23 Jan 2009 07:00
OXUS GOLD PLC
Status Report
Highlights:
Sale of 60,000 ounces of gold equivalent from AGF by end of Q4 2009
Sufficient capital resources
Addition to the existing bankable feasibility study of accelerating development of Phase 2 to reduce CAPEX
Company begins negotiations with a major Asian contracting and financing group
LONDON: 23 January 2009 - the Board of Oxus Gold plc ("Oxus" or the "Company") (OXS.L) notes the current fall in the Company's share price. The directors are not aware of any specific reason for this fall, other than general market sentiment.
The Board wishes to reassure shareholders that the Company's 50% owned Amantaytau Goldfields joint venture ("AGF") is expected to sell approximately 60,000 ounces of gold equivalent during 2009 from its ongoing gold and silver open pit (oxide) operations.
With the exception of 250,000 tonnes of higher grade (3.5 g/t) Sarybatyr oxide ore, AGF's existing open pit operations will in future be processed entirely by heap leach, which is more cost effective for the lower grade material being mined. This Sarybatyr ore is expected to be processed through the existing carbon-in-leach ("CIL") processing plant during Q2 2009, following which the CIL plant will be modified to treat sulphide ore from AGF's proposed underground expansion project ("Phase 2").
The Company recognises the difficulties currently facing the international financial sector and continues to work closely with the Royal Bank of Scotland and other banks in respect of the proposed finance for Phase 2.
However, the Company is currently preparing an addendum to the existing bankable feasibility study ("BFS") for Phase 2. This addendum envisages the accelerated development of Phase 2 at a very significantly reduced capital cost.
It is proposed that the high grade (approx 10 g/t) underground sulphide ore at Severny is accessed via the existing Shaft 10 rather than via declines. In addition, the deeper sulphide ores (approx 3.5 g/t) at Asaukak and Sarybatyr would be mined via an extension to the existing oxide open pits. It is proposed to process these sulphide ores initially using flotation followed by an ultra fine grinding and cyanide leaching circuit which would be incorporated into the existing CIL plant. Confirmatory metallurgical testwork with regard to this process is currently underway.
The accelerated development of Phase 2 is expected to produce approximately 100,000 ounces of gold annually by 2010, increasing AGF's production to an estimated 160,000 ounces annually, prior to completion of the final stage of Phase 2 which would further increase AGF's production to over 250,000 ounces annually, in line with the existing BFS.
Negotiations have also commenced with a major Asian contracting and financing group, with a view to concluding a cooperation agreement to develop and finance the underground sulphide project.
Richard Wilkins, CEO of Oxus, commented: "The Board is determined to see the Company safely through these unprecedented and difficult times. We have taken measures to cut costs, and we will continue to do so as appropriate. The Company has cash in the bank and will continue to receive repayments from AGF's ongoing operations against approximately $30 million of shareholder loans advanced to AGF by Oxus. We remain confident that AGF's reserves and resources, and production potential from the Phase 2 expansion, will enable the Company to develop a very significant and profitable business. Discussions will continue in both the western and eastern financial markets, and within Uzbekistan, to ensure that gold production from the sulphide ores will commence during the first half of 2010."
For further information, please contact:
Oxus Gold plc
Richard Wilkins Tel: +44 (0) 20 7907 2000
Jonathan Kipps
Fairfax I.S. PLC
Ewan Leggat Tel: +44 (0) 20 7598 5368
Conduit PR.
Ed Portman/Fiona Hyland Tel: +44 (0)20 7429 6666
END