25 February 2015Karelian Diamond Resources plc("Karelian" or "the Company") Half-yearly results for the six months ended 30 November 2014 SIGNIFICANT PROGRESS MADEKarelian Diamond Resources plc (AIM: KDR; ESM: KDR.I), the diamond explorationcompany focused on Finland, announces its results for the six months ended 30November 2014; a period during which the Company made excellent progress.Highlights: * Riihivaara samples in Eastern Finland shown to come from diamond stability field * Presence of eclogitic material in samples suggests source relatively close * Eclogitic materials tend to be associated with richer diamond grades * Agreement with Rio Tinto extendedProfessor Richard Conroy, Chairman, commented:"We have successfully progressed our diamond exploration programme in Finlandwith results at Riihivaara suggesting the close proximity of a new kimberlitediscovery".Further Information:Professor Richard Conroy, Chairman/ Karelian Diamond Tel: +353-1-661-8958Resources plcVirginia Bull/Simon Clements/ SanlamSecurities UKLimited Tel: +44-20-7628-2200(Nomad)Jon Belliss/ Abigail Wayne/Hume CapitalSecurities PLC Tel: +44-20-3693-1493(Broker)Ger Heffernan/IBI Corporate Finance Limited (ESM Adviser) Tel +353-766-234-800Michael Padley/ Lothbury Financial Services Tel: +44-20-3440-7620Don Hall/ Hall Communications Tel: +353-1-660-9377Visit the website at: www.kareliandiamondresources.com CHAIRMAN'S STATEMENTDear Shareholder,I have great pleasure in presenting your Company's Half-Yearly Report for thesix months ended 30 November 2014. During this period excellent progresscontinued to be made with the diamond exploration programme in the KarelianCraton in Finland, the objective of which is to discover a world class diamonddeposit. Also during the period your Company's confidentiality agreement (withBack in Rights) with Rio Tinto Mining and Exploration Ltd ("Rio Tinto") wasextended to 2020.Diamond Exploration ProgrammeYour Company's primary exploration area is in the Karelian Craton in NorthEastern Europe where, in the Finnish sector of the Craton, we hope to discovera diamond orebody comparable to the world class diamond deposits, Lomonosovaand the Grib Pipe, which have been discovered in the Russian sector of thecraton.The Karelian Craton, which extends across Finland and northwest Russia, iscomparable in size to the diamond rich Slave Lake Craton in Canada. The Russiandiamond company ALROSA Company Limited (Closed Joint-Stock Company), which isnow the world's largest diamond miner, has indicated recently that the KarelianCraton region will represent almost all of its future growth.Your Company's diamond exploration programme in Finland covers five regionsand, at Seitaperä in Eastern Finland, the programme has outlined the largestdiamondiferous pipe yet discovered in Finland.Recent exploration results from your Company's Riihivaara target in EasternFinland have been particularly exciting. Sample material from the target areahas been confirmed as being derived from the diamond stability field of theEarth's mantle. Eclogite mantle materials are present which is significant, asthese tend to be associated with richer diamond grades.Detailed analysis of the sample material from Riihivaara was carried out byScanning Electron Microscopy (SEM) at the Geological Survey of Finland (GTK)laboratory in Helsinki. The laboratory results have demonstrated the presenceof 27 Group 2 eclogite grains, plus 8 Harzburgitic G10 garnets including a G10(D), as well as 33 Lherzolite G9 garnets, 27 megacrysts and 1 Wehrlitic grain.The presence of what are known as Harzburgitic G10 garnets, including inparticular a G10(D), confirmed that the sample material is derived from thediamond stability field of the Earth's mantle. Follow up exploration is underway at Riihivaara.Exploration continues also on your Company's other diamond targets in Finland,particularly in the Kuhmo and Kuusamo areas of Eastern Finland.Agreement with Rio Tinto Mining & ExplorationThe existing Confidentiality Agreement (with Back in Rights), as announced on22 July 2010, with Rio Tinto Mining and Exploration Limited ("Rio Tinto") hasbeen extended until 30 June 2020.Under the agreement, Rio Tinto discloses to Karelian confidential informationand physical geological samples relating to exploration in Finland for thepurpose of the Company considering that information in relation to its ownexisting and potential exploration programmes in Finland.To date this information has included data on over 53,000 till samples, over600 analytical results, data on Kimberlite indicator minerals from over 200locations and records on the discovery of 122 diamonds. The integration of thisdata with your Company's own data has been of great benefit.In consideration of Rio Tinto disclosing the confidential information to it,Karelian has agreed that Rio Tinto will have the option to earn a 51 per cent.interest in any project identified by Karelian in Finland by Rio Tinto payingthe direct cash expenditures incurred in developing the project, subject to thefollowing conditions: 1. For diamond projects the option will be triggered if Karelian completes 10 tonnes or more of bulk sampling for diamond exploration; and 2. For all other minerals the option will be triggered if Karelian discovers a resource with an in situ value that is equal to or greater than the in situ value of 3 million ounces of gold in a JORC compliant resource calculation.FinanceThe loss after taxation for the half-year ended 30 November 2014 was €121,087(2013: loss of €96,610) and the net assets as at 30 November 2014 were €8,319,399 (2013: €4,363,079).At the Annual General Meeting a resolution extending the directors' warrants byfive years was passed.Directors and StaffI would like to thank my fellow directors, staff and consultants for theirsupport and dedication, which has enabled the continued success of the Company.I am also pleased to welcome Dr Sorċa Conroy to the Board with herbroad-ranging city experience. Her knowledge, skills and experience willsignificantly contribute to the Company as it moves forward.OutlookWe have made a significant amount of progress in the period and expect this tocontinue as we move forward with your Company's diamond interests in Finland.Yours faithfully,Professor Richard ConroyChairman25 February 2015 INCOME STATEMENT FOR HALF-YEAR ENDED 30 NOVEMBER 2014 Six months Six months Year ended ended ended 30 November 30 November 31 May 2014 2013 2014 (Unaudited) (Unaudited) (Audited) € € €OPERATING EXPENSES (122,808) (89,123) (191,139)Finance income - bank interest 1,721 - 699receivableFinance costs - interest on - (7,487) (8,451)shareholder loanLOSS BEFORE TAXATION (121,087) (96,610) (198,891)Taxation - - -LOSS FOR THE YEAR (121,087) (96,610) (198,891)Loss per ordinary share - basic (€0.0004) (€0.001) (€0.0013)and diluted STATEMENT OF COMPREHENSIVE INCOME FOR HALF-YEAR ENDED 30 NOVEMBER -2014 Six months Six months Year ended ended ended 30 November 30 November 31 May 2014 2013 2014 (Unaudited) (Unaudited) (Audited) € € €LOSS FOR PERIOD (121,087) (96,610) (198,891)Total income and expense - - -recognised in other comprehensiveincomeTOTAL COMPREHENSIVE INCOME FOR THE (121,087) (96,610) (198,891)PERIOD - ENTIRELY ATTRIBUTABLE TOEQUITYHOLDERS STATEMENT OF FINANCIAL POSITION AS AT 30 NOVEMBER 2014 30 November 30 November 31 May 2014 2013 2014 (Unaudited) (Unaudited) (Audited)ASSETS € € €Non-current AssetsIntangible assets 7,609,850 7,068,402 7,329,228Investment in Subsidiary 4 4 4Property, plant and equipment 0 249 165 7,609,854 7,068,655 7,329,397Current AssetsTrade and other receivables 307,309 7,051 55,779Cash and cash equivalents 924,748 4,271 2,105,041 1,232,057 11,322 2,160,820Total Assets 8,841,911 7,079,977 9,490,217EQUITY AND LIABILITIESCapital and ReservesCalled up share capital 2,865,350 922,083 2,865,350Share premium 6,786,177 4,621,158 6,786,177Share based payments reserve 559,118 487,716 525,275Retained losses (1,891,246) (1,667,878) (1,770,159)Total Equity 8,319,399 4,363,079 8,406,643Non-current LiabilitiesFinancial Liabilities 309,589 1,212,404 309,589Total Non-current Liabilities 309,589 1,212,404 309,-589Current LiabilitiesTrade and other payables 212,923 1,504,494 773,985Total Current Liabilities 212,923 1,504,494 773,985Total Liabilities 522,512 2,716,898 1,083,574Total Equity and Liabilities 8,841,911 7,079,977 9,490,217 STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 30 NOVEMBER 2014 Share-based Retained Share Share Payment Earnings Total Capital Premium Reserve (Deficit) Equity € € € € €At 1 June 2014 2,865,350 6,786,177 525,275 (1,770,159) 8,406,643Share-based payments - - 33,843 - 33,843Loss for the period - - - (121,087) (121,087)At 30 November -2014 2,865,350 6,786,177 559,118 (1,891,246) 8,319,399 Share-based Retained Share Share Payment Earnings Total Capital Premium Reserve (Deficit) Equity € € € € €At 1 June 2013 922,083 4,621,158 450,157 (1,571,268) 4,422,130Share-based payments - - 37,559 - 37,559Loss for the period - - - (96,610) (96,610)At 30 November 2013 922,083 4,621,158 487,716 (1,667,878) 4,363,079 CASH FLOW STATEMENT FOR THE HALF-YEAR ENDED 30 NOVEMBER 2014 Six months Six months Year ended ended ended 30 November 30 November 31 May 2014 2013 2014 (Unaudited) (Unaudited) (Audited) € € €Cash flows from operating activitiesCash (used in)/generated by operations (930,224) 197,602 (147,489)Tax paid - - -Net cash (used in)/generated by (930,224) 197,602 (147,489)operating activitiesCash flows from investing activitiesInvestment in exploration and (251,790) (236,273) (-432,548)evaluationNet cash used in investing activities (251,790) (236,273) (-432,548)Cash flows from financing activitiesIssue of share capital (net of - - 3,025,788expenses)Advances/(Repayment) of shareholder - 40,436 (343,915)loanBank interest received 1,721 - 699Net cash generated from financing 1,721 40,436 2,682,572activities(Decrease)/Increase in cash and cash (1,180,293) 1,765 2,102,535equivalentsCash and cash equivalents at beginning 2,105,041 2,506 2,506of periodCash and cash equivalents at end of 924,748 4,271 2,105,041period NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 NOVEMBER 20141. Basis of preparationThe half-yearly financial statements have been prepared on the basis of therecognition and measurement requirements of International Financial ReportingStandards (IFRS) as adopted by the European Union (EU), and theirinterpretations adopted by the International Accounting Standards Board (IASB).The accounting policies used in the preparation of the half-yearly financialinformation are the same as those used in the Company's audited financialstatements for the year ended 31 May 2014.2. Earnings per shareThe calculation of the loss per ordinary share of €0.0004 (2013: loss €0.001)is based on the loss for the financial period of €121,087 (2013: loss €96,610)and the weighted average number of ordinary shares in issue during the periodof 286,535,034 (2013: 92,308,242).Since the Company incurred a loss the effect of share options and warrantswould be anti-dilutive.3. DividendsNo dividends were paid or are proposed in respect of the half-year ended 30November 2014.4. Copy of half-yearly reportA copy of the half- yearly report will be available on the Company's websitewww.kareliandiamondresources.com and will be available from the Company'sregistered office, 10 Upper Pembroke Street, Dublin 2.