Karelian chairman rejects claims by shareholders amid coup attempt

Prof Richard Conroy responds to allegations money raised was spent on pay for directors

File image of Prof Richard Conroy at  the Conrad hotel in Dublin. File photograph: Brenda Fitzsimons/The Irish Times

File image of Prof Richard Conroy at the Conrad hotel in Dublin. File photograph: Brenda Fitzsimons/The Irish Times

 

Karelian Diamond Resources’ directors have put about £2 million sterling (€2.25 million) of their own money into the company, says its chairman, Prof Richard Conroy.

Shareholders who own 17 per cent of Karelian want to oust Prof Conroy and others from the company’s board, saying that they have spent £4.1 million of the £7.9 million that it has raised on directors’ salaries.

Prof Conroy rejected this yesterday, saying that directors have contributed £2 million of the total raised by Karelian, while they have regularly taken shares in the company in lieu of their salaries.

“And around 70 per cent of the £8 million raised has in fact gone into exploration or evaluation,” Prof Conroy added.

He also pointed out that the company has to pay the various costs of being listed on the London Stock Exchange’s Alternative Investment Market, as well as footing the bill for auditors, stockbrokers and other expenses.

Karelian operates in Finland, where it has a number of interests. These include the Lahtojoki diamond deposit, the Seitaperä kimberlite – a geological feature indicating diamonds’ presence – and a discovery at Riihivaara. All are in eastern Finland.

Extraordinary general meeting

Shareholders Alan Osborne, Richie Taberner, Steve Coomber and Kevin Taylor want the company to hold an extraordinary general meeting to remove Prof Conroy, his daughter Dr Sorca Conroy, Séamus FitzPatrick, Maureen Jones and Louis J Maguire as directors.

The rebels propose to replace those directors with Mr Osborne, Mr Taylor, and diamond mining experts Stephen Grimmer and Martin Doyle.

They claim that Karelian has made little progress with its interests, while many shareholders are down more than 70 per cent on their investment in the company.

Prof Conroy argued that the company has made good progress with its interests. It has a mining permit for Lahtojoki, whose previous owner, resources giant Rio Tinto, has approached the Irish company suggesting that it develop the deposit – if it is viable – in return for a share of the proceeds.

“We think it will be the first diamond mine in Europe outside Russia, ” Prof Conroy said.

He pointed out that the deposit had turned up one green diamond, for which people will pay a premium, as they are very unusual.

Prof Conroy acknowledged that Karelian’s share price – about 3.9p yesterday – was at a “very big discount” to the potential value of its assets, but noted that this was not unusual in its industry.

The dissident shareholders originally sought the extraordinary meeting at the end of last month, but an error in their first request meant they had to go through the process a second time. Karelian has not yet set a date for the meeting.