Altyngold Regulatory News (ALTN)

22 Jun 2006 07:01

Hambledon Mining PLC22 June 2006 HAMBLEDON MINING PLC Final Results Mining operations commenced Hambledon Mining plc ("Hambledon" or the "Group" or the "Company"), anAIM-listed mining and exploration company developing precious metal deposits inKazakhstan, announces its results for the year ended 31 December 2005 and thatmining operations have commenced at Sekisovskoye. Highlights: O Mining operations commenced in June 2006 with pre-stripping and stockpiling of ore from North Pit O JORC resource estimate has doubled to 2.7 million oz of gold O Recent underground drilling shows numerous new gold zones O Comparison of recent drilling results with earlier Soviet samples shows a 19% increase in gold content; confirming evidence of consistent underestimation of resource O Updated geological and mine model of open pit areas being finalised O Initial production to be around 40,000 oz per annum rising to over 100,000 oz when underground ore is treated Nicholas Bridgen, Chief Executive of Hambledon Mining plc, commented: "During the year the Group has made excellent progress. The gold JORC resourceestimate has increased significantly, to 2.7 million oz, and mining operationshave commenced. "The outlook for the Group, which was already good, has been improved enormouslyby the additional resource identified. This has allowed us to increase theplanned capacity of the plant which will lower the unit costs and take advantageof the increased gold price". ENQUIRIES: 22 June 2006 Hambledon Mining plcNicholas Bridgen, Chief Executive Tel: +44 (0) 207 870 6367 Bankside Consultants Tel: +44 (0) 207 367 8888Michael Spriggs / Michael Padley About Hambledon Mining plc Hambledon Mining plc is an AIM listed mining and exploration company developingprecious metal deposits in the mineral-rich Altai region of East Kazakhstan.Its subsidiary TOO Sekisovskoye holds two adjacent licence areas, Sekisovskoyeand Tserkovka, with JORC gold resources estimated at 2.7 million ounces andadditional non-compliant Soviet classified resources of 0.7 million ounces. TOOSekisovskoye has also been informed that it will be awarded two more adjacentterritories known as Glinka and Krugliachka. Mine preparation has commenced andconstruction of an 850,000 tpy treatment plant has started. New explorationareas are being evaluated and an updated mine model is being prepared. Chairman's Statement Review Since 1 January 2005 we have made excellent progress and this has continued intothe current financial year. Following good early results from the drilling programme and feasibility studythe board approved the fast-track development of the open pit project in March2005. Since then, equity finance totalling £15 million has been raised to fundthe development and we can now announce that mine preparation and pre-strippinghave commenced. In June 2005 we announced that analysis of the early 2005 surface drillingprogramme had resulted in a 45% increase in the JORC resource estimate atSekisovskoye. Over the following months further drilling from surface andunderground has encountered many new gold-bearing zones. Although the fullre-modelling of the resource, necessitated by the more recent undergrounddrilling programme, has not yet been completed, two early conclusions have beendrawn. First, the additional confidence in the extension zones of Sekisovskoye, whichwere formerly reflected only in the Soviet resource category P1, has enabled ourgeological consultants to re-classify this within our JORC resource estimate.This means that our JORC resource at Sekisovskoye is now estimated to stand at2.7 million ounces of gold plus 4.4 million ounces of silver, a further 100%increase over the June 2005 level. Second, the statistical basis has now been established to confirm previousevidence that the former Soviet drill samples were some 19% lower than theequivalent grades obtained by our own drilling programmes, suggesting thelikelihood that an uplift of this factor could be applied globally to formerSoviet drill sample results. Progress with the permitting of the project has been excellent, the highlightsof which were the approval of our technical process and our General ResourceEstimate in April 2006. In February 2006 the decision was taken to expand the design capacity of theplant to 850,000 tonnes per year, enabling the output of over 40,000 ounces ofgold per year at the open pit stage, rising to over 100,000 ounces per year oncethe underground ore, which is of higher grade, is substituted in the sameprocess plant. In view of the longer projected pit life, the decision was also made to purchaseour own mining fleet rather than rely on subcontractors. This fleet has beenprocured and is now operational. Initially, it is being used for sitepreparation and the pre-stripping of the open pit areas, with the additionalbenefit that the waste material can be used in construction of the tailings dam. Procurement of the major equipment for the process plant has already begun. Thecrushing plant equipment is being manufactured in China and will be deliveredshortly. A local construction firm is building the conveyors and supportstructure, to be ready for assembly on site later this year. This willinitially be used to crush waste to produce aggregates for use in constructionbefore commencing normal production when the process plant is started. The gold price has been volatile and after rising strongly to exceptionallevels, has recently fallen back to a level which is still some 30% above thelevel a year ago and remains very profitable for the company. I am pleased to report that the hard work of the Group's employees, togetherwith help from the gold price, has been rewarded with a significant rise in theshare price. Outlook Our future prospects have benefited from several factors. Of most significance,the JORC resource base, from which future production will be drawn, hasincreased substantially. The expansion of the design capacity of the plant hasnot only increased the potential design output but also reduced the anticipatedunit costs by the use of bigger, more cost effective, self owned and operatedequipment. All of these factors make a future expansion of the process plant more likely.Expansion from the current design capacity of 850,000 tonnes per year to aroundone million tonnes per year could be carried out relatively simply by addingfurther milling and leach tank capacity. This would open up the possibility ofproducing from both open pit and underground concurrently, and the treatment ofany mineralisation which may be developed from exploration of Tserkovka andother new territories. The most important task facing the Company is now to complete the constructionof the process plant. Operating in Kazakhstan carries risks and uncertaintiesthat make accurate predictions as to timing and costs difficult, and a shortageof engineering capacity has caused some delays, but the project team has madeconsistent progress and I look forward to the start of operations with increasedconfidence. George Eccles20 June 2006 Review of Projects - Sekisovskoye Summary • The JORC-based gold resource has doubled since our last update in June 2005 (which was, itself, 45% higher than at the start of 2005). This is attributable to the upgrading of the former Soviet prognosticated resource at Sekisovskoye. A further update to reflect the recent underground drilling is being prepared. • Underground drilling conducted in late 2005 shows numerous new gold zones and these results are now being evaluated. • An external mining feasibility study was completed for the open pit project in October 2005. Detailed pit design was completed by our in-house mining team but is currently being updated in respect of the new resource model and current gold prices. • Comparison of the now significant number of recent drill-hole samples with former Soviet drill-hole sampling in the same zones shows an overall increase of 19% in gold content, confirming previous evidence that the Soviet drilling underestimated the Sekisovskoye resource by this magnitude. • The conceptual milling facility design was completed in Australia and detailed engineering and initial construction are now underway for an 850,000 tonnes per annum treatment facility. • The Sekisovskoye ore resource and feasibility study was approved by the State Committee on Ore Resources, putting 25 tonnes of gold and 37 tonnes of silver onto the State Balance record. • Mining licences have been received, allowing the start of mining operations. • A complete mining fleet has been purchased and mining operations have commenced. Initial mining will focus on pre-stripping waste material from the North Pit which is required for the configuration of the tailings dam and ore stockpile area. • Feasibility work continues on the underground mine design, with the expectation of accessing high grade material from Ore Zone 11 in 2007 via a decline access roadway. Introduction The Sekisovskoye deposit was selected for further development for a number ofreasons. The deposit had undergone substantial development during Soviet timesand had significant Soviet classified resources. The main gold zones outcrop ina low hill, providing easy initial access, but gold-bearing mineralisationcontinues to a depth of at least 950 metres. The mineralisation is mainlyfree-milling and therefore simple to treat via carbon-in-leach cyanidationtechnology with gravity recovery of coarse gold. It has a low sulphide contentwith no arsenic or other deleterious elements, giving relatively fewenvironmental concerns. The project site is located near Sekisovka village which is only some40 kilometres from the major regional city of Ust Kamenogorsk (capital ofEast Kazakhstan Oblast) on a well-maintained sealed road. Ust Kamenogorsk hasan international airport as well as connections to both major highway and raillinks (including the Trans-Siberian Railway). Several high voltage power linesrun through the area, providing cheap electricity. Sekisovka village hastelephone and internet services while the area in general is home to severalmajor mining enterprises, ensuring a supply of experienced and relativelylow-cost labour. The mineral rights to the Sekisovskoye deposit are held by the 100% ownedsubsidiary TOO Sekisovskoye. Geology and mineralisation The deposit occurs in the northwest marginal zone of the 40 thousand km(2) RudnyAltai Palaeozoic metallogenic belt that occupies the eastern border ofKazakhstan and the Altaisky region of Russia. The mineral hosting intrusivesare of late Devonian age. Gold is associated with hydrothermal alteration of the breccia zone matrix andalso with hydrothermal sulphide veining. A high percentage of the gold occursas intergrowths and free grains, with only a minor percentage locked withinsulphides. Gold particles can be coarse, up to 0.4 mm, and this contributes toan erratic grade distribution, in addition to the effect of unmineralisedbreccia fragments. Drilling and resource estimate The evaluation of the drilling data obtained in the 2004 drilling programmeresulted in a change in the development philosophy of Sekisovskoye. The resultsof updated mine modelling and design indicated that an initial open pit projectwould be a highly profitable precursor to the development of the higher gradeunderground ore-zones. For this reason, the upper levels (to a maximum depth of240 m) of the Sekisovskoye deposit have been modelled to a cut-off of 0.5grammes per tonne, suitable for open pit mining, and the lower levels to 2grammes per tonne, reflecting the higher cost of underground mining. Themodelled zones within the proposed open pit currently make up only some 7% ofthe total Sekisovskoye/Tserkovka resource, the majority of which will be minedfrom underground. Hambledon's extensive diamond drilling programmes have intersected many new goldbearing horizons and continual evaluation and modelling of the favourablegold-hosting breccia pipe has resulted in a much larger structure, with a 10%volume increase since June 2005. As a result of the above encouraging trends,Computer Resource Services (CRS) evaluated the Soviet P1 resource situated alongstrike and down-dip of the modelled gold zones and has judged that a sufficientunderstanding of the gold occurrences has allowed this resource to be added tothe "inferred" JORC resource category. It is from this category that furtherdrillhole sampling may allow upgrading to the "indicated" class for ore reserveassessment. The resource statement reflects this change but does not yetreflect the remodelling which is currently taking place as a result of thelatest underground drilling results. A new update of the orebody model is being prepared, following which an updateof the resource statement for the open pit area will be released. Whilst the full analysis of the results of the underground drilling programmehas not yet been completed, preliminary results demonstrate noteworthy increasesin gold occurrences and confirm previous observations that Hambledon's samplegold grades are statistically 19% higher, at a gold cut-off grade of 0.5g/t,than the old Soviet surface drillhole results in the same area. CRS, theGroup's independent geological consultants, now conclude that a global increasein gold grade of about 20%, vis-a-vis the Soviet resource is likely. Highlighted gold intersections from the recent underground drilling programmeusing 0.5g/t Au cut-off: Drillhole Distance (m) Length (m) Au g/t From To D46 15.0 19.2 4.2 13.8 D47 37.5 57.0 19.5 3.0 D50 13.1 32.0 18.9 3.0 D52 77.7 98.6 20.9 3.5 D54 28.0 38.5 10.5 5.9 Project approvals As part of the approval process for the project, a General Resource Estimate forSekisovskoye was submitted and has recently been approved by the StateCommission for Mineral Reserves of the Republic of Kazakhstan. The Kazakhstanapproval process requires that an estimate of resources be submitted, togetherwith mining, processing and other information, broadly equivalent to a westernstyle feasibility study. This estimate is reviewed by experts appointed byVosKazNedra, the regulatory body in East Kazakhstan oblast, and by the Ministryof Energy and Mineral Resources. The approved resource is based on a smallerpart of the resource base than is used for the overall JORC statement containedin the Annual Report. The effect of the approval is that the resources have been entered into theState Balance, which allows the progression to the mining stage of the subsoiluse contract. This is a fundamental step that represents the most significantand time-consuming hurdle in the process by which mining operations inKazakhstan are approved. Following this, an official "licence to mine" has been granted thus amending theSubsoil Use Agreement to include mining activities as well as exploration.Further approvals are still required, principally concerning the finalenvironmental impact and the tailings dam design, but these are well in hand. Infrastructure Infrastructure requirements will be minor as the deposit is located close to amain road, giving easy access to Ust Kamenogorsk from where staff, supplies andequipment can be obtained. An adequate power supply exists from a nearby powergrid and only a short overhead power line to the project site and relatedsubstation must be installed. Water and telephone connections are available.An existing building has been acquired and renovated for use as the mine officeto cover mining and milling operations, engineering support, accounting,procurement, human resources and exploration functions as well as a temporarylaboratory. Project infrastructure will involve the aforementioned power line and upgradingof existing roads. Water for operations will come from dewatering of open pitand underground mines. Groundwater in the area is of potable quality andrequires no treatment other than standard chlorination for drinking waterpurposes. Mine planning The initial mine plan was based on an ore-body model, developed in Datamine,which was optimised using Whittle4D software to produce an optimum pit shell.This shell was used as the basis for the development of a mine design. At aprocessing rate of 850,000 tonnes per annum this would give an open pit life ofbetween 4 and 5 years. Since then, numerous further optimisation studies usinghigher gold prices and updated ore-body models have resulted in pit shells of upto 260,000 ounces, though some of these ounces may be more efficiently minedfrom underground. During the winter season of 2005/2006, over 4,000 metres of core have beendrilled from underground and further significant mineralisation was intersected. A revised open pit model is being prepared based on the new data while on-goingoptimisation studies are routinely carried out at the currently prevailing goldprice. A study was carried out to determine the best way in which the mining shouldproceed. Quotes were obtained from local mining contractors while a 'firstprinciples' estimate of the unit mining cost was conducted. This study showedthat there were significant cost savings to be generated by purchasing themining fleet and carrying out the mining on an owner-operator basis. The mining fleet, consisting of all new equipment, was ordered in early 2006.Two Hitachi Zaxis 850H hydraulic excavators from Japan and four (out of aneventual total of seven) 45-tonne Belaz haul trucks have already been delivered. Prestripping at the east end of the North Pit and site preparation have begun. The remainder of the mining fleet, including an Atlas Copco ROC L7 CR drillrig, a Dressta front end loader, bulldozers and ancillary equipment will bedelivered later in June 2006. All mining activities will be conducted andsupervised by Group personnel. Mining will incorporate standard drill and blast techniques. Ore grade materialwill be mined and hauled to a storage area adjacent to the mill crushing plant.Lower grade material will be stockpiled for later treatment while waste materialwill be used for tailings dam construction or otherwise placed in dumps. Processing Metallurgical testwork was carried out in Australia and Kazakhstan. The resultssupport the very high recoveries encountered in previous testing and an averagerecovery of 92% is expected using a conventional Carbon In Leach (CIL) circuit. The ore contains no environmentally deleterious components and environmentaltesting supports the expectation that there will be no acid rock drainageissues. The circuit consists of a 3-stage crushing plant followed by primary andsecondary grinding with gravity recovery and fine grinding of the gravityconcentrate. The gravity concentrate will be leached in a small, dedicatedintensive cyanidation circuit. A 6-stage CIL cyanidation leach system willrecover the gold and silver from the ore and concentrate through adsorption ontoactivated carbon. The carbon is eventually "stripped" and the precious metalsare electrodeposited onto cathodes. The cathodes are ultimately smelted intodore bullion for shipment to a refinery. Tailings will be detoxified prior toplacement in a tailings storage facility. Processing costs are expected to be alittle over US $6 per tonne. The planned ore throughput for the open pit ore is 850,000 tonnes per annum toproduce approximately 40,000 ounces of gold per annum. The same plant will becapable of treating underground ore which, being of higher grade, will result inproduction of over 100,000 ounces of gold per annum, although there is theability to further increase the throughput of underground ore with the additionof extra grinding and leaching capacity. Engineering Definitive metallurgical testwork and process design was completed in Australiain late 2005. Completion of conceptual design has enabled orders to be placedfor the major long lead process plant items: crushing plant, grinding mills,gravity concentrator, slurry pumps and agitators. The crushing equipment willbe delivered to site in July 2006 and crushing is expected to begin in autumn.The remaining process equipment is now being manufactured for delivery to sitein the second half of 2006. After initially experiencing problems locating experienced design engineers TOOSekisovskoye has recruited a team of engineers in Ust-Kamenogorsk to completethe final detailed design and to supervise and manage the construction of theprocessing facility. Construction of the process plant will be undertaken bylocal Kazakhstan engineering companies. Processing equipment has been sourcedfrom Russia, China, Canada, South Africa, Australia and Kazakhstan depending onquality, reliability and relative cost factors. Ongoing feasibility of the underground The feasibility study into the development of the underground ore zones iscontinuing. Based on an earlier prefeasibility study, a mining cash cost of US$22 per tonne (including mining overheads) was envisaged for a combination ofcut and fill and shrinkage methods at typical international prices. The costwas some 30% less when local equipment, labour, fuel and power costs wereapplied. Since then, the Group's own exploration programmes have contributedfurther to understanding the deposit and cheaper open-stoping methods are nowbeing considered. Even at the higher cut and fill costs, the start-up ofunderground mining is likely to greatly increase the gold production rate andlower the cash cost of production compared with those of the open pit. Initial underground mining will focus on accessing the near-surface, high gradeOre-body 11. This ore-body extends under the Sekisovskoye river so is noteasily accessible via open pit mining. A decline access roadway will beconstructed to access the upper part of the ore-body in late 2007 or early 2008. Although underground mine production will start at relatively low rates, thehigher average grade will greatly increase the profitability of the project. When the existing decline access roadway and related facilities have beenupgraded, the Group can access Ore-body 11 from below while working to tie inwith the new decline. At that point, full-scale underground mining can begin. Exploration In June of 2005 the Group was granted a 3-year exploration licence for theTserkovka territory which surrounds the original Sekisovskoye lease area andadds some 29 km2 to the total licence area. In addition, in November 2005, wereceived notification that the additional areas of Krugliachka and Glinka willbe added to the overall Tserkovka licence area by formal extension. We arestill awaiting the formal documentation, but planning for evaluation of theproperties is underway for the 2006 season. Limited exploration drilling was conducted by the Group at Tserkovka during 2005with additional drilling planned for 2006 at both Tserkovka and the additionalareas. Tserkovka The territory immediately surrounds the Company's existing deposit,Sekisovskoye, and contains four known mineralised deposits named Tserkovka,Feodulikha, and two areas designated only as Area 4 and Area 5. All these areaswere ostensibly similar to the Sekisovskoye deposit, indicating that anymineralisation from them is likely to be free-milling and treatable in the sameplant as Sekisovskoye. Each of the deposits lies within a maximum distance of 4 kilometres from Sekisovskoye, close to the main road between Ust Kamenogorskand Ridder, so infrastructure requirements for any future development would berelatively low. At Tserkovka itself, previous Soviet-era exploration revealed nine mineralisedbodies as identified by mapping-drilling, trenching, pitting and undergroundexploration from over a kilometre of underground tunnels. Records from theconclusion of the Soviet exploration in 1980 showed the resources only incontained metal terms which cannot be converted to tonnes and grades untiladditional supportive archives have been retrieved. The non-compliant resource amounted to: Category C2: 4.5 tonnes (145,000 ounces) Category P1 (prognosticated): 7.5 tonnes (241,000 ounces) Total C2 + P1: 12 tonnes (386,000 ounces) The Tserkovka deposit is essentially "on strike" with the Sekisovskoye orebodiesand favourable breccia styles host both the Sekisovskoye and Tserkovka deposits.It has been maintained by both former Soviet and the Group's geologists thatadditional ore-zones may subcrop between the two deposits. Therefore, thepotential for more discoveries along this five kilometre strike distance ishopefully high. Only limited drilling appears to have been carried out at the other sites duringSoviet times. The Soviet estimated resources, on a non-compliant resourcetotalled: Category P1 (prognosticated): 10-12 tonnes (322,000-386,000 ounces) In 2005 the Group evaluated available documentation and selected drill targetsin Area 5 and at the Tserkovka prospect. The data review suggested that Area 4and Feodulika were unlikely to contain sufficient mineralisation to justifydrilling at this stage. This was confirmed to a depth of 100 metres in Area 4by sterilisation drilling conducted as part of the project's tailings storagefacility site evaluation. In 2005, the Group drilled 18 holes from surface at Tserkovka and one hole inArea 5 representing 1,963 metres and 273 metres respectively. All holes wereeither NQ or HQ diamond core. Nothing of significant interest was intersected inArea 5, so additional drilling in that area has been postponed. At Tserkovka, mineralisation similar to Sekisovskoye was intersected togetherwith some interesting near-surface silver mineralisation. Based on the dataobtained from the 2005 programme and a review of additional Soviet explorationresults, a programme of 12 holes for a total of 1,800 metres is planned for the2006 season. Krugliachka and Glinka As mentioned, the Group has sought to expand its exploration base into nearbyprospects that are similar to Sekisovskoye and may be treated in the same or anexpanded treatment plant. Two mineralised areas in the vicinity, known asKrugliachka and Glinka, cover a combined area of approximately 10 squarekilometres. After submitting a formal application to the authorities, the Grouphas been informed by the Ministry of Energy and Mineral Resources that theseareas can be considered to be part of the Sekisovskoye-Tserkovka ore trend andtherefore will be granted as an extension of the Tserkovka exploration areawithout a tender. Formal authorisation of the extensions has yet to bereceived. Both Krugliachka and Glinka prospect areas are in agricultural/pastoralcountryside near to surface infrastructure (roads and power lines). Krugliachka lies 8 km to the northwest of Sekisovskoye and appears to have thepotential to be another deposit of the Sekisovskoye type, though exploration isat an early stage. Soviet exploration included surface and trench samples. Thegold content of several surface samples indicated grades of up to 5 g/t. TheSoviet geologists recommended trenching and shallow drilling in the hope ofdiscovering zones of secondary enrichment below the oxidised cap, similar to thehigh grade area of Sekisovskoye that was mined in Soviet times. The Group'sexploration team has prepared a programme of diamond core drilling and surfacesampling for 2006. Glinka lies some 8 km north-northwest of Sekisovskoye. The local population hasmined kaolin clay from the area and samples taken from the kaolin pit wallsindicate the possible presence of payable goldpolymetallic mineralisation.Based on Soviet exploration including surface sampling, trench samples andrelatively deep test pits (up to 15 metres in depth), the deposit appears to bemore akin to existing polymetallic deposits in the Ridder area (80 km northeastof Sekisovskoye). The current plan for 2006 exploration at Glinka includes more surface and trenchsamples as well as a continuing review of Soviet data. Mineral resources This estimate of the mineral resources of the Sekisovskoye deposit has beenprepared under the JORC Code and is an update to the resource as reported inNovember 2005. A fully revised summary will be announced once the analysis ofthe recent drilling data has been completed. Gold Silver Location Resource tonnes g/t g/t Contained g/t Contained category (million) cut-off metal metal oz * oz * Sekisovskoye upper Indicated 10.59 0.5 1.6 544,762 3.2 1,086,438 levels Inferred (b) 10.56 1.6 543,219 3.0 1,018,536(above 250m level) Sekisovskoye deeper Indicated 2.21 2.0 5.1 362,371 6.2 440,529 levels Inferred (b) 7.16 5.2 1,197,036 7.1 1,634,415 Sekisovskoye Indicated 3.40 0.5 0.7 76,519 1.4 153,037 marginal deeper levels (a) Inferred 0.96 0.6 18,519 1.2 37,038 Totals Indicated 16.20 1.9 983,652 3.2 1,680,004 Inferred 18.68 2.9 1,758,774 4.5 2,689,989 Total Inf + Ind 34.88 2.4 2,742,426 3.9 4,369,993 * Troy oz = 31.10348 (a) underground low grade material associated with high grade gold zones (b) includes resources that have been defined beyond the current limits of thegrade model. Note: In addition, resources in our new licence areas of Tserkovka, Feodulikha andAreas 4 & 5 contain former Soviet-based resources of C2 and P1 totalling some740,000 ounces of gold. It is expected that some of these resources can becategorised under the JORC Code after assessment of the current explorationdrilling results. Qualified person This estimate of the mineral resources has been prepared by Roger Rhodes B.Sc.,M.Sc., MIMMM, independent geological consultant with Computer Resource Services(CRS). He has over 35 years of relevant experience and is a qualified personfor the purpose of reporting resources under the JORC Code and the AIM Rules. Mr Rhodes has reviewed the resource information given in the annual report andconsents to its inclusion in the form and context in which it appears. This estimate of the mineral resources does not comprise part of the auditedfinancial statements. Consolidated profit and loss account For the year ended 31 December 2005 Notes Year ended Year ended 31 December 31 December 2004 2005 £000's £000's Administrative expenses exceptional expenditures - (96) other administrative expenses (836) (331) Operating loss (836) (427) Net interest and similar items 249 (11) Loss on ordinary activities before and after (587) (438)taxation and transferred to reservesRetained loss for the financial period (587) (438) Loss per ordinary share (UK pence per share) 3 (0.24) (0.22)Diluted loss per share (UK pence per share) 3 (0.24) (0.22) All results are derived from ongoing activities The Company has taken advantage of Section 230 of the Companies Act 1985 not topublish its individual profit and loss account. Consolidated balance sheet As at 31 December 2005 Notes Year ended Year ended 31 December 31 December 2004 2005 £000's £000's Fixed assets Intangible assets 52 672 Tangible assets 3,060 19 3,112 691Current assetsDebtors 213 13Cash at bank and in hand 4,021 1,263 4,234 1,276 (444) (418) Creditors: amounts falling due within one yearProvisions for liabilities and charges (1,127) - Net current assets 2,663 858 Net assets 5,775 1,549 Capital and reserves:Called up equity share capital 262 200Share premium account 6,820 2,069Merger reserve (148) (148)Profit and loss account (1,159) (572)Equity shareholders' funds 4 5,775 1,549 These financial statements were approved by the board of directors on 20 June2006 and signed on its behalf by Nicholas BridgenChief Executive Consolidated cash flow statement For the year ended 31 December 2005 Notes Year ended Year ended 31 December 31 December 2005 2004 £000's £000's Net cash outflow from continuing operating (889) (428)activities Returns on investments and servicing of financeInterest received 150 27Interest paid (21) (16)Miscellaneous non operating income 17 - 146 11Capital expenditure and financial investmentPayments to acquire intangible fixed assets (988) (435)Payments to acquire tangible fixed assets (277) (18) (1,265) (453) Net cash outflow before financing (2,008) (870) FinancingIssue of ordinary share capital in the year 4,813 2,119(net of share issue expenses) Share issue expenses relating to previous (47) -yearsIncrease in net cash in the period 2,758 1,249 Analysis and reconciliation of net funds As at 31 Cash flow Other non As at 31 December cash changes December 2004 2005 £000's £000's £000's £000's Cash at bank and in hand 1,263 2,737 21 4,021 Debt due within one year (274) 21 (50) (303) Net funds 989 2,758 (29) 3,718 Statement of total recognised gains and losses For the year ended 31 December 2005 31 December 2005 31 December 2004 £000's £000's Loss for the financial period (587) (438)Currency translation differences on - (2)foreign currency net investments Total recognised gains and losses (587) (440)relating to the financial period Reconciliation of movements in equity shareholders' funds For the year ended 31 December 2005 31 December 2005 31 December 2004 £000's £000's Total recognised gains and losses (587) (440)New capital subscribed (net of costs) 4,813 2,119 Net change in equity shareholders' funds 4,226 1,679 Opening equity shareholders' funds 1,549 (130)Closing equity shareholders' funds 5,775 1,549 Notes 1. Basis of preparation The consolidated financial information for the Group has been prepared under thehistorical cost convention in accordance with applicable United Kingdom Law andAccounting Standards. The policies have remained unchanged from the previousyear. 2. Revenue The Group is engaged in the exploration and development of gold and silverdeposits in East Kazakhstan and has no trading revenue. 3. Earnings per share 31 December 2005 31 December 2004 Unaudited Unaudited £000's £000's Loss for the period (587) (438) Weighted average number of ordinary shares 246,854,369 199,765,328 Loss per ordinary share (UK pence per share) (0.24) (0.22)Diluted loss per share (UK pence per share) (0.24) (0.22) 4. Post balance sheet events Issue of shares On 2 March 2006 a placing of 104,000,000 new ordinary shares at 10p per shareraised £10.4 million before expenses (expenses £0.4 million). The funds will beapplied to develop the Sekisovskoye project. Construction of processing facilities The Group has placed orders for key components of the processing facilityincluding crushers and ball mills for delivery in mid June 2006. 5. Dividends The directors are not proposing to pay a dividend. The Report and Accounts for the year to 31 December 2005 are being posted toshareholders and are available to the public from the Company's RegisteredOffice: Daws House, 33 - 35 Daws Lane, London, NW7 4SD. This information is provided by RNS The company news service from the London Stock Exchange