Possible diamond find for Karelian

AIM-listed exploration group Karelian Diamond said yesterday that material found during exploratory work at one of its four Finnish mining sites may lead to the discovery of a significant amount of diamonds.

Addressing the group's annual general meeting, chairman Dr Richard Conroy said that during a preliminary trenching programme in the Finnish sector of the Karelian Craton, the company had come across a stretch of kimberlitic material - a type of underground mineral known to be conducive to the creation of diamonds.

"This is a very exciting prospect," said Dr Conroy. "Diamonds are such that just a few diamonds in 100 tons of rock can be very valuable."

The company is particularly upbeat about the possible find because a similar project on the Russian side of the Karelian Craton is already producing a significant quality of diamonds.

However, the results won't be known for at least another 18 months.

Demand for diamonds, as with most minerals, has been strong over the past few years, pushing prices upwards, a trend Dr Conroy expects to continue.

The price of uncut diamonds increased by about 10 per cent in 2003 and by a further 20 per cent from January 2004 to mid 2005.

As stockpiles owned by large miners such as De Beers diminish and the supplies coming on stream slow, the price increases are expected to intensify.

Karelian, which was created last year through the separation of Conroy Diamonds and Gold's activities, reported a loss of €98,941 in the 14 months since its incorporation in March 2004.

In September of this year, the group raised €500,000 before expenses in a share placing on London's Alternative Investment Market.

Dr Conroy said the group will have to return to the market for more funds if it is successful with the initial Karelian Craton drilling programme .

If a large quantity of diamonds are found to be at the site, Karelian will take on a partner for the project, Dr Conroy said.

Karelian is also assessing the potential of its three other Finnish sites, situated at Lapland, Western and Southeastern.