Oxus Gold Plc Regulatory News (OXS)

12 Mar 2007 07:03

Oxus Gold PLC12 March 2007 news release For immediate release: 12 March 2007 Oxus Gold plc Oxus announces agreement in principle to transfer Kyrgyz and Romanian interests to KazakhGold Dividend to be Declared LONDON: 12 March 2007 - Oxus Gold plc ("Oxus" or the "Company") (OXS.L) ispleased to announce that it has agreed in principle to sell to KazakhGold GroupLimited, subject to contract ("KazakhGold") (KZG.L): - its 100% interest in Norox Mining Company Limited, which company owns 66.67% of Talas Gold Mining Company in Kyrgyzstan; - its 50% interest in the Romaltyn joint venture in Romania; and - certain exploration assets in Turkey currently owned by Oxus's 86% owned subsidiary, Marakand Minerals Limited (MKD.L), subject to board approval from Marakand for the issuance of 3,541,666 new ordinary shares in KazakhGold (currentlyvalued at approximately $72 million), plus deferred consideration of up to $80million, payable in cash in instalments, provided that KazakhGold obtains therequisite licence to enable it to continue with the development of the Jerooygold project in Kyrgyzstan. The proposed sale is subject to a number ofconditions, including completion of satisfactory due diligence, the receipt ofsatisfactory independent valuations of the assets, the receipt of all necessaryregulatory approvals and consents, and completion of final legal documentation. Oxus intends to distribute all or a large portion of the KazakhGold sharesarising from the transaction as a dividend to its shareholders and furtherdetails will be supplied to shareholders in due course. The initialconsideration currently represents 7% of KazakhGold's outstanding share capital. Darryl Norton has agreed to step down as a director of Oxus and to join theboard of KazkhGold as Joint Managing Director. In addition Steve Westhead andGeoff McLoughlin, both of whom have been full time engaged on the Romaltyn jointventure, will join KazakhGold as chief geologist and chief metallurgistrespectively. Upon completion of the proposed sale, KazakhGold will acquire 100% of NoroxMining Company Limited which in turn owns 66.67% of Talas Gold Mining Company inKyrgyzstan. Oxus has spent approximately $63 million on the Jerooy gold projectto date, including on the construction of a processing plant which isapproximately 80% complete. As previously announced, construction was suspendedin February 2006. The Romaltyn joint venture in Romania, in which KazakhGold already has a 50%interest, owns a gold processing plant in Baia Mare and certain explorationlicences. These assets were jointly acquired by Oxus and KazakhGold in January2007 following a successful bid in open auction. Oxus has spent approximately$3.8 million on the project to date, including its share of the purchase price. The transfer of the Turkish exploration assets will be subject to KazakhGold'sassessment of the economic viability of such assets, the determination of anappropriate fair market value to be paid to Marakand by Oxus and approval of theMarakand board. Oxus will continue to focus its efforts on the development of its producing goldoperations in Uzbekistan and to building the strategic alliance with ZeromaxGmbH. Apart from the ongoing oxide operations, it is intended to bring theunderground sulphides operation into production as soon as possible and toexpand Oxus's overall project base in Uzbekistan. Bill Trew, CEO of Oxus, commented "We are delighted to be able to make thisannouncement and, upon completion, we believe the transaction will represent awin-win situation for our shareholders and also for the shareholders ofKazakhGold. These Kyrgyz and Romanian assets, together with the experience thatDarryl, Steve and Geoff will bring to the KazakhGold management team, will addsignificant value to KazakhGold's already impressive Kazak asset base. We believe this transaction with KazakhGold provides a satisfactory resolutionfor Oxus of the difficult issues involved at Jerooy. We will recover the fundsexpended at Jerooy to date and will also have some further potential benefitshould KazakhGold be successful in obtaining the Jerooy mining licence. Oxuswill continue to focus on increasing its gold production in Uzbekistan and isworking closely with Zeromax in order to realise the full potential of theAmantaytau Goldfields project and to evaluating other project opportunities inUzbekistan." The deadline for subscription of the second tranche of new ordinary shares ofOxus by Zeromax, announced on 30 November 2006, has been extended to the closeof business on 19 March 2007. End Contacts: Oxus Gold plcRichard Wilkins Tel: +44 (0)20 7907 2000website: www.Oxusgold.co.uk Bankside Consultants Ltd.Keith Irons/Oliver Winters Tel: +44 (0)20 7367 8873 Canaccord Adams LimitedErin Needra Tel: +44 (0) 7050 6755 This information is provided by RNS The company news service from the London Stock Exchange