Karelian Diamond Resources acquires new Finnish mining permit

Karelian Diamond Resources has agreed to acquire a diamond mining permit over the Lahtojoki project in Finland, which it predicts can become a profitable low strip ratio open pit diamond mine.

Karelian will pay an initial €50,000, followed by another €100,000 after 24 months unless it decides to pull out of the projects, plus a 1% royalty payable either in diamonds or cash once production reaches a certain level.

The Lahtojoki kimberlite pipe is situated in the Kuopio–Kaavi region, a couple of hours drive from the AIM company's Riihivaara project, in a region of Finland that it said benefits from excellent infrastructure that includes good road access, power distribution and local technical and logistics availability.

Chairman Richard Conroy hailed the news as "potentially a low cost way for Karelian to take its initial step toward becoming a diamond producer".

"This complements our diamond exploration programme in Finland and confirms our view that Finland could become a major diamond province."

He plans to review the exploration and feasibility work that has been conducted to date at Lahtojoki and carry out any further studies that are deemed appropriate.

Karelian noted that the valid mining permit will allow it to proceed through to the development of the project, subject to any relevant environmental assessments or requirements.

Shares in Karelian shot up 21% to 1p, having recently bounced off their three-year low of 0.5p thanks in part to encouraging analysis by Rio Tinto over its nearby Riihivaara kimberlite.