Annual Report and Financial
Statements 2022
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
1
Contents
Chairman’s Statement
Company Information
Board of Directors
Directors’ Report
Independent Auditor’s Report
Income Statement
Statement of
Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to and forming part of
the Financial Statements
2
4
5
7
16
22
23
24
25
26
27
2
Chairman’s Statement
Professor Richard Conroy
Chairman
Dear Shareholder,
I have pleasure in presenting the
Company’s Annual Report and
Financial Statements for the year
ended 31 May 2022.
Lahtojoki Diamond deposit – Site visit
The Company’s exploration programmes
during the year yielded excellent results in
both Finland and Ireland.
A drone based geophysical survey in Finland
resulted in the identification of twenty-three
kimberlite targets in the Kuhmo area, where
the Company has previously discovered a
diamond and in till and in Ireland, during
the course of a stream sediment survey to
investigate the historically reported discovery
of a diamond, nickel, copper and platinum
group metal indicators were discovered.
Diamond Exploration and
Development in Finland
Diamond deposits only form beneath
areas of the earth’s crust known as Cratons.
The Karelian Craton stretches across Finland
and north-western Russia and is one of the
largest Cratons in the world. In the Russian
sector of the Craton, two world class diamond
deposits - Lomonosova and the Grib Pipe,
have been found. Both are now in production
as major diamond mines. The Company’s
objective is to find comparable deposits in
the similar geology which is present in the
Finnish sector of the Karelian Craton. The
identification of a large number of kimberlite
targets close to where the Company
discovered a diamond in till is a significant
step towards achieving this objective.
Kimberlite pipes enable diamonds, which
are formed deep under the earth’s crust,
to reach the surface. There is of course no
guarantee that a kimberlite pipe will contain
diamonds, most kimberlites in fact are not
diamondiferous. However, the presence of
the diamond discovered by the Company
down-ice of the kimberlite targets is a very
positive sign that the kimberlites which have
been identified by the Company in the Kuhmo
area of Finland may be diamondiferous.
The newly discovered kimberlite targets
followed from a high resolution, drone based,
magnetic survey. The survey was carried out
up-ice of the location where the Company
has previously discovered a diamond in till.
During the survey over eighty flight lines
(250km) were flown. Interpretation of the
resultant data from the survey has led to the
identification of the twenty-three kimberlite
targets. Many of the targets are extensive in
size, ranging from 0.5 hectares to over 4.5
hectares, and appear highly prospective.
On the diamond mining development side,
it is very much to be hoped in relation to
the Lahtojoki diamond deposit, which the
Company has acquired and which is known to
contain a percentage of the very valuable pink
diamonds, that the Company will soon receive
its long awaited land valuation decisions.
These decisions are required under Finnish
law for mine permitting but have been
greatly delayed by the COVID-19 pandemic.
The Company has just been notified that
the required public meeting will be held in
December 2022.
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 3
Stream sediment sampling, Northern Ireland
Two Kimberlite targets identified by UAV geophysics – magnetics
Ireland - Nickel, Copper
and Platinum Prospectivity
the Company’s exploration and development
programmes in both Finland and Ireland.
The discovery in Northern Ireland, during
the course of a diamond exploration
programme by the Company on its Licence
in Co. Fermanagh, of highly anomalous
numbers of indicators, particularly chromites,
suggestive of the presence of nickel, copper
and platinum group metals, adds a new and
very exciting dimension to the Company’s
mineral exploration interests and will be
actively followed up during the course of the
coming year.
Ireland is already an international base metals
province and significant gold discoveries
have also been made. Management has been
involved in both previous gold and base metal
discoveries in Ireland.
Such discoveries of other minerals during
diamond exploration programmes are not
unknown, the most famous being the Voisey
Bay world class nickel discovery in Canada.
COVID-19
The Company has taken necessary measures
in accordance with government guidelines
to protect the health, safety, and wellbeing
of its employees, contractors, and partners
in Finland and Ireland. COVID-19 continues
to limit field and laboratory work and, as
described previously, has delayed permitting
at the Company’s diamond deposit at
Lahtojoki. Despite these restrictions on
operations, work has continued in relation to
Environmental, Social
and Governance Issues
Great emphasis is placed by the Company on
Environmental, Social and Governance issues.
The Company is committed to high standards
of corporate governance and integrity in
all of its activities and operations including
rigorous health and safety compliance and
environmental consciousness and promotes a
culture of good ethical values and behaviour.
The Company conducts its business with
integrity, honesty and fairness and requires
its partners, contractors and suppliers to meet
similar ethical standards. Individual staff
members must ensure that they apply and
maintain these standards in all their actions.
It is a requirement that the Chairman of the
Board regularly monitors and reviews the
Company’s ethical standards and cultural
environment and where necessary takes
appropriate action to ensure proper standards
are maintained. The Company is fully
committed to complying with all relevant
health, safety and environment rules and
regulations as these apply to its operations
and all individuals working for the Company
are aware of their responsibilities in providing
a safe and secure working environment.
Finance
The profit after taxation from continuing
operations for the financial year ended
31 May 2022 was €13,597 (31 May 2021:
loss of €422,192) and the net assets of the
Company at 31 May 2022 were €9,480,807
(31 May 2021: €9,495,866). The profit is
generated as a result of the movement in
fair value of warrants totalling €389,904.
Directors and Staff
I would like to express my deep appreciation
of the support and dedication of Directors,
staff, and consultants which has made
possible the continued progress and success
which the Company has achieved.
Outlook
I look forward to continued success both
in relation to the Company’s diamond interests
in Finland, which are now at a particularly
exciting stage, and also to the Company’s new
exploration programme for nickel, copper and
platinum group metals in Northern Ireland. We
also look forward to receiving the necessary
land valuation decisions in addition to the
planned diamond exploration work in Finland.
Professor Richard Conroy
Chairman
28 November 2022
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 4
Company Information
Directors
Professor Richard Conroy
Chairman*
Seamus P. FitzPatrick
Deputy Chairman
Non-Executive Director +§
Maureen T.A. Jones
Managing Director*
Howard M. Bird
Non-Executive Director *+§
Dr. Sorc˙a C. Conroy
Non-Executive Director *§
Brendan McMorrow
Non-Executive Director *+§
* Member of the Executive Committee
+ Member of the Remuneration Committee
§ Member of the Audit Committee
Company Registration Number
382499
Company Secretary
and Registered Office
Maureen T.A. Jones
3300 Lake Drive
Citywest Business Campus
Dublin 24, D24 TD21, Ireland
Statutory Audit Firm
Deloitte Ireland LLP
Chartered Accountants
and Statutory Audit Firm
6 Lapp’s Quay
Cork, T12 VY7W, Ireland
London Stock Exchange
AIM Symbol: KDR
SEDOL: BD09HK6
ISIN number: IE00BD09HK61
Nominated Adviser (NOMAD)
Allenby Capital Limited
5 St. Helen’s Place
5th Floor
London, EC3A 6AB, UK
Head Office
Karelian Diamond Resources plc
3300 Lake Drive
Citywest Business Campus
Dublin 24, D24 TD21, Ireland
For further information visit
the Company’s website at:
www.kareliandiamondresources.com
or contact:
Hall Communications
1 Northumberland Road
Dublin 4, D04 F578, Ireland
Tel: +353 1 6609377
or
Lothbury Financial Services
Floor 6, 131 Cannon Street
London, EC4N 5AX, UK
Tel: +44 20 3290 0707
Registrars
Avenir Registrars Limited
No. 1 Main Street, Blessington
Co Wicklow, W91 V82T, Ireland
www.avenir-registrars.ie
Bankers
AIB
1-4 Lower Baggot Street
Dublin 2, D02 X342, Ireland
Nordea
Satamaradankatu 5, Helsinki, Finland
Broker
First Equity Ltd.
Salisbury House, Finsbury
London, EC2 M5QQ, UK
Legal Advisers
William Fry Solicitors
2 Grand Canal Square
Dublin 2, D02 A342, Ireland
Roschier, Attorneys Ltd.
Kasarmikatu 21 A
FI-00130, Helsinki, Finland
HPP Attorneys Ltd
Bulevardi 1 A
FL-00100, Helsinki, Finland
Professor Richard Conroy
Chairman
.
Seamus P. FitzPatrick
Deputy Chairman
Dr. Sorc˙a C. Conroy
Non-Executive Director
Maureen T.A. Jones
Managing Director
Howard M. Bird
Non-Executive Director
Brendan McMorrow
Non-Executive Director
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
Karelian Diamond Resources P.L.C.
Board of Directors
Board of Directors
5
Professor Richard Conroy - Chairman of the Board of Directors
Professor Richard Conroy is responsible for leading the Board and ensuring it operates in an effective manner whilst
promoting communication with shareholders. He has over 40 years’ experience of founding and growing companies in
the natural resources industry with a track record in making discoveries of global significance.
Experience
Professor Richard Conroy has been involved in natural resources for many years. He established Trans-International Oil,
which was primarily involved in Irish offshore oil exploration. Trans-International Oil initiated the Deminex Consortium
which included Deminex, Mobil, Amoco and DSM. Trans-International Oil was merged with Aran Energy P.L.C. in 1979,
which was later acquired by Statoil.
Professor Richard Conroy founded Conroy Petroleum and Natural Resources P.L.C. (“Conroy Petroleum”). Conroy
Petroleum was involved in both onshore and offshore oil production and exploration and also in mineral exploration.
Conroy Petroleum, in 1986, made the significant discovery of the Galmoy zinc deposits in County Kilkenny which was
later developed as a major zinc mine. The discovery at Galmoy led to the revival of the Irish base metal industry and to
Ireland becoming an international zinc province.
Conroy Petroleum was also a founding member of the Stoneboy consortium, which included Sumitomo Metal Mining
Co. Ltd., an exploration group which discovered the world class Pogo gold deposit in Alaska, now in production as a
major gold mine.
Conroy Petroleum acquired Atlantic Resources P.L.C. in 1992 and subsequently changed its name to ARCON
International Resources P.L.C. (“ARCON”). The oil and gas interests in ARCON were transferred to form Providence
Resources P.L.C. ARCON was later acquired by Lundin Mining Corporation.
Professor Richard Conroy was Chairman and Chief Executive of Conroy Petroleum/ARCON from 1980 to 1994. He
founded Karelian Diamond Resources P.L.C. in 1995. Since then, Professor Richard Conroy has utilised his extensive
experience in the exploration industry in his role as Chairman of the Board.
Professor Richard Conroy served in the Irish Parliament as a Member of the Senate. He was at various times front
bench spokesman for the Government party in the Upper House on Energy, Industry and Commerce, Foreign Affairs
and Northern Ireland.
Professor Richard Conroy is Emeritus Professor of Physiology in the Royal College of Surgeons in Ireland. Professor
Richard Conroy’s research included pioneering work on jet lag, shift working and decision making in business after
intercontinental flights. He co-authored the first textbook on human circadian rhythms.
Séamus P. FitzPatrick - Deputy Chairman/Non-executive Director
Séamus P. FitzPatrick is the Managing Partner and co-founder of CapVest, a private equity investment firm established
in London in 1999. He is currently chairman of Valeo Foods and is a Director of Eight Fifty Food Group. He was formerly
chairman of Findus, Vaasan & Vaasan, Mater Private, Youngs Bluecrest, and a Director of Scandi Standard and Curium
Pharma.
Experience
Prior to the founding of CapVest, Séamus P. FitzPatrick worked in M&A at Morgan Stanley in London. Thereafter, he
worked for Chase Capital Partners in New York.
Séamus P. FitzPatrick holds an honours degree in English and Psychology from Trinity College Dublin.
5
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
6
Board of Directors (continued)
Karelian Diamond Resources P.L.C.
Board of Directors (continued)
Maureen T.A. Jones - Managing Director
Maureen T.A. Jones oversees all of the Company’s business and is responsible for formulating the Company’s objectives
and strategy. She is also the Company Secretary for the Company and ensures all filings and requirements of the
Companies Acts are fulfilled.
Experience
Maureen T.A. Jones joined Conroy Petroleum on its foundation in 1980 and was a Director and a member of the Board
of Directors of Conroy Petroleum/ARCON from 1986 to 1994. Maureen T.A. Jones has a medical background and
specialised in the radiographic aspects of nuclear medicine before becoming a manager of International Medical
Corporation in 1977.
Maureen T.A. Jones has over twenty years’ experience at senior level in the natural resource sector. She is Managing
Director of Karelian Diamond Resources P.L.C. and was a founding Director of the Company. Maureen T.A. Jones brings
a vast amount of managerial experience to the Board along with extensive experience of the exploration industry.
Dr. Sorċa Conroy - Non-executive Director
Dr. Sorċa Conroy brings a broad range of knowledge to bear on the Company through her capital markets experience
and her experience in the natural resources sector.
Experience
Dr. Sorċa Conroy was recruited to ING Bank in 2006 and whilst there was ranked second in the Extel Survey for
Biotechnology Specialist Sales. Dr. Sorċa Conroy had previously worked in specialist sales for life sciences and
institutional equities at Canaccord Adams (2005-2006; where she ranked fourth in the 2006 Extel survey) and Hoodless
Brennan (2004-2005). A medical graduate of The Royal College of Surgeons in Ireland, Dr. Sorċa Conroy held a number
of clinical positions between her graduation in 1995 and joining Hoodless Brennan and is a director of Conroy Gold and
Natural Resources P.L.C. for over 10 years.
Brendan McMorrow - Non-executive Director
Brendan McMorrow brings a broad range of knowledge gained through holding senior financial roles in a variety of
listed public companies in the natural resources sector.
Experience
Brendan McMorrow has over 25 years’ experience in a number of public companies in the oil and gas and base metals
mining sectors listed in London, Toronto and Dublin where he held senior executive finance roles. He is currently Chief
Executive Officer of Ormonde Mining P.L.C., a natural resources exploration company. Prior to that he was Chief
Financial Officer of Circle Oil P.L.C. from 2005 to 2015, an AIM listed oil and gas exploration, development and
production company, with operations in North Africa and the Middle East. Brendan is a Fellow of the Chartered
Association of Certified Accountants.
Howard Bird - Non-executive Director
Howard Bird brings a broad range of knowledge gained through holding senior positions in a variety of different roles in
the natural resources sector. He was appointed to the Board on 17 September 2019.
Experience
Howard Bird is an internationally experienced Professional Geoscientist (diamonds, gold, platinum and base metals)
and has over 30 years’ diverse junior and senior mining company exploration, development and mining experience,
including over 15 years at senior executive management level. Howard has extensive worldwide experience and was
involved in programmes that have led to the discovery of over 100 kimberlites, working in Canada, Australia, Brazil,
South Africa, Angola, Zimbabwe, Democratic Republic of Congo, Botswana and Gabon.
Together, the Directors form the Board of Directors with a gender balance of four and two. The mix of experience that
the Directors bring to the Board include financial and managerial experience, mining, development and natural
resources experience which are crucial to the business of the Company and crucial to the smooth running of a Board of
Directors and company.
6
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
Directors’ Report
Karelian Diamond Resources P.L.C.
Directors’ Report
7
The Board of Directors submit their annual report together with the audited financial statements of Karelian Diamond
Resources P.L.C. (the “Company”) for the financial year ended 31 May 2022.
Principal activities, business review and future developments
Information with respect to the Company’s principal activities and the review of the business and future developments
as required by Section 327 of the Companies Act 2014 is contained in the Chairman’s statement on pages 3 to 4. The
Company is a mineral exploration and development company whose objective and strategy is to discover and develop
world class diamond projects in politically stable and geographically attractive countries such as Finland and Ireland in
order to create value for shareholders. During the financial year under review, the principal focus of management was
to continue to develop the activities of the Company, concentrating particularly on diamond exploration and
evaluation.
The challenges facing the Company in achieving this strategy are world commodity prices and general economic
activity, ensuring compliance with governmental and environmental legislation and meeting work commitments under
exploration permits and licences sufficient to maintain the Company’s interest therein. To accomplish its strategy and
manage the challenges involved, the Company employs experienced individuals with a track record of success of
discovering world class ore bodies together with suitably qualified technical personnel and consultants, experienced
drilling and geophysical and other contractors and uses accredited international laboratories and technology to
interpret and assay technical results. Additionally, the Company ensures as far as possible to obtain adequate working
capital to carry out its work obligations and commitments. Please refer to the section on risks and uncertainities on
pages 13, 14 and 15 for further details.
By co-ordinating all of the above, this should result in a satisfactory return and value for shareholders.
Results for the year and state of affairs at 31 May 2022
The income statement for the financial year ended 31 May 2022 and the statement of financial position at that date are
set out on pages 22 and 24 respectively. The profit for the financial year amounted to €13,593 (31 May 2021: a loss of
€422,192) and net assets at 31 May 2022 were €9,480,803 (31 May 2021: €9,495,866). No interim or final dividends
have been or are recommended by the Board of Directors.
The Company is not yet in a production stage and so has no income. Consequently, the Company is not expected to
report material profits until it disposes of or is able to profitably develop or otherwise turn to account its exploration
projects. The Directors monitor the activities and performance of the Company on a regular basis and uses both
financial and non-financial indicators to assess the Company’s performance.
Important events since the year-end
Post year end, the Company announced that the geophysical interpretation of drone based aeromagnetic data has
identified twenty three Kimberlite targets in the area surveyed.
The Company’s application for two additional mineral prospecting licences in Northern Ireland were granted, as
announced on 6 October 2022.
The final meeting related to land valuations regarding the Company’s diamond mine development at Lahtojoki with the
National Land Survey of Finland was postponed from June 2022 and is expected in December 2022.
There were no further important events to note post year end.
Directors
Please refer to pages 1, 5 and 6 for a listing of Directors and further details.
Except as disclosed in the following tables, neither the Directors nor their families had any beneficial interest in the
share capital of the Company. Apart from Directors’ remuneration (detailed in Note 2 and Note 4), there here
have been no contracts or arrangements entered into during the financial year in which a Director of the Company
had a material interest. Refer to Note 15 for further details.
7
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 8
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Karelian Diamond Resources P.L.C.
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Directors’ Report (continued)
Directors’ Report (continued)
31 May 2021
31 May 2021
31 May 2021
Warrants
Warrants
2,070,841
Warrants
-
2,070,841
317,651
-
2,070,841
9,288
317,651
-
-
9,288
317,651
-
9,288
-
Director
Director
Director
Director
Director
Director
31 May
2022
31 May
2022
31 May
2022
Warrants
Warrants
2,070,841
Warrants
-
2,070,841
317,651
-
2,070,841
9,288
317,651
-
-
9,288
317,651
-
9,288
-
Ordinary Shares
of €0.00025 each
Ordinary Shares
10,263,912
of €0.00025 each
Ordinary Shares
1,129,911
10,263,912
of €0.00025 each
789,990
1,129,911
10,263,912
481,341
789,990
1,129,911
285,000
481,341
789,990
285,000
481,341
285,000
Professor Richard Conroy
Dr. Sorċa Conroy
Professor Richard Conroy
Maureen T.A. Jones
Dr. Sorċa Conroy
Professor Richard Conroy
Séamus P. FitzPatrick
Maureen T.A. Jones
Dr. Sorċa Conroy
Brendan McMorrow
Séamus P. FitzPatrick
Maureen T.A. Jones
Brendan McMorrow
Séamus P. FitzPatrick
Brendan McMorrow
31 May
2022
31 May
2022
31 May
2022
Ordinary Shares
of €0.00025 each
Ordinary Shares
10,263,912
of €0.00025 each
Ordinary Shares
1,129,911
10,263,912
of €0.00025 each
789,990
1,129,911
10,263,912
481,341
789,990
1,129,911
285,000
481,341
789,990
285,000
481,341
285,000
Company secretary
Maureen T.A. Jones served as Company Secretary throughout the year.
Company secretary
Maureen T.A. Jones served as Company Secretary throughout the year.
Company secretary
Maureen T.A. Jones served as Company Secretary throughout the year.
Directors’ shareholdings and other interests
The interests of the Directors and their connected persons in the share capital of the Company were as follows:
Directors’ shareholdings and other interests
The interests of the Directors and their connected persons in the share capital of the Company were as follows:
Directors’ shareholdings and other interests
31 May 2021
Date of
Date of signing
The interests of the Directors and their connected persons in the share capital of the Company were as follows:
signing
financial
Date of
Date of signing
31 May 2021
statements
financial
signing
financial
31 May 2021
Date of
Date of signing
statements
statements
financial
signing
financial
Warrants
Ordinary Shares
statements
statements
financial
of €0.00025 each
statements
Warrants
Ordinary Shares
2,070,841
10,263,912*
of €0.00025 each
Warrants
Ordinary Shares
-
1,129,911
2,070,841
10,263,912*
of €0.00025 each
317,651
789,990
-
1,129,911
2,070,841
10,263,912*
9,288
481,341
317,651
789,990
-
1,129,911
-
285,000
9,288
481,341
317,651
789,990
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
-
285,000
9,288
481,341
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
-
285,000
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
Details of warrants, all of which are exercisable currently, are as follows:
Details of warrants, all of which are exercisable currently, are as follows:
Date of
Details of warrants, all of which are exercisable currently, are as follows:
signing
Date of
financial
signing
Date of
statements
financial
signing
Warrants
statements
financial
1,850,000
statements
Warrants
220,841
1,850,000
Warrants
150,000
220,841
1,850,000
167,651
150,000
220,841
9,288
167,651
150,000
9,288
167,651
9,288
Professor Richard Conroy
Professor Richard Conroy
Professor Richard Conroy
Maureen T.A. Jones
Professor Richard Conroy
Professor Richard Conroy
Maureen T.A. Jones
Maureen T.A. Jones
Professor Richard Conroy
Séamus P. FitzPatrick
Maureen T.A. Jones
Maureen T.A. Jones
Séamus P. FitzPatrick
Maureen T.A. Jones
Séamus P. FitzPatrick
Substantial shareholdings
So far as the Board of Directors are aware, no person or company, other than the shareholders listed below, held 3% or
Substantial shareholdings
more of the issued ordinary share capital of the Company.
So far as the Board of Directors are aware, no person or company, other than the shareholders listed below, held 3% or
Substantial shareholdings
more of the issued ordinary share capital of the Company.
So far as the Board of Directors are aware, no person or company, other than the shareholders listed below, held 3% or
Date of
more of the issued ordinary share capital of the Company.
signing
Date of
financial
signing
Date of
statements
financial
signing
%
statements
financial
%
statements
14.97
%
8.02
14.97
14.97
6.10
8.02
7.01
8.02
6.10
7.01
6.10
6.99
7.01
4.38
6.99
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
6.99
4.38
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
4.38
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
* Of the 10,263,912 (31 May 2021: 10,263,912) ordinary shares beneficially held by Professor Richard Conroy at 31 May 2022, 1,232,601 (31 May 2021:
1,232,601) are held by Conroy P.L.C., a company in which Professor Richard Conroy has a controlling interest.
31 May
2022
31 May
2022
31 May
2022
Ordinary Shares
of €0.00025 each
Ordinary Shares
10,263,912*
of €0.00025 each
Ordinary Shares
5,500,000
10,263,912*
of €0.00025 each
10,263,912*
4,178,571
5,500,000
4,801,690
5,500,000
4,178,571
4,801,690
4,178,571
4,789,201
4,801,690
3,000,000
4,789,201
4,789,201
3,000,000
3,000,000
31 May
2021
31 May
2021
31 May
2021
Ordinary Shares
of €0.00025 each
Ordinary Shares
10,263,912*
of €0.00025 each
Ordinary Shares
10,263,912*
5,360,000
of €0.00025 each
10,263,912*
3,928,571
5,360,000
2,300,000
5,360,000
3,928,571
3,928,571
5,861,939
2,300,000
2,300,000
3,000,000
5,861,939
5,861,939
3,000,000
3,000,000
Date of signing
financial
Date of signing
statements
financial
Date of signing
statements
financial
Ordinary Shares
statements
of €0.00025 each
Ordinary Shares
10,263,912*
of €0.00025 each
Ordinary Shares
5,500,000
10,263,912*
of €0.00025 each
10,263,912*
4,178,571
5,500,000
4,801,690
5,500,000
4,178,571
4,801,690
4,178,571
4,789,201
4,801,690
3,000,000
4,789,201
4,789,201
3,000,000
3,000,000
Professor Richard Conroy
Mr. Kevin Taylor
Professor Richard Conroy
Professor Richard Conroy
Martello Holdings Limited
Mr. Kevin Taylor
Mr. Steven Coomber
Mr. Kevin Taylor
Martello Holdings Limited
Martello Holdings Limited
Spreadex Limited
Mr. Steven Coomber
Mr. Steven Coomber
Mr. Fredrik Björnberg
Spreadex Limited
Spreadex Limited
Mr. Fredrik Björnberg
Mr. Fredrik Björnberg
31 May
2021
31 May
2021
31 May
2021
Warrants
1,850,000
Warrants
220,841
1,850,000
Warrants
150,000
220,841
1,850,000
167,651
150,000
220,841
9,288
167,651
150,000
9,288
167,651
9,288
31 May
2022
31 May
2022
31 May
2022
Warrants
1,850,000
Warrants
220,841
1,850,000
Warrants
150,000
220,841
1,850,000
167,651
150,000
220,841
9,288
167,651
150,000
9,288
167,651
9,288
Date of
signing
Date of
financial
signing
Date of
statements
financial
signing
Price £
statements
financial
0.08
statements
Price £
2.20
0.08
Price £
0.08
2.20
0.08
2.20
0.08
2.20
2.20
2.20
0.08
2.20
2.20
2.20
31 May
2022
31 May
2022
31 May
2022
Price £
0.08
Price £
2.20
0.08
Price £
0.08
2.20
0.08
2.20
0.08
2.20
2.20
2.20
0.08
2.20
2.20
2.20
31 May
2021
31 May
2021
31 May
2021
Price £
0.08
Price £
2.20
0.08
Price £
0.08
2.20
0.08
2.20
0.08
2.20
2.20
2.20
0.08
2.20
2.20
2.20
%
14.97
%
8.02
14.97
14.97
6.10
8.02
7.01
8.02
6.10
7.01
6.10
6.99
7.01
4.38
6.99
6.99
4.38
4.38
Shareholder
Shareholder
Shareholder
31 May
2022
31 May
2022
31 May
2022
%
09 December 2023
16 November 2022
09 December 2023
09 December 2023
16 November 2022
09 December 2023
16 November 2022
09 December 2023
16 November 2022
16 November 2022
16 November 2022
09 December 2023
16 November 2022
16 November 2022
16 November 2022
%
14.97
%
14.97
7.82
14.97
5.73
7.82
3.36
7.82
5.73
5.73
8.55
3.36
3.36
4.38
8.55
8.55
4.38
4.38
Expiry Date
Expiry Date
Expiry Date
31 May 2021
31 May 2021
31 May 2021
%
8
8
8
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 9
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Compliance policy statement of Karelian Diamond Resources P.L.C.
The Directors, in accordance with Section 225(2) of the Companies Act 2014, acknowledge that they are responsible for
securing the Company’s compliance with certain obligations specified in that section (‘relevant obligations’). The
Directors confirm that:
•
•
•
a compliance policy statement has been drawn up setting out the Company’s policies that in their opinion are
appropriate with regard to compliance with relevant obligations;
appropriate arrangements and structures have been put in place that, in their opinion, are designed to provide
reasonable assurance of compliance in all material respects with those relevant obligations; and
a review has been conducted, during the financial year, of those arrangements and structures.
It is the policy of the Company to review during the course of each financial year the arrangements and structures
referred to above which have been implemented with a view to determining if they provide a reasonable assurance of
compliance in all material respects with relevant obligations.
Statement of Directors’ responsibilities in respect of the annual report and the financial statements
The Directors are responsible for preparing the annual report, including the Directors’ Report and the financial
statements in accordance with the Companies Act 2014 and the applicable regulations. Irish Company law requires the
Directors to prepare financial statements for each financial year. Under that law, they have elected to prepare the
Company’s financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by
the EU and applicable law.
Under company law, the Directors must not approve the Company financial statements unless they are satisfied that
they give a true and fair view of the assets, liabilities and financial position of the Company and of the Company’s profit
or loss for that year and otherwise comply with the Companies Act 2014. In preparing the Company’s financial
statements, the Directors are required to:
select suitable accounting policies for the Company’s financial statements and then apply them consistently;
•
• make judgements and estimates that are reasonable and prudent;
•
state whether the financial statements have been prepared in accordance with the applicable accounting
standards, identify those standards, and note the effect and the reason for any material departure from these
standards; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
•
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any
time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that
the financial statements of the Company are prepared in accordance with the relevant accounting framework and
comply with the provisions of the Companies Act 2014. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other
irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements
of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Going concern
The Company recorded a profit of €13,593 (31 May 2021: a loss of €422,192) for the financial year ended 31 May 2022.
The Company had net assets of €9,480,803 (31 May 2021: €9,495,866) at that date. The Company had net current
liabilities of €1,429,982 (31 May 2021: €721,166) at that date. The Company had cash and cash equivalents of €117,868
(31 May 2021: €61,778) at 31 May 2022.
9
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 10
Directors’ Report (continued)
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Going concern (continued)
The Directors, namely Professor Richard Conroy, Séamus P. FitzPatrick, Maureen T.A. Jones, Dr. Sorċa Conroy, Howard
Bird, Brendan McMorrow, and former Director, namely James P. Jones, have confirmed that they will not seek
repayment of amounts owed to them by the Company of €1,106,970 (31 May 2021: €921,969) for a minimum period of
12 months from the date of approval of the financial statements, unless the Company has sufficient funds to repay.
The Directors are aware that the term of the convertible loan note expires on 10 December 2022 and have started
discussions with the loan note holder in relation to extension or conversion. The directors are confident that
these discussions will be satisfactorily concluded.
Conroy Gold and Natural Resources P.L.C. have confirmed that it will not seek repayment of amounts owed to it by
the Company of €199,806 (31 May 2021: €169,933) for a minimum period of 12 months from the date of
approval of the financial statements, unless the Company has sufficient funds to repay.
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 30 November 2023. As set out in the
Chairman’s statement, the Company expects to incur capital expenditure in 2022 and 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.
Corporate governance
The Board adopted the QCA Corporate Governance Code (“QCA Code”), which is derived from the 2018 UK
Corporate Governance Code and the Guidance on Board Effectiveness (the “Code”) but adapted to the needs of
smaller quoted companies. The Company agrees that good governance contributes to sustainable success and
recognises the renewed emphasis on business building trust by forging strong relationships with key stakeholders.
The Company understands the importance of a corporate culture that is aligned with the Company’s purpose and
business strategy, and which promotes integrity and includes diversity. The Company conducts its business with
integrity, honesty and fairness and requires its partners, contractors and suppliers to meet similar ethical
standards. The Board is satisfied that its corporate culture and culture of its employees aligns the Company’s
objectives, strategy and business model. It is an objective of the Company that all individuals are aware of their
responsibilities in applying and maintaining these standards in all their actions. The Board ensures that support is
available in the form of staff training and updating its employee handbook such that staff members understand
what is expected of them. The Company’s Statement of Compliance with the QCA Code is available on the
Company’s website www.kareliandiamondresources.com/corporate-governance.
Board of Directors
The Board of Directors is made up of two executive and four non-executive Directors. Biographies of each of
the Directors are set out on pages 5 and 6.
The Board of Directors agrees a schedule of regular meetings to be held in each calendar year and also meets on
other occasions as necessary. Meetings are usually held at the head office in 3300 Lake Drive, Citywest
Business Campus, Dublin 24, D24 TD21, Ireland. Due to COVID-19 a number of these meetings were held
by way of Zoom and teleconference calls. Board of Directors’ meetings were held on 6 occasions from 1 June
2021 to 31 May 2022 and attendance at these meetings is set out in the table below. An agenda and supporting
documentation were circulated in advance of each meeting.
Meetings held during the year
Professor Richard Conroy
Séamus P. FitzPatrick
Maureen T.A. Jones
Dr. Sorċa Conroy
Brendan McMorrow
Howard Bird
10
Board
6
6
4
6
6
6
5
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 11
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Board of Directors (continued)
There is an agreed list of matters which the Board of Directors has formally reserved to itself for decision, such as
approval of the Company’s commercial strategy, trading and capital budgets, financial statements, Board of Directors’
membership, major capital expenditure and risk management policies. Responsibility for certain matters is delegated to
Board of Directors’ committees. Executive Directors spend as much time on Company’s matters as is necessary for the
proper performance of their duties. Non-executive Directors are expected to spend a minimum of one day a month on
Company’s activities in addition to preparation for and attendance at Board and sub-committee meetings.
There is an agreed procedure for Directors to take independent legal advice.
The Company Secretary is responsible for ensuring that Board of Director’s procedures are followed, and all Directors
have direct access to the Company Secretary.
All Directors receive regular reports and full Board of Directors’ papers are sent to each Director in sufficient time
before Board of Director’s meetings, and any further supporting papers and information are readily available to all
Directors on request. The Board of Director’s papers include the minutes of all committees of the Board of Directors
which have been held since the previous Board of Director’s meeting, and, the Chairman of each committee is available
to give a report on the committee’s proceedings at Board of Director’s meetings if appropriate.
The Board of Directors has a process whereby each year every Director may meet the Chairman to review the conduct
of Board of Director’s meetings and the general corporate governance of the Company. The non-executive Directors
(other than Dr. Sorċa Conroy) are regarded as independent by the Board of Directors and have no material interest or
other relationship with the Company (Dr. Sorċa Conroy is a daughter of Professor Richard Conroy).
The Board, having fully considered the corporate needs of the Company, is satisfied that it has an appropriate balance
of experience and skills to carry out its duties. The Chairman of the Company oversees this process and reviews the
Board composition to ensure it has the necessary experience, skills and capabilities.
The current non-executive Directors have a wide range of financial and technical skills based on both qualifications and
experience, including significant fundraisings, financial management, technical expertise and the discovery and bringing
into production of operating mines. Each board member keeps their skills up to date through a combination of courses,
continuing professional development through professional bodies and reading.
The Company Secretary provides Directors with updates on key developments relating to the Company, the sector in
which the Company operates, legal and governance matters including advice from the Company’s broker, lawyers and
advisors.
Board performance
The Board, through its Chairman, will, in the coming year evaluate its ongoing performance, based on the requirements
of the business and corporate governance standards.
It is envisaged that the review process will include the use of internal reviews and periodic external facilitation. The
results of such reviews will be used to determine whether any alterations are needed at either a board or senior
management level or whether any additional training would be beneficial. It is intended that with effect from the end
of the next financial year, these evaluations will be undertaken annually, after the end of each financial year but prior
to the publication of the respective annual report and accounts.
Director’s performance will be measured by way of such matters as:
•
•
•
•
•
•
Commitment;
Independence;
Relevant experience;
Impartiality;
Specialist knowledge; and
Effectiveness on the Board.
11
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
12
Directors’ Report (continued)
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Board of Directors (continued)
Board performance (continued)
As set out in the Constitution of the Company, each year, one third of the Directors with the exception of the Chairman
and the Managing Director, retire from the Board of Directors by rotation. Effectively, therefore, each such Director will
retire by rotation within a three-year period.
Ethical values and behaviours
The Board of Directors is committed to high standards of corporate governance and integrity in all its activities and
operations and promotes a culture of good ethical values and behaviour. The Company conducts its business with
integrity, honesty and fairness and requires its partners, contractors and suppliers to meet similar ethical standards.
Individual staff members must ensure that they apply and maintain these standards in all their actions.
The Chairman of the Board of Directors regularly monitors and reviews the Company’s ethical standards and cultural
environment and where necessary takes appropriate action to ensure proper standards are maintained. Due to the size
and available resources of the Company, the Chairman of the Board of Directors carries out executive functions. The
Company is fully committed to complying with all relevant health, safety and environment rules and regulations as
these apply to its operations. It is an objective of the Company that all individuals are aware of their responsibilities in
providing a safe and secure working environment.
Board Committees
The Board of Directors has implemented an effective committee structure to assist in the discharge of its
responsibilities. The committees and their members are listed on page 1 of this report. Membership of the Audit and
Remuneration Committees is comprised exclusively of non-executive Directors. Attendance at the Audit and
Remuneration Committee meetings is set out in the table below:
Meetings held during the year
Séamus P. FitzPatrick
Brendan McMorrow
Dr. Sorca Conroy
Howard Bird
Audit Committee
Audit
Committee
3
2
3
3
n/a
Remuneration
Committee
-
-
-
n/a
-
The Audit Committee’s terms of reference have been approved by the Board of Directors. The Audit Committee,
constituted in accordance with Section 1097 of the Companies Act 2014, comprises three non-executive Directors and
is chaired by Séamus P. FitzPatrick. The Audit Committee reviews the accounting principles, policies and practices
adopted, and areas of management judgement and estimation during the preparation of the interim and annual
financial statements and discusses with the Company’s Auditor the results and scope of the audit. The external auditor
has the opportunity to meet with the members of the Audit Committee alone at least once a year.
The Audit Committee also advises the Board of Directors on the appointment of the external auditor and on their
remuneration. An analysis of the fees payable to the external audit firm in respect of audit services during the financial
year is detailed in Note 3 to the financial statements. The Audit Committee also undertakes a review of any non-audit
services provided to the Company. There were no such non-audit services provided during the period under review.
The Audit Committee is responsible for monitoring the controls which are in force to ensure the information reported
to the shareholders is accurate and complete. The Audit Committee also reviews internal controls and reviews the
effectiveness of the Company’s internal controls and risk management systems. It also considers the need for an
internal audit function, which it believes is not primarily required at present because of the size of the Company’s
operations. The members of the Audit Committee have agreed to make themselves available should any member of
staff wish to make representations to them about the conduct of the affairs of the Company.
12
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 13
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Board of Directors (continued)
Remuneration Committee
The Remuneration Committee’s terms of reference have been approved by the Board of Directors and are in
accordance with the QCA Remuneration Committee Guide for Small and Mid-Size Quoted Companies. The
Remuneration Committee comprises three non-executive Directors and is chaired by Séamus P. FitzPatrick.
Emoluments of executive Directors and senior management are determined by the Remuneration Committee. In the
course of each financial year, the Remuneration Committee determines any contract terms, remuneration and other
benefits, including share options, for each of the executive Directors. The Remuneration Committee applies the same
philosophy in determining executive Directors’ remuneration as is applied in respect of all employees. The underlying
objective is to ensure that individuals are appropriately rewarded relative to their responsibility, experience and value
to the Company.
The Board of Directors itself determines the remuneration of the non-executive Directors. Details of Directors’
remuneration for the current period are detailed in Note 2 and Note 4 to the financial statements.
During the year ended 31 May 2021, the Directors made the decision to decrease their remuneration due to the impact
of Covid-19. During the year ended 31 May 2022, Directors' remuneration has returned to the pre-agreed rates. No
actual increases occurred during the year ended 31 May 2022.
Executive Committee
The Executive Committee comprises Professor Richard Conroy, Dr. Sorċa Conroy, Ms. Maureen T.A. Jones, Brendan
McMorrow and Howard Bird. Its purpose is to support the Managing Director in carrying out the duties delegated to
her by the Board of Directors. It also ensures that regular financial reports are presented to the Board of Directors, that
effective internal controls are in place and functioning, and that there is an effective risk management process in
operation throughout the Company. The three non-executive directors are not involved in the daily management of the
Company.
Internal control
The Directors have overall responsibility for the Company’s system of internal control to safeguard shareholders’
investments and the Company assets. They operate a system of financial controls which enables the Board of Directors
to meet its responsibilities for the integrity and accuracy of the Company’s accounting records. Among the processes
applied in reviewing the effectiveness of the system of internal controls are the following:
•
•
•
The Board of Directors establishes risk policies as appropriate, for implementation by executive management;
All commitments for expenditure and payments are subject to approval by personnel designated by the Board
of Directors; and
Regular management meetings take place to review financial and operational activities.
The Board of Directors has considered the requirement for an internal audit function. Based on the scale of the
Company’s operations and close involvement of the Board of Directors, the Directors have concluded that an internal
audit function is not currently required.
Risks and uncertainties
The Company is subject to a number of potential risks and uncertainties, which could have a material impact on the
long-term performance of the Company and could cause actual results to differ materially from expectation. The
management of risk is the collective responsibility of the Board of Directors and is considered as part of all Board
meetings. An ongoing process for identifying, evaluating and managing or mitigating the principal risks faced by the
Company has been in place throughout the financial year and has remained in place up to the approval date of the
report and accounts. The Board intends to keep its risk control procedures under constant review, particularly with
regard to the need to embed internal control and risk management procedures further into the operations of the
business and to deal with areas of improvement which come to management’s and the Board’s attention.
13
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 14
Directors’ Report (continued)
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Risks and uncertainties (continued)
As might be expected in a Company of this size, a key control procedure is the day-to-day supervision of the business by
the Executive Directors, supported by the senior managers with responsibility for key operations. The Board has
considered the impact of the values and culture of the Company and ensures that, through staff communication and
training, the Board’s expectations and attitude to risk and internal control are embedded in the business. The Board of
Directors consider the following risks to be the principal risks affecting the business.
General Industry Risk
The Company’s business may be affected by the general risks associated with all companies in the diamond exploration
industry. These risks (the list of which is not exhaustive) include: general economic activity, the world diamond prices,
government and environmental regulations, permits and licenses, fluctuating metal prices, the requirement and ability
to raise additional capital through future financings and price volatility of publicly traded securities. As such there is no
guarantee that future market conditions will permit the raising of the necessary funds by way of issue of new equity,
debt financing or farming out of interests. To mitigate this risk, the Board regularly reviews Company cash flow
projections and considers different sources of funds.
Environmental Risk
Environmental and safety legislation may change in a manner that may require stricter or additional standards than
those now in effect. These could result in heightened responsibilities for the Company and could cause additional
expense, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be
predicted. The primary area that is expected to impact the Company is in the area of climate change and the impact of
this risk will continue to be monitored by the Directors and management. Management will continue to closely monitor
any regulatory updates in this area and its potential impact on the Company. The Company employs staff experienced
in the requirements of the relevant environmental authorities and seeks, through their experience, to mitigate the risk
of non-compliance with accepted best practice.
Exploration Risk
All drilling to establish productive diamond resources is inherently speculative, and, therefore, a considerable amount
of professional judgement is involved in the selection of any prospect for drilling. In addition, in the event drilling
successfully encounters diamonds, unforeseeable operating problems may arise which render it uneconomic to exploit
such finds. Estimates of potential resources include substantial proportions which are undeveloped. These resources
require further capital expenditure in order to bring them into production. No guarantee can be given as to the success
of drilling programmes in which the Company has an interest. The Company employs highly competent experienced
staff and uses a range of techniques to minimise risk prior to drilling and utilises independent experts to assess the
results of exploration activity.
Financial Risk
Refer to Note 17 in relation to the use of financial instruments by the Company, the financial risk management
objectives of the Company and the Company’s exposure to inflation, interest rate risk, foreign currency risk, liquidity
risk and credit risk. Management is authorised to achieve best available rates in respect of each forecast currency
requirement.
Pandemic Risk
The COVID-19 pandemic continued to have some impact on the Company’s activities during the financial year. Since the
outbreak of the COVID-19 pandemic, the Company has taken necessary measures in accordance with Government’s
guidelines to protect the health, safety and wellbeing of its employees, contractors and partners in Finland and Ireland
including for a period, staff working remotely. The field and laboratory work were not impacted as much in this
financial year end. The Company’s exploration and development programme continued.
14
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc
15
Karelian Diamond Resources P.L.C.
Directors’ Report (continued)
Risks and uncertainties (continued)
Russia/Ukraine war Risk
Since February 2022, the world has been watching closely the situation between Russia and the Ukraine and the impact
on Europe and the rest of the world. The main impacts seen to date are on the energy prices and any supply issues that
may occur in the energy sector as a result of restrictions imposed. Directors and management will continue to closely
monitor the situation and in particular the impact which it may have on the operations of the business.
Communication with shareholders
The Company gives high priority to communication with both shareholders and all other stakeholder groups. This is
achieved through publications such as the annual and interim report, and news releases on the Company’s website
www.kareliandiamondresources.com, which is regularly updated.
The Company encourages shareholders to attend the Annual General Meeting (AGM) to meet, exchange views and
discuss the progress of the Company. The Directors are available after the conclusion of the formal business of the
AGM to meet, listen to shareholders and discuss any relevant matters arising.
Political donations
There were no political donations during the financial year (31 May 2021: €Nil).
Accounting records
The Board of Directors are responsible for ensuring adequate accounting records, as outlined in Sections 281 to 285 of
the Companies Act 2014, are kept by the Company. The Board of Directors, through the use of appropriate procedures
and systems and the employment of competent persons have ensured that measures are in place to secure compliance
with these requirements.
The accounting records are maintained at the Company’s business address, 3300 Lake Drive, Citywest Business Campus,
Dublin 24, D24 TD21, Ireland.
Disclosure of information to auditor
So far as each of the Directors in office at the date of approval of the financial statements is aware:
•
•
There is no relevant audit information of which the Company’s auditor is unaware; and
The Directors have taken all steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
This information is given and should be interpreted in accordance with the provisions of Section 330 of the Companies
Act 2014.
Auditor
Deloitte Ireland LLP will continue in office in accordance with Section 383 (2) of the Companies Act 2014. Shareholders
will be asked to authorise the Directors to fix their remuneration.
On behalf of the Directors:
Professor Richard Conroy (Chairman)
Maureen T.A. Jones (Managing Director)
28 November 2022
15
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 16
Independent auditor’s report to the members of Karelian Diamond Resources Plc
Independent Auditor’s Report
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’)
In our opinion the financial statements:
•
•
give a true and fair view of the assets, liabilities and financial position of the company as at 31 May
2022 and of the profit of the company for the financial year then ended; and
have been properly prepared in accordance with the relevant financial reporting framework and, in
particular, with the requirements of the Companies Act 2014.
The financial statements we have audited comprise:
• the Income statement;
• the Statement of comprehensive income;
• the Statement of financial position;
• the Statement of changes in equity;
• the Statement of cash flows; and
• the related notes 1 to 19, including a summary of significant accounting policies as set out in note 1.
The relevant financial reporting framework that has been applied in their preparation is the Companies Act
2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union (“the relevant
financial reporting framework”).
BBaassiiss ffoorr ooppiinniioonn
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable
in the “Auditor's
responsibilities for the audit of the financial statements” section of our report.
law. Our responsibilities under those standards are described below
We are independent of the company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing
and Accounting Supervisory Authority as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
MMaatteerriiaall uunncceerrttaaiinnttyy rreellaatteedd ttoo ggooiinngg ccoonncceerrnn
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
We draw attention to Note 1 in the financial statements, which indicates that as at 31 May 2022 the company
had net current liabilities of €1,429,982.
As stated in Note 1, these events or conditions indicate that a material uncertainty exists that may cast
significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
16
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 17
Independent auditor’s report to the members of Karelian Diamond Resources Plc
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern
basis of accounting included:
•
•
•
•
•
•
•
•
obtaining an understanding of the company’s relevant controls over the preparation of cash flow
forecasts and approval of the projections and assumptions used in cash flow forecasts to support the
going concern assumption;
assessing the design and determining the implementation of these relevant controls;
evaluating directors’ plans and their feasibility by agreeing the inputs used in the cash flow forecast to
expenditure commitments and other supporting documentation;
challenging the reasonableness of the assumptions applied by the directors in their going concern
assessment;
obtaining confirmations received by the company from the directors and former directors evidencing
that they will not seek repayment of amounts owed to them by the company within 12 months of the
date of approval of the financial statements, unless the company has sufficient funds to repay;
understanding the status of the discussions in relation to the extension or conversion of the
convertible loan note which is due to expire on 10 December 2022;
assessing the mechanical accuracy of the cash flow forecast model; and
assessing the adequacy of the disclosures made in the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
SSuummmmaarryy ooff oouurr aauuddiitt aapppprrooaacchh
KKeeyy aauuddiitt mmaatttteerrss
The key audit matters that we identified in the current year were:
• Going concern (see material uncertainty related to going concern section); and
• Valuation of Intangible Assets.
Within this report, any new key audit matters are identified with
and any key
audit matters which are the same as the prior year identified with
.
The materiality that we used in the current year was €280,000 which was deter-
mined on the basis of approximately 3% of Shareholder’s Equity.
We determined the scope of our audit by obtaining an understanding of the compa-
ny and its environment and assessing the risks of material misstatement.
There were no significant changes in our approach.
MMaatteerriiaalliittyy
SSccooppiinngg
SSiiggnniiffiiccaanntt cchhaannggeess iinn
oouurr aapppprrooaacchh
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current financial year and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the
matter described in the material uncertainty relating to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
17
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc Independent auditor’s report to the members of Karelian Diamond Resources Plc
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
18
VVaalluuaattiioonn ooff IInnttaannggiibbllee AAsssseettss
Independent Auditor’s Report (continued)
As at 31 May 2022, the carrying value of Exploration and evaluation assets included in
intangible assets in the statement of financial position amounted to €10,910,931
Independent auditor’s report to the members of Karelian Diamond Resources Plc
KKeeyy aauuddiitt mmaatttteerr
ddeessccrriippttiioonn
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
VVaalluuaattiioonn ooff IInnttaannggiibbllee AAsssseettss
KKeeyy aauuddiitt mmaatttteerr
ddeessccrriippttiioonn
HHooww tthhee ssccooppee ooff
oouurr aauuddiitt rreessppoonndd--
eedd ttoo tthhee kkeeyy aauuddiitt
mmaatttteerr
HHooww tthhee ssccooppee ooff
oouurr aauuddiitt rreessppoonndd--
eedd ttoo tthhee kkeeyy aauuddiitt
mmaatttteerr
KKeeyy oobbsseerrvvaattiioonnss
KKeeyy oobbsseerrvvaattiioonnss
We draw your attention to the disclosures made in Notes 1 and 7 to the financial
statements concerning the valuation of Intangible assets held. The valuation of
intangible assets by the company is dependent on the 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.
As at 31 May 2022, the carrying value of Exploration and evaluation assets included in
intangible assets in the statement of financial position amounted to €10,910,931
The valuation of intangible assets in the statement of financial position was assessed
as a significant risk and given the balance constitutes the majority of the total assets in
We draw your attention to the disclosures made in Notes 1 and 7 to the financial
the statement of financial position, we considered it a key audit matter.
statements concerning the valuation of Intangible assets held. The valuation of
intangible assets by the company is dependent on the further successful development
We performed the following procedures:
and ultimate production of the mineral resources and the availability of sufficient
finance to bring the resources to economic maturity and profitability.
• We evaluated the design and determined the implementation of relevant
controls in place over the capitalisation and subsequent valuation of intangible
The valuation of intangible assets in the statement of financial position was assessed
assets;
as a significant risk and given the balance constitutes the majority of the total assets in
• We inspected documentation in respect of licences held and considered and
the statement of financial position, we considered it a key audit matter.
challenged the directors’ assessment of indicators of impairment in relation to
exploration and evaluation assets;
We performed the following procedures:
We performed the following procedures:
• We performed a review of the proposed exploration programme in respect of
• We evaluated the design and determined the implementation of relevant
• We evaluated the design and determined the implementation of relevant
the company’s assets; including:
controls in place over the capitalisation and subsequent valuation of intangible
controls in place over the capitalisation and subsequent valuation of intangible
discussing and challenging the allocation of capitalised costs for their
-
assets;
assets;
reasonableness,
• We inspected documentation in respect of licences held and considered and
• We inspected documentation in respect of licences held (as relevant);
assessing the reasonableness of the assets capitalised in the current year,
-
challenged the directors’ assessment of indicators of impairment in relation to
and
• We challenged the directors’ assessment of indicators of impairment in relation
exploration and evaluation assets;
reviewing and considering indicators of impairment.
-
to exploration and evaluation assets. We also performed a review of the
• We performed a review of the proposed exploration programme in respect of
• We obtained a listing of intangible asset additions in the financial year and
proposed exploration programme in respect of the company’s assets to consider
the company’s assets; including:
selected a sample of additions to ensure the capitalisation was in line with
indicators of impairment;
discussing and challenging the allocation of capitalised costs for their
-
accounting policies;
• We performed a review of Board of Directors meeting minutes and press releases
reasonableness,
• We performed a review of Board of Directors meeting minutes and press
issued by the company in relation to the status of exploration and evaluation
assessing the reasonableness of the assets capitalised in the current year,
-
releases issued by the company in relation to the status of exploration and
assets;
and
evaluation assets;
reviewing and considering indicators of impairment.
-
• We performed a review of budgeted expenditure for the next 12 months from
• We performed a review of budgeted expenditure for the next 12 months from
• We obtained a listing of intangible asset additions in the financial year and
the date of approval of the financial statements; and
the date of approval of the financial statements; and
selected a sample of additions to ensure the capitalisation was in line with
• We also considered the adequacy of the disclosure in the financial statements.
• We also considered the adequacy of the disclosure in the financial statements.
accounting policies;
A significant uncertainty exists in relation to the ability of the company to realise the
• We performed a review of Board of Directors meeting minutes and press
exploration and evaluation assets capitalised to intangible assets.
releases issued by the company in relation to the status of exploration and
evaluation assets;
the date of approval of the financial statements; and
As noted above, we draw your attention to the disclosures made in Notes 1 and 7 to
• We performed a review of budgeted expenditure for the next 12 months from
the financial statements concerning the valuation of intangible assets. The valuation of
intangible assets by the company is dependent on the successful renewal of certain
• We also considered the adequacy of the disclosure in the financial statements.
licences, the further successful development and ultimate production of the
A significant uncertainty exists in relation to the ability of the company to realise the
mineral resources and the availability of sufficient finance to bring the resources
exploration and evaluation assets capitalised to intangible assets.
to economic maturity and profitability. The financial statements do not include any
adjustments in relation to these uncertainties and the ultimate outcome cannot, at
As noted above, we draw your attention to the disclosures made in Notes 1 and 7 to
present, be determined. Our opinion is not modified in respect of this matter.
the financial statements concerning the valuation of intangible assets. The valuation of
intangible assets by the company is dependent on the successful renewal of certain
licences, the 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. The financial statements do not include any
adjustments in relation to these uncertainties and the ultimate outcome cannot, at
present, be determined. Our opinion is not modified in respect of this matter.
18
18
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 19
Independent auditor’s report to the members of Karelian Diamond Resources Plc
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
Our audit procedures relating to these matters were designed in the context of our audit of the financial
statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on
the financial statements is not modified with respect to any of the risks described above, and we do not
express an opinion on these individual matters.
OOuurr aapppplliiccaattiioonn ooff mmaatteerriiaalliittyy
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions
of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced.
We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
We determined materiality for the company to be €280,000 which is approximately 3% of Shareholder’s
Equity. We have considered Shareholder’s Equity to be the critical component for determining materiality as
we determined the Shareholder’s Equity position to be of most importance to the principal external users of
the financial statements. Raising equity funding is of key importance to the company in continuing its current
operations and is reflective of the current business life cycle of the company. We have considered
quantitative and qualitative factors such as understanding the entity and its environment, history of
misstatements, complexity of the company and reliabity of control environment.
We agreed with the Audit Committee that we would report to them any audit differences in excess of
€14,000, as well as differences below that threshold which, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
AAnn oovveerrvviieeww ooff tthhee ssccooppee ooff oouurr aauuddiitt
We determined the scope of our audit by obtaining an understanding of the company and its environment
and assessing the risks of material misstatement within the company. We did not identify any significant
changes in the company in the current year therefore there has been no change in audit scope compared
with the prior year. The key audit matters we identified have remained consistent with prior year.
.
19
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 20
Independent auditor’s report to the members of Karelian Diamond Resources Plc
Independent Auditor’s Report (continued)
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
OOtthheerr iinnffoorrmmaattiioonn
The other information comprises the information included in the Annual Report and Financial Statements,
other than the financial statements and our auditor’s report thereon. The directors are responsible for the
other information contained within the Annual Report and Financial Statements.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that
fact.
We have nothing to report in this regard.
RReessppoonnssiibbiilliittiieess ooff ddiirreeccttoorrss
As explained more fully in the Directors’ Report, the directors are responsible for the preparation of the finan-
cial statements and for being satisfied that they give a true and fair view and otherwise comply with the
Companies Act 2014, and for such internal control as the directors determine is necessary to enable the prep-
aration of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to con-
tinue as a going concern, disclosing, as applicable, matters related to going concern and using the going con-
cern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
AAuuddiittoorr’’ss rreessppoonnssiibbiilliittiieess ffoorr tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on IAASA’s
website at: http://www.iaasa.ie/Publications/Auditing-standards/International-Standards-on-Auditing-for-use-
in-Ire/Description-of-the-auditor-s-responsibilities-for. This description forms part of our auditor’s report.
20
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 21
Independent auditor’s report to the members of Karelian Diamond Resources Plc
RReeppoorrtt oonn tthhee aauuddiitt ooff tthhee ffiinnaanncciiaall ssttaatteemmeennttss
Opinion on the financial statements of Karelian Diamond Resources Plc (the ‘Company’) (continued)
RReeppoorrtt oonn ootthheerr lleeggaall aanndd rreegguullaattoorryy rreeqquuiirreemmeennttss
OOppiinniioonn oonn ootthheerr mmaatttteerrss pprreessccrriibbeedd bbyy tthhee CCoommppaanniieess AAcctt 22001144
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of
•
•
•
our audit.
In our opinion the accounting records of the company were sufficient to permit the financial statements
to be readily and properly audited.
The financial statements are in agreement with the accounting records.
In our opinion the information given in the directors’ report is consistent with the financial statements
and the directors’ report has been prepared in accordance with the Companies Act 2014.
MMaatttteerrss oonn wwhhiicchh wwee aarree rreeqquuiirreedd ttoo rreeppoorrtt bbyy eexxcceeppttiioonn
Based on the knowledge and understanding of the company and its environment obtained in the course
of the audit, we have not identified material misstatements in the directors' report.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report
to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by law are not
made.
UUssee ooff oouurr rreeppoorrtt
This report is made solely to the company’s members, as a body, in accordance with Section 391 of the Com-
panies Act 2014. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
KKeevviinn BBuuttlleerr
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
No. 6 Lapp’s Quay
Cork
Date: 28 November 2022
21
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 22
Karelian Diamond Resources P.L.C.
Income statement
for the financial year ended 31 May 2022
Continuing operations
Operating expenses
Share-based payment expense
Movement in fair value of warrants
Profit/(loss) before finance costs and taxation
Interest expense
Net finance costs
Profit/(loss) before taxation
Income tax expense
Profit/(loss) for the financial year
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share
Note
2
16
16
3
11
5
6
2022
€
(369,019)
-
389,904
20,885
(7,292)
(7,292)
13,593
-
13,593
2021
€
(370,370)
(46,519)
5,250
(411,639)
(10,553)
(10,553)
(422,192)
-
(422,192)
0.0002
(0.0082)
The total profit/(loss) for the financial year is entirely attributable to equity holders of the Company.
______________________
Professor Richard Conroy
Chairman
___________________
Maureen T.A. Jones
Managing Director
22
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 23
Karelian Diamond Resources P.L.C.
Statement of comprehensive income
for the financial year ended 31 May 2022
Profit/(loss) for the financial year
2022
€
2021
€
13,593
(422,192)
Income recognised in other comprehensive income
-
-
Total comprehensive profit/(loss) for the financial year
13,593
(422,192)
The total comprehensive profit/(loss) for the financial year is entirely attributable to equity holders of the
Company.
23
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 24
Karelian Diamond Resources P.L.C.
Statement of financial position
as at 31 May 2022
Assets
Non-current assets
Intangible assets
Financial assets
Total non-current assets
Current assets
Cash and cash equivalents
Other receivables
Total current assets
Total assets
Equity
Capital and reserves
Share capital presented as equity
Share premium
Share-based payments reserve
Retained deficit
Total equity
Liabilities
Non-current liabilities
Derivative liability
Convertible loan
Warrant liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Convertible Loan
Total current liabilities
Total liabilities
Total equity and liabilities
Note
7
8
9
10
13
13
16
11
11
11
12
11, 12
31 May
2022
€
10,910,931
-
10,910,931
117,868
60,178
178,046
31 May
2021
€
10,766,576
4
10,766,580
61,778
652,957
714,735
11,088,977
11,481,315
3,191,807
9,959,181
450,658
(4,120,843)
9,480,803
146
-
-
146
1,441,238
166,790
1,608,028
1,608,174
3,191,807
9,959,181
450,658
(4,105,780)
9,495,866
146
159,498
389,904
549,548
1,435,901
-
1,435,901
1,985,449
11,088,977
11,481,315
The financial statements were approved by the Board of Directors on 28 November 2022 and authorised for issue on
28 November 2022. They are signed on its behalf by:
______________________
Professor Richard Conroy
Chairman
__________________
Maureen T.A. Jones
Managing Director
24
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 25
Karelian Diamond Resources P.L.C.
Statement of changes in equity
for the financial year ended 31 May 2022
Balance at 1 June 2021
Share issue costs
Profit for the financial
year
Balance at 31 May 2022
Balance at 1 June 2020
Share issue
Warrant issue
Share issue costs
Transfer from share-
based payment reserve to
retained deficit
Loss for the financial year
Balance at 31 May 2021
Share
capital
€
3,191,807
-
-
3,191,807
3,185,432
6,375
-
-
-
-
3,191,807
Share
premium
€
9,959,181
-
-
9,959,181
9,150,829
1,156,987
(348,635)
-
-
-
9,959,181
Share-based
payment reserve
€
Retained
deficit
€
450,658
-
(4,105,780)
(28,656)
-
450,658
13,593
(4,120,843)
456,624
-
-
-
(3,666,104)
-
-
(23,450)
(5,966)
-
450,658
5,966
(422,192)
(4,105,780)
Total
equity
€
9,495,866
(28,656)
13,593
9,480,803
9,126,781
1,163,362
(348,635)
(23,450)
-
(422,192)
9,495,866
Share capital
The share capital comprises of 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 the Annual General Meeting held on 9 December 2016. A detailed breakdown of the
share capital figure is included in Note 13.
Share premium
The share premium reserve comprises of the excess consideration received in respect of share capital over the nominal
value of 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 or lapsed during the
year, which are reclassified to retained deficit.
Retained deficit
This reserve represents the accumulated losses absorbed by the Company to the statement of financial position date.
25
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 26
Karelian Diamond Resources P.L.C.
Statement of cash flows
for the financial year ended 31 May 2022
Cash flows from operating activities
Profit/(loss) for the financial year
Adjustments for:
Movement in fair value of warrants
Interest expense
Expense recognised in income statement in respect of
equity settled share-based payments
Increase in trade and other payables
Increase in other receivables
(Repayment to)/advances from Conroy Gold and Natural Resources P.L.C.
Net cash used in operating activities
Cash flows from investing activities
Investment in exploration and evaluation
Net cash used in investing activities
Cash flows from financing activities
Issue of share capital*
Share issue costs*
Repayment on loans
Net cash provided by financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
2022
€
13,593
(389,904)
7,292
-
(369,019)
75,340
(11,872)
(70,000)
(375,550)
(144,355)
(144,355)
604,651
(28,656)
-
575,995
56,090
61,778
117,868
2021
€
(422,192)
(5,250)
10,553
46,519
(370,370)
146,927
(762,367)
228,402
(757,408)
(243,006)
(243,006)
1,068,988
(23,450)
712
1,046,250
45,836
15,942
61,778
* On 27 May 2021, the Company completed a share placing and subscription raising funds amounting to €604,651 with
share issue costs of €28,656 being incurred. These funds were received in early June 2021 while the share issue costs
were paid in the same period.
26
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 27
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
1
Accounting policies
Reporting entity
Karelian Diamond Resources P.L.C. (the “Company”) is a company domiciled in Ireland. The Company is a public
limited company incorporated in Ireland under registration number 382499. The registered office is located at
3300 Lake Drive, Citywest Business Campus, Dublin 24, D24 TD21, Ireland.
Basis of preparation
The financial statements are presented in euro (“€”). The € is the functional currency of the Company. The
financial statements are prepared under the historical cost basis except for derivative financial instruments which,
if any, are measured at fair value at each reporting date.
The preparation of 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 period in which the
estimate is revised and in any future periods affected. Details of significant judgements are disclosed in the
accounting policies.
The financial statements were authorised for issue by the Board of Directors on 28 November 2022.
Going concern
The Company recorded a profit of €13,593 (31 May 2021: a loss of €422,192) for the financial year ended 31 May
2022. The Company had net assets of €9,480,803 (31 May 2021: €9,495,866) at that date. The Company had net
current liabilities of €1,429,982 (31 May 2021: net current liabilities of €721,166) at the statement of financial
position date.
The Directors, Professor Richard Conroy, Séamus P. FitzPatrick, Maureen T.A. Jones, Dr. Sorċa Conroy, Brendan
McMorrow, Howard Bird and former Director James P. Jones, have confirmed that they will not seek repayment of
amounts owed to them by the Company of €1,106,970 (31 May 2021: €921,969) within 12 months of the date of
approval of the financial statements, unless the Company has sufficient funds to repay.
Conroy Gold and Natural Resources P.L.C. have confirmed that it will not seek repayment of amounts owed to it by
the Company of €199,806 (31 May 2021: €169,933) for a minimum period of 12 months from the date of
approval of the financial statements, unless the Company has sufficient funds to repay.
The Directors are aware that the term of the convertible loan note expires on 10 December 2022 and have started
discussions with the loan note holder in relation to extension or conversion. The directors are confident that these
discussions will be satisfactorily concluded.
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 30 November 2023. As set out further in the
Chairman’s statement, the Company expects to incur capital expenditure in 2022 and 2023, consistent with its
strategy as an exploration company. The Directors recognise that net current liabilities of €1,429,982 (31 May
2021: €721,166) is a material uncertainty that may cast significant doubt on the Company’s ability to continue as a
going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal
course of business. In reviewing the proposed work programme for exploration and evaluation assets and, 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.
The financial statements do not include any adjustments to the carrying value and classification of assets and
liabilities that would arise if the Company was unable to continue as going concern.
Statement of compliance
The Company’s financial statements have been prepared in accordance with IFRS as adopted by the European
Union (“EU”) and the requirements of the Companies Act 2014.
27
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 28
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1
Accounting policies (continued)
Recent accounting pronouncements
(i) New and amended standards adopted by the Company
The Company has adopted the following amendments to standards for the first time for its annual reporting year
commencing 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;
Amendments to IFRS 4 Insurance Contracts- deferral of IFRS 9 – Effective 1 January 2021;
The adoption of the above amendments to standards had no significant impact on the financial statements of the
Company either due to being not applicable or immaterial.
(ii) New standards and interpretations not yet adopted by the Company
Certain new accounting standards and interpretations have been published that are not mandatory for 31 May
2022 reporting periods and have not been early adopted by the Company.
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 financial year 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;
IAS 8 amendments regarding the definition of accounting estimates – Effective date 1 January 2023;
IAS 1 amendments regarding the disclosure of accounting policies - Effective date 1 January 2023;
IFRS 17 Insurance contracts – Effective date deferred to 1 January 2023.
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 3 amendments updating a reference to the Conceptual Framework – Effective date 1 January 2022;
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;
IAS 37 amendments regarding the costs to include when assessing whether a contract is onerous – Effective
date 1 January 2022.
IFRS 1 amendments resulting from Annual Improvements to IFRS Standards 2018–2020 (subsidiary as a first-
time adopter) – Effective date 1 January 2022; and
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;
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 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 – Effective date 1 January 2024.
28
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 29
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1 Accounting policies (continued)
(a) Intangible assets
The Company accounts for mineral expenditure in accordance with IFRS 6: Exploration for and Evaluation of
Mineral Resources.
(i) Capitalisation
Certain costs (other than payments to acquire the legal rights to explore) incurred prior to acquiring the rights to
explore are charged directly to the income statement. Exploration, appraisal and development expenditure
incurred on exploring, and testing exploration prospects are accumulated and capitalised as intangible exploration
and evaluation (“E&E”) assets.
E&E capitalised costs include geological and geophysical costs, and other direct costs of exploration (drilling,
trenching, sampling and technical feasibility and commercial viability activities). In addition, E&E capitalised costs
include an allocation from operating expenses, including share-based payments. All such costs are necessary for
exploration and evaluation activities.
E&E capitalised costs are not amortised prior to the conclusion of appraisal activities.
At completion of appraisal activities if technical feasibility is demonstrated and commercial resources are
discovered, then the carrying amount of the relevant E&E asset will be reclassified as a development and
production asset, once the carrying value of the asset has been assessed for impairment. If following completion of
appraisal activities in an area, it is not possible to determine technical feasibility and commercial viability, or if the
right to explore expires, then the costs of such unsuccessful exploration and evaluation are written off to the
income statement in the period in which the event occurred.
(ii) Impairment
If facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable amount, an
impairment review is performed. The following are considered to be key indicators of impairment in relation to
E&E assets:
•
•
•
•
The period for which the entity has the right to explore in the specific area has expired or will expire in the near
future and is not expected to be renewed.
Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is
neither budgeted nor planned.
Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in
the specific area.
Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
For E&E assets, where the above indicators exist or on an annual basis, an impairment test is carried out. The E&E
assets are categorised into Cash Generating Units (“CGU”) on a country-by-country basis. The carrying value of the
CGU is compared to its recoverable amount and any resulting impairment loss is written off to the income
statement. The recoverable amount of the CGU is assessed as the higher of its fair value, less costs to sell, and its
value in use.
29
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 30
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1
Accounting policies (continued)
(b) Income taxation expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income
statement except to the extent that it relates to items recognised directly in other comprehensive loss, in which
case it is recognised in the statement of comprehensive income. Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities on a net basis or their tax assets and liabilities will be settled
simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will
be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
(c) Share-based payments
The Company classifies instruments issued as financial liabilities or equity instruments in accordance with the
substance of the contractual terms of the instruments. When the warrants issued (see note 16 for details) have an
exercise price in sterling, they are derivative in nature and are liability classified. They do not qualify for equity
classification as any cash settlement on exercise of these warrants will be received in a foreign currency. Where
warrants are issued in the functional currency of the Company and meet the other necessary conditions, they are
recognised as equity instruments. The warrant liabilities are recognised at their fair value on initial recognition and
subsequently are measured at fair value through profit or loss. Any incremental direct costs associated with the
issuance of warrants are taken as an immediate charge to finance costs through the income statement. See note
11 for further details.
For equity-settled share-based payment transactions (i.e. the granting of share options and share warrants), the
Company measures the services and the corresponding increase in equity at fair value at the measurement date
(which is the grant date) using a recognised valuation methodology for the pricing of financial instruments
(Binomial Lattice Model or Black Scholes Model).
(d) Trade and other receivables and payables
Trade and other receivables are measured at their transaction price and subsequently measured at amortised cost.
Trade and other payables are measured at initial recognition at fair value, and subsequently measured at
amortised cost.
(e) Earnings per share
The Company presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the
effects of all potentially dilutive ordinary shares.
30
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 31
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1
Accounting policies (continued)
(f) Cash and cash equivalents
Cash and cash equivalents consist of cash at bank held by the Company and short-term bank deposits with a
maturity of three months or less. Cash and cash equivalents are held for the purpose of meeting short-term cash
commitments.
(g) Pension costs
The Company provides for pensions for certain employees through a defined contribution pension scheme. The
amount charged to the income statement is the contribution payable in that financial year. Any difference
between amounts charged and contributions paid to the pension scheme is included in receivables or payables in
the statement of financial position.
(h) Foreign currencies
Transactions denominated in foreign currencies relating to costs and non-monetary assets are translated into € at
the rates of exchange ruling on the dates on which the transactions occurred. Monetary assets and liabilities
denominated in foreign currencies are translated into € at the rate of exchange ruling at the statement of financial
position date. The resulting profits or losses are dealt with in the income statement.
(i) Directors’ Loans
The Directors’ loans are initially measured at fair value, net of transaction costs and subsequently measured at
amortised cost using the effective interest method, with interest expense recognised on the effective interest rate
method. The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability.
(j) Convertible loan
As the convertible loan is made up of both liability and derivative components, it is considered to be a compound
financial instrument. At initial recognition, the carrying amount of a compound financial instrument is allocated to
its liability and derivative components. The fair value of the liability, which is the difference between the
transaction price and the fair value of the conversion feature, and derivative is recognised as a liability in the
statement of financial position. The conversion feature is subsequently measured at fair value with changes
recognised in profit or loss. The liability is subsequently measured at amortised cost. The Company accounts for
the interest expense of the convertible loan note at the effective interest rate. The difference between the
effective interest rate and interest rate attached to the convertible loan increases the carrying amount of the
liability so that, on maturity, the carrying amount is equal to the capital cash repayment that the Company may be
required to pay.
(k) Ordinary shares
Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares and share
warrants are recognised as a deduction from retained earnings, net of any tax effects. Effective 6 July 2022, share
issue costs can be deducted from share premium. Costs in relation to the issuance of warrants will continue to be
deducted from retained earnings.
(l) Impairment - financial assets are measured at amortised cost
Financial assets measured at amortised cost are reviewed for impairment loss at each reporting date. The
Company applies the simplified approach in accordance with IFRS 9.
The Company measures the loss allowance at an amount equal to the lifetime expected credit losses as required
under a simplified approach for trade receivables that do not contain a financing component.
31
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 32
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1
Accounting policies (continued)
(l) Impairment - financial assets are measured at amortised cost (continued)
The Company’s approach to expected credit losses (“ECL”) reflects a probability-weighted outcome, the time value
of money and reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic conditions. Significant
financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy or financial re-
organisation and default in payments are all considered indicators for increases in credit risks.
If the credit risk increases to the point that it is considered to be credit impaired, interest income will be calculated
based on the gross carrying amount adjusted for the loss allowance. Any contractual payment which is more than
90 days past due is considered credit impaired.
(m) Significant accounting judgements and key sources of estimation uncertainty
Significant judgements in applying the Company’s accounting policies
The preparation of the financial statements requires the Board of Directors to make judgements and estimates and
form assumptions that affect the amounts of assets, liabilities, contingent liabilities, revenues and expenses
reported in the financial statements. On an ongoing basis, the Board of Directors evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. The Board of Directors bases
its judgements and estimates on historical experience and on other factors it believes to be reasonable under the
circumstances, the results of which form the basis of the reported amounts that are not readily apparent from
other sources. Actual results may differ from these estimates under different assumptions and conditions. In the
process of applying the Company’s accounting policies above, the Board of Directors have identified the
judgemental areas that have the most significant impact on the amounts recognised in the financial statements
(apart from those involving estimations), which are dealt with as follows:
Exploration and evaluation assets
The assessment of whether operating costs and salary costs are capitalised to exploration and evaluation costs or
expensed involves judgement. The Board of Directors consider the nature of each cost incurred and whether it is
deemed appropriate to capitalise it within exploration and evaluation assets. Given that the activity of
management and the resultant administration and salary costs are primarily focused on the Company’s diamond
prospects, the Board of Directors consider it appropriate to capitalise a portion of such costs. These costs are
reviewed on a line by line basis with the resultant calculation of the amount to be capitalised being specific to the
activities of the Company in any given year.
Cash generating units
As outlined in the intangible assets accounting policy, the exploration and evaluation assets should be allocated to
CGUs. The determination of what constitutes a CGU requires judgement.
The carrying value of each CGU is compared to its recoverable amount. The recoverable amount of the CGU is
assessed as the higher of its fair value less costs to sell and its value in use. The determination of value in use
requires the following judgements:
•
•
•
Estimation of future cash flows expected to be derived from the asset.
Expectation about possible variations in the amount or timing of the future cash flows.
The determination of an appropriate discount rate.
32
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 33
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
1
Accounting policies (continued)
(m) Significant accounting judgements and key sources of estimation uncertainty (continued)
Significant judgements in applying the Company’s accounting policies (continued)
Going concern
The preparation of financial statements requires an assessment on the validity of the going concern assumption.
The validity of the going concern assumption is dependent on the successful further development and ultimate
production of the mineral resources and the availability of sufficient finance to bring the resources to economic
maturity and profitability. The Board of Directors have reviewed the proposed programme for exploration and
evaluation assets and, on the basis of the equity raised after the financial year, the results from the exploration
programme and the prospects for raising additional funds as required, consider it appropriate to prepare the
financial statements on the going concern basis. Refer to page 27 for further details.
Deferred tax
No deferred tax asset has been recognised in respect of tax losses as it is not considered probable that future
taxable profit will be available against which the related temporary differences can be utilised.
Key sources of estimation uncertainty
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
Exploration and evaluation assets
The carrying value of exploration and evaluation assets was €10,910,931 (31 May 2021: €10,766,576) at 31 May
2022. The Board of Directors carried out an assessment, in accordance with IFRS 6: Exploration for and Evaluation
of Mineral Resources relating to the remaining licence or claim terms, likelihood of renewal, likelihood of further
expenditure, possible discontinuation of activities over specific claims and available data which may suggest that
the recoverable value of an exploration and evaluation asset is less than its carrying amount. Based on this
assessment, the Board of Directors is satisfied as to the carrying value of these assets and is satisfied that these are
recoverable, acknowledging however that their recoverability is dependent on future successful exploration
efforts. While uncertainty exists, primarily due to the nature of the mining and exploration business, the Directors
will continue to assess the carrying amounts of the exploration and evaluation assets. This assessment includes an
assessment of the possible outcomes that can be reasonably expected in the forthcoming financial period.
Employee benefits – Share-based payment transactions
The Company operates equity-settled share-based payment arrangements with non-market performance
conditions which fall within the scope of and are accounted for under the provisions of IFRS 2: Share-based
Payment. Accordingly, the grant date fair value of the options under these schemes is recognised as an operating
expense with a corresponding increase in the “Share-based payment reserve”, within equity, where the exercise
price is granted in EUR or recognised as a liability where a different currency is quoted as the exercise price over
the vesting period. The estimation of share-based payment costs requires the selection of an appropriate valuation
model and consideration as to the inputs necessary for the valuation model chosen. The Company has made
estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of
those options. The model used by the Company is the Black Scholes Model. The fair value of these options is
measured using an appropriate option pricing model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share
options that vest, except where forfeiture is only due to share prices not achieving the threshold for vesting.
33
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 34
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
2 Operating expenses
Analysis of operating expenses
Operating expenses
Transfer to intangible assets
Operating expenses are analysed as follows:
Professional fees
Wages and salaries
Personnel costs
Other operating expenses
Auditor’s remuneration
2022
€
503,260
(134,241)
369,019
151,043
187,469
77,722
68,026
19,000
503,260
2021
€
449,671
(79,301)
370,370
184,846
99,721
49,048
97,056
19,000
449,671
Of the above costs, a total of €134,241 (31 May 2021: €79,301) is capitalised to intangible assets based on a review
of the nature and quantum of the underlying costs. Refer to Note 1(a)(i) for further details. The costs capitalised to
intangible assets mainly relate to the costs of geological and on-site personnel together with an appropriate
portion of executive management salaries. €57,500 (31 May 2021: €54,039) is charged to the Statement of
Comprehensive Income in relation to Directors’ salaries.
Wages, salaries and personnel costs as disclosed above is analysed as follows:
Wages and salaries and personnel costs
Social insurance costs
2022
€
258,044
7,147
265,191
2021
€
144,111
4,658
148,769
The amount of wages, salaries and related costs capitalised to intangible assets during the financial year was
€129,969 (31 May 2021: €72,369).
The average number of persons employed during the year (including executive Directors) by activity was as
follows:
Corporate management and administration
Exploration and evaluation
2022
2021
2
-
2
2
-
2
34
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 35
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
2
Operating expenses (continued)
An analysis of remuneration for each Director of the Company in the current financial year (prior to amounts
transferred to intangible assets) is as follows:
Professor Richard Conroy
Maureen T.A. Jones
Brendan McMorrow
Séamus P. FitzPatrick
Dr. Sorċa Conroy
Howard Bird
Fees
€
20,000
10,000
10,000
10,000
10,000
10,000
70,000
Salary
€
65,000
50,000
-
-
-
-
115,000
Share-based
payment €
-
-
-
-
-
-
-
Pension
contributions €
-
-
-
-
-
-
-
Total
€
85,000
60,000
10,000
10,000
10,000
10,000
185,000
An analysis of remuneration for each Director of the Company in the prior financial year (prior to amounts
transferred to intangible assets) is as follows:
Professor Richard Conroy
Maureen T.A. Jones
Brendan McMorrow
Séamus P. FitzPatrick
Dr. Sorċa Conroy
Howard Bird
Fees
€
12,500
6,250
6,250
6,250
6,250
6,250
43,750
Salary
€
40,625
31,250
-
-
-
-
71,875
Share-based
payment €
-
-
-
-
-
-
-
Pension
contributions €
-
-
-
-
-
-
-
Total
€
53,125
37,500
6,250
6,250
6,250
6,250
115,625
During the year ended 31 May 2021, the Directors made the decision to decrease their remuneration due to the
impact of Covid-19. During the year ended 31 May 2022, Directors' remuneration has returned to the pre-agreed
rates. No actual increases occurred during the year ended 31 May 2022.
3 Profit/(loss) before taxation
The profit/(loss) before taxation is arrived at after charging the following items:
Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
•
Audit of financial statements
2022
€
2021
€
19,000
19,000
No fees were incurred for other assurance; tax advisory or other non-audit services in respect of the current or prior
financial years.
35
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 36
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
4
Directors’ remuneration
Aggregate emoluments paid to or receivable by Directors in respect of
qualifying services
2022
€
2021
€
185,000
115,625
During the year ended 31 May 2022 and 31 May 2021, one Director was a member of a defined contribution
scheme but no amounts were paid and accordingly, no other disclosures are required by Section 305 of the
Companies Act 2014.
No compensation has been paid or is payable for the loss of office or other termination benefit in respect of the
loss of office of Director or other offices (31 May 2021: €Nil).
5
Income tax expense
No taxation charge arose in the current or prior financial year due to losses incurred in prior years and carried
forward to the current year.
Factors affecting the tax charge for the financial year:
The total tax charge for the financial year is different to the standard rate of Irish corporation tax. This is due to the
following:
Profit/(loss) on ordinary activities before taxation
Irish standard tax rate
Tax credit at the Irish standard rate
Effects of:
Losses carried forward utilised
Losses carried forward for future utilisation
Tax charge for the financial year
2022
€
13,593
12.50%
1,699
(1,699)
-
-
2021
€
(422,192)
12.50%
(52,774)
-
52,774
-
No deferred tax asset has been recognised on accumulated tax losses as it cannot be considered probable that
future taxable profit will be available against which the deferred tax asset can be utilised.
Unutilised losses may be carried forward from the date of the origination of the losses but may only be offset
against taxable profits earned from the same trade. Unutilised losses carried forward amounted to €12,859,143 at
31 May 2022 and €12,872,736 at 31 May 2021.
36
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 37
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
6
Profit/(loss) per share
Basic profit/(loss) per share
Profit/(loss) for the year attributable to equity holders of the
Company
2022
€
13,593
2021
€
(422,192)
Number of ordinary shares at start of the financial year
Number of ordinary shares issued during the financial year
Number of ordinary shares at end of the financial year
68,542,749
-
68,542,749
43,042,749
25,500,000
68,542,749
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
68,542,749
51,434,530
Basic and diluted profit/(loss) per ordinary share
0.0002
(0.0082)
Diluted profit/(loss) per share
The effect of share options and warrants is anti-dilutive.
7
Intangible assets
Exploration and evaluation assets
Finland
Cost
At 1 June
Expenditure during the financial year:
•
• Other operating expenses (Note 2)
At 31 May
Licence and appraisal costs
31 May
2022
€
10,766,576
10,114
134,241
10,910,931
31 May
2021
€
10,523,570
163,705
79,301
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.
37
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 38
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
8
Financial assets
Investment in subsidiaries
31 May
2022
€
-
31 May
2021
€
4
Financial assets represent investments of €2 in each of the Company’s wholly owned subsidiary undertakings,
Karelian Diamonds Limited and Nordic Diamonds Limited. The net asset of each entity is €2.
At 31 May 2021, the above subsidiaries have not been consolidated on the basis that they are immaterial as the
net asset of each entity is €2. During the year ended 31 May 2022, the two subsidiaries were dissolved.
9
Cash and cash equivalents
Cash held in bank accounts
31 May
2022
€
117,868
117,868
31 May
2021
€
61,778
61,778
During the year ended 31 May 2022, four new Nordea Bank accounts were opened for the purpose of holding
collateral deposits related to the Finnish licenses. As at 31 May 2022, a total amount of €24,500 (31 May 2021:
€Nil) relates to these collateral deposits and are treated as restricted cash balances.
10
Other receivables
VAT receivable
Other receivables
Share subscriptions receivable
11 Non-current liabilities
Warrant liabilities
31 May
2022
€
43,664
16,514
-
60,178
31 May
2021
€
31,283
17,023
604,651
652,957
During the year ended 31 May 2022, no new warrants were issued. During the prior year, 16,775,000 warrants
were issued with a sterling exercise price and expiry of thirty months. The fair value amount at grant date was
valued using the Black Scholes Model and recorded as warrant liabilities. At 31 May 2022, the warrants in issue
were fair valued with the movement in fair value being recorded in the income statement. See Note 16 for further
details.
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 convertible loan note is unsecured, has a term of three
years 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 10 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.
38
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 39
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
11 Non-current liabilities (continued)
Convertible loan (continued)
Any conversion of the convertible loan note will be a for a minimum of €60,761 (£50,000) of loan notes. The
amount of €146 (31 May 2021: €146) relates to derivative liability attached to the convertible loan note. The
convertible loan amounted to €166,790 (31 May 2021: €159,498) at 31 May 2022 and is classified as a current liability.
Opening Balance
Interest payable
Derivative liability element
12 Current liabilities
Trade and other payables
Accrued Directors’ remuneration
Fees and other emoluments
Pension contributions
Amount due to related party (see note 15 (c))
Other creditors and accruals
31 May
2022
€
-
-
-
-
31 May
2022
€
843,720
263,250
199,806
134,462
1,441,238
31 May
2021
€
148,945
10,553
-
159,498
31 May
2021
€
658,720
263,250
169,933
343,998
1,435,901
As at 31 May 2022, director fees amounting to €34,167 (31 May 2021: € 24,167) due to Brendan McMorrow is
included in Fees and other emoluments. As at 31 May 2022, an amount of €2,500 (31 May 2021: €13,700) payable
to Brendan McMorrow for other services rendered by him is included in other creditors and accruals.
It is the Company’s practice to agree terms of transactions, including payment terms with suppliers. It is the
Company’s policy that payment is made according to the agreed terms. The carrying value of the trade and other
payables approximates to their fair value.
Convertible loan
See note 11 for details, . The convertible loan is classified as a current liability for the year ended 31 May 2022.
Opening Balance
Interest payable
Derivative liability element
31 May
2022
€
159,498
7,292
-
166,790
31 May
2021
€
148,945
10,553
-
159,498
The Directors are aware that the term of the convertible loan note expires on 10 December 2022 and are in regular
contact with the loan note holder who is both supportive and a significant shareholder in the Company.
Related party loans
Opening balance 1 J une
Loan conversion to equity*
Loan repayment
Closing balance 31 May
31 May
2022
€
-
-
-
-
31 May
2021
€
93,662
(92,950)
(712)
-
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 40
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
12 Current liabilities (continued)
Related party loans (continued)
Prior to the various placings of shares, the immediate funding requirements of the Company had been financed by
advances from Professor Richard Conroy (Director, executive chairman and major shareholder) and Maureen T.A.
Jones (Director, Managing Director and shareholder). There is no interest payable in respect of these loans, no
security has been attached to these loans and there is no repayment or maturity terms.
*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.
13
Called up share capital and share premium
Authorised:
182,532,751,034 ordinary shares of €0.00001 each
7,301,310,041 consolidated ordinary shares of €0.00025 each
317,785,034 deferred shares of €0.00999 each
31 May
2022
€
-
1,825,328
3,174,672
5,000,000
31 May
2021
€
-
1,825,328
3,174,672
5,000,000
The deferred shares do not entitle the holder to receive a dividend or other distribution. Furthermore, the
deferred shares do not entitle the shareholder to receive notice of or vote at any general meeting of the Company,
and do not entitle the shareholder to any proceeds on a return of capital or winding up of the Company.
Issued and fully paid – Current financial year
Number of
ordinary shares
Called up
share capital
€
Called up deferred
share capital
€
Share
premium
€
Start of current financial year –
shares of €0.00025 each
68,542,749
17,135
3,174,672
9,959,181
End of current financial year
68,542,749
17,135
3,174,672
9,959,181
Issued and fully paid – Prior financial year
Number of
ordinary shares
Called up
share capital
€
Called up deferred
share capital
€
Share
premium
€
Start of prior financial year –
shares of €0.00025 each
43,042,749
10,760
3,174,672
9,150,829
Share issue (a)
Share issue (b)
10,500,000
13,000,000
Warrants issued (see note 16)
-
Loan conversion into shares (c)
2,000,000
2,625
3,250
-
500
-
-
-
-
463,136
601,401
(348,635)
92,450
End of prior financial year
68,542,749
17,135
3,174,672
9,959,181
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 41
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
13
14
15
Called up share capital and share premium (continued)
(a) On 25 August 2020, the Company raised €465,761 (£420,000) 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.
(b) 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.
(c) 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.
Warrants: At 31 May 2022, warrants over 17,286,250 shares exercisable at prices varying from £0.04 to £0.08 and
€0.10 at any time up to 27 November 2023 were outstanding. There were no new warrants issued during the year
ended 31 May 2022 (31 May 2021: 16,775,000 warrants were issued).
Options: At 31 May 2022 and 31 May 2021, there are no options outstanding.
Share price: The share price at 31 May 2022 was £0.025 (31 May 2021: £0.0475). The share price ranged from
£0.0205 to £0.0475 (31 May 2021: £0.0230 to £0.0650) during the year under review.
Commitments and contingencies
At 31 May 2022, there were no capital commitments or contingent liabilities (31 May 2021: €Nil) recognised at the
balance sheet date. Should the Company decide to further develop the Lahtojoki project, an amount of €40,000 is
payable by the Company to the vendors of the Lahtojoki mining concession.
Related party transactions
(a) Details of Directors’ loans previously advanced by Professor Richard Conroy and Maureen T.A. Jones are
outlined in Note 12 of the financial statements.
(b) The Company shares office accommodation with Conroy Gold and Natural Resources P.L.C. which has certain
common Directors and shareholders. For the financial year ended 31 May 2022, Conroy Gold and Natural
Resources P.L.C. incurred costs totalling €100,313 (31 May 2021: €54,872) on behalf of the Company. These costs
were recharged to the Company by Conroy Gold and Natural Resources P.L.C.
These costs are analysed as follows:
Office salaries
Rent and rates
Other operating expenses
2022
€
72,469
15,850
11,994
100,313
2021
€
49,048
-
5,824
54,872
(c) At 31 May 2022, the Company owed €199,806 to Conroy Gold and Natural Resources P.L.C. (31 May 2021:
€169,933 owed to). Amounts owed to Conroy Gold and Natural Resources P.L.C. were included within trade and
other payables during the current year. During the financial year ended 31 May 2022, the Company paid €70,000
to (31 May 2021: €173,530 was received from) Conroy Gold and Natural Resources P.L.C. During the financial year
ended 31 May 2022, the Company was charged €99,873 (31 May 2021: €54,872) by Conroy Gold and Natural
Resources P.L.C. in respect of the allocation of certain costs as detailed in Note 15(b).
(d) At 31 May 2022, Brendan McMorrow was owed €34,167 (31 May 2021: €24,167) in respect of his services as a
director and also an amount of €2,500 (31 May 2021: €13,700) payable to him for other services rendered. These
amounts are included in the trade and other payables balance in the statement of financial position.
(e) Refer Note 2 for an analysis of remuneration for each Director of the Company.
(f) Details of share capital transactions with the Directors are disclosed in the Directors’ Report.
(g) Apart from Directors’ remuneration (detailed in Note 2 and Note 4), loans from two shareholders (who are also
Directors which is detailed in Note 12), convertible loan from a shareholder (which is detailed in Note 11) and
share capital transactions (which are detailed within the Directors’ Report), there have been no contracts or
arrangements entered into during the financial year in which a Director of the Company had a material interest.
41
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 42
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
16
Share-based payments
Warrants granted generally have a vesting period of two and half years. Details of the warrants outstanding during
the financial year are as follows:
2022
No. of Share
Warrants
17,286,250
-
-
17,286,250
2022
Weighted
Average
Exercise Price
€
0.0918
-
-
0.0918
2021
No. of Share
Warrants
900,139
16,775,000
(388,889)
17,286,250
2021
Weighted
Average
Exercise Price
€
0.0815
0.09
(0.06)
0.0918
At 1 June
Granted during the financial year
Lapsed during the financial year
At 31 May
As a result of the valuation performed at year end, the fair value of the sterling based warrants was Nil (31 May
2021: €389,904) and accordingly €389,904 was credited to the Income Statement as a movement in the fair value
of warrants.
The Company estimated the fair value of warrants awards using the Black Scholes Model. The determination of
the fair value of share-based payment awards on the date of grant and on revaluation at each year end using the
Black Scholes Model is affected by Karelian Diamond Resources P.L.C. stock price, share price volatility as well as
assumptions regarding a number of subjective variables. These variables include the expected term of the awards,
the stock price volatility, the risk-free interest rate and the expected dividends.
The following key input assumptions were used to calculate the fair value of the sterling based warrants:
Dividend yield
Share price volatility
Risk free interest rate
Expected life (in years)
2022
Warrants
0%
61%
1.24%
2.0
2021
Warrants
0%
90%
0.1%
2.0
During the prior year, warrants were granted to the broker as part of the share issuances in August 2020 and May
2021. During the prior year, an amount of €46,519 was recognised in the income statement based on the fair
value of these warrants at grant date. No warrants lapsed during the current year. Amounts relating to share
warrants which lapsed during the prior year and which are reclassified to retained deficit were €5,966.
17
Financial instruments
Financial risk management objectives, policies and processes
The Company has exposure to the following risks from its use of financial instruments:
(a) Inflation;
(b) Interest rate risk;
(c) Foreign currency risk;
(d) Liquidity risk; and
(e) Credit risk.
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk
management framework.
42
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 43
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
17 Financial instruments (continued)
Financial risk management objectives, policies and processes (continued)
The Company’s risk management policies are established to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the
Company’s activities.
The Company’s Audit Committee oversees how management monitors compliance with the Company’s risk
management policies and procedures and framework in relation to the risks faced.
(a) Inflation
The Company is exposed to the risk associated with inflation such as the impact of increased operating expenses
including rent, light & heat and wages and salaries. The Chairman and Managing Director monitor costs on an
ongoing basis.
(b) Interest rate risk
The Company currently finances its operations through shareholders’ funds and loan finance. The loan finance at
31 May 2022 relates to a convertible loan therefore any fluctuations in interest rates will not have an impact on
the results of the Company and no sensitivity analysis has been performed. The Company did not enter into any
hedging transactions with respect to interest rate risk.
(c) Foreign currency risk
The Company is exposed to currency risk on purchases, loans and bank deposits that are denominated in a
currency other than the functional currency of the Company. The Company is further exposed to foreign currency
risk through the warrants denominated in sterling which is not the Company’s functional currency.
It is the Company’s policy to ensure that foreign currency risk is managed wherever possible by matching foreign
currency income and expenditure. During the years ended 31 May 2022 and 31 May 2021, the Company did not
utilise foreign currency forward contracts or other derivatives to manage foreign currency risk.
The Company’s foreign currency risk exposure in respect of the principal foreign currencies in which the Company
operates was as follows at 31 May 2022:
Cash and cash equivalents
Convertible loan
Trade and other payables
Derivative liability
Other receivables
Amount due to related party
Total exposure
Sterling exposure
denominated in €
67,138
(166,790)
(7,046)
(146)
-
-
(106,844)
Not at risk
€
50,730
-
(1,434,192)
-
16,514
(199,806)
(1,566,754)
Total
€
117,868
(166,790)
(1,441,238)
(146)
16,514
(199,806)
(1,673,598)
43
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 44
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
17
Financial instruments (continued)
Financial risk management objectives, policies and processes (continued)
(c) Foreign currency risk (continued)
The Company’s foreign currency risk exposure in respect of the principal foreign currencies in which the Company
operates was as follows at 31 May 2021:
Cash and cash equivalents
Share subscriptions receivable
Amount due to related party
Other receivables
Convertible loan
Derivative liability
Trade and other payables
Warrant liabilities
Total exposure
Sterling exposure
denominated in €
10,294
604,651
-
-
(159,498)
(146)
(30,132)
(389,904)
35,265
Not at risk
€
51,484
-
(169,933)
17,023
-
-
(1,405,769)
-
(1,507,195)
Total
€
61,778
604,651
(169,933)
17,023
(159,498)
(146)
(1,435,901)
(389,904)
(1,471,930)
The following are the significant exchange rates that applied against €1 during the financial year:
Average Rate
2022
Average Rate
2021
Spot Rate
31 May
2022
Spot Rate
31 May
2021
GBP
0.844
0.888
0.851
0.860
Sensitivity analysis
A 10% strengthening of the Euro against Sterling, based on outstanding financial assets and liabilities at 31 May
2022 would have decreased the reported loss by €10,684 (31 May 2021 decreased by: €3,527) as a consequence
of the retranslation of foreign currency denominated financial assets at those dates. A weakening of 10% of the
Euro against Sterling would have had an equal and opposite effect.
It is assumed that all other variables, especially interest rates, remain constant in the analysis.
(d) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and adverse conditions, without incurring
unacceptable losses or risking damage to the Company’s reputation.
The Company manages liquidity risk by regularly monitoring cash flow projections. The nature of the Company’s
exploration and appraisal activities can result in significant differences between expected and actual cash flows.
44
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 45
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
17
Financial instruments (continued)
Financial risk management objectives, policies and processes (continued)
(d) Liquidity risk (continued)
Contractual maturities of financial liabilities as at 31 May 2022 were as follows:
Trade and other
payables (including
amounts owed to
related party)
Derivative liability
Convertible loan
Carrying
amount €
Contractual
cash flows €
6 months or
less €
6-12 months
€
1-2 years
€
2-5 years
€
1,441,238
146
166,790
1,441,238
146
166,790
1,608,174
1,608,174
334,268*
-
-
334,268*
-
-
-
-
1,106,970**
-
-
-
146***
166,790***
1,106,970**
166,936***
Contractual maturities of financial liabilities as at 31 May 2021 were as follows:
Trade and other
payables (including
related party loans)
Derivative liability
Convertible loan
Carrying
amount €
Contractual
cash flows €
6 months or
less €
6-12 months
€
1-2 years
€
2-5 years
€
1,435,901
146
159,498
1,435,901
146
159,498
1,595,545
1,595,545
513,932*
-
-
513,932*
-
-
-
-
921,969**
-
-
-
146***
159,498***
921,969**
159,644***
*The amount of €334,268 (31 May 2021: €513,932) relates to other creditors and accruals (including amounts
owed to Conroy Gold and Natural Resources P.L.C.).
**The Directors, Professor Richard Conroy, Séamus P. FitzPatrick, Maureen T.A. Jones, Dr. Sorċa Conroy, Howard
Bird and Brendan McMorrow, and former Director James P. Jones, have confirmed that they will not seek
repayment of amounts owed to them by the Company of €1,106,970 (31 May 2021: €921,969) within 12 months of
the date of approval of the financial statements, unless the Company has sufficient funds to repay. There were no
related party loans in existence at 31 May 2022 and 31 May 2021 relating to monies owed to any of the Directors.
***On 10 December 2019, the Company has entered into a convertible loan note agreement for a total amount of
€145,829 (£120,000) with one of its shareholders. Please refer to Note 11 for further details.
The Company had cash and cash equivalents of €117,868 at 31 May 2022 (31 May 2021: €61,778).
45
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 46
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
17
Financial instruments (continued)
Financial risk management objectives, policies and processes (continued)
(e) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge its obligation.
Credit risk is the risk of financial loss to the Company if a cash deposit is not recovered. Company deposits are
placed only with banks with appropriate credit ratings.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk was as follows:
Cash and cash equivalents
Other receivables
Share subscriptions receivable
2022
€
117,868
16,514
-
134,382
2021
€
61,778
17,023
604,651
683,452
The Company’s cash and cash equivalents are held at AIB Bank which has a credit rating of “BBB” (31 May 2021:
‘’BBB’’) as determined by Fitch.
Expected credit loss
The Company measures credit risk and expected credit losses on financial assets measured at amortised cost using
probability of default, exposure at default and loss given default. Management consider both historical analysis
and forward-looking information in determining any expected credit loss. At 31 May 2022 and 31 May 2021, all
cash is accessible on demand and held with counterparties with a credit rating of BBB or higher. Having
considered the credit rating of the counterparties and the outstanding balances, management have determined
that for both financial years presented, the amount of ECL is immaterial.
(f) Fair values versus carrying amounts
Due to the short-term nature of the majority of the Company’s financial assets and liabilities held at amortised
cost at 31 May 2022 and 31 May 2021, the fair value equals the carrying amount in each case. The carrying value
of non-current financial assets and liabilities is a reasonable approximation of fair value.
(g) Capital management
The principal activities of the Company are concentrating particularly on diamond exploration and evaluation.
The Company has historically funded its activities through share issues and placings and loans. The Company’s
capital structure is kept under review by the Board of Directors and it is committed to capital discipline and
continues to maintain flexibility for future growth.
The capital structure of the Company consists of equity of the Company (refer to the statement of changes in
equity and Note 13). The Company is not subject to any externally imposed capital requirements.
46
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 47
Karelian Diamond Resources P.L.C.
Notes
to and forming part of the financial statements for the financial year ended 31 May 2022
(continued)
18
Post balance sheet events
Post year end, the Company announced that the geophysical interpretation of drone based aeromagnetic data has
identified twenty three Kimberlite targets in the area surveyed.
The Company’s application for two additional mineral prospecting licences in Northern Ireland were granted.
The final meeting in relation to the Company’s diamond mine development at Lahtojoki with the National Land
Survey of Finland was postponed from June 2022 until December 2022.
There were no further material events subsequent to the reporting date which necessitate revision of the figures
or disclosures included in the financial statements.
19 Approval of the audited financial statements for the financial year ended 31 May 2022
the
These audited financial statements were approved by the Board of Directors on 28 November 2022. A copy
of
Company’s website
www.kareliandiamondresources.com and will be available from the Company’s registered office at 3300 Lake
Drive, Citywest Business Campus, Dublin 24, D24 TD21, Ireland.
statements will
available
financial
audited
the
on
be
47
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc 48
Annual Report and Financial Statements 2022 Karelian Diamond Resources Plc