REG-Karelian Diamond Res.: Variation to existing CLN agreement and conversion

Karelian Diamond ResourcesAnnouncement

20/12/2022 07:15

20 December 2022

Karelian Diamond Resources plc

(“Karelian Diamonds” or the “Company”)

Variation to existing convertible loan agreement and conversion of loan

Background

On 10 December 2019 the Company announced that it had raised £240,000 through
a subscription of £120,000 at 4 pence per share and the issue of an unsecured
convertible loan note (the “Convertible Loan Note”) to raise £120,000.
The fundraise in December 2019 was undertaken with Fredrik Björnberg (the
“Lender”), a member of a prominent family in Finland which previously
owned the Luikonlahti copper mine in the Kaavi area of Finland and founded the
company which originally discovered the Lahtojoki diamond deposit over which
Karelian Diamonds now hold a mining concession.

The Convertible Loan Note had a term of three years and has attracted interest
at a rate of 5% per annum to be payable on the redemption or conversion of the
Convertible Loan Note. The Convertible Loan Note, including the total amount
of accrued but unpaid interest, was originally convertible at a conversion
price of 10 pence per share.

On 29 November 2022 the Company announced, as part of its final results
announcement for the year ended 31 May 2022, that it had started discussions
with the Lender in relation to an extension of the term, or conversion, of the
Convertible Loan Note and that a number of options were available to the
Company. The Company also stated that the loan note holder was both a
supportive and significant shareholder in the Company and that the Board was
confident that the discussions would be satisfactorily concluded.

Mr Fredrik Björnberg is currently interested in 3,000,000 ordinary shares of
€0.00025 each in the capital of the Company (“Ordinary Shares”)
representing 3.70 per cent. of the current issued share capital of the
Company.

Agreement to vary terms and conversion of Convertible Loan Note

The Company has agreed with the Lender to vary the terms of the Convertible
Loan Note such that the conversion price of the Convertible Loan Note is
amended from 10 pence per Ordinary Share to 4 pence per Ordinary Share (the
“Revised Conversion Price”). The Revised Conversion Price represents an
81% premium on the Company’s closing mid-market share price on 19 December
2022.

Following the variation to the existing loan agreement as detailed above, the
Lender has immediately exercised its conversion rights and submitted a notice
of conversion to the Company in relation to the Convertible Loan Note
(“Conversion”). At the Revised Conversion Price, the loan and all accrued
interest (£138,000 as at 10 December 2022) is convertible into 3,450,000 new
Ordinary Shares (the “Conversion Shares”).  

Following the issue of the Conversion Shares, Mr Fredrik Björnberg is
expected to have a beneficial interest in a total of 6,450,000 Ordinary Shares
in the Company, representing 7.63% of the enlarged issued share capital of the
Company on Admission.

Admission and total voting rights

Application has been made to the London Stock Exchange for the 3,450,000
Conversion Shares to be admitted to trading on AIM ("Admission"). It is
expected that Admission will become effective on, or around, 23 December 2022.

Following the Conversion, the issued share capital of the Company will
comprise 84,492,749 ordinary shares of €0.00025, with one voting right per
share. The Company does not hold any shares in treasury. Therefore, the total
number of Ordinary Shares and voting rights in the Company will be 84,492,749.

Following the Conversion, the above figure may be used by shareholders in the
Company as the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to their
interest in, the share capital of the Company under the FCA's Disclosure
Guidance and Transparency Rules.

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



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