensation to
be paid by the Company amounts in total to €162,815. This compensation is
to be paid within three months from 28th December 2022 and the Company expects
to fund this through existing cash resources.
Land possession for the duration of the mine is a major step forward in the
Company’s proposed development of the Lahtojoki diamond deposit. The
diamond mining project covers 71 hectares (c.176 acres) and the actual
Lahtojoki kimberlite pipe has a surface area of 16 hectares (c.40 acres).
The deposit, as well as containing high quality colourless gem diamonds, also
contains pink diamonds which are highly sought after and can command prices up
to 20 times that of normal colourless gem diamonds.
The development of a diamond mine at Lahtojoki will, I believe, not only bring
significant benefits to the Company, but also to the entire surrounding
Kuopio-Kaavi area and, when in production, will be the first diamond mine in
Europe outside Russia.
The Company will also be looking to progress its highly exciting diamond
exploration programme in the Kuhmo region of Finland where twenty-three
kimberlite targets have been identified up-ice of the Company’s discovery of
a green diamond.
Progress has also been made in relation to Karelian’s highly interesting
nickel, copper and platinum mineralisation exploration project in Northern
Ireland. Applications for exploration licences to extend the Company’s
exploration area to include adjacent prospective acreage have been granted.
Anomalous amounts of chromites which have been observed in stream sediment,
raise the exciting prospect of the possible presence of nickel, copper and
platinum in the Company’s exploration acreage, although this remains to be
confirmed.
Finance
The Company announced on 28 November 2022 an equity fundraise of £250,000
(gross of expenses) through a placing of 12,500,000 Ordinary shares at a price
of 2 pence per share. Settlement of this fundraise occurred in early December
2022 upon admission of the shares to trading on AIM on 5 December 2022. As
such the funds from this fundraising are not reflected in the cash balances of
the Company at the period end. The loss after taxation for the half year
ended 30 November 2022 was €168,786 (for the six-month period ended 30
November 2021: profit of €99,165) and the net assets as at 30 November 2022
were €9,312,017 (for the six-month period ended 30 November 2021:
€9,566,375).
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 progressing with the proposed development of the
Lahtojoki diamond deposit and to further explore the resources both in Finland
with diamonds and in Northern Ireland where we potentially have significant
nickel, copper and platinum group metals targets.
Yours faithfully,
__________________
Professor Richard Conroy
Chairman
28 February 2023
Condensed income statement and condensed statement of comprehensive income
for the six month period ended 30 November 2022
Condensed income statement
Note Six-month period ended 30 November 2022 (Unaudited) € Six-month period ended 30 November 2021 (Unaudited) € Year ended 31 May 2022 (Audited) €
Continuing operations
Operating expenses (165,140) (167,685) (369,019)
Movement in fair value of warrants 5 - 270,496 389,904
Operating profit/(loss) (165,140) 102,811 20,885
Interest expense (3,646) (3,646) (7,292)
Profit/(Loss) before taxation (168,786) 99,165 13,593
Income tax expense - - -
Profit/(Loss) for the financial period/year (168,786) 99,165 13,593
Profit/(loss) per share
Basic and diluted earnings/(loss) per share 2 (€0.0025) €0.0014 €0.0002
Condensed statement of comprehensive income
Six-month period ended 30 November 2022 (Unaudited) € Six-month period ended 30 November 2021 (Unaudited) € Year ended 31 May 2022 (Audited) €
Profit/(loss) for the financial period/year (168,786) 99,165 13,593
Income/(expense) recognised in other comprehensive income - - -
Total comprehensive income/(expense) for the financial period/year (168,786) 99,165 13,593
Condensed statement of financial position as at 30 November 2022
Note 30 November 2022 (Unaudited) 30 November 2021 (Unaudited) Year ended 31 May 2022 (Audited)
€ € €
Assets
Non-current assets
Intangible assets 3 10,989,210 10,907,401 10,910,931
Financial assets - 4 -
Total non-current assets 10,989,210 10,907,405 10,910,931
Current assets
Cash and cash equivalents 90,177 275,141 117,868
Other receivables 36,034 90,255 60,178
Total current assets 126,211 365,396 178,046
Total assets 11,115,421 11,272,801 11,088,977
Equity
Capital and reserves
Called up share capital presented as equity 3,191,807 3,191,807 3,191,807
Share premium 9,959,181 9,959,181 9,959,181
Share based payments reserve 450,658 450,658 450,658
Retained losses (4,289,629) (4,035,271) (4,120,843)
Total equity 9,312,017 9,566,375 9,480,803
Liabilities
Non-current liabilities
Convertible loan - 163,144 -
Warrant liabilities 5 - 119,395 -
Derivative liability 146 146 146
Total non-current liabilities 146 282,685 146
Current liabilities
Trade and other payables: amounts falling due within one year 1,632,822 1,423,741 1,441,238
Convertible Loan 6 170,436 - 166,790
Total current liabilities 1,803,258 1,423,741 1,608,028
Total liabilities 1,803,404 1,706,426 1,608,174
Total equity and liabilities 11,115,421 11,272,801 11,088,977
Condensed statement of cash flows for the six-month period ended 30 November
2022
Six-month period ended 30 November 2022 (Unaudited) € Six-month period ended 30 November 2021 (Unaudited) € Year ended 31 May 2022 (Audited) €
Cash flows from operating activities
Profit/(Loss) for the financial period/year (168,786) 99,165 13,593
Adjustments for:
Expense recognised in income statement in respect of equity settled share-based payments - - -
Interest expenses 3,646 3,646 7,292
Movement in fair value of warrants - - (389,904)
(Decrease)/increase in trade and other payables 191,584 38,266 75,340
Decrease/(increase) in other receivables 24,144 562,702 (11,872)
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C - - (70,000)
Net cash provided by/(used in) operating activities 50,588 433,283 (375,550)
Cash flows from investing activities
Investment in exploration and evaluation (78,279) (140,825) (144,355)
Net cash used in investing activities (78,279) (140,825) (144,355)
Cash flows from financing activities
Issue of share capital - - 604,651
Share issue costs - (28,656) (28,656)
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C. - (50,439) -
Net cash (used in)/provided by financing activities - (79,095) 575,995
Increase in cash and cash equivalents (27,291) 213,363 56,090
Cash and cash equivalents at beginning of financial period/year 117,868 61,778 61,778
Cash and cash equivalents at end of financial period/year 90,177 275,141 117,868
Condensed statement of changes in equity for the six-month period ended 30
November 2022
Share capital (including deferred share capital) Share premium Share-based payment reserve Retained losses Total equity
€ € € € €
Balance at 1 June 2022 3,191,807 9,959,181 450,658 (4,120,843) 9,480,803
Issue of share capital - - - - -
Share issue costs - - - - -
Share based payments - - - - -
Profit for the financial period - - - (168,786) (168,786)
Balance at 30 November 2022 3,191,807 9,959,181 450,658 (4,289,629) 9,312,017
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 - - - - -
Loss 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
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 2022, 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.
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.
Notes to and forming part of the condensed financial statements for the
six-month period ended 30 November 2022
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 2022
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
2022, 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 2022.
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 2022 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 2023.
Going concern
The Company recorded a loss of €168,786 (30 November 2021: profit of
€99,165) for the six-month period ended 30 November 2022. The Company had
net current liabilities of €1,677,047 (30 November 2021: €1,058,345) 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 2024. As set out further in the Chairman’s
statement, the Company expects to incur capital expenditure in 2023,
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
The Company’s financial statements have been prepared in accordance with
IFRS as adopted by the European Union (“EU”).
Recent accounting pronouncements
The Group and the Company adopted the following amendments to standards for
the first time in its interim reporting period commencing from 1 June 2022:
* IFRS 1 amendments resulting from Annual Improvements to IFRS Standards
2018–2020 (subsidiary as a first-time adopter) – 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.
* IFRS 3 amendments updating a reference to the Conceptual Framework –
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;
* 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.
The adoption of the above amendments to standards and interpretations has been
considered for the purposes of these interim financial statements and is
either considered to be not applicable or immaterial.
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 2022. The Board of Directors is
currently assessing whether these standards once adopted by the Group and the
Company will have any impact on the financial statements of the Group and the
Company.
* IFRS 4 amendments regarding the expiry date of the deferral approach –
Effective date 1 January 2023.
* 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; and
* IAS 8 amendments regarding the definition of accounting estimates –
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 Group and 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 and classification of liabilities as
current or non-current – Effective date 1 January 2024.
2. Profit/(loss) per share
Basic earnings per share
Six-month period ended 30 November 2022 (Unaudited) € Six-month period ended 30 November 2021 (Unaudited) € Year ended 31 May 2022 (Audited) €
Profit/(loss) for the financial period/year attributable to equity holders of the Company (168,786) 99,165 13,593
Number of ordinary shares for the purposes of earnings per share 68,542,749 68,542,749 68,542,749
Basic earnings/(loss) per ordinary share (€0.0025) €0.0014 €0.0002
Diluted earnings/(loss) per share
The effect of share options and warrants is anti-dilutive.
3. Intangible assets
Exploration and evaluation assets
Cost 30 November 2022 (Unaudited) € 30 November 2021 (Unaudited) € 31 May 2022 (Audited) €
At 1 June 10,910,931 10,766,576 10,766,576
Expenditure during the financial period/year
* License and appraisal costs 18,510 32,233 10,114
* Other operating expenses 59,769 108,592 134,241
At 30 November/31 May 10,989,210 10,907,401 10,910,931
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. Commitments and Contingencies
At 30 November 2022, 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. 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 total amount outstanding as at 30 November 2022 including
accrued interest was €170,436. This agreement was varied in December 2022
post period end and the loan note holder exercised their conversion rights to
convert the loan and all accrued interest (totalling £138,000) into 3,450,000
new ordinary shares in the company on 20(th) December 2022.
6. 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 as at 30 November 2022 was €NIL. There were no new
warrants issued during the period and none were exercised or lapsed.
7. Related party transactions
(a) Apart from Directors’ remuneration, and loans from shareholders, (who
are also Directors), there have been no contracts or arrangements entered into
during the six-month period in which a Director of the Company had a material
interest.
(b) 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 2022, Conroy Gold and Natural Resources plc
incurred costs totalling €34,846 (30 November 2021: €50,311) 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 €234,651 (30 November 2021: €169,804) by the Company.
8. Subsequent events
The Company raised £250,000 through a placing of 12,500,000 Ordinary shares,
settlement of which occurred in early December 2022.
As detailed in Note 5 above, the convertible loan note, which as at 30
November 2022 amounted to €170,436 including interest, was converted in full
into new ordinary shares in December 2022.
Subsequent to the period end the National Land Survey announced that the
ground rental compensation for the local landowners to be paid by the Company
amounts in total to €162,815. This compensation is to be paid within three
months from 28th December 2022 and the Company expects to fund this through
existing cash resources.
There were no material events subsequent to the reporting date which
necessitate revision of the figures or disclosures included in the financial
statements.
9. Approval of the condensed financial statements
These condensed financial statements were approved by the Board of Directors
on 27 February 2023. A copy of the condensed financial statements will be
available on the Company’s website www.kareliandiamondresources.com on 28
February 2023.
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