REG-Karelian Diamond Resources Plc: Half-yearly results for the six months ended 30 November 2023
29/02/2024 07:15
29 February 2024
Karelian Diamond Resources plc
(“Karelian” or “the Company”)
Half-yearly results for the six months ended 30 November 2023
Karelian Diamond Resources plc (AIM: KDR), the diamond exploration company
focused on Finland, announces its unaudited results for the six months ended
30 November 2023. Details of these can be found below and a full copy of the
interim results statement can be viewed on the Company’s website
(www.kareliandiamondresources.com). The period was one of steady progress,
particularly in working towards opening the first diamond mine.
Highlights of the half-year period included:
* The proceedings to establish the mining concession for the applied for area
at the Lahtojoki diamond deposit are now at an advanced stage.
* Mining concession at Lahtojoki is expected to be approved, now the last of
the compensation appeals are being finalised. This follows prior approvals by
TUKES, the Finnish mining authority.
* Exploration programme in the Kuhmo region of Finland continues to be highly
encouraging with results from basal till sampling suggesting that two of the
sample locations may be close to the source of the green diamond the Company
discovered.
* Work continues in Northern Ireland on the nickel, copper and platinum
mineralisation anomalies.
* Post Period: 3 year extension granted for Exploration Permit covering the
Riihivaara Kimberlite discovery and adjacent areas.
Professor Richard Conroy, Chairman of Karelian, said:
“We are very pleased with the Company’s progress regarding the planned
development of the mine at the Lahtojoki diamond deposit, the work to find the
source of the green diamond and, post period, the extension of the exploration
permits which will allow the Company to continue its work on the emerging
kimberlite field at Kuhmo. Overall, it has been a very satisfactory period
for the exploration team.”
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
Peterhouse Capital Limited (Broker) Lucy Williams / Duncan Vasey +44-20-7469-0930
Lothbury Financial Services Michael Padley +44-20-3290-0707
Hall Communications Don Hall +353-1-660-9377
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 2023.
The period was one of continued progress in relation to the development of the
Lahtojoki diamond deposit in the Kuopio-Kaavi region of Finland. The
proceedings to establish the mining concession are now at an advanced stage.
A mining concession application has already been approved by TUKES (the
Finnish mining authority). Following the order of TUKES, the National Land
Survey has carried out the process in relation to ground rental compensation
for the local landowners and is now finalising the appeals by two landowners
regarding the amount of compensation and the mine boundary.
Land possession for the duration of the mine is a major step forward in the
Company’s proposed development of the Lahtojoki deposit. The diamond mining
project covers 71 hectares (c.176 acres) with the actual kimberlite pipe
having a surface area of 16 hectares (c.40 acres). The deposit, as well as
containing high quality colourless gem diamonds, contains pink diamonds which
are highly sought after and can command prices up to 20 times that of normal
colourless gem diamonds.
I believe the development of a diamond mine at Lahtojoki will not only bring
significant benefits to the Company, but also to the entire surrounding
Kuopio-Kaavi area and, when in production, is expected to be the first diamond
mine in Europe outside Russia.
The Company’s exploration programme in the Kuhmo region of Finland continues
to be highly encouraging up-ice of the Company’s discovery of a green
diamond. Results from the Company’s basal till sampling suggest that two of
the sample locations may be close to the source of the green diamond.
The Company’s nickel, copper and platinum mineralisation exploration project
in Northern Ireland also continues to be very encouraging.
Exercise of Warrants
During the period the Company received warrant exercise notices to subscribe
for a total of 600,000 new ordinary shares of nominal value €0.00025 each at
an exercise price of 2 pence per ordinary share, as announced by the Company
on 11 October 2023.
Finance
During the period there was a fundraising of £250,000 (including £100,000
from Board members) at 2.5 pence per ordinary share.
Following admission of these new ordinary shares, in relation to the
fundraising and exercised warrants, the Company had a total of 105,092,749
ordinary shares in issue.
The loss after taxation for the half year ended 30 November 2023 was
€136,351 (30 November 2022: loss of €168,786) and the net assets as at 30
November 2023 were €9,832,149 (30 November 2022: €9,312,017).
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 continuing to progress the planned development
of the Lahtojoki diamond deposit and also to further success with its diamond
exploration in Finland and the identification of a kimberlite pipe, as well as
to further positive results from the exploration programme for nickel, copper
and platinum group metals in Northern Ireland.
Yours faithfully,
Professor Richard Conroy
Chairman
28 February 2024
Condensed income statement
Note Six-month period ended 30 November 2023 (Unaudited) € Six-month period ended 30 November 2022 (Unaudited) € Year ended 31 May 2023 (Audited) €
Continuing operations
Operating expenses (255,240) (165,140) (297,386)
Movement in fair value of warrants 6 122,128 - 9,565
Operating loss (133,112) (165,140) (287,821)
Interest expense (3,239) (3,646) (3,646)
Loss before taxation (136,351) (168,786) (291,467)
Income tax expense - - -
Loss for the financial period/year (136,351) (168,786) (291,467)
Loss per share
Basic and diluted earnings/(loss) per share 2 (0.0014) (0.0025) (0.0038)
Condensed statement of comprehensive income
Six-month period ended 30 November 2023 (Unaudited) € Six-month period ended 30 November 2022 (Unaudited) € Year ended 31 May 2023 (Audited) €
Loss for the financial period/year (136,351) (168,786) (291,467)
Income/(expense) recognised in other comprehensive income - - -
Total comprehensive income/(expense) for the financial period/year (136,351) (168,786) (291,467)
Condensed statement of financial position
Note 30 November 2023 (Unaudited) 30 November 2022 (Unaudited) Year ended 31 May 2023 (Audited)
€ € €
Assets
Non-current assets
Intangible assets 3 11,439,845 10,989,210 11,265,894
Financial assets - - -
Total non-current assets 11,439,845 10,989,210 11,265,894
Current assets
Cash and cash equivalents 215,025 90,177 116,038
Other receivables 57,834 36,034 79,003
Total current assets 272,859 126,211 195,041
Total assets 11,712,704 11,115,421 11,460,935
Equity
Capital and reserves
Called up share capital presented as equity 3,203,532 3,191,807 3,200,882
Share premium 10,726,620 9,959,181 10,546,844
Share based payments reserve 450,658 450,658 450,658
Retained losses (4,548,661) (4,289,629) (4,412,310)
Total equity 9,832,149 9,312,017 9,786,074
Liabilities
Non-current liabilities
Convertible loan 122,483 - 119,246
Warrant liabilities 5 95,606 - 109,224
Derivative liability 10,304 146 10,304
Total non-current liabilities 228,393 146 238,774
Current liabilities
Trade and other payables: amounts falling due within one year 1,652,162 1,632,822 1,436,087
Convertible Loan 6 - 170,436 -
Total current liabilities 1,652,162 1,803,258 1,436,087
Total liabilities 1,880,555 1,803,404 1,664,859
Total equity and liabilities 11,712,704 11,115,421 11,460,935
Condensed statement of cash flows
Six-month period ended 30 November 2023 (Unaudited) € Six-month period ended 30 November 2022 (Unaudited) € Year ended 31 May 2023 (Audited) €
Cash flows from operating activities
(Loss) for the financial period/year (136,351) (168,786) (291,467)
Adjustments for:
Interest expenses 3,239 3,646 3,646
Movement in fair value of warrants (122,128) - 109,224
(Decrease)/increase in trade and other payables 200,825 191,584 1,361
Decrease/(increase) in other receivables 21,168 24,144 (18,825)
Advances from/(repayments to) Conroy Gold and Natural Resources P.L.C 15,250 - 119,246
Net cash provided by/(used in) operating activities (17,997) 50,588 (76,815)
Cash flows from investing activities
Investment in exploration and evaluation (173,951) (78,279) (354,963)
Net cash used in investing activities (173.951) (78,279) (354,963)
Cash flows from financing activities
Issue of share capital 299,555 - 453,109
Share issue costs (8,620) - (23,161)
Net cash provided by financing activities 290,935 - 429,948
Increase in cash and cash equivalents 98,987 (27,291) (J,830)
Cash and cash equivalents at beginning of financial period/year 116,038 117,868 117,868
Cash and cash equivalents at end of financial period/year 215,025 90,177 116,038
Condensed statement of changes in equity
Share capital (including deferred share capital) Share premium Share-based payment reserve Retained losses Total equity
€ € € € €
Balance at 1 June 2023 3,200,882 10,546,844 450,658 (4,412,310) 9,786,074
Issue of share capital 2,650 296,905 - - 299,555
Share issue costs * - (8,620) - - (8,620)
Warrant issue * - (108,509) - - (108,509)
Loss for the financial period - - - (136,351) (136,351)
Balance at 30 November 2023 3,203,532 10,726,620 450,658 (4,548,661) 9,832,109
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 - - - - -
Loss 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
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 and Warrant issues during the period:
During the period ended 30 November 2023, the Company raised £150,000 through
the issue of 6,000,000 ordinary shares of the company at a price of £0.025
per Subscription Share. In addition, Professor Richard Conroy and Dr Sorca
Conroy both subscribed for 2,000,000 shares each in addition to this amount
bringing the total amount raised to £250,000. As part of this fundraise,
10,000,000 warrants at £0.04 per share were issued, the value of which at
date of issue was deducted from share premium in line with the Company’s
accounting policies. There were no share issues in the period ending 30
November 2022.
Share premium
The share premium comprises the excess consideration received in respect of
share capital over the nominal value of the shares issued as adjusted for the
costs of share issue in line with the Company’s accounting policies.
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 2023
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
2023, 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 2023.
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 2023 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 2024.
Going concern
The Company recorded a loss of €136,351 for the six-month period ended 30
November 2023 (30 November 2022: loss of €168,786). The Company had net
current liabilities of €1,379,302 at that date (30 November 2022:
€1,677,047).
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 2025. As set out further in the Chairman’s
statement, the Company expects to incur capital expenditure in 2024,
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 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 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 2023 (Unaudited) € Six-month period ended 30 November 2022 (Unaudited) € Year ended 31 May 2023 (Audited) €
Profit/(loss) for the financial period/year attributable to equity holders of the Company (136,351) (168,786) (291,467)
Number of ordinary shares for the purposes of earnings per share 95,096,311 68,542,749 76,460,146
Basic earnings/(loss) per ordinary share (€0.0014) (€0.0025) (€0.0038)
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 2023 (Unaudited) € 30 November 2022 (Unaudited) € 31 May 2023 (Audited) €
At 1 June 11,265,894 10,910,931 10,910,931
Expenditure during the financial period/year
* License and appraisal costs 93,258 18,510 269,314
* Other operating expenses 80,693 59,769 85,649
At 30 November/31 May 11,439,845 10,989,210 11,265,894
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 2023, there were no capital commitments or contingent
liabilities (31 May 2023: 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 26 May 2023, the Company entered into a convertible loan note agreement for
a total amount of €129,550 (£112,500) with Conroy Gold and Natural
Resources P.L.C. which is both a shareholder in the company and has a number
of other connections as noted in Note 7. The convertible loan note is
unsecured, has a term of 18 months 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 5 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.
The amount of €10,304 relates to derivative liability attached to the total
convertible loan note at date of issue above and the net amount of €119,246
was recorded as the value of the convertible loan at 31 May 2023. The value of
the convertible loan including interest at 30 November 2023 was €122,483 and
is classified as a non-current liability.
6 Warrant liabilities
The Company holds 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 2023 was €95,606.
10,000,000 warrants at a price of £0.04 were issued during the period and
600,000 warrants were exercised during the period at a price of £0.02.
7 Related party transactions
(a)Apart from Directors’ remuneration, equity investment from Directors, 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 2023, Conroy Gold and Natural Resources plc
incurred costs totalling €49,596 (30 November 2022: €34,846) on behalf of
the Company. These costs were recharged to the Company by Conroy Gold and
Natural Resources plc. At 30 November 2023, Conroy Gold and Natural
Resources plc was owed €69,870 (30 November 2022: €234,651) by the
Company.
(c) In May 2023, Conroy Gold and Natural Resources P.L.C. converted amounts
owing to it equivalent to €143,943 (£125,000) into ordinary equity in the
Company and a further €129,550 (£112,500) into a convertible loan
instrument as detailed in Note 5.
8 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.
9 Approval of the condensed financial statements
These condensed financial statements were approved by the Board of Directors
on 28 February 2024. A copy of the condensed financial statements will be
available on the Company’s website www.kareliandiamondresources.com on 29
February 2024.
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