Ireland's Karelian Targeting Europe's First Non-Russian Diamond Mine in Finland

Mining and Exploration
17/11/2016 10:08

Karelian Diamond Resources, the AIM-listed diamond exploration company focused on Finland, has published its results for the year ended 31 May 2016, "A year in which highly encouraging progress has been made towards achieving its objective to discover, or acquire, and develop diamond deposits in Finland", and has announced a proposed capital reorganization to be voted on December 9, 2016. The primary highlight of the year was the acquisition of the Lahtojoki Diamond Deposit, along with the acquisition of a mining permit for this deposit. The company believes it has potential to become profitable open pit diamond mine. The Lahtojoki diamond mine project benefits significantly by being well located with water and grid power available. The company will take a phased approach to developing a mine, which will include re-modelling the diamondiferous pipe together with a re-assessment of the microdiamond data available. This next stage is expected to take up to 12 months.

The company further states that the Riihivaarä  Kimberlite Body previously discovered is likely to be diamondiferous. Professor Richard Conroy, Chairman of Karelian Diamond Resources plc commented: “The acquisition of the Lahtojoki diamond pipe Mining Permit, together with these encouraging results relating to its potential, complement our existing licences and are a major step forward for our diamond program in Finland.” The exploration company was established in 2005 has delineated the largest diamond pipe so far found in Finland at Seitaperä, dicovered a new kimberlite body at Riihivaara and acquired a mining permit over the Lahtojoki diamond deposit. Karelian focuses on the Finnish side of an Archean Craton which hosts Alrosa’s Lomonosova and Lukoil’s Grib mines in Russia. Karelian and its partner Rio Tinto are searching for something similar in Finland. In 2014 Karelian signed a confidentiality agreement with back-in rights with Rio Tinto. In return for Rio disclosing confidential information to Karelian, Rio has the right to earn 51% in any of Karelian’s projects in return for funding construction of a mine i.e. if any of Karelian’s projects end up being built by Rio, Karelian retains a 49% free carried interest to production. This agreement has been extended to 2020.

Concerning the proposed capital reorganization, the company's ordinary shares have recently traded at a discount to their nominal value of €0.01. As the Company cannot issue shares at a discount to the nominal value, the Board is proposing the Capital Reorganisation. Accordingly, Shareholders will be asked at the AGM to approve a sub-division of the Company's Existing Ordinary Shares which will have the effect of reducing the nominal value of the issued and unissued ordinary share capital of the Company.