The information contained within this announcement is deemed by the Company to 
    constitute inside information as stipulated under the Market Abuse Regulations 
                              (EU) No. 596/2014 ("MAR").                           

                            Karelian Diamond Resources plc                         

                             ("Karelian" or "the Company")                         

                                                                    12 January 2017

        RECENTLY DISCOVERED KIMBERLITE BOULDER IS DERIVED FROM AN UNDISCOVERED     
                                      KIMBERLITE                                   

      * Analysis Of The Recently Discovered  Kimberlite Boulder Shows Clearly It Is
        Not Derived From The Lahtojoki Diamondiferous Kimberlite Pipe

      * No Kimberlites Are Known In An Up Ice Direction From The Discovery Site

      * Thin Section Of The Boulder Proves The Sample To Be An Altered Hypabyssal
        Kimberlite.

      * Previous Indicator Mineral Compositions Indicate Diamond-Bearing Mantle Has
        Been Sampled.



    Karelian Diamond Resources plc ("Karelian") (AIM: KDR, ESM: KDRI), the diamond
    exploration company focused on Finland, is pleased to announce that it has
    received further results and a report from the Geological Survey of Finland
    ("GTK") on the kimberlite boulder discovery made 2.5km SW of the Lahtojoki
    Diamond Deposit (announced on 9 November 2016), which shows that this boulder
    is derived from an undiscovered kimberlite.

    Thin section and field emission scanning electron microscopy (FESEM) work
    provides textural and elemental information of the boulder sample. The thin
    section of the boulder proves the sample to be an altered hypabyssal
    kimberlite.

    The location of the boulder could have potentially been the result of an older
    SSW ice flow direction transporting a block of material from the Lahtojoki
    kimberlite to the boulder discovery location. However, given that Lahtojoki is
    a diatreme filled with tuffisitic or tuffisitic breccia kimberlite, it is clear
    this boulder material is not derived from the Lahtojoki pipe.

    The most likely explanation for the source of this boulder is that it is
    derived from an undiscovered kimberlite up ice from the initial discovery site.

    Previous work on the mantle-derived indicator mineral compositions from the
    boulder material indicates a similar Archean diamond-bearing mantle has been
    sampled by this kimberlite.

    This release has been approved by Kevin McNulty PGeo, who is a member of the
    Company's technical staff and holds a BSc/MSc in Geology and Remote Sensing, in
    accordance with the guidance note for Mining, Oil & Gas Companies issued by the
    London Stock Exchange in respect of AIM Companies, which outlines standards of
    disclosure for mineral projects.

    Professor Richard Conroy, Chairman, Karelian Diamond Resources plc commented:

    "This   information offers the prospect of there being a new additional
    undiscovered kimberlite in the vicinity of the Lahtojoki Mining Permit which
    has a mineral composition indicating that it has sampled the diamond-bearing
    mantle. This is very exciting indeed and, as hoped, significantly increases the
    attractiveness of the Lahtojoki Diamond Deposit."

    Further Information:

    Professor Richard Conroy, Chairman, Karelian Diamond           Tel: +353-1-661-8958
    Resources plc                                                                      
                                                                                       
    David Hart / James Thomas / Nick Harriss, Allenby              Tel:                
    Capital Limited (Nomad)                              +44-20-3328-5656              
                                                                                       
    Ger Heffernan / Jan Fitzell, IBI Corporate Finance             Tel: +353-7662-34800
    Limited (ESM Adviser)                                                              
                                                                                       
    Jon Belliss / Elliot Hance, Beaufort Securities                Tel:                
    Limited (Broker)                                     +44-20-7382-8300              
                                                                                       
    Michael Padley, Lothbury Financial Services Limited            Tel:                
                                                         +44-20-3290-0707              
                                                                                       
    Don Hall, Hall Communications                                  Tel: +353-1-660-9377

    www.kareliandiamondresources.com