25th Feb 2015 09:18
LONDON (Alliance News) - Karelian Diamond Resources PLC shares dropped on Wednesday after it reported a wider loss in the first half as operating expenses increased and despite saying it has extended its confidentiality agreement with mining giant Rio Tinto PLC.
Karelian shares were down 10.5% to 0.850 pence per share on Wednesday morning.
For the six months ended November 30, the company reported a loss of EUR121,087, wider than the EUR96,610 loss it reported in the same period of 2013. This was caused by operating expenses increasing during the period.
The company does not currently generate any revenue and is focused on developing its diamond projects in Finland, especially the Karelian Crafton area which spreads from Finland into north-west Russia.
"During this period excellent progress continued to be made with the diamond exploration programme in the Karelian Craton in Finland, the objective of which is to discover a world class diamond deposit," said Chairman Richard Conroy.
Karelian said its existing confidentiality agreement with Rio Tinto Mining and Exploration Ltd, which was set up in 2010, has now been extended until June 30, 2020. Under the agreement, Rio Tinto discloses confidential information and physical geological samples about its operations in Finland for Karelian to use on its own projects and exploration licenses in the country.
To date this information has included data on over 53,000 till samples, over 600 analytical results, data on Kimberlite indicator minerals from over 200 locations and records on the discovery of 122 diamonds, which Karelian said has been "of great benefit".
In return for the information, Karelian has given Rio Tinto the right to earn a 51% interest in any project owned by Karelian in Finland in return for Rio Tinto paying for direct capital expenditures to develop the project.
Karelian said Rio Tinto's option would be triggered if it produced 10 tonnes of ore or conducted bulk sampling at a diamond project in Finland, and for other mineral projects, Karelian would need to discover a resource that is equal to 3 million ounces of gold in a JORC compliant resource for Rio Tinto's option to be triggered, it said.
A JORC resource is the Australasian code for reporting exploration results that sets minimum standards for reporting mineral exploration results, mineral resources and ore reserves.
"We have made a significant amount of progress in the period and expect this to continue as we move forward with your company's diamond interests in Finland," said Conroy.
By Joshua Warner; [email protected]; @JoshAlliance
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