Oxus Gold Plc Regulatory News (OXS)

22 Oct 2007 07:01

Oxus Gold PLC22 October 2007 news release For immediate release: 22 October 2007 Oxus Gold plc Final Results for the twelve months ended 30 June 2007 • Kyrgyz, Romanian and Turkish assets sold to KazakhGold Group Limited for approximately $73 million, plus potential deferred cash consideration of up to $80 million • Oxus retains rights to its claim in arbitration against the Kyrgyz Republic • Dividend in specie declared equivalent to 17.98 cents per share • Oxus reports a loss of $18.91 million for the year attributable to equity shareholders (2006: a profit of $2.11 million). The result includes exceptional charges of $19.70 million offset by a gain arising from the sale of the rights to the Jerooy project and other assets of $8.00 million • Amantaytau Goldfields ("AGF") reports $3.99 million loss ($1.99 million loss attributable) for the six month period to 30 June 2007 and $6.42 million loss ($3.21 million loss attributable) for the year. • AGF produced 24,138 ounces of gold in the six month period to 30 June 2007 and 59,373 ounces for the year • AGF sold 37,675 ounces of gold in the six month period to 30 June 2007 and 65,174 ounces for the year • Silver off-take contract signed in June 2007, enabling AGF to export refined silver • Refining contract signed with the Almalyk refinery to refine silver dore from Vysokovoltnoye • AGF sold first silver from AGF's CIP operations on 30 June 2007 equal to 44,038 ounces • AGF sold first silver from AGF's Vysokovoltnoye silver-gold heap leach operations in July 2007 equal to 58,502 ounces • Vysokovoltnoye project produced 13,608 kilograms of dore containing 398,999 ounces of silver and 6,709 ounces of gold by 30 June 2007 • Vysokovoltnoye's stockpiled dore and calcine, at 30 June 2007 sales value, worth $25 million • Uzbek courts reject $224 million of a total $225 million in tax and customs claims arising from the state audit • Production commenced at AGF's Asaukak oxide deposit • Zeromax purchases a 15.6% stake in Oxus and enters into strategic alliance LONDON: 22 October 2007 - Oxus Gold plc ("Oxus", the "Company" or "the Group")reports its final results for the 12 months ended 30 June 2007 (the "year").This has been a very challenging period for the Group during which time it facedunprecedented interruptions to AGF's operations in Uzbekistan due to adisruptive tax audit, the financial impact of the loss of certain taxprivileges, and the impact of a number of legal issues which were both costlyand time consuming. Although AGF's operations were returning to normal towardsthe end of the year, the lengthy period of disruption at AGF, as well as otherongoing corporate matters, inevitably had a serious negative impact on theGroup's earnings and expenses during the year as a whole, which led to asubstantial loss overall. Oxus believes these issues are now largely behind theGroup and that it can once again take a more positive view of the future. (All references to $ are to United States dollars.) Report on Activities Financial Results The Group reports a reduction in gross revenue, excluding attributable jointventure income, to $2.39 million (2006: $3.38 million), resulting primarily fromthe loss of anticipated fee income following the sale of the Jerooy project.The AGF joint venture contributed an attributable loss of $3.21 million for theyear (2006: $10.17 million attributable profit). Total group earnings for theyear showed an unaudited loss after taxation and minority interest of $18.91million (6.25 cents per share loss) against a profit of $2.11 million (0.73cents per share profit) in the comparable year to 30 June 2006. The result includes exceptional charges of $19.7 million offset by a gainarising from the sale of the rights to the Jerooy project and other assets of$8.0 million. The Group has not recognised any future gain attributable to 'deferred cash consideration' of up to $80 million payable by KazakhGold GroupLimited ("Kazakhgold") in the event that KazakhGold or a nominee acquires, oracquires the benefit of, a licence to enable it to continue with the developmentof the Jerooy gold project in Kyrgyzstan. If such additional consideration isreceived the Company will withdraw its arbitration proceedings against theKyrgyz Republic. The Company has declared a dividend equivalent to $65.69 million (2006: nil).The dividend was paid in specie by the distribution of the majority of theKazakhGold Global Depositary Receipts (GDRs) received as consideration for thesale of the Jerooy project and certain other assets. The dividend was equal to17.98 cents per share. The Group has written down the value of its holdings in Eurogold Limited by $5.7million to the market value as at 30 June 2007 as it now considers that the fallin value is long-term. The Group has also written down the carrying value of the3,541,666 KazakhGold GDRs, initially to the quoted value on the London StockExchange on 22 June 2007, the record date of the dividend in specie, and inrespect of the retained holding of 220,322 GDRs, to the quoted value on 30 June2007. The total amount provided against the GDRs was $2.9 million. The exceptional charges included further costs arising as a consequence of theabortive 2002 project financing and related litigation of $7.3 million, costs of$2.8 million incurred in the arbitration proceedings against the KyrgyzGovernment, impairment costs on investments of $8.6 million (including theKazakhgold GDRs) and legal costs of $1.0 million. Total assets increased to $186.29 million (2006: $176.37 million), includingcash and cash equivalents of $10.88 million (2006: $13.71 million). During theyear the Company issued 67,278,975 shares, comprising 57,000,000 to Zeromax GmbHupon acquisition of a strategic stake in the Company, 10,000,000 to JNR Limitedfor consultancy services, 206,667 stock options were exercised, and 72,308shares were issued to directors in place of remuneration. The total number ofshares in issue at 30 June 2007 was 365,399,173. At 30 June 2007 the Group's loan facility from Nedbank had reduced to $13.75million. The accounts have been prepared in accordance with International FinancialReporting Standards (IFRS), The 2006 comparatives have been restated to reflectthe writing back of goodwill arising on the acquisition of further shares inMarakand Minerals Limited, previously accounted as a deduction from the capitalreserve, and the classification of warrants returned to the Company by the Courtin respect of the abortive 2002 financing and subsequent litigation as afinancial asset. There was no impact on last year's earnings. Uzbek State tax audit During July and August 2006 AGF underwent a State 'complex' tax, customs andcompliance audit as part of the established regulatory procedure. As a result ofthe audit, the State tax and customs authorities initially claimed approximately$225 million in taxes, customs duties, fines and penalties for alleged breachesof the Uzbek tax law. Subsequently the Navoi Regional Economic Court and theTashkent Supreme Economic Court rejected $224 million of these claims. Oxus madeprovision within its annual accounts to 30 June 2006 to cover its 50% share ofthe outstanding liability of $1 million. The State audit materially disrupted the ongoing operations of AGF due tovarious restrictions imposed on assets and bank accounts whilst the tax andcustoms claims were passing through the Uzbek legal process. There are someresidual issues still being negotiated with the Uzbek tax authorities within theframework of ongoing constructive discussions which AGF expects to resolveshortly. During the period AGF also paid approximately $6.2 million in taxes that it hadpreviously been exempted from by virtue of tax privileges granted to AGF bydecrees of the Uzbek Government. Following constructive discussions, for aperiod of 18 months with effect from 1 May 2007 AGF has been granted a deferralof payment of withholding tax, property tax and customs duties on importedgoods. These deferred taxes and duties, of which $1.03 million was accrued atthe year end, will become payable in 6 monthly installments commencing 1November 2008, and will be financed as part of the capital cost of the Phase 2sulphides underground project. Had AGF not suffered the loss of its tax privileges, the loss for the yearattributable to Oxus would have been $100,000, as opposed to $3.21million. Legal issues On 4 August 2003 the Company cancelled 5,000,000 warrants for shares exercisableat 15.25 pence per share, which had been issued in relation to the abortive 2002project financing and related litigation. The grantee disputed thiscancellation, and following litigation the court ordered that the warrantsshould be reinstated and offered the grantee a choice of receiving the warrantsor cash. The grantee opted to receive cash and the warrants were returned to theCompany. The grantee also asserted an entitlement, under an adjustment provisionin the original warrant deed, to an additional 3,313,380 warrants. In thisrespect the court ruled in favour of the Company and no additional warrants wereawarded. During the year the Company incurred expenses of $7.35 million (2006:$4.62 million) arising in respect of this litigation, including damages, legalcosts and interest. The warrants are now held as a financial asset by theCompany pending resale and are valued at $2.23 million. The Company intends tosell these warrants or to place the underlying shares for cash, when it isanticipated that the transaction will recover a surplus to the present carryingvalue. During the year the Company continued its claim in arbitration against theKyrgyz Republic under the United Kingdom - Kyrgyz Republic Bilateral InvestmentTreaty. Oxus is seeking to recover its loss of profits arising from thecancellation of the mining licence for the Jerooy gold project, less the amountit received in mitigation from the transaction with KazakhGold. The KyrgyzRepublic is challenging the jurisdiction of the arbitral tribunal and a decisionfrom the tribunal at a hearing held recently on jurisdiction is expected in thenext few weeks. The Company continues to own all rights arising from thisarbitration subject to the withdrawal of this claim upon receipt of the 'deferred cash consideration' from KazakhGold. During the year the Companyincurred expenses of $2.79 million in respect of the arbitration. Operations The disruptions caused by the State audit inevitably consumed significantmanagement time and represented a major distraction from efforts to ensureefficient and economic operation of the AGF oxide plant, the Vysokovoltnoyesilver-gold heap leach project and the further development of the undergroundsulphides. Although operations were able to continue, albeit at a reduced level, AGF wasunable to run the mining operation at maximum efficiency resulting in thedepletion of oxide ore stockpiles and strategic consumable stocks. As a resultof this, the expected reduction in grade and quality of ore, and an increasedtax base arising from the loss of privileges, it was not possible to maintainplant production at economic levels. In addition, the financial disruption andimpact on working capital led to shortages of diesel, lime and steel balls, andresultant interruptions to mining and processing operations. Gold production forthe year was therefore substantially below target, although AGF did export itsfirst silver bullion from the oxide plant on 30 June 2007 when a total of 44,038ounces was shipped to London. Nevertheless, during the period, mining at Amantaytau Centralny continued untilthe oxide ores were exhausted. Mining continued into the higher grade 'refractory transition / 'sulphidic' oxide' ores until this was curtailed due toincreasingly low gold recoveries in the plant. After the planned commencement ofmining at the lower grade Asaukak deposit and haulage of ore to the CIP plantgold recoveries improved considerably, and during May and June averaged over 90%(even though the recovery for the six months to the 30 June 2007 averaged only56%). At Vysokovoltnoye irrigation of the stacked ore and the operation of the MerrillCrowe plant continued throughout the period, as did production of concentrate.As at 30 June 2007 a total of 13,608 kilograms of dore containing 398,999 ouncesof silver and 6,709 ounces of gold were produced. Of this 5,759 kilograms hadbeen stockpiled and 7,849 kilograms were awaiting refining at the Almalyk Miningand Metallurgical Combinat ("Almalyk"). In June, the Uzbek Government approvedthe silver off-take agreement, enabling AGF to export 44,038 ounces of refinedsilver from its CIP operations on the 30 June and its first silver fromVysokovoltnoye, 58,502 ounces, in July. Since the year end dore production hasincreased to 8,200 kilograms per month, although silver sales are expected toaverage 5 tonnes per month until the refining capacity at Almalyk can beincreased, or a contract to export silver dore to international refineries isconcluded and registered with the Uzbek authorities. The value of precious metal in the dore and silver calcine concentrate atVysokovoltnoye at 30 June 2007, taken at current sales value less refining cost,and where applicable, smelting costs, was approximately $25 million. Thedevelopment costs of the Vysokovoltnoye project, including plant and machinery,mine infrastructure and stacking incurred to date are $21.79 million, which willbe expensed over the revenue producing life of the project. Amantaytau Goldfields Phase 1 oxides project The following table summarises AGF's operating results: Six months to 30 Six months to 31 Year to 30 June Year to 30 June June 2007 December 2006 2007 2006 Ore mined, tonnes 708,902 454,198 1,163,100 1,517,574Ore processed, tonnes 315,542 561,135 876,677 1,609,726Average grade (g/t) 4.2 2.4 3.1 3.9Average gold recovery (%) 56.0 80.6 68.4 73.6Gold produced, ounces 24,138 35,235 59,373 146,937Gold sales, ounces 37,675 27,499 65,174 154,038Hedge ounces 0 0 0 76,699Spot ounces 37,675 27,499 65,174 77,339Average gold price $ per ounce 651 608 633 451Average cash cost $ per ounce 576 536 559 250Average total cost $ per ounce 666 623 642 302Net profit (loss) after tax & debt service $m (3,986) (2,440) (6,426) 20.337 Underground Sulphides Project A feasibility study into the mining and processing of the substantial AGFprimary sulphide mineral resource was completed by Wardell Armstrong inSeptember 2005. In addition, in order to comply with Uzbek regulations, it wasnecessary to restate the feasibility study in accordance with Uzbek standardsfor approval by the authorities. Both of these studies were based on undergroundmining and a new biological oxidation plant. The Uzbek approval process was alsodelayed whilst the claims arising from the State audit were passing through theUzbek legal process. However, AGF and the Uzbek authorities are now cooperatingfully and the formal approval from the Uzbek Government for the sulphidesproject is expected towards the end of the year. The Phase 2 sulphides project is designed to mine the deeper primary sulphideextensions to the oxide ore bodies that have been mined-out by open pit methodsat Amantaytau Centralny and also to mine the adjacent Amantaytau Severnysulphide ores. Combined they contain underground Ore Reserves of 9.71 milliontonnes at an average grade of 7.71 grammes per tonne (g/t) containing 2.41million ounces of gold. This Ore Reserve is within a combined Measured andIndicated Resource above a 3.5 g/t cut-off of 10.32 million tonnes at an averagegrade of 9.0 g/t gold containing 2.97 million ounces of gold. There is anadditional Inferred Resource of 2.05 million tonnes at an average grade of 7.6 g/t, containing a further 0.5 million ounces of gold. The ore body is open atdepth and at Amantaytau Severny Soviet drilling at 500 metres below thecurrently explored ore bodies encountered 51.6 g/t gold over 8 metres. TheseResources and Reserves are JORC compliant and are included in the totals in thetables in Appendices 1&2. Detailed tabulations will be posted on the websiteshortly. Whilst the delay in implementing the sulphides project has affected AGFnegatively in the short term it has allowed time for optimisation studies to becarried out which offer significant benefits over the original design. Insteadof building a new stand-alone plant, the existing oxide CIP plant will bemodified to accept sulphide ore. This will mean that the existing crushing,milling, thickening and reagent systems will be re-used along with individualitems such as the interstage carbon screens. Since the plant modifications aremainly adding additional processing sections, subject to successful financing,the new plant can be constructed and commissioned without significantlyaffecting the existing plant production. Re-using the existing plant will not only optimise capital but will also reducelead times associated with the procurement of major equipment such as mills. Itis therefore planned to start feeding sulphidic ore to the plant in the secondquarter of 2009. In addition, since existing plant capacity is higher than thatallowed for in the feasibility study, it is planned to increase the sulphideplant throughput from the original design tonnage of 750,000 tonnes per annum in2009 to 1,200,000 tonnes per annum by 2012 as the underground ore production isexpanded. In order to provide sulphidic ore to feed the plant in 2009 initially it will benecessary to mine the sulphides from surface by expanding the existingAmantaytau Centralny open pits, since significant quantities of ore fromunderground will only become available in 2010. Deepening the existing pits willnot only allow the sulphide plant to be brought on stream earlier but will alsoprovide an access point for the underground mine portal. By starting the portalin the pit, the length of the required decline will be reduced and the necessityto excavate a large box cut through the poor surface rock will be avoided whichwill save on both capital and time. Although testwork undertaken in the last twelve months has led to encouragingresults by using ultra-fine grinding and flotation technology, negotiations arenow well underway to utilise biological oxidation technology. This technology isalready being used at a nearby project in Uzbekistan and is considered to be thepreferred and more reliable alternative. A new economic model for the sulphides project has also been prepared, whichwill now form the base case for future financial projections. Further detailsrelating to this project will be released shortly. Other Heap Leach Projects In addition to the development of the sulphides, which will become the mainpriority for AGF during 2008, AGF also intends to construct and commission a 1million tonnes per annum heap leach facility close to the Asaukak pit. For theinitial twelve months this facility will be fed from low grade ore stockpilessituated at Asaukak. This will significantly reduce operating costs and allowfor the plant to pay for itself within a year. Approximately 29,000 ounces ofgold is expected to be produced from this facility in 2009. The initial cost of creating the low grade ore stockpile of approximately251,000 tonnes, at an average contained gold grade of 0.7 grammes per tonne, hasbeen fully expensed to date. Heap leaching of the Asaukak low grade stockpiles will require the completion ofexploration drilling, then development followed by shallow open-pit mining ofother deposits within the Asaukak area (Aksai, North Asaukak, Sreddiny, AksaiNorth, Daugystau North and Karasai West) and then other satellite oxidedeposits. Alongside production from the higher grade sulphides, heap-leachingwill provide an ongoing recovery of gold from the lower grade oxide deposits,thus contributing to AGF's future profitability and increasing the overallproduction from 170,000 ounces gold equivalent in 2009 to over 300,000 ouncesfrom 2010. Exploration Exploration activities were severely cut back during the period due to financialdisruptions. Fortunately grade control drilling of the upper benches of theAsaukak Pit was completed before the disruption resulting from the State Audit.Grade control has therefore continued without further Reverse Circulation ("RC")drilling, and at both Asaukak and Vysokovoltnoye increased trench / rip-linesampling has been carried out. Commencement of the programme of further trenching and RC drilling of depositsfor heap-leaching in the Asaukak area was delayed, but is now scheduled toproceed following a refurbishment of the RC drilling rig. Core drilling using AGF's CS14 drill rig has been carried out on a single shiftbasis during much of the period to assist in further engineering andmetallurgical development work. An additional benefit of these programmes wasthe training of AGF's Uzbek drillers on operating the rig. The separate programmes were: • geotechnical drilling (7 holes totaling 645 metres - in addition to that reported last year) to determine rock conditions along the line of the proposed access declines for the Amantaytau Severny underground mine. The drilling was directed at identifying how the rock conditions varied with depth, and to confirm the positions of predicted faults and dykes beneath the Mesozoic cover rocks; • drilling to obtain core (5 holes totaling 297 metres) for metallurgical samples in the 'graphitic / transition / oxidized sulphidic ores' and primary ores below the mined out oxides in the Amantaytau Centralny pits. The drill core was logged and classified into separate 'mineralogical / metallurgical' sub-types for further testwork, in order to more specifically determine metallurgical characteristics as part of the open-pit sulphide engineering programme; • four holes totaling 210 metres were drilled at Vysokovoltnoye to intersect the transition zone from oxides to sulphides, around the base of the designed open-pit, and provide drill core for detailed geological logging, analysis and metallurgical testwork. This programme will be continued, so as to determine in more detail the relationship between specific rock units and heap-leach recoveries of silver and gold, in advance of pit development and grade control work and • at the western end of the Asaukak open-pit, 8 holes totaling 400 metres have been drilled to test a potential extension of mineralization between the existing pit and a fault zone. This is not expected to be of particularly high grade, but could potentially provide additional feed for heap-leaching. AGF's strategy in terms of exploration and development going forward will focuson the specific projects and the recruitment of additional staff and contractorsrequired to manage geological and engineering aspects. Of priority are: • geostatistical remodeling of the Amantaytau Centralny sulphides at a lower cut-off grade for open pit mining, followed by pit optimization and detailed design. This work has commenced subsequent to the year end, and resource and open pit reserves are to be revised accordingly; • preparation for Amantaytau Severny underground access development, further underground exploration and stope definition drilling; • further trenching, and following RC rig refurbishment, drilling of deposits for heap-leaching in the Asaukak area (Aksai, North Asaukak, Sreddiny, Aksai North, Daugystau North and Karasai West), followed by modeling, pit design and engineering; • ongoing exploration around Vysokovoltnoye to further optimise and extend the life of the Vysokovoltnoye heap-leach operation. AGF has 4.8 million ounces of gold and 38 million ounces of silver containedwithin its Measured and Indicated Resources, plus a further 2.4 million ouncesof gold and 16 million ounces of silver in the Inferred Category, as well assignificant Exploration Potential. These Resources are JORC compliant and aretabulated in Appendices 1&2. Within the Resource Base, AGF has Proven and Probable Reserves as of 1 July2007 totaling 2.8 million ounces of gold and 6.7 million ounces of silver, byfar the greatest value being in the Amantaytau Severny and Centralny sulphideproject. Oxus has a 50% share in AGF's resources and reserves. These Reservesare JORC compliant and are tabulated in Appendices 1&2. Detailed tabulations will be posted on the website shortly. Appendices 3 and 4contain descriptions of the JORC and Soviet Reserve and Resourcecategorisations, Jerooy In June 2007 the Group completed the sale of all its interests in the Jerooygold project in Kyrgyzstan to KazakhGold. These interests were held by theCompany's 100% subsidiary, Norox Mining Company Limited, which in turn owns66.67% of Talas Gold Mining Company. The sale also included the Company's 50%interest in the Romaltyn joint venture in Romania and certain exploration assetsin Turkey previously owned by the Group's 84% owned subsidiary, MarakandMinerals Limited. The Group had spent approximately $63 million on the Jerooy gold project,including the construction of a processing plant which was approximately 80%complete before construction was suspended in February 2006, and approximately$3.8 million on the Romaltyn joint venture, in which KazakhGold already owned a50% interest. Romaltyn owns a gold processing plant in Baia Mare and certainexploration licences. The consideration for this transaction was 3,541,666 new ordinary shares inKazakhGold valued at the time at approximately $73 million, plus the potential 'deferred cash consideration' of up to $80 million payable in the event thatKazakhGold or a nominee acquires, or acquires the benefit of, a licence toenable it to continue with the development of the Jerooy gold project. The transaction generated a gain on sale of $8.0 million. No value has beenattributed to the 'deferred cash consideration' or to the claim in arbitrationas at 30 June 2007. Other activity Zeromax strategic investment In November 2006 the Company announced that it had signed a subscriptionagreement with Zeromax GmbH, Uzbekistan's largest private-sector company, tobring Zeromax into Oxus as a strategic investor and alliance partner. Pursuantto that agreement Zeromax purchased 57,000,000 new ordinary shares in theCompany at 21.5p per share, and currently owns 15.6% of Oxus. Zeromax is owned by Miradil S. Djalalov, a Tashkent entrepreneur who founded thecompany in 2000. It operates in Uzbekistan through a series of joint venturesand investments in the oil & gas, mining, agriculture and textile sectors andhas forged strong working relationships with the Uzbek Government. As a result of the alliance, Harry Eustace has joined the Company from Zeromaxas Vice President - Corporate Development. In addition Mr. Djalalov has agreedto join the Oxus board as a non-executive director in due course. The Companycontinues to work very closely with Zeromax and is optimistic that the alliancewill enhance the development of AGF as well as leading to the acquisition of newprojects in Uzbekistan. Eurogold In 2005 Oxus agreed to acquire certain assets of, and subsidiary company sharesin, Eurogold Limited, a company listed on the Australian Stock Exchange and onthe AIM market of the London Stock Exchange. The Company subsequently withdrewthis offer and in April 2006 entered instead into an asset purchase agreement toacquire certain assets owned by Eurogold. In June 2006 Oxus terminated thisagreement when it became apparent that the approved reserves were significantlyless than the 578,000 ounces that Oxus had been led to believe. Eurogolddisputed this termination, and commenced legal proceedings in the AustralianFederal Court, claiming damages. Oxus has counterclaimed for the sums advancedunder a loan agreement with the Eurogold group and damages in relation to sharespurchased in Eurogold. No date has yet been set for trial. During the year theCompany incurred expenses of $618,000 in respect of this litigation. Marakand Minerals Limited Marakand Minerals is an 84.04% owned subsidiary of Oxus. Marakand is a mining exploration and development company which has focused onbase metals and silver. Its principal asset is its interest in the Khandizapolymetallic deposit in South East Uzbekistan, and the surrounding explorationareas. Until recently, the Company had also been pursuing a strategy to acquireexploration assets in Turkey. Marakand's involvement in the development of the Khandiza polymetallic depositin Uzbekistan, which was to be by way of a joint venture with the StateCommittee of Geology of the Republic of Uzbekistan ("Goscomgeology"), continuesto be uncertain. The Uzbek Government transferred the Khandiza mineral reservesfrom Goscomgeology to the state owned Almalyk Mining and Metallurgical Combinat,resulting in the proposed joint venture with Goscomgeology falling away. Withthe further passage of time it now appears increasingly unlikely that Marakandwill be involved in the future development of the Khandiza deposit. In October2004, Marakand completed and submitted a feasibility study to the UzbekGovernment and in 2005 completed an Environmental and Social Impact Assessmenton the project. Marakand has evaluated the surrounding South East Uzbekistanregion and identified a number of priority exploration targets. Marakand,together with Oxus, owns the rights to the results of this work, including thefeasibility study. Marakand's right to an option relating to the Karakilise copper deposit licencein Turkey was transferred to KazakhGold as part of the KazakhGold asset saletransaction. Marakand's 25% interest in Hatay Madencilik SA and related copper /gold exploration licence is also subject to sale to KazakhGold, pending theresolution of outstanding legal and regulatory issues. Oxus paid Marakand$950,000 in cash to acquire these assets prior to their onward sale. This amounthas been offset against the Company's loan account with Marakand, and wasconsistent with a fair market valuation undertaken by independent mineralindustry consultants. Since the longer term future of Marakand remains in doubt, the directors of Oxusbelieve it to be in the interests of the Group as a whole to acquire the 15.96%minority not already owned by Oxus. Consideration will be in the form of newordinary shares in Oxus. The Group will continue to push for the recognition ofits rights with regard to the Khandiza deposit, and in the event thatcompensation is received or the Group does become involved in the development ofthe project, the minority shareholders of Marakand will continue to benefit byvirtue of being shareholders in Oxus. Directors Darryl Norton stepped down as a director of Oxus on 12 March 2007 in order tojoin the board of KazakhGold as part of the asset sale transaction withKazakhGold. Mr. Norton served as an alternate director from 1 December 2005 andjoined the Board on 8 January 2007. The Company wishes to thank Mr Norton forthe time that he served both as an alternate and as an executive director andwishes him every success with KazakhGold. Dividend in Specie The Company received 3,541,666 new ordinary shares in KazakhGold asconsideration for the sale of Norox Mining Company Limited and other assets toKazakhGold. These shares were converted into KazakhGold GDRs which trade on theLondon Stock Exchange on the basis of one share being equal to one GDR. Following an extraordinary general meeting of the Company on 20 June 2007 theshareholders approved a dividend in specie equivalent to one GDR for every 110Oxus shares held on the record date, 22 June 2007. On 2 July 2007 a total of3,321,344 GDRs were allocated to the dividend in specie, representing a value of$65.69 million, or 17.98 cents per share. These GDRs can only be held electronically and 98.56% of them have alreadybeen distributed to shareholders. A cash alternative, valid until close ofbusiness on 31 October 2007, has now been offered to those shareholders who havenot received their GDRs. Any GDRs not cashed will continue to be held by theCompany until the relevant shareholder provides the Company's registrars withthe appropriate electronic CREST account details. Outlook The year ended June 2007 was one of the most challenging periods in the Group'shistory. Beset with financial and legal challenges in Uzbekistan, Kyrgyzstan andin the United Kingdom, the Group was forced to spend a significant amount ofmanagement time and substantial financial resources in order to resolve theseissues. However, despite these distractions, two major transactions, which areof significant benefit to the shareholders, were completed during the year. Thesale of the Kyrgyz, Romanian and Turkish assets to Kazakgold created directvalue in the form of dividends and the strategic investment by Zeromax hascreated a stronger foundation and made Oxus better equipped to meet the demandsof operating in Uzbekistan, putting Oxus on a positive footing for a promisingfuture. With the strong resource and reserve base at AGF to underpin ongoingproduction of gold and silver the Group remains committed to expanding itsproduction output from its current levels and to accelerating the development ofthe underground sulphides project at AGF. Therefore despite various setbacks, the year ended 30 June 2007 has ended on apositive note and has allowed Oxus to consolidate its operations in Uzbekistan,forge stronger relationships, and look to the future with confidence. For further information please visit www.oxusgold.co.uk or contact: OXUS GOLD PLC Jonathan Kipps - Finance Director Tel: +44 (0) 207 907 2000Richard Wilkins - Company Secretary Tel: +44 (0) 207 907 2000 CANACCORD ADAMS LIMITED Mike Jones Tel +44 (0) 207 050 6500Erin Needra Tel: +44 (0) 207 050 6500 BANKSIDE CONSULTANTS Keith Irons Tel: +44 (0) 207 367 8888Oliver Winters Tel: +44 (0) 207 367 8888 COMPETENT PERSONS' REVIEW The Ore Reserves and Mineral Resources have been compiled by the Company'sgeological staff (which includes, in a consulting capacity, Competent Persons;Bill Charter BSc. CGeol. FGS, CEng, MIMM and Gordon Wylie BSc (Hons) Geology,MAusIMM, FGSSA) and were reviewed by Wardell Armstrong International Ltd bytheir Competent Person Dr Phil Newall, BSc.,ARSM, Phd, CEng. FIMM.. Appendix 5gives more background on the Competent Persons. A summary of the Group's financial results follow Consolidated Income Statement Year ended 30 Year ended 30 Year ended 30 June June June 2007 2007 2006 Note US$000 US$000 US$000 Revenue 2,387 3,383 Direct expensesExploration and evaluation expenditure - (1,224) Gross profit 2,387 2,159 Administrative expenses (6,985) (5,749)Share-based payments (218) (1,393)Foreign exchange loss (223) (158)Gain on sale of Norox Mining Company Limited and other assets 3 8,034 -Gain on sale of investments 92 -Total gain from the sale of investments 8,126 -Legal and other costs arising from abortive 2002 financing 2 (7,347) (4,617)Jerooy arbitrations costs (2,792) -Other legal costs (963) -Impairment losses recognised on investments held 4 (8,602) -Total exceptional costs (19,704)Operating loss (16,617) (9,758) Share of (loss)/profit from joint ventures 6 (3,213) 10,169 Financial income 5 2,457 2,261Financial expense (1,538) (289) Net financial income 919 1,972 (Loss)/Profit before tax (18,911) 2,383 Taxation (55) 15 (Loss)/Profit for the year (18,966) 2,398 Attributable to:Equity shareholders of the parent (18,908) 2,110Minority interests (58) 288 (18,966) 2,398 Basic (loss)/earnings per share - US cents (6.25) 0.73 Diluted earnings per share - US cents (6.25) 0.71 All amounts relate to continuing operations. Consolidated Balance Sheet Note 2007 2006 US$000 US$000 RestatedNon-current assetsIntangible assets 3,068 3,068Property, plant and equipment 608 5,227Exploration and mining development properties 7 40,445 90,643Investments in joint ventures 8 42,527 47,075Available-for-sale investments at market value 9 5,171 3,348Available-for-sale investments at cost 895 895 92,714 150,256 Current assetsTrade and other receivables 10 14,772 10,172Available-for-sale investments 65,696 -Derivative financial instruments 2,228 2,228Cash and cash equivalents 10,881 13,717 93,577 26,117 Total assets 186,291 176,373 Equity and liabilities Equity attributable to ordinary shareholdersShare capital 11 6,104 4,774Share premium 105,341 77,407Capital reserve 22,799 22,614Revaluation reserve - (3,907)Merger reserve 34,929 34,929Retained earnings (84,278) 326 Total equity attributable to ordinary shareholders 84,895 136,143 Minority interests 4,431 4,020 Total equity 89,326 140,163 Non-current liabilitiesInterest-bearing loans and borrowings 12 8,750 13,750AGF Phase 2 project development fund - 6,209 8,750 19,959 Current liabilitiesInterest-bearing loans and borrowings 12 5,000 5,000AGF Phase 2 Project Development Fund 10,866 4,657Trade and other payables 6,653 6,594Proposed dividend 13 65,696 - 88,215 16,251 Total equity and liabilities 186,291 176,373 Consolidated Cash Flow Statement Note Year ended 30 Year ended 30 June June 2007 2006 US$000 US$000 RestatedCash flows from operating activitiesLoss/profit before tax for the year (18,911) 2,398Adjustments for:Depreciation, depletion and amortisation 2,405 136Interest paid 1,538 289Equity-settled share-based payment expenses 185 1,364Income attributable to joint venture 3,213 (10,169)Non-cash movements in minority interests 469 (259)Salaries and bonuses converted to shares 50 43Other reserve movements (2,620) - Cash flows from operating activities before changes in working capital and provisions (13,671) (6,198) Increase in amounts due from joint venture (2,809) (6,464)(Increase)/decrease in trade and other receivables (1,790) 1,673Increase in AGF Phase 2 Project Development Fund - 3,323Increase in trade and other payables 3 5,409 Cash absorbed by operating activities (18,267) (2,257) Cash flows from investing activitiesInvestment in plant and equipment - (5,262)Investment in exploration and mining development properties (8,864) (30,516)Investment loans - (416)Acquisition of warrants - (2,228)Net return of investment from joint venture 1,335 -Other investments - (895)Sale of investments 285 -Dividend received from joint venture - 1,250 Net cash from investing activities (7,244) (38,067) Cash flows from financing activitiesProceeds from the issue of share capital 29,213 746Proceeds from bank borrowings - 20,000Repayment of bank borrowings (5,000) (1,250)Interest paid (1,538) (289) Net cash from financing activities 22,675 19,207 Net decrease in cash and cash equivalents (2,836) (21,117)Cash and cash equivalents at 1 July 13,717 34,834 Cash and cash equivalents at 30 June 10,881 13,717 Statement of Changes in shareholders equity Total For the year ended 30 Share Capital Revaluation Merger Retained Shareholders Minority TotalJune 2007 Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Restated Restated Restated Balance at 1 July 2005 4,581 65,540 19,660 (1,117) 34,929 (857) 122,736 12,858 135,594Profit after tax for the year - - - - - 2,398 2,398 (288) 2,110 On consolidation of minority interests - - - - - (1,215) (1,215) - (1,215) Total recognised in income and expense for the year - - - - - 1,183 1,183 (288) 895Shares issued to acquire Marakand shares 167 11,105 (9,595) - - - 1,677 - 1,677 Goodwill arising on purchase of Marakand shares - - 3,068 - - - 3,068 - 3,068 Arising on revaluation of exploration rights in Marakand - - 8,117 - - - 8,117 - 8,117 Arising on revaluation of investments - - - (2,790) - - (2,790) - (2,790)Arising on consolidation of minority interests - - - - - - - (8,579) (8,579) Warrants and options exercised 15 228 - - - - 243 - 243 Equity-settled share-based payments 10 493 1,364 - - - 1,867 29 1,896 Conversion of Directors remuneration to shares 1 41 - - - - 42 - 42 Balance at 30 June 2006 (restated) 4,774 77,407 22,614 (3,907) 34,929 326 136,143 4,020 140,163 Balance at 1 July 2006 4,774 77,407 22,614 (3,907) 34,929 326 136,143 4,020 140,163Losses after tax for the year - - - - - (18,909) (18,908) (58) (18,966) Total recognised in income and expense for the year - - - - - (18,908) (18,908) (58) (18,966) Shares issued in the year 1,125 23,066 - - - - 24,191 439 24,630 Warrants and options exercised 5 58 - - - - 63 30 93 Equity-settled share-based payments 198 4,760 185 - - - 5,143 - 5,143 Conversion of Directors remuneration to shares 2 50 - - - - 52 - 52 Transfer to income statement - - - 3,907 - - 3,907 - 3,907 Equity dividends (note 13) - - - - - (65,696) (65,696) - (65,696) Balance at 30 June 2007 6,104 105,341 22,799 - 34,929 (84,278) 84,895 4,431 89,326 Statement of Changes in Equity for the Group For the year ended 30 June 2007 - continued Share capital is the amount subscribed for shares at nominal value. Share premium represents the excess of the amount subscribed for share capitalover the nominal value of these shares net of share issue expenses. Capital reserve represents the credit to equity in respect of share-basedpayments together with reserves arising from the acquisition of minorityinterests and historic adjustments arising from corporate reconstructions priorto the adoption of international accounting standards. The capital reserve hasbeen restated The revaluation reserve comprises amounts held in equity in respect of therevaluation or devaluation of available-for-sale investments. The merger reserve comprises gains arising from a Group corporate reconstructionin 2001. Retained earnings represent the cumulative (loss)/profit of the Groupattributable to equity shareholders. Notes forming part of the financial statements 1 Basis of preparation and accounting policies The Group financial statements consolidate those of the Company and itssubsidiaries (together referred to as "the Group"). The parent company financialstatements present information about the Company as a separate entity and notabout its group. These financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs and IFRIC interpretations) asadopted by the European Union and also in accordance with the Companies Act2006. 2 Legal and other costs arising from abortive 2002 financing The litigation in respect of the abortive financing exercise in 2002 hasnow been concluded. Additional High Court and other legal costs were incurred during the year to finally bring to a close this matter. The Group and Company have recognised the Warrants returned by the High Court as a financial asset. 3 Gain on sale of Norox Mining Company Limited and other assets On 11 May 2007 the Group completed the sale of Norox Mining Company Limitedand other related assets to KazakhGold Group Limited, a company incorporated inJersey. The assets sold were 100% of Norox Mining Company Limited, the Group's 50% share in the Romaltyn Limited joint venture, the right to an optionrelated to the Karakalise copper deposit licence in Turkey and the Group's 25%holding in Hatay Madencilik SA subject to completion of certain legal and regulatory issues. If the Hatay Holdings are not transferred there will be noadjustment to the consideration paid by KazakhGold Group Limited, Norox MiningCompany Limited owned 66.67% of The Talas Gold Mining Company ("TGMC") inKyrgyzstan. TGMC owned the Group's interests in the Jerooy Gold mining projectin Kyrgyzstan. All of the Group's interests in the Jerooy project, includingits rights arising from licence agreements and related arrangements with theKyrgyz Republic have been included in the sale and the Group retains no interestin or liability from the Jerooy project with the exception of the rights to theinternational arbitration concerning the disputes with the Kyrgyz Republic.These rights have been retained by the Group. No value has been attributed tothese rights in these financial statements. If the Group is subsequentlyawarded compensation the full amount will be recovered by the Group. Theconsideration paid by KazakhGold Group Limited will not be adjusted if such arecovery is made by the Group. Romaltyn Limited successfully bid for a licence to exploit certain Romaniangold mining assets in late 2006 but did not commence any significant developmentof these assets prior to the sale. The results of the trading and the exploration and mining developmentexpenditure in respect of the sale assets are included within the Groupfinancial statements up to the date of sale. The consideration received for the sale assets was the receipt of 3,541,666new ordinary shares in KazakhGold Group Limited. These were subsequentlyconverted to KazakhGold Group Limited Global Depositary Receipts (GDRs) whichare listed on the London Stock Exchange. The Group has retained its rights inrespect of the international arbitration against the Kyrgyz Republic wheresums in excess of US$500 million, less amounts already received, have beenclaimed by the Group. The Group realised a gain of $8,034,000 on this salecomprising: Group 2007 US$000 Gain on Exploration and mining development property 6,835 Net gain on other assets 1,342 Net loss on sale of Turkish interests (143) 8,034 KazakhGold Group Limited will pay additional consideration of up to $80million conditional upon Kazakhgold Group Limited or a nominee acquiring alicence to mine or acquiring a company or entity that has the benefit of alicence to mine the Jerooy Deposit and commences development or production atthis site. On the achievement of this benefit and upon receipt of theadditional consideration the Group will withdraw its arbitration proceedings. No amounts have been recognised in these financial statements for either of these contingent assets. 4 Impairment losses recognised on investments held Year ended 30 June Year ended 30 June 2007 2006 Group Group US$000 US$000 Eurogold Limited 5,709 - KazakhGold Group Limited GDRs 2,893 - 8,602 - The fall in value of the Eurogold Limited shares, which are listed on boththe London Alternative Investment Market and the Australian Stock Exchange,is now considered to be long term and the Group's investments have beenwritten down to market value as at 30 June 2007. The amount provided includes advances made to Eurogold Limited and amounts previously held in therevaluation reserve. The KazakhGold Group Limited GDRs have been marked to market value as at22 June 2007 when the majority of the GDRs were allocated to the Company'sdividend in specie. The remaining holding held by the Company of 220,322GDRs has also been adjusted to market value as at 30 June 2007. 5 Financial income - Group Year ended 30 June Year ended 30 June 2007 2006 Group Group US$000 US$000 Interest receivable from Joint Venture 2,228 1,969 Interest receivable - other 229 292 2,457 2,261 6 Share of (loss)/profit from joint ventures The Group's joint venture operations are conducted through AmantaytauGoldfields AO ("AGF"). The information disclosed below shows the amountsattributable to the Group and has been extracted from the latest auditedfinancial statements for AGF dated 31 December 2006 together with the managementaccounts of AGF dated 30 June 2007. Year ended 30 June Year ended 30 June 2007 2006 Group Group US$000 US$000 Revenue 18,885 32,661 (Loss)/profit before tax (3,213) 10,169 Taxation - - (Loss)/profit after tax (3,213) 10,169 Dividend paid - (1,250) Net earnings retained (3,213) 8,919 Revenue comprises the Group's share of the proceeds of AGF received for the sale of gold and precious minerals. AGF sold 65,174 ounces of gold in the year (2006: 154,038 ounces). All known taxation liabilities for the year have been included above. 7 Exploration and mining Kyrgyzstan Uzbekistan Uzbekistan Uzbekistan Total development properties Jerooy Amantaytau Aristantau Khandiza And Balpantau Group Group Group Group Group US$000 US$000 US$000 US$000 US$000 Cost At 1 July 2005 23,005 7,979 687 28,456 60,127 Additions 27,193 3,323 - - 30,516 Disposals - - - - - At 30 June 2006 50,198 11,302 687 28,456 90,643 At 1 July 2006 50,198 11,302 687 28,456 90,643 Additions 8,864 - - - 8,864 Disposals (59,062) - - - (59,062) At 30 June 2007 - 11,302 687 28,456 40,445 The Group's exploration and development properties are not amortised untilproduction commences. The Group's investments in exploration and miningdevelopment properties are reviewed for impairment. On 11 May 2007 the Group sold all of its interests in the Jerooy projectto KazakhGold Group Limited. The Group's investment in the Amantaytau region is held primarily throughits joint venture company. Refer to note 8. The amounts included above havebeen expended by the Group in the region but have not yet been transferredto the joint venture. Refer also to note 8 for further details of the Group'sinvestment in the joint venture. Licences for development at Aristantau and Balpantau have not yet beenobtained. Discussions are continuing. The amounts included above in respect of the exploration and miningdevelopment property held at Khandiza are stated at the value of$28,456,000 being the valuation of the project based upon a report by Wardell Armstrong International on 28 November 2003. The Group's interests in Khandizaare held through its subsidiary Marakand Minerals Limited. On 10 August2006 a decree was issued instructing Marakand's partner, Goscomgeology, totransfer local responsibility for Khandiza from Goscomgeology to OAO Almalyk GMK("Almalyk") a state owned base metal mining and smelter company. Thedecree also cancelled an earlier decree which had authorised Marakand toproceed with the project on a concession basis or product sharing agreement. Marakand has indicated its preparedness to develop the project jointly withAlmalyk but no clearly defined role or structure has yet been forthcoming.Marakand continues to seek clarification of its role in the project fromthe Uzbek Government. In the event it is determined that there is no role forthe Company in the project, then Marakand will seek the appropriatecompensation to which it is entitled under Uzbek Law. Discussions arecontinuing. The Directors believe that no diminution in value is currentlyappropriate. 8 Interests in joint venture - Group Investment Loans Total Group Group Group US$000 US$000 US$000 Cost At 1 July 2005 14,294 23,290 37,584 Group's share of profits (note 6) 10,169 - 10,169 Dividends received (1,250) - (1,250) Amounts advanced - 6,626 6,626 Amounts repaid - (6,054) (6,054) At 30 June 2006 23,213 23,862 47,075 At 1 July 2006 23,213 23,862 47,075 Group's share of Losses (note 6) (3,213) - (3,213) Dividends received - - - Amounts advanced - 6,330 6,330 Amounts repaid - (7,665) (7,665) At 30 June 2007 20,000 22,527 42,527 9 Available-for-sale investments at market value 2007 2006 Group Group US$000 US$000 At 1 July 3,348 5,722 Additions 4,307 416 Disposals (285) - Adjustment to market fair value (2,199) (2,790) At 30 June 5,171 3,348 Analysis of investments held: Eurogold Limited 864 3,063 Ovoca Gold Plc - 285 KazakhGold Group Global Depositary Receipts 4,307 - 5,171 3,348 Eurogold Limited is listed on both the London Alternative InvestmentMarket and on the Australian Stock Exchange. The company conducts goldmining operations in the Ukraine. The KazakhGold Group Limited GDRs, each of which grants the holder theright to one ordinary share in KazakhGold Group Limited, are listed on theLondon Stock Exchange. The company conducts gold mining operationsprimarily in Kazakhstan. The Group holds 220,322 GDRs from its initialallocation of 3,541,666 received from the sale of Norox Mining CompanyLimited and certain other assets (note 3). The balance of 3,321,344 GDRshas been allocated to a dividend in specie by the Company. 10 Trade and other receivables - Group 2007 2006 Group Group US$000 US$000 Trade debtors 674 - Amounts due from joint venture 12,232 9,422 Other debtors 1,857 670 Prepayments 9 80 14,772 10,172 11 Issued share capital Group and Group and Group and Group and Company Company Company Company Number Number US$000 US$000 2007 2006 2007 2006 At 1 July 298,120,198 287,017,343 4,774 4,581 Stock options exercised 206,667 126,667 5 2 Warrants exercised 10,000,000 750,000 198 13 Share-based payments (1) - 572,000 - 10 Other shares issued 57,000,000 - 1,125 - Marakand Minerals Limited (2) - 9,614,016 - 167 Conversion of directors 72,308 40,172 2 1 remuneration to shares At 30 June 365,399,173 298,120,198 6,104 4,774 1. Services received by the Company and settled by the issue of equity shares in the Company. The value of the equity issued was the fair value of the services received. 2. During 2006 9,614,016 shares were issued in exchange for an additional 28,842,066 ordinary shares in Marakand Minerals Limited. These were valued at $11,272,000, representing £0.25 per share. During 2007 10,000,000 warrants were issued to JNR Limited in payment for services. The value of the warrants issued was equal to the fair value of the services provided. The warrants contained the right to be converted to equity shares of the Company at £0.25 per share. These were converted during 2007. At 30 June 2007 the Company has 5,000,000 warrants outstanding, being those returned to the Company by the High Court. These warrants are due to expire on 8 February 2008 following extension by the Company. They are exercisable at £0.1525 per share and are classified as a financial asset. 12 Interest-bearing loans and borrowings Current Current Non-current Non-current Group and Group and Group and Group and Company Company Company Company US$000 US$000 US$000 US$000 2007 2006 2007 2006 Nedbank Corporate Loan Facility 5,000 5,000 8,750 13,750 The Company has a $20 million corporate loan facility with NedbankLimited. The loan is being repaid over four years from drawdown and has aninterest rate of 2.75% above 3 month LIBOR. The loan is secured on the Group's shares in, and loans to, Amantaytau Goldfields, and other subsidiarycompany shares and loans. The facility has been used to refinance thebalance of the original AGF syndicated project finance loan, the capitalexpenditure on the Vysokovoltnoye project at AGF and to provide working capital.The amount outstanding on the Nedbank loan on 19 October 2007 was $12.5million. 13 Proposed dividend 2007 2006 Group and Company Company US$000 US$000 Dividend in specie 65,696 - The record date for the dividend was 22 June 2007. The ex-dividend date,as set by the London Stock Exchange, was 2 July 2007. The payment wasauthorised by the Company's ordinary shareholders at an ExtraordinaryGeneral Meeting held on 20 June 2007. APPENDIX 1 Please follow the link below to view; OXUS GOLD PLC PRECIOUS METAL RESOURCES AS OF 1st JULY 2007 http://www.rns-pdf.londonstockexchange.com/rns/0831g_-2007-10-22.pdf APPENDIX 2 OXUS GOLD PLC PRECIOUS METAL RESERVES AS OF 1st JULY 2007 JORC Classified Proven Reserves Probable Reserves Proven + Probable Deposits Mt Grade g/t Contained Mt Grade g/t Contained Mt Grade g/t Contained Kozs Kozs Kozs Gold Silver Gold Silver Gold Silver Gold Silver Gold Silver Gold SilverAMANTAYTAU GOLDFIELDS Total Oxides 2.21 1.6 22.1 111 1,571 7.10 1.4 22.6 320 5,168 9.31 1.4 22.5 430 6,739 Total Sulphides 1.83 8.4 496 7.88 7.5 1,912 9.71 7.7 2,408 Total Amantaytau 4.04 4.7 12.1 607 1,571 14.98 4.6 10.7 2,231 5,168 19.02 4.6 11.0 2,839 6,739 Goldfields OXUS ATTRIBUTABLE - 50% 304 786 1,116 2,584 1,419 3,369 No new reserve calculations were undertaken during the year as no new information was made availabe. Changes from the previous year were due to mining depletion Underground'sulphide reserves come from the Wardell Armstrong feasibilitystudy dated 2005 APPENDIX 3 DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES EXTRACTED FROM THE JORCCODE: (December 2004) (www.jorc.com) Exploration Results include data and information generated by explorationprogrammes that may be of use to investors. The Exploration Results may or maynot be part of a formal declaration of Mineral Resources or Ore Reserves. A 'Mineral Resource' is a concentration or occurrence of material of intrinsiceconomic interest in or on the Earth's crust in such form, quality and quantitythat there are reasonable prospects for eventual economic extraction. Thelocation, quantity, grade, geological characteristics and continuity of aMineral Resource are known, estimated or interpreted from specific geologicalevidence and knowledge. Mineral Resources are sub-divided, in order ofincreasing geological confidence, into Inferred, Indicated and Measuredcategories. An 'Inferred Mineral Resource' is that part of a Mineral Resource for whichtonnage, grade and mineral content can be estimated with a low level ofconfidence. It is inferred from geological evidence and assumed but not verifiedgeological and/or grade continuity. It is based on information gathered throughappropriate techniques from locations such as outcrops, trenches, pits, workingsand drill holes which may be limited or of uncertain quality and reliability. An 'Indicated Mineral Resource' is that part of a Mineral Resource for whichtonnage, densities, shape, physical characteristics, grade and mineral contentcan be estimated with a reasonable level of confidence. It is based onexploration, sampling and testing information gathered through appropriatetechniques from locations such as outcrops, trenches, pits, workings and drillholes. The locations are too widely or inappropriately spaced to confirmgeological and/or grade continuity but are spaced closely enough for continuityto be assumed. A 'Measured Mineral Resource' is that part of a Mineral Resource for whichtonnage, densities, shape, physical characteristics, grade and mineral contentcan be estimated with a high level of confidence. It is based on detailed andreliable exploration, sampling and testing information gathered throughappropriate techniques from locations such as outcrops, trenches, pits, workingsand drill holes. The locations are spaced closely enough to confirm geologicaland/or grade continuity. An 'Ore Reserve' is the economically mineable part of a Measured and/orIndicated Mineral Resource. It includes diluting materials and allowances forlosses which may occur when the material is mined. Appropriate assessments andstudies have been carried out, and include consideration of and modification byrealistically assumed mining, metallurgical, economic, marketing, legal,environmental, social and governmental factors. These assessments demonstrate atthe time of reporting that extraction could reasonably be justified. OreReserves are sub-divided in order of increasing confidence into Probable OreReserves and Proved Ore Reserves. A 'Probable Ore Reserve' is the economically mineable part of an Indicated, andin some circumstances Measured Mineral Resource. It includes diluting materialsand allowances for losses which may occur when the material is mined.Appropriate assessments and studies have been carried out, and includeconsideration of and modification by realistically assumed mining,metallurgical, economic, marketing, legal, environmental, social andgovernmental factors. These assessments demonstrate at the time of reportingthat extraction could reasonably be justified. A 'Proved Ore Reserve' is the economically mineable part of a Measured MineralResource. It includes diluting materials and allowances for losses which mayoccur when the material is mined. Appropriate assessments and studies have beencarried out, and include consideration of and modification by realisticallyassumed mining, metallurgical, economic, APPENDIX 4 SOVIET/UZBEK (RUSSIAN) CLASSIFICATION OF RESOURCES & RESERVES The following description of the Russian classification of resources andreserves is from the report "Oxide resource potential of the Amantaytau-Vysokovoltnoye Orefield", prepared by P.S. Newall (BSc, PhD, CEng, MIMM), dated16 October 2001, Ref: 61-0200. This report was prepared by CSMA Consultants Ltd,which is now Wardell Armstrong International. In addition, an article on Russian mineral reporting by Stephen Henley reportedin Mining Journal, London, August 20, 2004, provides a useful summary Stephen Henley is principal ofRESOURCES COMPUTING INTERNATIONAL LTDS. Henley PhD, Ceng, FIMMM, FGSResources Computing International LtdMatlock, Derbyshire, UKStephen.henley@resourcescomputing.com Soviet System of Resource/Reserve Classification The former Soviet system for classification of reserves and resources, developedin 1960 and revised in 1981, is still used today in the Commonwealth ofIndependent States. Essentially, it divides mineral concentrations into sevencategories of three major groups, based on the level of exploration performed:explored reserves (A, B, C1), evaluated reserves (C2) and prognostic resources(P1, P2, P3). The following description of the resource and reserveclassification is derived from a paper by S.A.Diatchkov (1994) and has beenmodified by WGM to relate to currently acceptable international standards. Theclassifications of the reserves described by Diatchkov are those that weredeveloped by the former USSR authorities. In principle, they follow a successionof approximations that are applied to various stages of exploration. This meansthat reserves are assigned to classes based on the degree of reliability of dataand indicate their comparative importance for the national economy. Reserves are classified into five main categories and designated by the symbolsA, B, C1, C2 and P1. Capital letters are used to designate ores that areeconomic. Sometimes, the same group of letters are written in lower case (i.e.a, b, c) when the mineralisation is considered sub-economic. Alternatively, asimple classification into 'balansovye' (commercially exploitable reserves) and'zabalansovye' (uneconomic resources) is used. Resources and Reserves include the first four categories, A, B, C1 and C2. Thecategories C1 and C2 are relevant to the AGF Licence Area and are defined here. Category C1: The reserves in place have been estimated by a sparse grid of trenches,drillholes or underground workings. This category also includes reservesadjoining the boundaries of A and B reserves as well as reserves of very complexdeposits in which the distribution cannot be determined even by a very densesample grid. The quality and properties of the deposit are known tentatively byanalyses and by analogy with known deposits of the same type. The generalconditions for exploitation are partially known. Category C2: The reserves have been extrapolated from limited data, probably only a singlehole. This category includes reserves that are adjoining A, B, and C1 reservesin the same deposit. Classification of CIS Mineral Deposits Deposits of solid minerals in CIS are classified into five major groups, basedlargely on the character and size of the deposit. The ability to define thecategories of reserves depends on the deposit group in which the deposit isclassified. The deposits of the AGF licence area have been classified by GKZ(State Committee for Resources) as being confined to Group 3. APPENDIX 5 COMPETENT PERSONS The resources and reserves stated in this report have been compiled or Approvedby the following Competent Persons: P S Newall, BSc, ARSM, PhD, CEng, FIMM Wardell Armstrong International Ltd Wheal Jane, Baldhu, Truro, Cornwall, TR3 6EH Tel: +44 1872 560738 Fax: +44 1872 561079 Web: //www.wardell-armstrong.com P Newall, is Senior Consulting Geologist and Director with WAI and has practisedhis profession as a mine and exploration geologist for over twenty years forboth base and precious metals. Gordon Wylie BSc (Hons) Geology, MAusIMM, FGSSA Gordon Wylie is a consultant and non-executive Director of Oxus Gold plc. Gordonhas over 31 years experience in the mining and exploration industry. From 1998to 2005 Gordon was in charge of AngloGold and latterly, AngloGold Ashanti'sglobal exploration programme and was appointed Executive Officer in early 2004 William J Charter, BSc, CGeol, FGS, CEng, MIMM Bill Charter has over 29 years experience in mining and exploration industry.Having gained experience with Anglo American Corporation (in Fiji and SouthAfrica), then worked in Central Asia and other locations worldwide. Started workwith the Oxus Group in 1996. In November 2003 was appointed as TechnicalDirector of Marakand Minerals Limited, also acting as Geological Consultant toMarakand's parent company Oxus Gold plc. This information is provided by RNS The company news service from the London Stock Exchange