Oxus Gold Plc Regulatory News (OXS)

18 May 2009 07:00



Oxus Gold plc

("Oxus" or "Company")

Final preliminary results for the 18 months ended 31 December 2008

AGF reports an operating profit of $2.70 million* for the year ended 31 December 2008 (year ended 31 December 2007: operating loss of $7.93 million)

AGF produces 66,465 ounces* of gold equivalent for the year ended 31 December 2008 (year ended 31 December 2007: 83,339 ounces) 

AGF reports gold sales of 67,329 ounces* of gold equivalent for the year ended 31 December 2008 (year ended 31 December 2007: 74,740 ounces)

AGF has 18 tonnes of silver doré ready to be shipped to a refinery in Switzerland

Oxus reports gross revenue, which represents recharged administrative and other costs, of $5.28 million for the 18 month period ended 31 December 2008 (year ended 30 June 2007: $2.39 million)

Oxus reports a loss of $54.39 million for the 18 month period ended 31 December 2008 (year ended 30 June 2007: loss of $18.97 million). The result includes net exceptional charges of $43.51 million (2007: $18.74 million), $38.90 million of which were reported in the 6 month interim period to 31 December 2007 

Bankable feasibility study completed on underground sulphides project

Lower capital cost first phase addendum to the bankable feasibility study completed 

Placing of convertible loan notes raises cash for working capital. Current cash balances stand at $9 million

Monthly corporate overheads reduced by 39% over the 18 month period ended 31 December 2008

Special dividend paid equivalent to $65.69 million from the sale of the Jerooy project to KazakhGold

Arbitration with the Kyrgyz Republic settled with a net receipt by Oxus of $3.34 million

Eurogold litigation settled with a combination of cash and shares

*50% attributable to Oxus  Chairman's Statement

During the latter part of 2008 the Oxus Group had to adapt to the very difficult economic and financial environment. Few people would have predicted the economic meltdown in the banking and financial markets last seen in the Great Depression of the 1930s. This in turn has led to substantial erosion in shareholders' value across all sectors and Oxus, like many of its peers, has seen its own market capitalisation shrink very substantially.

As a consequence of the current economic climate the capital required to develop the Group's 50% owned underground sulphide mine at Amantaytau Goldfields (AGF) in Uzbekistan has been delayed. As a result, we have been in discussions with a number of potential alternative sources of financing, including a major Chinese contracting and financing group. The directors remain confident that we will be successful in securing finance for the underground mine and we are now targeting first production in mid 2011, assuming that this finance will be available by November this year. 

In light of this delay in the development of the underground project, Oxus has taken a number of decisions which include:-

Reducing all costs where possible to ensure that the Oxus Group preserves sufficient cash resources to survive through these difficult times. The Group has approximately $9 million in cash at the time of this statement and we will continue to pursue further cost reduction measures.

Revising the underground sulphide project feasibility study to enable the Group to construct the first phase of the mine at a substantially reduced capital cost.

Exploring a number of alternative financial markets to raise the required capital to build the sulphide mine.

The delay in bringing the sulphide mine into production has necessitated fast tracking the development of the Sarybatyr open pit oxide deposit through the carbon in pulp (CIP) plant in order to maintain gold production and cashflow during the intervening period. AGF has applied for the appropriate mining permit and we estimate that 110,000 ounces of gold will be recovered from this deposit over a 24 month period beginning in June 2009.

Mining at the Vysokovoltnoye heap leach operation is scheduled to re-commence in June 2009 after refining 18 tonnes of silver and gold doré stockpiled at the mine. Subject to obtaining the permit to export unrefined metal, we plan to export this stockpile for refining in Switzerland. The relevant permit is currently being finalised and the directors are optimistic that approval from the Uzbek Government will be forthcoming in the near future. We expect that this heap leach will produce 340,000 gold equivalent ounces over the remainder of its economic life, estimated to be a further 11 years.

In order to stimulate the investment of foreign capital, the Government of Uzbekistan has instituted various initiatives which we believe will positively assist our in-country operations. One example of this is the recently announced Uzbekneftegas, Petronas (Malaysia) and Sasol (South Africa) transaction to construct a Gas-to-Liquids plant in Uzbekistan at a cost of some US$2.5 billion, which is a vote of confidence by foreign investors in Uzbekistan.

We have refocused the Group to adapt to the current environment and, despite the difficulties we have experienced over the last few months, we remain confident that with the support of all stakeholders your company is well placed to unlock real value for shareholders.

Finally I would like to thank Douglas Sutherland, my predecessor, for his wise counsel during the time he was acting Chairman and Chairman of the Company. I would also like to thank all our staff, both in London and in Uzbekistan, for their hard work and commitment over the last year.

Richard Shead

Executive Chairman

15 May 2009  FINANCIAL AND OPERATING REVIEW

The Company has changed its accounting reference date to 31 December, in order to coincide with that of its joint venture, Amantaytau Goldfields (AGF). Therefore the current reporting period is for the 18 months ended on 31 December 2008. Many of the exceptional items reported below have already been reported in the six monthly interim accounts to 31 December 2007 and 30 June 2008. Comparatives are for the 12 month reporting period that ended on 30 June 2007.

AGF has always reported on a calendar year end basis, to 31 December. Accordingly the Review of Operations also includes a comparison of AGF's business on a calendar year end basis. 

FINANCIAL REVIEW 

The Group reports gross revenue, excluding attributable joint venture income, of $5.28 million in the 18 month period to 31 December 2008 (year to 30 June 2007: $2.39 million). Gross revenue represents the recharge of exploration, evaluation and administrative costs which are borne by the Group and shown as Group costs, but relate directly to the AGF joint venture.

The AGF joint venture contributed an attributable loss of $2.27 million (2007: $3.21 million attributable loss), which includes $1.45 million of exceptional costs arising from providing for or writing off certain assets no longer deemed to have a realisable value. Total Group earnings for the period showed a loss after taxation of $54.39 million (14.57 cents per share loss) against a loss of $18.97 million (6.25 cents per share loss) in 2007. 

The results include net exceptional charges of $43.51 million, arising substantially from providing against the Group's entire investment in the Khandiza project amounting to $28.46 million. Also included are costs relating to the settlement of the Eurogold litigation of $8.36 million (settled by a combination of cash and shares in the Company), a net receipt of $3.34 million with regard to the arbitration against the Kyrgyz Republic, and an adjustment of $8.55 million in respect of the carrying value of the Group's investment in AGF. $38.90 million of these net exceptional charges were provided for in the six month interim period to 31 December 2007.

During the period, the Company paid a special dividend equivalent to $65.69 million in respect of the year ended 30 June 2007 (2006: nil). The dividend was paid in specie on 2 July 2007 with the distribution to shareholders of the majority of the KazakhGold GDRs received as consideration for the sale of the Jerooy project and certain other assets in June 2007. The dividend was equal to 17.98 cents per share.

Total assets decreased to $75.65 million (2007: $184.06 million) including cash and cash equivalents of $9.87 million (2007: $10.88 million). During the period the Company issued 16,040,512 shares, comprising 2,221,621 shares issued to acquire the minority shareholders in Marakand Minerals Limited, and 5,066,666 shares issued as a result of options and warrants being exercised. Zeromax was issued 6,030,151 shares from the capitalisation of a $3 million working capital loan to the Company (which was lent onwards to AGF), and 2,722,074 shares were granted to Eurogold as part of the final litigation settlement. The total number of shares in issue at 31 December 2008 was 381,439,685.

On 14 May 2008, the Company completed a placement of 8.0% unsecured convertible loan notes in units of $250,000 each at par for gross proceeds of $18.5 million. The notes were issued to existing shareholders and to new institutional investors. The notes are convertible into new ordinary shares of the Company at 37 pence per share. At the holder's option, the notes may be converted on the earlier of a written request to convert, or first drawdown on the project finance facility to construct the underground sulphides project at AGF. The notes may also be redeemed on the earlier of the first drawdown on the project finance facility, or 13 May 2010. If all the notes are converted, the maximum number of new shares that would be issued is 26,315,789.

Each of Zeromax and RAB Special Situations (Master) Fund subscribed for $6 million of the convertible notes. By virtue of the size of their respective shareholdings in the Company, each of these subscriptions constituted a Related Party Transaction for the purposes of the AIM rules. The directors of the Company, having consulted its nominated adviser, considered that the terms of the subscriptions were fair and reasonable insofar as the Company's shareholders were concerned.

At 31 December 2008, the Group's loan facility from Nedbank had reduced to $6.25 million, of which $5 million is repayable by 31 December 2009.

The Group is faced with a number of material uncertainties that cast significant doubt over the Group's ability to continue as a going concern. These uncertainties and the directors' considerations thereof are discussed in Note 2 of this announcement. 

 

REVIEW OF OPERATIONS

All figures relating to AGF are 50% attributable to Oxus.

During the year to 31 December 2008 AGF produced 66,465 ounces of gold equivalent (year to 31 December 2007: 83,339 ounces) and sold 67,329 ounces of gold equivalent (2007: 74,740 ounces). For the eighteen month period under review AGF produced 115,125 ounces of gold equivalent and sold 104,394 ounces of gold equivalent. 

AGF reports an operating profit before exceptional items and tax of $2.70 million for the year ended 31 December 2008 (2007: operating loss of $7.93 million). For the eighteen month period under review AGF reports an operating loss before exceptional items and tax of $1.23 million.

	6 months ended 31/12/08 $000	6 months ended 31/12/08 $000	6 months ended 31/12/07 $000	6 months ended 30/6/07 $000	6 months ended 31/12/06 $000
Revenue	25,104	33,796	24,034	24,529	16,719
Operating profit/(loss) before exceptional items and tax	1,786	920	(3,940)	(3,986)	(2,440)

During the 18 month period under review AGF continued to mine the Asaukak and Vysokovoltnoye open pits, with the Asaukak ore being processed through the carbon-in-pulp (CIP) plant and the Vysokovoltnoye ore being heap leached and processed at the adjacent Merrill Crowe plant. The CIP operation reported an operating loss of $9.40 million, whilst the heap leach operation reported an operating profit of $8.16 million. The CIP operation, however, does report an operating profit of $142,000 for the final six months of the period. 

AGF also incurred exceptional costs of $2.91 million as a result of providing for or writing off certain assets no longer deemed to have a realisable value, resulting in AGF reporting a loss, after tax, of $4.54 million for the eighteen month period ended 31 December 2008.

Following the planned shut down of the CIP plant in January 2009, and given the delay in the underground sulphide project, it is now proposed to process the higher grade Sarybatyr open pit oxide ore through the plant until underground sulphide production commences, scheduled for mid 2011, subject to the appropriate finance being available by November 2009. Heap leach production will continue from the Vysokovoltnoye operation, and will be supplemented by the Asaukak heap leach operation from mid 2010.

CIP Plant Open Pit Oxide Operation

The CIP plant continued to operate throughout the period under review until shut down in January 2009. A total of 1,555,313 tonnes of ore were processed at an average grade of 1.56 grammes per tonne (g/t), producing 64,032 ounces of gold. Both the grade and gold recovery gradually decreased throughout the period as a result of the higher grade ore being depleted, and the increasingly sulphidic nature of some of the deeper ores. During the six months to 31 December 2007 the project also incurred high mining costs associated with the pre-stripping of the Asaukak open pit.

At 31 December 2008 1.32 million tonnes of lower grade ore at 0.64 g/t were stockpiled at the mine for future heap leaching.

Despite operating at a marginal profit during the second half of 2008, AGF has temporarily closed the plant until higher grade ore is available from Sarybatyr. The plant is expected to recommence operations in June 2009.

The depletion of the Asaukak oxide reserve and the delay in funding the underground sulphide project required the development of further higher grade oxide deposits to maintain feed to the CIP plant. The feasibility study to exploit the Sarybatyr deposit, located in the south west of AGF's license area, is now in the final stages of Uzbek Government approval and the necessary mining permit is expected to be issued in the near future. All the preparatory work has been completed, including the construction of additional roads required to haul the ore to the CIP plant. The mining of the Sarybatyr deposit will form part of AGF's ongoing open-pit operations from June 2009, assuming the mining permit has been issued.

It is planned that Sarybatyr will provide feed to the plant of 2.26 million tonnes of ore at an average grade of 1.90 g/t. A total of 110,000 ounces of gold is expected to be produced from Sarybatyr during its economic life, which is estimated to be 24 months. When the CIP plant starts processing sulphide ore, all remaining economic unprocessed Sarybatyr oxide ore will be processed at the Vysokovoltnoye heap leach operation.

The following table summarises AGF's operating results in respect of the CIP plant open pit oxide operation: 

(50% attributable to Oxus)

CIP Production
	6 months to	6 months to	6 months to	6 months to	6 months to
	December	June	December	June	December
	2008	2008	2007	2007	2006
Ore processed, tonnes	470,806	554,872	529,635	422,479	561,135
Average grade (g/t)	1.30	1.65	1.70	4.20	2.4
Average gold recovery (%)	78.3	80.3	83.2	56.0	80.6
Gold produced, ounces	16,101	23,689	24,242	24,138	35,236
Gold sales, ounces	20,313	26,646	15,134	37,675	27,499
Average gold price $ per ounce	883	910	756	651	608
Average cash cost $ per ounce	730	742	857	576	536
Average total cost $ per ounce	876	1,003	1,019	666	623

Vysokovoltnoye Silver-Gold Open Pit Heap Leach Operation

The following table summarises AGF's operating results in respect of the Vysokovoltnoye silver-gold heap leach operation.

(50% attributable to Oxus)

Vysokovoltnoye Silver-Gold Heap Leach
	6 months to	6 months to		6 months to	6 months to	6 months to
	December	June		December	June	December
	2008	2008		2007	2007	2006
Ore stacked, tonnes	270,902	281,825		186,853	235,765	198,608
Average silver grade (g/t)	95.5	78.2		98.8	96.2	128.53
Average gold grade (g/t)	1.01	0.89		0.94	1.08	1.33
Silver produced, ounces	676,821	251,438		790,291	315,648	49,830
Gold produced, ounces	7,856	2,982		9,696	4,157	699
Gold equivalent produced, ounces	18,821	7,854		24,418	10,541	-
Gold equivalent refined and sold, ounces	9,934	10,436		21,931	-	-
Average silver price $ per ounce	13.16	17.67		13.43	-	-
Average gold price $ per ounce	819	912		721	-	-
Average production cash cost $ per ounce sold (gold equivalent)	272	389		389	-	-
Average total cash cost $ per ounce sold (gold equivalent)	322	465		465	-	-
Gold equivalent conversion ratio	62.2	51.6		53.7	49.4	-

The Vysokovoltnoye heap leach operation continued throughout the period under review. A total of 739,580 tonnes of ore were crushed and stacked at an average silver grade of 89.7 g/t and an average gold grade of 0.95 g/t. 1,718,550 ounces of silver and 20,534 ounces of gold were produced at an average total cost (gold equivalent) of $346 per ounce.

From November 2007 to March 2008 no stacking took place due to the extremely cold weather, although some irrigation of the stacks was possible during this period, thereby allowing metal to be produced. As a consequence of this unscheduled stoppage appropriate lagging and other action has been taken to ensure continuous operation in the future. 

Throughout the period AGF continued to experience difficulties with the in-country Almalyk refinery, which was unable to refine the required tonnage in accordance with its contractual commitments. At 31 December 2008 the stockpile of unrefined metal stored at AGF and Almalyk was 21.38 tonnes of silver (687,493 ounces) and 390 kgs of gold (12,539 ounces) with a total sales value of approximately $18 million. 

Arrangements are being made to export an initial 18 tonnes of silver doré for refining in Switzerland. The permit to allow this export of doré metal is expected to be issued by the Uzbek Government in the near future. In order to prevent future accumulations of stockpiled doré, discussions are underway with the Almalyk refinery to improve the commercial refining contract and to increase its monthly refining capability (with the doré being cast into anodes at AGF, and then sent directly for electro-refining at Almalyk, bypassing the smelting furnace), and, as an alternative, with the Uzbek Government for an ongoing export permit for the refining of silver doré in Switzerland. In the light of this, the construction of AGF's proposed silver refinery has been suspended.

Future Open Pit Oxide Operations

It is currently planned to continue oxide production until 2022. The existing CIP plant will process the Sarybatyr ore until sulphide production commences, planned for mid 2011. Thereafter oxide ore will be processed entirely by heap leach, using the existing pads and plant at Vysokovoltnoye and the new pads and plant currently under construction at Asaukak.

The Vysokovoltnoye heap leach operation will continue to process lower grade oxide ore from the Vysokovoltnoye deposit and a further 6 deposits in the immediate vicinity. It is estimated that approximately 340,000 ounces of gold equivalent will be recovered from the Vysokovoltnoye operation over the next 10 years.

In October 2008, a decision was made to suspend the Asaukak heap leach operation until such time as cash flow allowed further work. The operation is now planned to commence production in mid 2010 and will require a further $2 million of capital expenditure during the first half of 2010 prior to commissioning. It is planned that this operation will recover an estimated 250,000 ounces of gold from the Asaukak and nearby deposits over the next 10 years or more. Project implementation is well advanced with earthworks complete, all major capital equipment ordered, and the manufacture of several major items completed. 

A stockpile at Asaukak of 1.32 million tonnes of ore at 0.64 g/t is in place, containing 27,000 ounces of gold.

 

The Asaukak open pit oxide heap leach operation will complement the existing Vysokovoltnoye open pit oxide heap leach operation, thereby enabling AGF to continue producing gold from its oxide operations at a planned rate of approximately 55,000 ounces of gold equivalent per annum over the next 10 years or more.

The production of gold from the oxide ore is in addition to the gold which is planned to be produced from the underground sulphide project.

Underground Sulphide Project

In June 2008 Wardell Armstrong International (WAI) completed a bankable feasibility study (BFS) in respect of AGF's underground sulphide Severny deposit, and part of the Centralny deposit. WAI updated the study in November 2008 to include additional reserve ounces. This study envisaged a 750,000 tonnes per annum (tpa) operation (increasing to 1.2 million tpa) over an initial 8 year mine life, at a capital cost of approximately $170 million. The Royal Bank of Scotland (RBS) was mandated to arrange this finance. 

As a result of the current economic and financial conditions, this financing has been delayed and the Company has been in discussions with other potential sources of finance, to include a major Chinese contracting and financing group. 

In May 2009, WAI completed an addendum to the BFS in respect of a lower capital cost first phase of the underground sulphide project, which also includes AGF's sulphide tailings arising from transitional and sulphide ore previously processed through the CIP plant as part of AGF's open pit oxide operation. This study envisages an initial 450,000 tpa operation at a capital cost of approximately $73 million. The Company believes that, if the originally envisaged project cannot be financed at this time, the lower capital cost first phase of the project will be financed and that construction will finally commence later in 2009, with first sulphide production now scheduled for mid 2011.

The underground sulphide project is an extension and expansion of the existing CIP operation and therefore benefits from the existing infrastructure, existing skilled labour force and management's experience of operating in Uzbekistan. 

WAI November 2008 Updated BFS Sulphide Project

The BFS envisages that the sulphide mine will be brought into production based only on the current sulphide reserves of the Severny and Centralny deposits and does not take into account possible future production from the remaining resources of these deposits nor any potential future resources at depth. Significant other potential sulphide resources exist in the satellite oxide deposits within the AGF licence area. The project is scheduled to produce an average of 230,000 ounces of gold per annum when in full production. The planned start date for production is the second quarter of 2011. A drilling programme is planned to start in 2009 for all potential targets to increase the resources and convert them into reserves for future exploitation.

The Project will be an underground mining operation accessed via two parallel declines, with the portals located in the northernmost location at the base of the existing Centralny Pit No 1 where the oxide ore has been mined out.

Mine design is planned around cut and fill mining methods with limited sub-level open stoping. The cut and fill mining method results in high physical extraction ratios and minimal dilution but is relatively expensive. Geotechnical work is being undertaken prior to underground development with a view to improving mining methods and reducing the production cost per ounce.

The ore will be processed using bio-oxidation technology provided by Goldfields, South Africa. The existing CIP plant will be modified to accept the sulphide ore. The existing milling, reagent handling, elution, electro-winning and smelting sections will be retained and upgraded while the leach feed thickener will be converted to accept flotation tails. The float concentrate will be bio-digested to break down the sulphide minerals, thickened and cyanide leached in a carbon in leach (CIL) section. The plant will be constructed in two phases in line with the increase in production from the mining operations. Phase 1 will consist of a single flotation bank and two bio-oxidation modules designed to treat 750,000 tpa of ore. Phase 2 will increase the plant capacity to approximately 1.2 million tpa. Overall plant recovery of 88% has been used in the BFS based on 96% float and 92% CIL recovery.

The BFS recognises the JORC classified Measured and Indicated resource base for the Amantaytau Severny and Centralny sulphides to total 13.5 million tonnes at 6.89 g/t containing 2.99 million ounces of gold.

Based on the above resource, JORC classified Proven and Probable reserves have been estimated for stoping blocks within a 3.5 g/t cut-off at Severny and a 2.0 g/t cut-off at Centralny to be 8.96 million tonnes at 6.99 g/t containing 2.01 million ounces of gold.

The BFS mine plan has an initial life of 8 years. However, based on the wealth of data available from Soviet times and validated by Lonhro and Oxus, there is significant potential to increase the resource base substantially. Neither Centralny nor Severny have been closed off at depth and considerable potential exists for the delineation of mineralisation below existing development levels. A single deep drill hole at Amantaytau Severny intersected mineralisation at 870 metres below surface comprising a drilled width of 8 metres at 51.6 g/t (the estimated true width based on the drill section is 1.73 metres). 

The Project's initial capital funding requirement is estimated to be $167.8 million. A further $48.7 million of sustaining capital over the life of the Project will be funded from the Project cash flows.

From the time of reaching full production, operating costs are forecast to be $86.30 per tonne of ore mined and $402 per ounce of gold produced.

The original BFS was based on the COMEX forward gold price curve at the date of the BFS as supplied by Standard Bank London Ltd. At a flat gold price of $850 per ounce with no inflation of costs, the net present values of the Project, ungeared and pre-profits tax, are $582 million at a discount rate of 0% per annum, $364 million at 7% per annum and $299 million at 10% per annum. The internal rate of return is 57.0% and payback is 24 months from start of production.

WAI May 2009 Lower Capex First Phase BFS Sulphide Project

This addendum to the BFS envisages that the sulphide mine will be brought into production initially from 213,000 tonnes of sulphide ore tailings at a grade of 3.90 g/t arising from previously processed sulphidic ore, followed by the underground Centralny deposit and the high grade Severny deposit. The project is scheduled to produce 100,000 ounces per annum when in full production. Subject to financing being made available in order for construction to commence in November 2009, first production is scheduled for the second quarter of 2011. 

The underground mining operations will be accessed via a single decline, with the existing No 10 Shaft being utilised for ventilation and as a second outlet. The mine design is planned around transverse bench and fill, longitudinal retreat stoping and a reduced amount of cut and fill stoping compared to the original BFS. Access development scheduling and costing was done by Shaft Sinkers and the mine planning was again done by WAI. 

The ore will be processed using bio-oxidation technology. The plant will be constructed to treat 450,000 tpa, using only one of the existing mills and a single bio-oxidation module. Overall plant recoveries will remain the same at 88% except for the tailings where a recovery of 56% has been used.

The addendum to the BFS utilises only a total of 4.1 million tonnes of underground production from Centralny and Severny at an average grade of 7.03 g/t, containing 934,447 ounces of gold. This tonnage represents less than 50% of the JORC classified Proven and Probable reserves. The mine plan has an initial life of 12 years. Optimisation exercises to determine the timing of a production increase are being undertaken.

The initial capital funding requirement is estimated to be $73.8 million. A further $55.5 million of sustaining capital over the life of the project will be funded from the project cash flows. From the time of reaching full production, total operating costs are forecast to be $87.5 per tonne mined and $377 per ounce of gold produced.

At a flat gold price of $850 per ounce with no inflation of costs, the net present values of the Project, ungeared and pre-profits tax, are $197 million at a discount rate of 0% per annum, $103 million at 7% per annum and $78 million at 10% per annum. The internal rate of return is 34.7% and payback is 30 months from start of production. These economics take no account of any plans to expand production and to mine the remaining Proven and Probable reserves as utilised in the November 2008 updated BFS. At a 7% discount rate it is estimated that these reserves would add a further $205 million to the net present value. Given that the main access development will already have been completed, it is also anticipated that these additional reserves will be mined at a substantially lower capital cost than envisaged in the November 2008 updated BFS.

 

RESERVES AND RESOURCES

The Company's Precious Metal Ore Reserve and Mineral Resource statements, as audited by independent mineral industry consultants Wardell Armstrong International as of April 2009, are as follows :

 

AMANTAYTAU GOLDFIELDS PRECIOUS METAL ORE RESERVES AS OF APRIL 2009 (50% attributable to Oxus Gold plc)
	Proven Reserves						Probable Reserves					Proven and Probable
AMANTAYTAU GOLDFIELDS (AGF)	Cut off	Mt	Grade g/t		Contained Kozs		Mt	Grade g/t		Contained Kozs		Mt	Grade g/t		Contained Kozs
	g/t Au		Gold	Silver	Gold	Silver		Gold	Silver	Gold	Silver		Gold	Silver	Gold	Silver
CIP Oxides
Sarybatyr (15% Dilution, 95% Ore Recovery)	0.60	0.75	2.20		53		0.86	1.60		44		1.61	1.88		97
Sub-Total CIP Oxides		0.75	2.20		53		0.86	1.60		44		1.61	1.88		97
Asaukak Oxide Heap Leach
Asaukak (15% Dilution, 95% Ore Recovery)	0.50	0.01	1.18	1.4	1	1	0.16	1.34	1.4	7	7	0.18	1.33	1.4	8	8
Stockpiled low grade ore at Asaukak	0.50	1.32	0.64		27							1.32	0.64		27
Uzunbulak (15% Dilution, 95% Ore Recovery)	0.80	0.09	1.94	3.8	5	11	0.91	1.74	2.5	51	72	1.00	1.76	2.6	56	83
Sub-Total Asaukak Heap Leach		1.42	0.72	0.2	33	11	1.07	1.68	2.3	58	79	2.49	1.14	1.1	91	91
Vysokovoltnoye Silver-Gold Heap Leach
Vysokovoltnoye OB4 (8% Dilution, 95% Ore Recovery)	0.60	0.66	1.33	28.0	28	591	1.77	1.21	26.2	69	1,493	2.43	1.25	26.6	97	2,083
Vysokovoltnoye OB7 (15% Dilution, 95% Ore Recovery)	0.50*	0.04	1.00	72.2	1	98	1.64	0.96	38.7	51	2,036	1.68	0.96	39.5	52	2,134
Stockpiled ore at Vysokovoltnoye	0.60	0.07	0.91	99.6	2	239						0.07	0.91	99.6	2	239
Sub-Total Vysokovoltnoye Heap Leach		0.77	1.28	37.3	32	927	3.41	1.09	32.2	120	3,529	4.19	1.13	33.1	152	4,456
TOTAL AGF OXIDE ORE RESERVES		2.94	1.24	9.9	118	939	5.35	1.29	21.0	222	3,608	8.28	1.28	17.1	340	4,547
Sulphides (Underground)
Amantaytau Centralny (23.4% Dilution, 91.3% Ore Recovery)	2.00						2.21	4.67		332		2.21	4.67		332
Amantaytau Severny (28.3% Dilution, 99.0% Ore Recovery)	3.50	0.85	7.60		207		5.88	7.77		1,470		6.73	7.75		1,677
Sulphides (Surface / Open Pit))
Sulphidic tailings (5.0% Dilution and 95.0% Reserve Recovery)	1.00						0.21	3.90		27		0.21	3.90		27
Asaukak Open-Pit Expansion (15% dilution, 95% Ore Recovery)	1.42	0.04	3.09	5.4	4	7	0.68	2.67	3.3	58	71	0.72	2.69	3.4	62	77
TOTAL AGF SULPHIDE ORE RESERVES		0.88	7.40	0.2	210	7	8.99	6.53	0.2	1,887	71	9.87	6.61	0.2	2,097	77
TOTAL AGF RESERVES					328	945				2,109	3,679				2,437	4,625
OXUS ATTRIBUTABLE - 50%					164	473				1,055	1,840				1,219	2,312
Notes : Depleted Asaukak and Vysokovoltnoye OB7 reserves are as per 31st December 2008
Silver grades under 'Total Oxide' and 'Total Sulphide' do not reflect average over total reserve tonnages
Vysokovoltnoye OB7 oxide cut off grade is 0.5 g/t for gold and 25 g/t for silver
In addition to the above Ore Reserves, the designed open pits include the following 'in-pit inferred resources' (with mining dilution and recovery) and will be subject to grade control during mining
In the case of Vysokovoltnoye OB7, included is an 'in-pit inferred sulphide resource (transition zone)' but subject to further metallurgical testwork :

AMANTAYTAU GOLDFIELDS (AGF)	Cut off	Mt	Grade g/t		Contained Kozs
	g/t Au		Gold	Silver	Gold	Silver
Oxides
Sarybatyr (15% Dilution, 95% Recovery)	0.60	0.65	1.96		41
Asaukak (15% Dilution, 95% Recovery)	0.50	0.07	1.18	1.3	3	3
Vysokovoltnoye OB7 (15% Dilution, 95% Recovery)	0.50*	0.16	1.00	10.2	5	53
Sub-Total AGF oxide 'in-pit inferred' resources		0.88	1.72	2.0	49	56
Sulphides
Vysokovoltnoye OB7 (15% Dilution, 95% Recovery)	1.42*	0.10	0.95	106.9	3	353
Asaukak Open-Pit Expansion (15% dilution, 95% Recovery)	1.42	0.04	2.37	3.4	3	5
Sub-Total AGF sulphide 'in-pit inferred' resources		0.15	1.38	75.7	7	358
Total AGF 'in-pit inferred resources'		1.03	1.68	12.5	56	414
OXUS ATTRIBUTABLE - 50%					28	207
Note : Vysokovoltnoye OB7 oxide cut off grade is 0.5 g/t for gold and 25 g/t for silver; and sulphide cut off grade is 1.42 g/t for gold, and 25 g/t for silver
The Amantaytau Centralny and Severny underground sulphide reserves are based on the 2008 BFS, within which are the following Stage I reserves :
AMANTAYTAU GOLDFIELDS (AGF)	Cut off	Mt	Grade g/t		Contained Kozs
	g/t Au		Gold	Silver	Gold	Silver
Amantaytau Severny Stage I - proven	3.50	0.29	8.66		80
Amantaytau Severny Stage I - probable	3.50	2.80	8.50		764
Amantaytau Severny - sub-total		3.09	8.51		845
Amantaytau Centralny Stage I - proven	3.50	0.08	9.36		23
Amantaytau Centralny Stage I - probable	3.50	0.06	9.16		16
Amantaytau Centralny - sub-total		0.13	9.28		40
AGF Combined Centralny and Severny Stage I Reserve		3.22	8.55		884
OXUS ATTRIBUTABLE - 50%					442

 

AMANTAYTAU GOLDFIELDS PRECIOUS METAL MINERAL RESOURCES AS OF APRIL 2009 (50% attributable to Oxus Gold plc)
	JORC Classified		Measured Resources					Indicated Resources					Inferred Resources						Expl Results
	Deposits	Cut off	Mt	Grade g/t		000 ozs		Mt	Grade g/t		000 ozs		Mt	Grade g/t		000 ozs			000 ozs
		g/t		Gold	Silver	Gold	Silver		Gold	Silver	Gold	Silver		Gold	Silver	Gold	Silver		Gold	Silver
	Oxides
	Asaukak	0.50	0.02	1.23	1.3	1	1	0.35	1.43	1.2	16	13	0.22	1.34	1.2	10	8
	Uzunbulak	0.60	0.12	1.93	4.0	7	15	1.94	1.52	2.8	95	175	1.28	1.29	2.1	53	88
	Amantaytau Centralny	0.40	0.29	2.40	-	22	-	0.29	2.39	-	22	-	0.31	1.56	-	15	-
	Sarybatyr	0.60	0.73	2.46	-	57	-	0.87	1.79	-	50	-	0.78	2.14	-	54	-
	Vysokovoltnoye OB4	0.60	1.22	1.29	34.1	50	1,332	3.63	1.20	27.7	140	3,236	0.59	1.43	22.6	27	430
	Vysokovoltnoye OB7	0.50*	0.06	0.95	61.7	2	117	2.58	0.86	34.5	71	2,864	0.45	0.81	14.3	12	205
	Zapadny Amantaytau	0.60	1.23	1.48	-	58	-	0.46	1.07	-	16	-	0.06	1.16	-	2	-
	AGF - 17 deposits	0.60	-	0.00	-	-	-	7.02	1.37	-	308	-	12.59	1.32	-	536	-		1,966	301
	AGF - 7 Exploration Targets	0.60	-	0.00	-	-	-	-	0.00	-	-	-	-	0.00	-	-	-		453	25,114
	Total Oxides		3.65	1.69	12.5	198	1,465	17.14	1.30	11.4	719	6,288	16.28	1.35	1.4	709	731		2,419	25,415
	Sulphides
	Severny	2.00	0.94	8.99	-	272	-	7.95	7.98	-	2,040	-	0.67	5.70	-	123	-
	Centralny	2.00	1.99	4.75	-	304	-	2.62	4.46	-	376	-	3.11	4.28	-	428	-
	Asaukak	1.50	0.06	3.03	4.6	6	9	1.42	2.68	2.6	122	121	0.70	2.54	2.5	57	56
	Uzunbulak	0.60	0.06	3.56	5.6	6	10	1.50	1.92	3.6	93	172	8.08	2.83	5.6	736	1,451
	Sarybatyr	1.50											2.31	2.58		192
	Vysokovoltnoye OB4	0.60	3.71	1.26	33.7	151	4,019	7.28	1.13	35.9	265	8,389	3.85	1.08	32.1	133	3,981
	Vysokovoltnoye OB7	0.50*	-	0.00	-	-	-	6.12	0.98	73.1	193	14,391	5.74	0.84	51.4	155	9,488
	AGF - 7 deposits (sulphides only)		-	0.00	-	-	-	-	0.00	-	-	-	-	0.00	-	-	-		5,171	46,683
	Total Sulphides		6.75	3.40	18.6	738	4,037	26.89	3.57	26.7	3,089	23,072	24.47	2.32	19.0	1,824	14,975		5,171	46,683
Total Amantaytau Goldfields			10.41	2.80	16.4	937	5,502	44.04	2.69	20.7	3,809	29,361	40.75	1.93	12.0	2,533	15,706		7,590	72,098
OXUS ATTRIBUTABLE - 50%						468	2,751				1,904	14,680				1,267	7,853		3,795	36,049
Soviet/Uzbek Classified Resources (Additional to JORC)						P1					P2
						000 ozs					000 ozs
						Gold	Silver				Gold	Silver
	AGF Sulphides					5,841	314,604				3,745	45,110
OXUS ATTRIBUTABLE - 50%						2,921	157,302				1,873	22,555
Notes : Asaukak and Vysokovoltnoye OB7 resources take into consideration depletion up to 31st December 2008
Vysokovoltnoye OB7 oxide and sulphide cut off grades are 0.5 g/t for gold, and 18 g/t for silver
Silver grades under 'Total Oxide' and 'Total Sulphide' do not reflect average over total resource tonnages
Exploration results comprise all Soviet/Uzbek B, C1 & C2 resources, and P1/P2 resources to 50m depth for oxide and 3 deposits for sulphide, not yet JORC resource classified

 

AGF's Proven and Probable Ore Reserves as of April 2009 (50% attributable to Oxus) are:

Oxide ores: 340,000 ounces gold and 4.547 million ounces silver

Sulphide ores: 2.097 million ounces gold and 77,000 ounces silver

Total: 2.437 million ounces gold and 4.625 million ounces silver

During the period since 1 July 2007 the principal changes with regard to the reduction of oxide reserves are a result of block model adjustments and depletion due to mining at Asaukak of 80,000 ounces of gold and 58,000 ounces of silver, and at Vysokovoltnoye by 2.372 million ounces of silver and 23,000 ounces of gold. Included in the reserves are 27,000 ounces of gold in low grade stockpiled ore at Asaukak, and 239,000 ounces of silver and 2,000 ounces of gold in stockpiled ore at Vysokovoltnoye.

With regard to sulphide reserves, there has been an overall reduction due to block model adjustments and mine design of 311,000 ounces of gold, but an increase of 77,000 ounces of silver. Included in the reserves are 27,000 ounces of gold in sulphidic tailings which will be reprocessed in the proposed sulphide plant, together with 62,000 ounces of gold and 77,000 ounces of silver in an expansion of the Asaukak open pit into sulphides.

AGF's Measured and Indicated Mineral Resources as of April 2009 (50% attributable to Oxus) are:

Oxides: 918,000 ounces gold and 7.753 million ounces silver

Sulphides: 3.828 million ounces gold and 27.110 million ounces silver

Total: 4.745 million ounces gold and 34.863 million ounces silver

During the period since 1 July 2007 the principal changes are an overall reduction, as a result of block model adjustments and depletion due to mining, of 65,000 ounces of gold and 3.178 million ounces of silver.

AGF's Inferred Mineral Resources as of April 2009 (50% attributable to Oxus) are:

Oxides: 709,000 ounces gold and 731,000 ounces silver

Sulphides: 1.824 million ounces gold and 14.975 million ounces silver

Total: 2.533 million ounces gold and 15.706 million ounces silver

Although there are changes in the Inferred Mineral Resource as a result of block model adjustments and depletion due to mining, there is an overall increase of 170,000 ounces of gold largely due to the modelling and inclusion of the Sarybatyr sulphides, which will be subject to further exploration and metallurgical testwork before upgrade to Measured and Indicated Mineral Resources and then conversion to Ore Reserve.

EXPLORATION

The principal objective of AGF's exploration programme during 2008 has been the technical support of the sulphide BFS team with geological and geotechnical aspects of the study, as well as bulk sampling. In addition to continued evaluation and mine design work on the AGF's Severny and Centralny deposits, related studies have been carried out to increase the potential feed to the sulphide plant from additional sources. 

The sulphidic tailings facility has been auger sampled and a Reserve has been established totalling 213,000 tonnes at an average grade of 3.90 g/t gold. The Asaukak deposit has been re-evaluated and an open pitable sulphide Ore Reserve has been estimated totalling 715,000 tonnes at an average grade of 2.69 g/t gold. The Sarybatyr deposit has been re-evaluated and in addition to oxide Ore Reserves of 1.61 million tonnes at an average grade of 1.88 g/t gold plus 0.65 million tonnes of 'in-pit inferred resource' at an average grade of 1.96 g/t gold, an Inferred Sulphide Resource has been estimated by AGF to total 2.31 million tonnes at an estimated average grade of 2.58 g/t gold. 

Physical exploration work has included geotechnical drilling (associated with the Amantaytau Severny proposed decline), drilling to provide samples for metallurgical testwork at Amantaytau Zapadny and Vysokovoltnoye, trenching and bulk sampling of the Sarybatyr deposit and trenching in the Asaukak region.

Sarybatyr Deposit

Surface trenching and bulk sampling was carried out at the Sarybatyr deposit during the last quarter of 2008. Previous metallurgical testwork indicated gold recoveries around 70% whilst simulating a conventional cyanide leach followed by gold adsorption onto resin (resin in pulp (RIP). However, further laboratory testwork simulating cyanide leaching in the presence of activated carbon (carbon in leach (CIL) indicated an improvement in gold recovery to over 80%. A 12,667 tonne bulk sample with an average headgrade of 3.33 g/t was fed through AGF's plant as an 'industrial test' over a twelve day period. During the test period, gold recoveries significantly improved, averaging 90.4%. Two of the leach tanks in AGF's plant have already been converted from conventional leach to CIL, and it is planned to process oxide ore from Sarybatyr up until the time where the plant will be switched over to operate as a sulphide plant. 

Asaukak Region

During the second half of 2008, surface trenching was carried out in the Asaukak region to identify extensions to already known low grade oxide mineralisation, and therefore additional oxide reserve potential for the Asaukak heap-leach project. Oxide ores from the Asaukak deposit have now been virtually mined out from the current pit design, and 1.318 million tonnes of low grade oxide ores at an average grade of 0.64 g/t gold are stockpiled ready for stacking (the higher grades having been hauled to the CIL plant for processing). It is planned to expand the Asaukak open pit to generate sulphide ores, and this may also generate a further 176,000 tonnes of oxide ore at an estimated average grade of 1.33 g/t gold.

The Northern Asaukak deposit (with Measured and Indicated Resources totalling 620,000 tonnes at an average grade of 1.55 g/t gold) and the Sreddiny deposit (with Measured and Indicated Resources totalling 1.02 million tonnes at an average grade of 1.29 g/t gold) are fully explored and are now ready for final evaluation and pit design. 

Trenching has been carried out to the north of Aksay, and around the Severo Vostochny, Severo Zapadny, Northern Daugystau and Western Asaukak deposits. As of the end of 2008, a total of 141 trenches (totalling 4,502 metres) have been excavated for channel sampling. 61 trenches have so far been mapped and sampled. Of the 2,343 samples taken so far, assay results have so far been received for 1,819 samples.

Assays are still outstanding from the above areas, together with umpire duplicate check analyses and selected bottle roll tests. Further trenching and sampling are required at Severo Vostochny, Severo Zapadny, North Daugystau and Western Asaukak oxide deposits. At Western Asaukak, further trench excavation commenced before the end of 2008, and the programme of trench mapping and sampling is scheduled to recommence in Q2 2009. After completion of the trenching programme, further RC drilling will be required to test the mineralization at depth, prior to resource reassessment.

OTHER ACTIVITY

Zeromax

 

During the period Zeromax, Uzbekistan's largest private sector company, acquired a further 11,533,797 shares in the Company, and now owns 68,533,797 shares, representing 17.87% of the Company's issued share capital. Zeromax also subscribed for $6 million of the Company's unsecured convertible loan notes. These convertible loan notes, if converted, will convert into 8,534,850 new ordinary shares in the Company at a price of 37 pence per share.

Zeromax is owned by Miradil Djalalov, a Tashkent entrepreneur who founded the company in 2000. It operates in Uzbekistan through a series of joint ventures and investments in the oil and gas, mining, agriculture and textiles sectors, employing some 25,000 people, and has forged strong relationships with the Uzbek Government. On 7 January 2008, Mr Djalalov joined the board of the Company as a non-executive director.

Amantaytau Goldfields / Oxus Gold Scholarship Foundation

On 26 June 2008, at a ceremony at the Uzbek Embassy in London, the Company inaugurated the Amantaytau Goldfields / Oxus Gold Scholarship Foundation in the presence of HRH Prince Michael of Kent GCVO, who has agreed to act as Patron of the Foundation.

The Foundation has been established with the Westminster International University in Tashkent (WIUT) to award scholarships to support undergraduates and postgraduate studies at WIUT for selected students from the Navoi Province of Uzbekistan, where AGF has its mining operations. The Foundation is about to open an English Language Learning Centre in Zarafshan, the local town to AGF's operations, in order to teach English to local students and to improve the English language teaching skills of the local teachers. WIUT will manage the Learning Centre.

WIUT is unique in the region since the degrees that it awards are of the same quality and international standing as if they had been awarded by Westminster University in London. WIUT currently has 750 students from Uzbekistan and neighbouring countries, studying a variety of business and economic subjects.

Extractive Industries Transparency Initiative

In August 2008 the Company formally became a corporate supporter of the Extractive Industries Transparency Initiative (EITI). The EITI is a partnership of governments, international organisations, companies, NGOs, investors and business and industrial organisations, whose aim is to contribute to sustainable development and poverty reduction by increasing the transparency in transactions between governments and companies in the extractive industries.

As a result, for the year ended 31 December 2009 the Company intends to establish a practice of disclosing all payments made to governments via its annual financial statements and the publication in the local Uzbek press of relevant information relating to the financial management of AGF. 

BOARD OF DIRECTORS

On 7 January 2008 William Trew stepped down as Chief Executive Officer and resigned as a director of the Company. Richard Wilkins, a founder director of the Company, was appointed CEO in his place.

In addition, Miradil Djalalov, the managing director and owner of Zeromax, joined the board as a non-executive director, and John Donald joined the board as an executive director and Chief Operating Officer. John Donald, a mining engineer, was previously COO and a director of the Company until his retirement in 2004.

On 3 March 2008, Douglas Sutherland, non-executive director and acting Chairman of the Company, assumed the role of non-executive Chairman, and on 13 June 2008 Richard Shead joined the board as a non-executive director. Richard Shead, who has many years' experience in the mining industry in South Africa, was previously an executive director of the Company from June 2003 to October 2004.

At the Annual General Meeting on 5 December 2008, Douglas Sutherland, non-executive Chairman, and Gordon Wylie, non-executive director, both retired by rotation and Richard Shead assumed the role of non-executive Chairman.

On 31 January 2009, Jonathan Kipps, Finance Director and Company Secretary, resigned as a director of the Company. On 1 February 2009 Richard Shead assumed the role of executive Chairman, and James McBurney joined the board as a non-executive director. James McBurney has over twenty years' experience in the banking sector and has held senior positions at a number of global financial insitutions.

With effect from 1 February 2009, the role of Finance Director has been split between Richard Thornton, a chartered accountant with more than twenty years' experience in senior level financial and commercial positions in various quoted companies, and Jyoti Chandhok, a chartered management accountant, who had worked for the previous eight years in the mining sector, primarily with AIM quoted companies. In addition, Jyoti Chandhok was appointed Company Secretary with effect from 1 February 2009.

The Company would like to express its gratitude to each of Douglas Sutherland, Gordon Wylie and Jonathan Kipps for their significant contributions during their respective terms as directors of the Company.

FINANCIAL ADVISERS

On 22 September 2008 the Company appointed Fairfax I.S. PLC to act as its joint broker alongside Canaccord Adams Limited, and on 8 December 2008 Fairfax was appointed as the Company's nominated adviser, in place of Canaccord, who also stepped down as joint broker.

On 1 January 2009 Fox-Davies Capital Limited was appointed as joint broker alongside Fairfax. 

ACCOUNTING REFERENCE DATE AND CHANGE OF AUDITORS

In order to bring its financial statements in line with AGF, the Group extended its accounting reference period by six months and is therefore publishing audited accounts for the eighteen month period ended 31 December 2008.

In May 2008 the Company appointed Deloitte LLP as auditors, replacing BDO Isle of Man.

ANNUAL GENERAL MEETING

The Company's ninth Annual General Meeting will be held on 16 June 2009 at 11.00 am at The Washington Mayfair Hotel, 5 Curzon Street, London W1J 5HE.

 

For further information please visit www.oxusgold.co.uk or contact:

Oxus Gold plc

Richard Shead (Chairman) Tel: +44 (0) 207 907 2000

Richard Wilkins (CEO)

Richard Thornton

Jyoti Chandhok

Fairfax I.S. PLC

Ewan Leggat Tel: +44 (0) 207 598 5368

Conduit PR Ltd

Fiona Hyland / Ed Portman Tel: +44 (0) 207 429 6606

  

Consolidated income statement for the 18 month period ended 31 December 2008
		18 Months ended 31 December 2008		12 Months ended 30 June 2007
	Note	2008 US$000	2008 US$000	2007 US$000	2007 US$000
Revenue			5,278		2,387
Exploration and evaluation costs			(3,657) _______		- _______
Gross profit			1,621		2,387
Administrative expenses before exceptional items			(12,000)		(8,389)
Exceptional items: Gain on sale of Norox Mining Company Limited and other assets		-		8,034
Gain on sale of investments	4	1,336 _______		92 _______
Total gain from the sale of investments			1,336		8,126
Legal and other costs arising from abortive 2002 financing		-		(7,347)
Net Jerooy arbitration settlement and costs	5	3,339		(2,792)
Eurogold settlement and costs	6	(8,357)		-
Impairment of Khandiza mining property	7	(28,456)		-
Impairment of goodwill in Marakand	7	(1,487)		-
Impairment in carrying value of joint venture		(8,548)		-
Impairment losses recognised on investments		-		(8,602)
		_______		_______
Total exceptional costs			(43,509)		(18,741)
Share of loss from joint ventures	8		(2,272) _______		(3,213) _______
Operating loss			(54,824)		(19,830)
Financial income			2,932		2,457
Financial expense			(2,496)		(1,538)
			_______		_______
Net financial income			436		919
			_______		_______
Loss before tax			(54,388)		(18,911)
Taxation			-		(55)
			_______		_______
Loss for the period / year			(54,388)		(18,966)
			_______		_______
Attributable to: Equity shareholders of the parent			(54,388)		(18,908)
Minority interests			-		(58)
			_______		_______
			(54,388)		(18,966)
			_______		_______
Basic loss per share - US cents	9		(14.57)		(6.25)
			_______		_______
Diluted earnings per share - US cents			(14.57)		(6.25)
			_______		_______
All amounts relate to continuing operations.

  

Consolidated balance sheet at 31 December 2008
		31 December 2008		30 June 2007
	Note	US$000	US$000	US$000	US$000
Non-current assets
Intangible assts		-		3,068
Property, plant and equipment		328		608
Exploration and mining development properties	10	687		40,445
Investment in joint venture	11	46,981		42,527
Available-for-sale investments at market value		-		5,171
Available-for-sale investments at cost		895		895
		_______		_______
			48,891		92,714
Current assets
Trade and other receivables		16,883		14,772
Available-for-sale investments		-		65,696
Cash and cash equivalents		9,873		10,881
		_______		_______
			26,756		91,319
			_______		_______
Total assets			75,647		184,063
			_______		_______
Equity and liabilities
Equity attributable to ordinary shareholders Share capital	12		6,425		6,104
Share premium			113,040		105,341
Capital reserve			22,566		20,571
Merger reserve			34,929		34,929
Retained earnings			(138,666)		(84,278)
			_______		_______
Total equity attributable to ordinary shareholders			38,294		82,667
Minority interests			-		4,431
			_______		_______
Total equity			38,294		87,098
Non-current liabilities Interest-bearing loans and borrowings	13		17,834		8,750
			_______		_______
Current liabilities
Interest-bearing loans and borrowings	13	6,407		5,000
AGF Phase 2 Project Development Fund	14	10,866		10,866
Current tax liabilities		2		-
Trade and other payables		2,244		6,653
Dividend		-		65,696
		_______		_______
			19,519		88,215
			_______		_______
Total equity and liabilities			75,647		184,063
			_______		_______

 

Consolidated cash flow statement for the 18 month period ended 31 December 2008
		18 Months ended 31 December 2008		12 Months ended  30 June 2007
		2008 US$000	2008 US$000	2007 US$000	2007 US$000
Cash flows from operating activities
Loss before tax for the year		(54,388)		(18,911)
Adjustments for:
Loss attributable to joint venture		2,272		3,213
Depreciation		283		206
Impairment of Goodwill		4,739		-
Impairment of mining properties and investments		34,188		2,199
Interest payable		2,234		1,538
Equity-settled share-based payment expenses		964		185
Amortisation of loan issue costs		262		-
Profit on sale of in vestments		(1,336)		-
Non-cash movements in minority interests		-		-
Salaries and bonuses converted to shares		-		469
Salaries and bonuses converted to shares		-		50
Other reserve movements		566		(2,620)
		_______		_______
Cash flows from operating activities before changes in working capital and provisions			(10,216)		(13,671)
Increase in amounts due from joint venture		(2,830)		(2,809)
Decrease/(increase) in trade and other receivables		2,160		(1,790)
(Decrease)/Increase in trade and other payables		(4,310)		3
		_______		_______
			(4,980)		(4,596)
			_______		_______
Cash absorbed by operating activities			(15,196)		(18,267)
Cash flows from investing activities
Investment in plant and equipment		(3)		-
Investment in exploration and mining  development properties		-		(8,864)
(Investment)/net return of investment in joint venture		(4,408)		1,335
Sale of available-for-sale investments		6,273		285
Costs of acquisition of Marakand Minerals Limited minority interest		(501)		-
		_______		_______
Net cash from investing activities			1,361		(7,244)
Cash flows from financing activities
Proceeds from the issue of share capital		5,670		29,213
Proceeds from issue of convertible loan notes		17,000		-
Costs of issue of convertible loan notes		(817)		-
Repayment of bank borrowings		(7,500)		(5,000)
Proceeds from the sale of warrants		448		-
Interest paid		(1,974)		(1,538)
		_______		_______
Net cash from financing activities		12,827		22,675
		_______		_______
Net decrease in cash and cash equivalents			(1,008)		(2,836)
Cash and cash equivalents at beginning of period/year			10,881		13,717
			_______		_______
Cash and cash equivalents at end of period/year			9,873		10,881
			_______		_______

 

Statement of changes in shareholders' equity - Group

for the 18 month period ended 31 December 2008

	Capital US$000	Share premium US$000	Capital reserve US$000	Revaluation reserve US$000	Merger reserve US$000	Retained earnings US$000	Shareholders' equity US$000	Minority interests US$000	Total US$000
Balance at 1 July 2006	4,774	77,407	22,614	(3,907)	34,929	326	136,143	4,020	140,163
Losses after tax for the year	-	-	-	-	-	(18,908)	(18,908)	(58)	(18,966)
	_______	_______	_______	_______	_______	_______	_______	_______	_______
Total recognised in income and expense for the year	-	-	-	-	-	-	(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
Returned warrants (note 3)	-	-	-	-	-	-	(2,228)	-	(2,228)
Dividend	-	-	(2,228)	-	-	(65,696)	(65,696)	-	(65,696)
	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 30 June 2007	6,104	105,341	20,571	-	34,929	(84,278)	82,667	4,431	87,098
	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 1 July 2007	6,104	105,341	20,571	-	34,929	(84,278)	82,667	4,431	87,098
Losses after tax for the period	-	-	-	-	-	(54,388)	(54,388)	-	(54,388)
	_______	_______	_______	_______	_______	_______	_______	_______	_______
Total recognised in income and expense for the period	-	-	-	-	-	(54,388)	(54,388)	-	(54,388)
Shares issued in the period	321	7,699	-	-	-	-	8,020	-	8,020
Equity-settled share-based payments	-	-	981	-	-	-	981	-	981
Gain on sale of warrants	-	-	448	-	-	-	448	-	448
Acquisition of minority interests	-	-	-	-	-	-	-	(4,431)	(4,431)
Capital portion of convertible loan notes	-	-	566	-	-	-	566	-	566
	_______	_______	_______	_______	_______	_______	_______	_______	_______
Balance at 31 December 2008	6,425	113,040	22,566	-	34,929	(138,666)	38,294	-	38,294
	_______	_______	_______	_______	_______	_______	_______	_______	_______

  

1. Basis of preparation 

The financial information presented in this Announcement has been prepared in accordance with IFRS and IFRIC interpretations as adopted by the EU and therefore complies with AIM rules. While the financial information contained in this Announcement has been prepared in accordance with IFRS, this Announcement does not itself contain sufficient information to comply with IFRS. This Announcement does not constitute the Group's statutory accounts for the period ended 31 December 2008 but is derived from those accounts. The statutory accounts for the period ended 31 December 2008 will be delivered to the Registrar of Companies following the Company's AGM. The auditors have reported on those accounts and their report was unqualified but modified to include an emphasis of matter paragraph on the material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern as described in note 2 below. The audit report did not contain statements under section 237(2) or (3) of Companies Act 1985. 

This Announcement has been prepared under the historical cost convention as modified for the valuation of certain financial instruments, investments and assets and in accordance with the accounting policies set out in the company's financial statements for the year ended 30 June 2007. Such accounting policies have been applied consistently in all material respects throughout the current and the previous year. A copy of the statutory accounts for the year ended 30 June 2007 has been delivered to the Registrar of Companies. The auditors' report on these accounts was not qualified, did not contain a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 237(2) or (3) of the Companies Act 1985.

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.

2. Going concern 

The Company, like most companies, has had to adapt to very difficult economic and financial conditions. These conditions have inevitably impacted the Group's business, most noticeably the ability to finance the proposed underground project at AGF, the financing for which was being arranged by The Royal Bank of Scotland. As a result of the current economic and financial conditions, this financing has been delayed, and the Company has commenced discussions with other potential financiers, including a major Chinese contracting and financing group. Discussions in this latter respect are now well advanced and the directors believe that the appropriate mandates will be signed in the near future.

The Company placed $18.5 million of convertible loan notes in May 2008, the proceeds of which were used for general working capital, to progress the Asaukak heap leach project, and to finance initial development of the underground project. When it became apparent that the underground financing would be delayed this expenditure was curtailed and this, together with shareholder loan repayments from AGF has allowed the Group to ensure sufficient cash resources to meet ongoing requirements. For the purposes of the Company's cash flow forecasts, it is assumed that these notes will either be refinanced or converted into equity when they fall due in May 2010, and the Company will continue to communicate as appropriate with the note holders, most of whom are also shareholders in the Company. 

At 31 December 2008, the Company had breached the Nedbank loan covenants and, as a result, the whole balance due to Nedbank has been reclassified as short term. The breach has been notified to Nedbank.

Post year end, the Company has continued to make quarterly repayments to Nedbank against the $20 million corporate facility, which on 11 May 2009 stood at $3.75 million. Other than the convertible loan notes, the Company has no other debt.

The directors have also undertaken a number of measures in order to preserve cash until such time as economic and financial conditions improve. These measures include a reduction in the size of the board, all directors and senior management (including those at AGF) being paid approximately 20% of their salaries or fees in shares, rather than cash, and relocation of the Company's head office to smaller, less expensive premises. Further cost reduction measures are being pursued. At 11 May 2009, the Group's cash resources stood at approximately $9 million,

The Company is also impacted by the ability of AGF to repay part or all of its loan to the Company, which is in turn dependent on AGF's ability to generate cash.

Operations at AGF's open pit mines are also being optimised as far as possible in order to preserve cash and improve future profitability, particularly given the delays in financing the underground project. In this regard the CIP plant has been temporarily shut down pending the issuance of the mining permit to enable the higher grade Sarybatyr ore to be mined. The documentation in respect of this permit has been submitted to the Uzbek authorities, who have indicated that it will be processed swiftly. Mining at the Vysokovoltnoye silver / gold heap leach operation has also been temporarily suspended until AGF has been able to refine and sell the significant stockpile of silver doré that has accumulated as a result of the local Almalyk refinery not being able to cope with the quantities being produced by AGF. Negotiations are also underway to convert the current open pit mining contract into a leasing arrangement so as to benefit from various advantageous tax and customs privileges.

Despite this, the refining and sale of precious metals has continued, and AGF is still expected to sell approximately 60,000 ounces of gold equivalent in 2009, as previously forecast.

The Uzbek Government, in line with many other governments around the world, has introduced various measures to assist companies during the recession, particularly those that are exporting goods. In November 2008, the Uzbek President signed a decree authorising numerous incentives and assistance programmes in this respect. AGF has therefore been working closely with the Uzbek authorities to resolve a number of issues that have been negatively impacting cash flow. This includes the recovery of some $5.8 million in VAT owed to AGF at 31 December 2008, expected soon to be repaid or authorised for offset against other taxes, and permission to export approximately 18 tonnes of silver and gold doré, valued at approximately $15 million, for refining in Switzerland. As a result of the accumulation of this stockpile discussions are also underway with the Almalyk refinery to increase its monthly refining capability (by bypassing the smelting furnace), and, as an alternative, with the Uzbek Government for an ongoing export permit for the refining of silver doré in Switzerland. In the light of this, the construction of AGF's proposed silver refinery has been put on hold.

Until 31 December 2008, AGF's business was classified as 'zero-rated' for VAT purposes. On 1 January 2009 this status was changed to 'exempt', meaning that AGF would no longer be able to recover its input VAT. Since this change impacts negatively on AGF's cost structure, it is expected that Oxus as a foreign investor will be able to take advantage of the provisions of the Uzbek Foreign Investment Laws, and also the UK-Uzbekistan Bilateral Investment Treaty, in order to maintain the previous VAT regime. Application has been made to the Uzbek Government in this respect. 

The Company is grateful to its strategic shareholder, Zeromax, for making available an UZS 7 billion (approximately $4.8 million) interest free working capital facility to AGF in April 2009 whilst these various issues are being resolved with the Uzbek authorities.

The directors' assumptions with regard to the refinancing or conversion of the convertible loan notes, the repayment of the Nedbank debt should the bank demand early repayment, the timing of production from the Sarybatyr deposit, the export of the stockpiled silver doré to a Swiss refinery, the recovery of VAT from the Uzbek authorities, and the reclassification of AGF's business as 'zero-rated' for VAT purposes, are integral to the Group meeting its forecast cashflows for the 12 months following the signing of these accounts. Should there be undue delay in achieving the foregoing there may be insufficient cashflow for the Group to manage its day to day operations without seeking and relying on further financing, which may or may not be available. Therefore, a material uncertainty exists which may cast significant doubt on the Group's ability to continue as a going concern and, therefore, to realise its assets and discharge its liabilities in the normal course of business.

After making suitable enquiries, and based on the current status of discussions and negotiations in respect of the foregoing, the directors have formed a judgment, at the time of approving the Financial Statements, that there is a reasonable expectation that the Group has, or will have, adequate resources to enable the Company and the Group to remain a going concern. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

3. Segmental analysis

A segment is a distinguishable component of the Group that is engaged in providing products or services in a particular business sector (business segment) or in providing products or services in a particular economic environment (geographic segment), which is subject to risks and rewards that are different in those other segments. The Group operated in the period in one segment, the mining and production of gold and other precious metals, and in one principal geographic area: Uzbekistan. Accordingly all activities for the period to 31 December 2008 relate to a single activity within a single market. 

In 2007 the Group operated within one market but two geographic areas: Uzbekistan and Kyrgyzstan. In 2007 the Group sold its operations in Turkey and Romania together with the Jerooy assets and operations in Kyrgyzstan. No significant operating activities took place in Romania or Turkey in the year or in the previous year.

The Company only operated in the United Kingdom in support of its operations in Uzbekistan and all activities are in respect of mining operations.

Uzbekistan	Kyrgyzstan Group 2008 US$000	Not allocated Group 2008 US$000	Total Group 2008 US$000	Group 2008 US$000
Revenue - Management services	5,278	-	-	5,278

4 Gain on sale of investments - Group

During the period the Group sold its remaining Kazakhgold Group Limited GDRs at a profit of $578,000 and also sold its shares in Eurogold Limited at a profit of $758,000. Proceeds were $6,273,000. Both investments were classified as 'available-for-sale'.

5 Jerooy arbitration claim - Group

The Group has settled its arbitration claim against the Kyrgyz Republic under the United Kingdom - Kyrgyz Republic Bilateral Investment Treaty. The Group received compensation of $5,000,000 offset by additional legal costs of $1,661,000. 

6 Eurogold

Group and Company

On 19 February 2008, the Company reached agreement with Eurogold Limited ("Eurogold") and its wholly owned subsidiary Eurogold Holdings ("Bermuda") Limited ("EHBL") to settle the proceedings commenced in 2006 by Eurogold and EHBL.

The proceedings were commenced following the company's decision to terminate its purchase agreement with Eurogold for its Ukrainian gold assets. As previously disclosed, the Company believed, at termination, that a material adverse change had occurred to the business and assets of EHBL from what it understood the position to be when it entered into the agreement.

Under the terms of the settlement, the Company paid Eurogold A$7.95 million (US$7.2 million) comprising a combination of cash and the issue of shares in the Company. 

The charge to the income statement is comprised of:	US$000
Legal settlement (cash)	6,174
Legal settlement (shares)	1,074
Legal fees and associated costs	1,109
	_______
	8,357
	_______

7 Impairment of Khandiza mining property and goodwill

	2008 Group US$000
Khandiza project	28,456
Goodwill and other Marakand assets net of minority interest acquired	1,487
	_______
Total impairment in respect of investment in Marakand Minerals Limited	29,943
	_______

The Group has made a full provision against the carrying value of its investment in the Khandiza

project as, during the period, it has become increasingly uncertain whether the Group will be invited to participate in the future development of this asset. The Group has also provided in full against goodwill ($4,739,000) and other assets ($1,179,000) held in respect of Marakand Minerals Limited net of minority interests ($4,431,000) acquired on 18 October 2007. 

The previous amounts included in the revaluation reserve that relate to the Company's investment in Marakhand Minerals have been charged to the income statement in accordance with group policy.

8 Share of loss from joint ventures

The Group's joint venture operations are conducted through Amantaytau Goldfields AO ("AGF"). The information disclosed below shows the amounts attributable to the Group and has been extracted from the latest audited financial statements for AGF dated 31 December 2007 together with the unaudited management accounts of AGF dated 31 December 2008. See the Financial and Operating Review for further information. The information shown below is for the 18 month period ended 31 December 2008 and year ended 30 June 2007

	2008 Group US$000	2007 Group US$000
Revenue	43,290	18,885
	_______	_______
Operating loss before exceptional costs	(617)	(3,213)
Exceptional Costs	(1,453)	-
Operating loss	(2,070)	(3,213)
Taxation	(202)	-
	_______	_______
Loss after tax	(2,272)	(3,213)
Dividend paid	-	-
	_______	_______
Net earnings retained	(2,272)	(3,213)
	_______	_______

Revenue comprises the Group's share of the proceeds that AGF received for the sale of gold and precious metals. Further details of production, sales and achieved prices are included within the Financial and Operating Review. All known taxation liabilities for the year have been included above.

9 Loss per share

The calculation of the basic loss per share is based upon the net loss after tax and minority interests attributable to ordinary shareholders of US$ 54,388,000 (2007 - a loss of US$18,908,000) and a weighted average number of shares in issue for the year of 371,731,589 (2007- 302,578,528).

	2008 Group	2007 Group
Basic loss per share (cents)	(14.57)	(6.25)
	_________	_________
Loss attributable to equity shareholders	($54,388,000)	($18,908,000)
	_________	_________
	Number	Number
Weighted average number of shares in issue	373,257,305	302,578,528
	________	________

Diluted earnings per share

The diluted loss per share is the same as the basic loss per share as the loss for the period and for 2007 has an anti-dilutive effect. 

  10 Exploration and mining development properties

	Kyrgyzstan Jerooy Group US$000	Uzbekistan Amantaytau Group US$000	Uzbekistan Aristantau and Balpantau Group US$000	Uzbekistan Khandiza Group US$000	Total Group US$000
Cost
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
	_______	_______	_______	_______	_______
At 1 July 2007	-	11,302	687	28,456	40,445
Impairment of mining rights	-	(436)	-	(28,456)	(28,892)
Transfer to interests in  joint venture (note 27)	-	(10,866)	-	-	(10,866)
	_______	_______	_______	_______	_______
At 31 December 2008	-	-	687	-	687
	_______	_______	_______	_______	_______

The Group's exploration and development properties are not amortised until production commences. The Group's investments in exploration and mining development properties have been reviewed for impairment in accordance with the Group accounting policy.

Under Uzbek law the Group has obtained the rights to the licenses for the development of Aristantau and Balpantau. The issue of these licenses is expected.

11 Investment in joint venture 

	Investment Group US$000	Loans Group US$000	Total Group US$000
Cost
At 1 July 2006	23,313	23,862	47,075
Group's share of losses (note 8)	(3,213)	-	(3,213)
Amounts advanced	-	6,330	6,330
Amounts repaid	-	(7,665)	(7,665)
	_______	_______	_______
At 30 June 2007	20,000	22,527	42,527
	_______	_______	_______
At 1 July 2007	20,000	22,527	42,527
Group's share of Losses (note 8)	(2,272)	-	(2,272)
Adjustment to carrying value of investment (see below)	(8,548)	-	(8,548)
Expenditure transferred from exploration and mining development properties	10,866	-	10,866
Amounts advanced	-	4,408	4,408
	_______	_______	_______
At 31 December 2008	20,046	26,935	46,981
	_______	_______	_______

The interest in joint venture is the Group's 50% attributable interest in AGF. The Group has recognised in retained earnings cumulative profit after tax of $12,305,800 (2007 - $14,578,000) in respect of the joint venture. The loans are catagorised as loans and receivables. At the balance sheet date none of the loans are past due but not impaired.

The value of the Group's investment in AGF has been subject to an impairment by determining the recoverable output using 'value in use' calculations. The key assumptions are those regarding the discount, forward gold price ($850/ounce) and the successful completion of the project; all these are discussed in more detail in the Financial and Operating Review.and Note 2.

Management estimates discount rates using apre-tax rate of 10% that reflects market assessments, time value of money and risks specific to the project. 

The Group has conducted sensitivity analyses on the impairment test of the investment carrying value using discount rates of up to 20% which indicates sufficient headroom available. Using gold prices of the forward price curve there is also no indication of impairment.

Investment	Country of incorporation	Type of shares held	% Held 2008	% Held 2007	Accounting reference date
Amantaytau Goldfields AO	Uzbekistan	Ordinary	50%	50%	31 December

Further information in respect of AGF (50% share)

	2008 Group US$000	2007 Group US$000
Non-current assets
Exploration and mining development properties	6,214	7,275
Mining properties	14,942	27,197
Current assets	18,579	5,020
	_______	_______
Total assets	39,735	39,492
	_______	_______
Non-current liabilities	(8,466)	(12,425)
Current liabilities	(18,964)	(12,490)
	_______	_______
Total liabilities	(27,430)	(24,915)
	_______	_______
Net assets	12,305	14,577
	_______	_______
Amounts charged to AGF:
Fees for management and technical services	4,772	2,287
Interest	2,642	2,229
	_______	_______
	7,414	4,516
	_______	_______
Amounts due from AGF:
Investment loan account	26,935	22,527
Trade and other debtors	15,064	12,232
	_______	_______
	41,999	34,759
	_______	_______

At 31 December 2008 AGF have a liability to the Group in respect of unpaid dividends of $3.0 million (2007: 3.0 million). This dividend is included within the Group's investment in AGF.

AGF had committed and contracted capital commitments of $1.8 million at 31 December 2008.

Included in the disclosure of AGF's net assets in 2007 was the Group's cost of investment of $ 5.423 million. This analysis has been restated.

12 Issued and fully paid share capital

	Group and Company Number  2008	Group and Company Number 2007	Group and Company US$000 2008	Group and Company US$000 2007
At 1 July	365,399,173	298,120,198	6,104	4,774
Stock options exercised (1)	66,666	206,667	1	5
Warrants exercised (2)	5,000,000	10,000,000	100	198
Other shares issued	8,752,225	57,000,000	175	1,125
Marakand Minerals Limited (3)	2,221,621	-	45	-
Conversion of directors remuneration to shares	-	72,308	-	2
	_________	_________	_________	_________
At 31 December 2008 and 30 June 2007	381,439,685	365,399,173	6,425	6,104
	_________	_________	_________	_________

Capital structure

Details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital and details of employee share schemes are shown above. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Company's Articles of Association, the Combined Code, the Companies Act and related legislation. The directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital and all issued shares are fully paid. 

The convertible loan note issued by the Company could result in a maximum number of new ordinary shares being issued of 26,315,798. Share options outstanding at 31 December 2008 could result in the issue of a maximum of 16,961,000 ordinary shares. These shares, if issued, will rank pari passu with existing ordinary shares.

13 Interest-bearing loans and borrowings

	Current Group US000 2008	Current Group US000 2007	Non-current Group US$000 2008	Non-current Group US$000 2007
Convertible loan notes	-	-	17,667	-
Lease finance	157	-	167	-
Nedbank Corporate Loan Facility	6,250	5,000	-	8,750
	_______	_______	_______	_______
	6,407	5,000	17,834	8,750
	_______	_______	_______	_______

On 14 May 2008 the Company completed a placement of 8.0% unsecured convertible loan notes in units of $250,000 each at par, due May 2010 (the "Notes"), for gross proceeds of $18.5 million. The Notes are convertible into new ordinary shares of the Company at a price of 37 pence per share converted at a fixed exchange rate in accordance with the terms of the contract. At the holder's option, the Notes may be converted on the earlier of a written request from the holder to convert, or first drawdown on the project finance facility to construct the underground sulphides project at AGF. The Notes will be redeemed on 14 May 2010 if not converted. If all the Notes are converted, the maximum number of new shares that would be issued is 26,315,789. An amount of $566,000 has been recognised in equity representing the fair-value of the element of the convertible loan notes allocated to the option to convert. The amount outstanding on the loan notes on 12 May 2009 was $17.2 million.

The Company has a $20 million corporate loan facility with Nedbank Limited. The loan is being repaid over four years from drawdown and has an interest rate of 2.75% above 3 month LIBOR. The loan is secured on the Group's shares in, and loans to, AGF, and other subsidiary company shares and loans. The losses incurred by the Group have resulted in a technical breach of the loan covenants, in particular the interest cover and debt service cover covenants, agreed with Nedbank at the inception of the loan. The Company continues to service the loan under its normal terms and there has been no request from Nedbank for early settlement. As a result of these breaches the Group and Company have classified the non-current proportion of the loan of $1.25 million, representing the final instalment, as a current liability.

The amount outstanding on the Nedbank loan on 14 May 2009 was $3.75 million. 

The lease finance is in respect of mining equipment owned by a Group company. The lease finance is repayable by quarterly instalments ending on 30 November 2010. The interest rate is fixed at 7.7%. Based on the repayment dates on these leases, the difference between the minimum lease payment and present value of the lease payments is not considered to be material for the Group. 

14 AGF Phase 2 project development fund

	Current US$000 2008	Current US$000 2007
AGF Phase 2 Project Development Fund	10,866	10,866
	_______	_______

At 31 December 2008 the Phase 2 Project Development Fund was $10,866,379 (2007 - $10,866,379). AGF signed a hedge gold off-take agreement with various lending banks in April 2003. As a result AGF sold gold at prices below the market price of gold. The fund represents the Uzbek Government's share of the lost revenue to be settled by the Company.

The Company originally committed to transfer the monies to the fund over the period to May 2008. Discussions are ongoing with the Uzbek Government with a view to determining new deferred payment terms. The Company continues to recognise the fund as a current liability. The Group no longer enters into any form of hedging arrangement in respect of gold prices.

  APPENDIX 1 DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES EXTRACTED FROM THE JORC CODE: (December 2004) (www.jorc.org)  Exploration Results include data and information generated by exploration programmes that may be of use to investors. The Exploration Results may or may not be part of a formal declaration of Mineral Resources or Ore Reserves. 

A 'Mineral Resource' is a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. 

An 'Inferred Mineral Resource' is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.  An 'Indicated Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

  A 'Measured Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and/or grade continuity. 

An 'Ore Reserve' is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.

  A 'Probable Ore Reserve' is the economically mineable part of an Indicated, and in some circumstances Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. 

Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. 

A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. 

 APPENDIX 2 SOVIET/UZBEK (RUSSIAN) CLASSIFICATION OF RESOURCES & RESERVES  The following description of the Russian classification of resources and reserves is from the report "Oxide resource potential of the Amantaytau-Vysokovoltnoye Orefield", prepared by P.S. Newall (BSc, PhD, CEng, MIMM), dated 16 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 reported in Mining Journal, London, August 20, 2004, provides a useful summary.  Stephen Henley is principal of RESOURCES COMPUTING INTERNATIONAL LTD 

S. Henley PhD, CEng, FIMMM, FGS  Resources Computing International Ltd  Matlock, Derbyshire, UK  Stephen.henley@resourcescomputing.com Soviet System of Resource/Reserve Classification

  The former Soviet system for classification of reserves and resources, developed in 1960 and revised in 1981, is still used today in the Commonwealth of Independent States. Essentially, it divides mineral concentrations into seven categories 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 reserve classification is derived from a paper by S.A.Diatchkov (1994) and has been modified by WGM to relate to currently acceptable international standards. The classifications of the reserves described by Diatchkov are those that were developed by the former USSR authorities. In principle, they follow a succession of approximations that are applied to various stages of exploration. This means that reserves are assigned to classes based on the degree of reliability of data and indicate their comparative importance for the national economy. 

Reserves are classified into five main categories and designated by the symbols A, B, C1, C2 and P1. Capital letters are used to designate ores that are economic. Sometimes, the same group of letters are written in lower case (i.e. a, b, c) when the mineralisation is considered sub-economic. Alternatively, a simple 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. The categories 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 reserves adjoining the boundaries of A and B reserves as well as reserves of very complex deposits in which the distribution cannot be determined even by a very dense sample grid. The quality and properties of the deposit are known tentatively by analyses and by analogy with known deposits of the same type. The general conditions for exploitation are partially known.

 

Category C2:

 The reserves have been extrapolated from limited data, probably only a single hole. This category includes reserves that are adjoining A, B, and C1 reserves in the same deposit. Classification of CIS Mineral Deposits

  Deposits of solid minerals in CIS are classified into five major groups, based largely on the character and size of the deposit. The ability to define the categories of reserves depends on the deposit group in which the deposit is classified. The deposits of the AGF licence area have been classified by GKZ (State Committee for Resources) as being confined to Group 3. APPENDIX 3 COMPETENT PERSONS  The resources and reserves stated in this report have been compiled and approved by 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  Dr Newall, is a Consulting Geologist and Director with WAI and has practised his profession as a mine and exploration geologist for over twenty five years.  William J Charter, BSc, CGeol, FGS, CEng, MIMM  William Charter has over 30 years experience in both exploration and mining. He started working in Central Asia with the Oxus Group in 1996, and is currently Chief Geologist of Oxus Gold plc.

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