Oxus Gold Plc Regulatory News (OXS)

Oxus Gold Plc

("Oxus" or the "Company")

Final Results for the year ended 31 December 2010

CHAIRMAN'S STATEMENT

Firstly please accept my apologies for the delay in presenting the annual report and accounts to shareholders. As you will be aware from well publicised announcements this was due to not being able to access relevant information from Amantaytau Goldfields (AGF), our 50% owned joint venture in Uzbekistan, required to finalise the accounts of the Oxus Group.

Looking back at 2010 Oxus had at the beginning of the year progressed discussions with a Chinese Consortium to a point where on 6 January 2010 it entered into a US$185 million financing agreement which would have enabled Oxus to build and develop the underground Sulphide mine for AGF in Uzbekistan.

Despite an extensive due diligence undertaken by the Consortium which indicated the strong viability of constructing and developing the mine, it became obvious by late 2010 that even though the investment was to be made at the level of Oxus Gold, the Uzbek government would not welcome the development of a gold mine in Uzbekistan by Chinese investors.

Both I and senior management of the company consider the Uzbek position as very short-sighted. An inward investment of up to $185 million would have been positive for the Uzbek gold mining industry and would have created employment opportunities for people in the region of the proposed mine. As a consequence of the Uzbek government's negative reaction to the transaction, the Chinese Consortium terminated their agreement with Oxus in December 2010. This had the effect of impairing Oxus's liquidity and operational capabilities in Uzbekistan.

Events following the withdrawal of the Chinese Consortium led our directors to believe that it would be in the best interest of shareholders to sell the 50% shareholding in AGF to the Uzbek government. Despite assurances that a buy-out by Oxus' Uzbek joint venture partners was in principle acceptable to the Uzbek government, Oxus then faced an ongoing attack campaign against it by the Uzbek government. These attacks included Uzbekistan's failure to issue certain licences to AGF, a frivolous court action initiated by the Uzbek Ministry of Finance, and pressure from Oxus' Uzbek joint venture partners to liquidate AGF despite AGF under trying circumstances producing a profit of US$4.82 million for the twelve months to 31 December 2010.

The attacks against Oxus continued into 2011, with the first quarter marked by an arbitrary and onerous Uzbek government audit of AGF that effectively excluded Oxus from its investment in Uzbekistan. Oxus and AGF personnel fled the country over legitimate concerns about their safety, and Oxus was forced to declare force majeure as to its management obligations toward AGF.

Also in 2011, Oxus retained the international law firm Amsterdam & Peroff LLP to protect the interests of Oxus and its shareholders against the wrongful conduct of the Uzbek government, and to pursue the legal remedies available to Oxus. Oxus' subsequent attempts to discuss and resolve the issues with the Uzbek government proved unproductive. Consequently, on 31 August 2011, Oxus served a Notice of Arbitration on Uzbekistan under the Agreement for the Promotion and Protection of investments dated 24 November 1993 between the United Kingdom and the Republic of Uzbekistan (the Investment Treaty). Among other things, the Investment Treaty requires the Uzbek government to treat Oxus fairly and equitably as an investor, to refrain from discriminating against Oxus, and to provide Oxus with full protection and security. Oxus asserts in the arbitration that the conduct of the Uzbek government constitutes a systematic violation of the Investment Treaty, and that Oxus is entitled, in addition to other relief, to full compensation for its injuries in an amount estimated to be no less than $400 million. This amount includes a claim in respect of the Khandiza base metals project, which the Uzbek Government took from Marakand Minerals in 2006 without offering any compensation at the time.

The filing of the Notice of Arbitration represents significant progress toward obtaining redress for Oxus and its shareholders, and comes as a result of considerable effort by Oxus personnel and its international legal counsel. I am confident in the strength of Oxus' claims, and pleased with the progress of the arbitration. Nevertheless, we remain, as always, open to a resolution of the dispute on fair and equitable terms.

I would like to take this opportunity to express my thanks to all shareholders and Oxus staff for their loyalty shown to the company during what has been a most stressful year.

Richard Shead

Executive Chairman

11 November 2011

CONTACT DETAILS:

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

FINANCIAL REVIEW

For the year ended 31 December 2010 the Group has accounted for its joint venture, Amantaytau Goldfields ("AGF"), using equity accounting, rather than proportionate consolidation, which was used for the year ended 31 December 2009. In the board's view, the equity accounting method provides a reliable and more relevant presentation of the Group's results and its operating activity for the year ended 31 December 2010. Therefore, the Group decided to make a voluntary change in the accounting policy and the new accounting policy was applied retrospectively. Comparatives for the year ended 31 December 2009 and the eighteen month period ended 31 December 2008 have been restated to reflect this change in accounting policy, as required by revised IAS 1.

The decision to revert back to equity accounting is based on the fact that the Group is currently in dispute with the Government of Uzbekistan as to the future of AGF, and is seeking appropriate compensation for its 50% share in AGF via a negotiated settlement or international arbitration. The Company has commenced international arbitration proceedings against the Uzbek Government and has included the loss of the Khandiza base metals project in 2006 within the proceedings. Although the outcome of the proceedings is uncertain, compensation sought from the proceedings exceeds the book value of the AGF assets. Accordingly no provision has been made in the financial statements against the carrying value of AGF.

The Group's share of AGF's profit and net assets for the year ended 31 December 2010 is unaudited, given a lack of access to the relevant financial records, and is based on management and other accounting information provided by AGF and reviewed and checked by the Group's accounting personnel prior to the commencement of the dispute (see note 39 to the financial statements).

RESULTS FOR THE YEAR

The Group reports gross revenue of $nil for the year ended 31 December 2010 (2009: $nil). Revenue is instead reflected in the consolidated income statement as the Group's 50% share of AGF's profits.

The Group reports a loss for the year ended 31 December 2010 of $3.70 million (0.93 cents per share loss) against a loss of $5.84 million (1.52 cents per share loss) for the year ended 31 December 2009.

AGF reports an unaudited operating profit before exceptional items of $8.46 million for the year ended 31 December 2010 (2009: $10.96 million) and a profit after exceptional items and tax of $4.82 million (2009: $1.02 million). 50% of this profit has been reflected in the Group's results. During the year ended 31 December 2010 AGF produced 5,895 ounces of gold (2009: 4,000 ounces) and 685,568 ounces of silver (2009: 170,299 ounces), and sold 5,117 ounces of gold (2009: 16,073 ounces) and 668,019 ounces of silver (2009: 664,121 ounces), for total revenue of $19.69 million (2009: $26.53 million). The general risks of operating in Uzbekistan are disclosed in Note 32 and events subsequent to 31 December 2010 related to the operations in Uzbekistan are discussed in Note 39.

Total Group assets decreased to $56.79 million (2009: $65.66 million), including cash and cash equivalents of $6.67 million (2009: $8.66 million).

CORPORATE ACTIVITIES

During the year the Company issued 28,357,596 new ordinary shares, of which 3,697,834 represented fees and salaries of directors and senior management capitalised as part of a cash preservation strategy, and 9,034,762 represented capitalised interest on the Company's convertible loan notes. A further 15,625,000 new ordinary shares were issued against conversion of $3 million of convertible loan notes. Since the year end a further 4,395,647 new ordinary shares have been issued, representing capitalised fees and salaries of directors and senior management. As at 7 September 2011 the total number of shares in issue was 418,816,103.

In January 2010 the Company announced that it had signed a conditional agreement with a consortium of Chinese investors to invest and arrange financing in a total aggregate amount of up to approximately $185 million (the "Financing"). The funds were to be used to provide working capital to the Company and to finance and develop AGF's operations in Uzbekistan, including the expansion of open pit heap leach mining operations, the development of one or more underground mines, and an accelerated exploration programme. The Company's shareholders approved the terms of the Financing at an EGM held on 26 January 2010. On 31 December 2010 the agreement lapsed following the inability of AGF to renew or obtain certain operating licences from the Uzbek Government and the failure to obtain final regulatory approvals from the Chinese Government.

The Ministry of Finance of the Republic of Uzbekistan is claiming $10.84 million from the Company in respect of the AGF Phase 2 Project Development Fund (the "Fund") and has obtained a judgment in its favour in the Uzbek courts, which it is seeking to enforce in the English courts. The Company is vigorously defending the claim and considers that the Fund is no longer payable. The circumstances surrounding the creation of the Fund also form part of the Group's claim in arbitration against the Uzbek Government.

In May 2008 the Company issued convertible loan notes in the principal amount of $18.5 million. In January 2010 the notes were restructured such that they are convertible at 12p per share, earn interest at UK LIBOR + 3% per annum, and are repayable, if not converted, in May 2013. In November 2010 $3 million in principal amount of notes were converted. If all the remaining notes are converted the maximum number of new ordinary shares that would be issued is 80,729,166.

At 31 December 2010 the Company owed Nedbank $2.5 million against a $20 million corporate loan facility. Since the year end this amount has been repaid in full.

The directors continue to undertake appropriate measures in order to preserve cash until such time as the Group's operations are fully funded and the dispute with the Uzbek Government has been resolved. At 21 October 2011, the Group's cash resources stood at approximately $3.0 million.

DIRECTORS' REPORT

The directors present their report together with the audited financial statements for the year ended 31 December 2010.

PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS DEVELOPMENTS

During the period under review, the principal activities of the Company and its subsidiary and joint venture companies ("the Group") were the continued development of its core operations at the 50% owned Amantaytau Goldfields ("AGF") joint venture in Uzbekistan.

During the year AGF produced 5,895 ounces of gold and 685,568 ounces of silver, and sold 5,117 ounces of gold and 668,019 ounces of silver, for total revenue of $19.7 million. AGF reported an unaudited profit of $4.8 million for the year ended 31 December 2010. Despite this, towards the end of the year, the Uzbek shareholders began to lobby for the liquidation of AGF, citing dissatisfaction with its financial performance.

In January 2010 the Company signed a conditional agreement with a consortium of Chinese investors to invest and arrange up to a total of $185 million in order to expand AGF's operations, including the development of an underground mine for which a bankable feasibility study had been completed. On 31 December 2010 the agreement lapsed following the inability of AGF to renew or obtain certain operating licences from the Uzbek Government and the failure to obtain final regulatory approvals from the Chinese Government.

In January 2011 the Uzbek shareholders agreed in principle to acquire the Group's 50% shareholding in AGF. In February 2011 the Group submitted a detailed offer to the Uzbek shareholders of AGF. To date no reply has been received to the offer and instead AGF has been subjected to an extensive audit of its financial and economic activities by an audit commission appointed by the Uzbek Government. This has resulted in the Group becoming unable to manage the operational affairs of AGF and a declaration of force majeure in March 2011. On 31 August 2011 the Group commenced international arbitration proceedings against the Uzbek Government in order to seek appropriate compensation if a satisfactory settlement cannot otherwise be reached. The Group has also included the loss of the Khandiza base metals project in 2006 within the proceedings.

As a result of the dispute, the Group's share of AGF's profit and net assets for the year ended 31 December 2010 remains unaudited, given the current lack of access to the relevant financial records.

Compensation sought from the proceedings exceeds the book value of the AGF and Khandiza assets. Accordingly no provision has been made in these financial statements against the carrying value of AGF.

Further information on the activities of the Group and a review of business developments are included in the Chairman's Statement and the Financial Review.

The Company's shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange, but trading in the shares was suspended on 29 June 2011 at the request of the Company, pending the publication of these audited financial statements for the year ended 31 December 2010 and the unaudited interim financial statements for the 6 month period ended 30 June 2011.

RESULTS AND DIVIDEND

The results for the year are set out in the Consolidated Income Statement on page 9.

The directors are not recommending the payment of a dividend in respect of the year under review (2009: nil).

CHANGE IN ACCOUNTING POLICY

Prior to the year ended 31 December 2010, the Group used proportionate consolidation to account for its interest in the AGF joint venture. Given the current state of affairs at AGF the directors now consider that proportionate consolidation of 50% of AGF's income, expenditure, assets and liabilities is no longer appropriate. In the board's view, the equity accounting method provides a reliable and more relevant presentation of the Group's results and its operating activity than the proportionate consolidation for the year ended 31 December 2010. Therefore, the Group decided to make a voluntary change in the accounting policy and the new accounting policy was applied retrospectively.

Comparatives for the year ended 31 December 2009 and the 18 month period ended 31 December 2008 have accordingly been restated to reflect this change in accounting policy, as required by revised IAS 1.

DIRECTORS AND THEIR INTERESTS

The directors who served during the year were:

Richard Wilkins continues to serve as company secretary.

On 21 October 2011 the directors' interests in the equity share capital of the Company were:

In accordance with the Company's Articles of Association at least one third of the directors must retire by rotation at each Annual General Meeting, and they may stand for re-appointment at the Meeting. Additionally, a director appointed during the year must stand for re-appointment at the first Annual General Meeting after such appointment. Accordingly the director retiring by rotation is Oliver Prior and, being eligible, offered himself for re-appointment at the Annual General Meeting, which was held on 30 June 2011.

SHARE CAPITAL

Details of the Company's share capital are disclosed in Note 24 to the Financial Statements.

On 21 October 2011 the Company was aware of the following holdings of 3% or more in the Company's issued share capital:

CORPORATE GOVERNANCE

During the financial year to 31 December 2010 directors sought, as far as is considered appropriate having regard to the size and nature of activities of the Company, to comply with the Combined Code on Corporate Governance applicable to listed companies. The board is assisted in this regard by an Audit and Independence Committee and a Remuneration and Nominations Committee, both of which are represented by Oliver Prior, the only non-executive director. Mr Prior liaises as appropriate with the Chairman of the Company and with the external auditors.

REMUNERATION AND NOMINATIONS COMMITTEE

The Remuneration and Nominations Committee comprises Oliver Prior and James McBurney (resigned in February 2011). Oliver Prior acts as Chairman. The Committee reviews the performance of the executive directors and sets the scale and structure of their remuneration and the basis of their service agreements. In determining remuneration, the Committee seeks to enable the Company to attract and retain executives of the highest calibre. The Committee also makes recommendations to the board concerning allocation of share options to employees. The Committee is also responsible for nominating candidates, for the approval of the board, to fill either executive or non-executive vacancies or additional appointments to the board.

Details of the directors' remuneration are shown in Note 8 to the Financial Statements.

EMPLOYEE CONSULTATION

The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings and employee representatives are consulted regularly on a wide range of matters affecting their current and future interests. The Group also operates an employee share option scheme.

The Group is committed to providing equal opportunity for individuals in all aspects of employment. The Group gives every consideration to applications for employment by disabled persons where the requirements of the job may be adequately filled by a disabled person. Where existing employees become disabled, it is the Group's policy wherever practicable to provide continuing employment under similar terms and conditions and to provide training, career development and promotion wherever appropriate.

CHARITABLE AND POLITICAL DONATIONS

The Company has created and has been sponsoring the Amantaytau Goldfields / Oxus Gold Scholarship Foundation. This sponsorship ceased from 30 June 2011 due to the current state of affairs at AGF.

The Company has also provided financial assistance from time to time to the Uzbek British Trade and Industry Council, a government body whose purpose is to further business ties between Uzbekistan and Great Britain, and the British Uzbek Society, a non-profit making organisation which serves to strengthen cultural and social ties between the two countries.

DIRECTORS' INDEMNITY

The Company has indemnified the directors and other officers of the Company against qualifying liabilities in accordance with the provisions of the Companies Act 2006.

PAYMENTS TO CREDITORS

The Group's policy is to settle the terms of payment with its suppliers when agreeing the terms of each transaction, either by accepting the suppliers' terms or by making the suppliers aware of alternative terms, and to abide by the agreed terms. Trade creditors of the Group at 31 December 2010 represented 28 days of annual purchases (2009: 30 days).

FINANCIAL RISK MANAGEMENT AND CAPITAL STRUCTURE

Details of the Group's policies towards financial risk management and its capital structure are disclosed in Note 32 to the Financial Statements. The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Financial and Operating Review. The Group's principal risks are summarised in the Going Concern section below and further details given in the Financial and Operating Review.

GOING CONCERN

The Group's activities are dependent on its ability to generate or raise the appropriate finance to support such activities, and on the issuance and maintenance of appropriate mining and operating licences and permits.

The Group has declared force majeure with regard to AGF and is seeking appropriate compensation through international arbitration. The Group has also included the loss of the Khandiza base metals project in 2006 within the proceedings. Compensation sought from the proceedings exceeds the book value of the AGF and Khandiza assets. However, the recoverability of the carrying value of the assets remains dependant on the outcome of the proceedings, which is uncertain. Please refer to the Post Balance Sheet Events note 39 for more detail on the international arbitration.

The Ministry of Finance of the Republic of Uzbekistan is claiming $10.84 million from the Company in respect of the AGF Phase 2 Project Development Fund (the "Fund") and has obtained a judgment in its favour in the Uzbek courts, which it is seeking to enforce in the English courts. The Company is vigorously defending the claim and considers that the Fund is no longer payable. The circumstances surrounding the creation of the Fund also form part of the Group's claim in arbitration against the Uzbek Government.

In May 2008 the Company issued convertible loan notes in the principal amount of $18.5 million. These notes were convertible into ordinary shares of the Company at 37p per share, earned interest at 8% per annum and were repayable, if not converted, in May 2010. The notes have now been restructured such that they are convertible at 12p per share, earn interest at US LIBOR + 3% per annum, and the repayment date has been extended to May 2013. $3.0 million of the notes were converted into ordinary shares of the Company at 12p per share in November 2010. The Company has assumed these notes will not be redeemed in the 12 months from the date of these financial statements (see note 27 to the financial statements).

At 31 December 2010, the Company owed Nedbank $2.5 million against a $20 million corporate loan facility. Since the year end this amount has been repaid in full.

The directors continue to undertake appropriate measures in order to preserve cash until such time as the Group's operations are fully funded and the dispute with the Uzbek Government has been resolved. At 21 October 2011, the Group's cash resources stood at approximately $3.0 million.

The future of the Group and its principal activities remain materially uncertain depending on the outcome of the dispute with the Uzbek Government. Therefore a material uncertainty exists which may cast significant doubt on the Company and the Group's ability to continue as a going concern and, therefore, maybe unable to realise its assets and discharge its liabilities in the normal course of the business. Once the outcome is known, it is currently the intention of the directors to consult the Company's shareholders as to the future direction of the Group's activities. Nevertheless after making enquiries, and considering the uncertainties described above, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts.

AUDITOR

Each of the persons who is a director at the date of approval of this annual report confirms that:

- so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

- the director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

Deloitte LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

Richard Wilkins

Company Secretary

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable laws and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under the law the directors have, as required by the AIM Rules for Companies (the "AIM rules"), prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU) and have also elected to prepare the Company financial statements in accordance with those standards. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements the directors are required to:

- select suitable accounting policies and then apply them consistently;

- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

- provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

- make an assessment of the Company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in annual reports may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

1. the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2. the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

Richard Shead

Executive Chairman

11 November 2011

INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF OXUS GOLD PLC

We were engaged to audit the financial statements of Oxus Gold plc for the year ended 31 December 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated and Parent Company Cash Flow Statements, the Consolidated and Parent Company Statements of Changes in Shareholders' Equity and the related notes 1 to 39. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Because of the matters described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Basis for disclaimer of opinion on financial statements

The audit evidence available to us was limited due to restrictions placed on the scope of our work as a result of the ongoing legal dispute between the Uzbekistan Government and Oxus Gold Plc.

As a result we did not have access to the financial records and management of Amantaytau Goldfields ("AGF"), the joint venture through which the group has conducted its operations in Uzbekistan, and have been unable to obtain sufficient appropriate audit evidence in the group financial statements concerning:

- the carrying value of the group's mining properties of $2 million;

- the existence of the group's drill rig held in the possession of AGF, which has a carrying value of $2.2 million;

- the carrying value of the $45.5 million investment in the AGF joint venture as at 31 December 2010; and

- the share of profit from the AGF joint venture for the year ended 31 December 2010 of $2.4 million.

In addition, as shown in note 20 to the financial statements, the company's investment in the AGF joint venture has been shown net of a liability previously imposed against the group, and upheld in the Uzbekistan courts in the year, in respect of the AGF Phase II development fund. The carrying value of this liability at 31 December 2010 was $10.9 million. The Uzbekistan Government has brought this case before the United Kingdom (UK) courts to enforce the ruling obtained in Uzbekistan. The directors are unable to provide evidence as to whether the group has been formally released from this liability and are currently challenging this claim in the UK courts as well as in the international arbitration detailed in note 39.

We have been unable to obtain sufficient appropriate audit evidence as to whether the company has been released from liability and accordingly whether the accounting treatment adopted by the company as outlined above is in accordance with IFRS.

Disclaimer of opinion on financial statements

Because of the significance of the matters described in the Basis for Disclaimer of Opinion on Financial Statements paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly we do not express an opinion on the financial statements.

Emphases of matter - going concern and recoverability of assets

Notwithstanding our disclaimer of opinion on the financial statements, we draw your attention to the disclosures made in notes 1, 19 and 39 to the financial statements in relation to going concern, the company's ability to recover the drill rig claim and the group and company's ability to recover asset values depending on the outcome of the international arbitration described below.

During early 2011 the group ceased operations in Uzbekistan and, in March 2011, declared force majeure in respect of its management obligations towards the AGF joint venture in that country. The company subsequently entered into international arbitration with the Uzbekistan Government on 31 August 2011 asserting that the Uzbekistan Government has violated the terms of the 1993 Agreement for the Promotion and Protection of Investments between the United Kingdom and the Republic of Uzbekistan and the case is ongoing. At present the directors of the company believe it is not possible to estimate reliably the outcome of the arbitration and the extent to which certain assets related to its investment in Uzbekistan may be recoverable. As disclosed in note 39, the arbitration requests that damages be awarded in favour of the Group in an amount to be proven and quantified in the proceedings and currently estimated as no less than US$400 million. Depending on the outcome of the arbitration the group and company may not be able to recover fully the carrying value of mining properties of $2 million, and the $45.5 million investment in the AGF joint venture as at 31 December 2010 (which is net of the $10.9 million liability related to the AGF development fund which may become due and payable). In addition, the parent company may not be able to recover fully its investments of $75.7 million and loans of $7.9 million.

In July 2011, the group submitted a claim to its insurers regarding the drill rig, with a carrying value of $2.2 million at 31 December 2010, held in the possession of AGF. Depending on the outcome of the claim, the group may not be able to recover fully the value of the drill rig.

The group's and the company's ability to continue as a going concern is dependent upon a favourable outcome of the international arbitration without which they may not be able to settle their liabilities as they fall due during the 12 months from the date of approval of these financial statements. These conditions, along with other matters explained in notes 1, 19 and 39 and to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group's and company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and company were unable to continue as a going concern.

Opinion on other matter prescribed by the Companies Act 2006

Notwithstanding our disclaimer of an opinion on the financial statements, in our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

Arising from the limitation of our review on AGF referred to above:

- we were unable to determine whether adequate accounting records have been kept;

- we have not obtained all the information and explanations that we require for our audit; and

- adequate returns for our audit have not been received from the AGF joint venture, which has not been visited by us.

Other than as disclosed above, we have nothing further to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

- adequate accounting records have not been kept by the parent company; or

- the parent company financial statements are not in agreement with the accounting records and returns; or

- certain disclosures of directors' remuneration specified by law are not made..

Deborah Thomas (Senior statutory auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

London

11 November 2011

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

All amounts related to continued operations.

(*) comparative information for the year ended 31 December 2009 was restated (Note 3).

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2010

(*) comparative information as at 31 December 2009 and 2008 was restated (Note 3).

These financial statements were approved by the Board of Oxus Gold plc, registered in England and Wales No. 4056219, on 11 November 2011 and signed on their behalf by:

Richard Shead

Executive Chairman

COMPANY BALANCE SHEET AS AT 31 DECEMBER 2010

These financial statements were approved by the Board of Oxus Gold plc, registered in England and Wales No. 4056219, on11 November 2011 and signed on their behalf by:

Richard Shead

Executive Chairman

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE YEAR ENDED 31 DECEMBER 2010

Share capital is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.

Capital reserve represents the credit to equity in respect of share-based payments adjusted for foreign exchange movements together with reserves arising from the acquisition of minority interests, the capital proportion of convertible loans and historic adjustments arising from corporate reconstructions prior to the adoption of international accounting standards. The capital reserve has been restated to recognise in equity the value of returned warrants.

The merger reserve comprises gains arising from a Group corporate reconstruction in 2001.

Retained deficit represents the cumulative loss of the Group attributable to equity shareholders.

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

Share capital is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.

Capital reserve represents the credit to equity in respect of share-based payments adjusted for foreign exchange movements together with reserves arising from the acquisition of minority interests, the capital proportion of convertible loans and historic adjustments arising from corporate reconstructions prior to the adoption of international accounting standards. The capital reserve has been restated to recognise in equity the value of returned warrants.

Retained deficit represents the cumulative loss of the Group attributable to equity shareholders.

NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010

1. General information

Oxus Gold plc (the "Company") is a company incorporated in England and Wales under the Companies Act 2006 and throughout the year ended 31 December 2010 was listed on the London AIM stock exchange. The address of the registered office is 52 Charles Street, London, W1J 5EU. The nature of the Group's operations and its principal activities are set out in the Directors' Report and Financial Review.

These financial statements are presented in US Dollars which is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 3.

Going concern

The Group's activities are dependent on its ability to generate or raise the appropriate finance to support such activities, and on the issuance and maintenance of appropriate mining and operating licences and permits.

The Group has declared force majeure with regard to AGF and is seeking appropriate compensation through international arbitration. The Group has also included the loss of the Khandiza base metals project in 2006 within the proceedings. Compensation sought from the proceedings exceeds the book value of the AGF and Khandiza assets. However, the recoverability of the carrying value of the assets remains dependant on the outcome of the proceedings, which is uncertain. Please refer to the Post Balance Sheet Events note 39 for more detail on the international arbitration.

The Ministry of Finance of the Republic of Uzbekistan is claiming $10.84 million from the Company in respect of the AGF Phase 2 Project Development Fund (the "Fund") and has obtained a judgment in its favour in the Uzbek courts, which it is seeking to enforce in the English courts. The Company is vigorously defending the claim and considers that the Fund is no longer payable. The circumstances surrounding the creation of the Fund also form part of the Group's claim in arbitration against the Uzbek Government.

In May 2008 the Company issued convertible loan notes in the principal amount of $18.5 million. These notes were convertible into ordinary shares of the Company at 37p per share, earned interest at 8% per annum and were repayable, if not converted, in May 2010. The notes have now been restructured such that they are convertible at 12p per share, earn interest at US LIBOR + 3% per annum, and the repayment date has been extended to May 2013. $3.0 million of the notes were converted into ordinary shares of the Company at 12p per share in November 2010. The Company has assumed these notes will not be redeemed in the 12 months from the date of these financial statements (see note 27 to the financial statements).

At 31 December 2010, the Company owed Nedbank $2.5 million against a $20 million corporate loan facility. Since the year end this amount has been repaid in full.

The directors continue to undertake appropriate measures in order to preserve cash until such time as the Group's operations are fully funded and the dispute with the Uzbek Government has been resolved. At 21 October 2011, the Group's cash resources stood at approximately $3.0 million.

The future of the Group and its principal activities remain materially uncertain depending on the outcome of the dispute with the Uzbek Government. Therefore a material uncertainty exists which may cast significant doubt on the Company and the Group's ability to continue as a going concern and, therefore, maybe unable to realise its assets and discharge its liabilities in the normal course of the business. Once the outcome is known, it is currently the intention of the directors to consult the Company's shareholders as to the future direction of the Group's activities. Nevertheless after making enquiries, and considering the uncertainties described above, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts.

2. Application of new and revised International Financial Reporting Standards (IFRSs)

(a) New and revised IFRSs affecting amounts reported in the current year (and/or prior years)

The following new and revised IFRSs have been applied in the current year and have affected the amounts reported in these consolidated financial statements. Details of other new and revised IFRSs applied in these consolidated financial statements that have had no material effect on the consolidated financial statements are set out in section (b) below.

Application of new and revised International Financial Reporting Standards (IFRSs) (continued)

(b) New and revised IFRSs applied with no material effect on the consolidated financial statements

The following new and revised IFRSs have also been adopted in these consolidated financial statements. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements.

Application of new and revised International Financial Reporting Standards (IFRSs)

(c) New and revised IFRSs in issue but not yet effective

The Group has not early applied the following new and revised IFRSs that have been issued but are not yet effective:

Improvements to IFRSs issued in 2010 (except for the amendments to IFRS 3(2008), IFRS 7, IAS 1 and IAS 28 described earlier in section 2.1) (5)

(1) Effective for annual periods beginning on or after 1 July 2010.

(2) Effective for annual periods beginning on or after 1 July 2011.

(3) Effective for annual periods beginning on or after 1 January 2011.

(4) Effective for annual periods beginning on or after 1 February 2010.

(5) Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate.

The amendments to IFRS 7 titled Disclosures - Transfers of Financial Assets increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures of transactions when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period.

The directors do not anticipate that these amendments to IFRS 7 will have a significant effect on the Group's disclosures regarding transfers of trade receivables previously effected. However, if the Group enters into other types of transfers of financial assets in the future, disclosures regarding those transfers may be affected.

Application of new and revised International Financial Reporting Standards (IFRSs)

IAS 24 Related Party Disclosures (as revised in 2009) modifies the definition of a related party and simplifies disclosures for government-related entities.

The disclosure exemptions introduced in IAS 24 (as revised in 2009) do not affect the Group because the Group is not a government-related entity. However, disclosures regarding related party transactions and balances in these consolidated financial statements may be affected when the revised version of the Standard is applied in future accounting periods because some counterparties that did not previously meet the definition of a related party may come within the scope of the Standard.

The amendments to IAS 32 titled Classification of Rights Issues address the classification of certain rights issues denominated in a foreign currency as either an equity instrument or as a financial liability. To date, the Group has not entered into any arrangements that would fall within the scope of the amendments. However, if the Group does enter into any rights issues within the scope of the amendments in future accounting periods, the amendments to IAS 32 will have an impact on the classification of those rights issues.

IFRIC 19 provides guidance regarding the accounting for the extinguishment of a financial liability by the issue of equity instruments. To date, the Group has not entered into transactions of this nature. However, if the Group does enter into any such transactions in the future, IFRIC 19 will affect the required accounting. In particular, under IFRIC 19, equity instruments issued under such arrangements will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued will be recognised in profit or loss.

The directors anticipate that the adoption of these IFRSs and Interpretations in future periods will have no material impact on the financial statements of the Group.

3. Significant accounting policies

(a) Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain assets and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

The Group has taken advantage of the exemption under section 405 of the Companies Act 2006 and consequently the income statement of the parent company is not presented as part of these financial statements. The loss of the parent company for the financial year amounted to $5.7 million (2009: $6.7 million).

The following subsidiary undertakings have been consolidated within the financial statements:

(b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) (together the "Group") made up to 31 December each period. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group's equity. Minority interests consist of the amount of those interests at the date of the original business combination and the minority interest's share of changes in equity since the date of the combination.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition, or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra group transactions, balances, income and expenses are eliminated on consolidation.

(c) Change in accounting policy

Prior to the year ended 31 December 2010, the Group used proportionate consolidation to account for its interest in the AGF joint venture. Given the current state of affairs at AGF the directors now consider that proportionate consolidation of 50% of AGF's income, expenditure, assets and liabilities is no longer appropriate. In the board's view, the equity accounting method provides a reliable and more relevant presentation of the Group's results and its operating activity for the year ended 31 December 2010. Therefore, the Group decided to make a voluntary change in the accounting policy and the new accounting policy was applied retrospectively.

Comparatives for the year ended 31 December 2009 and the 18 month period ended 31 December 2008 have accordingly been restated to reflect this change in accounting policy, as required by revised IAS 1.

As set out below, the change in accounting policy had no effect on net assets or profit recognised by the Group prior to and in the 2009 financial statements.

(d) Joint venture entities

During the period, the Group held interest in a joint venture entity. A joint venture entity is an entity in which the Group holds a long term interest and shares joint control over the strategic, financial and operating decisions with one or more other ventures under a contractual arrangement.

Jointly controlled entities are included in the financial statements using the equity method of accounting. Under the equity method, an investment in a joint venture is initially recognised in the consolidated balance sheet at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the joint venture. When the Group's share of losses of a joint venture exceeds the Group's interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture. Adjustments are made to the financial statements of joint ventures where necessary to comply with IFRSs.

Profits and losses arising on transactions between the Group and jointly controlled entities are recognised only to the extent of unrelated investors' interests in the entity. The investor's share in the jointly controlled entity's profits and losses resulting from these transactions is eliminated against the asset or liability of the joint venture arising on the transaction.

The Group assesses at each balance sheet date whether there is objective evidence that its investment in jointly controlled entities is impaired. The processes adopted for the impairment review are set out in accounting policy (p) below.

(e) Business combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method. The acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. Where the fair value of consideration paid exceeds the fair value of the identifiable assets, liabilities and contingent liabilities acquired the resulting difference is classified as goodwill and presented as a non-current intangible asset. Where the fair value of consideration paid is lower than the fair value of identifiable assets, liabilities and contingent liabilities acquired the difference is classified as 'negative goodwill' and recognised in income statement. Goodwill arising from business combinations is assessed for impairment (policy 'p' below).

The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.

Where the value of a business combination increases as a result of the purchase of all or part of a minority interest in an existing subsidiary or of an investment in an associated company which as a result of the increase in investment by the Group becomes classified as a subsidiary in the year of the increase, the purchase method as set out above is applied proportionately to the increase in investment as set out above. The relevant proportion of the results of the acquired operations is included in the consolidated income statement from the date of the relevant acquisition.

(f) Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in US Dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for:

- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

- exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments / hedge accounting); and

- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to minority interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(g) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Sale of goods

Revenue represents the net invoice value of goods and is measured at the fair value of consideration received or receivable, after deducting discounts, volume rebates, value added tax and other sales taxes.

A sale is recognised when the significant risks and rewards of ownership have passed, and when revenue can be measured reliably. This is generally when title and any insurance risk have passed to the customer, and the goods have been delivered to a contractually agreed location.

Dividend and interest revenue

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably).

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

(h) Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessee

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(i) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the effective portion of the derivative is recognised in other comprehensive income and released to profit or loss when the qualifying asset impacts profit or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk, the capitalised borrowing costs reflect the hedged interest rate.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(j) Operating profit

Operating profit or loss is stated before charging restructuring costs and after the share of results of associates but before investment income and finance costs.

(k) Finance income

Finance income comprises interest income on funds invested and foreign exchange gains. Interest income is recognised in the income statement as it accrues, using the effective interest rate method.

(l) Finance costs

Financing costs comprise interest payable on borrowings calculated using the effective interest rate method, the accumulation of interest on provisions and foreign exchange losses.

(m) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

(n) Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size and incidence to enable a full understanding of the financial performance. Transactions which may give rise to exceptional items are principally gains and losses on the sale of investments, impairment charges relating to major mining properties and investments in subsidiary undertakings, restructuring costs and the results and costs relating to litigation.

(o) Mining properties

Mineral rights acquired and exploration and evaluation expenditure capitalised

Mineral rights and exploration and evaluation costs arise from expenditure incurred prior to development activities and include the cost of acquiring and maintaining the rights to explore, investigate, examine and evaluate an area for mineralisation.

Exploration and evaluation expenditure in the relevant area of interest comprises costs which are directly attributable to:

- Researching and analysing existing exploration data;

- Conducting geological studies, exploratory drilling and sampling;

- Examining and testing extraction and treatment methods; and

- Compiling pre-feasibility and feasibility studies.

Exploration and evaluation expenditure also includes the costs incurred in acquiring mineral rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects. Capitalised costs, including general and administrative costs, are only allocated to the extent that those costs can be related directly to operational activities in the relevant area of interest, and where the existence of a commercially viable mineral deposit has been established.

No amortisation charge is recognised in respect of these intangible assets. Mineral rights and exploration and evaluation expenditure are capitalised within intangible assets until such time that the activities have reached a stage which permits a reasonable assessment of the existence of commercially exploitable reserves. Once this has occurred, the respective costs previously held as intangible assets are transferred to mine development costs in property, plant and equipment.

Where the projects have not yet been granted a licence or are determined not to be commercially viable, the related costs are written off to income statement.

Capitalised exploration and evaluation expenditure is assessed for impairment in accordance with the indicators set out in IFRS 6 Exploration for and Evaluation of Mineral Reserves. In circumstances where a property is abandoned, the cumulative costs relating to the property are written off.

Mineral rights acquired through a business combination or an asset acquisition are capitalised separately from goodwill if the asset is separable or arises from contractual or legal rights and the fair value can be measured reliably on initial recognition.

(p) Property, plant and equipment

On initial recognition, land, property, plant and equipment are valued at cost, being the purchase price and the directly attributable cost of acquisition or construction required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by the Group.

Properties in the course of construction for production, supply or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use and transferred to the appropriate category of property, plant and equipment.

Depreciation is charged to income and is provided so as to write off the cost, less estimated residual values, of property, plant and equipment as follows:

Mining assets, except for certain mining equipment and buildings, where economic benefits from the asset are not consumed in a pattern which is linked to the production level, are depreciated using a units of production method based on estimated economically recoverable reserves, which results in a depreciation charge proportional to the depletion of reserves. In applying the units of production method, depreciation is normally calculated using the quantity of material processed at the mine in the period as a percentage of the total quantity of material to be extracted in current and future periods based on proven and probable reserves.

Depreciation on all other assets is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

Expenses incurred in respect of the maintenance and repair of property, plant and equipment are charged against income when incurred. Refurbishment and improvement expenditure, where the benefit is expected to be long lasting, is capitalised as part of the appropriate asset.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

(q) Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(r) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

(s) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash.

(t) Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial Assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Held-to-maturity investments

Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.

Available for sale financial assets

Listed shares and listed redeemable notes held by the Group that are traded in an active market are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is reclassified to profit or loss.

Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established.

The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the balance sheet date. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include:

- significant financial difficulty of the issuer or counterparty; or

- default or delinquency in interest or principal payments; or

- it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the differences between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Compound instruments

The component parts of compound instruments (convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured.

Financial liabilities

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(u) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

(v) Pensions

The Group does not enter into any pension scheme arrangements. The Group does make payments in lieu of pensions for certain individuals; these costs are expensed as incurred.

(w) Employee bonus

Employee costs include bonus payments made to certain directors and employees based upon predetermined performance targets set by the Group. Any such bonus payments directly attributable to the exploration and mining development properties or the mining properties are capitalised against the carrying values of such assets until commercial production commences where such costs are amortised on the same basis as the exploration and mining development properties. All other bonus payments are expensed in the income statement as incurred.

(x) Share-based payments

 The Group has applied the requirements of IFRS 2 Share-based Payment.

The Company awards share options to certain Company directors and Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a binomial option valuation model for options granted before 19 May 2008 and a Black-Scholes model for options granted on or after this date, both models taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest only where vesting is dependent upon the satisfaction of service and non-market vesting conditions or where the vesting periods themselves are amended by the introduction of new schemes and the absorption of earlier schemes by agreement between the Company and the relevant employees.

At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

Where options granted are cancelled all future charges arising in respect of the grant are charged to the income statement on the date of cancellation.

4. Accounting estimates and judgments

Many of the amounts included in the financial statements involve the use of judgment and/or estimation. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to previous experience but actual results may differ from the amounts included in the financial statements. Information about such judgments and estimation is contained in the accounting policies and/or the notes to the financial statements and the key areas are summarised below.

Capitalised mining costs and mining resources

The recovery of the value of the Group's exploration and development mining properties together with the value of similar properties held within the Group's joint-venture is reviewed in the light of future production estimates, the price of gold, achievable operating and capital costs and ongoing geological studies. Over the longer term the actual mineable resources achieved may vary significantly from the current estimates. The Group periodically updates estimates of reserves, resources and ore-grades in respect of its exploration and mining development properties and of its recognised value of its joint-venture operation and assesses those for indicators of impairment relating to its capitalised costs.

Base of mining operations

The Group's primary base of mining operations is in the Republic of Uzbekistan. The laws relating to commercial operations, taxation and future dividend payments are still under development and there may be unforeseen changes to the operating and fiscal environment. The financial statements have been prepared on the assumption that no significant adverse changes to the economic, regulatory and fiscal environment will arise. These risks are also discussed in note 32.

Mineral resources

There are a number of uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Group's control. Such estimation is a subjective process, and the accuracy of any reserve or resource estimates is a function of the quantity and quality of available data and of the assumptions made and judgments used in technical and geological interpretation. There can be no assurance that mineral resources can be upgraded to proven and probable reserves and subsequently mined and recovered.

Mining Licences

The issue of mining licences in Uzbekistan has been under review for a number of years. In 2006 all previously issued mining licenses in Uzbekistan were withdrawn and a letter issued by Gosgortechnadzor (State Industries and Mine Inspectorate) on 26 December 2006 granting AGF the right to mine for an unlimited period of time was issued in its place, and similarly to all other existing mining companies in Uzbekistan. The resolution of a meeting of the Cabinet of Ministers on 2 March 2009 requested Gosgortechnadzor to prepare all the relevant documents for the issuance of new mining licences to AGF. The financial statements have been prepared on the assumption that the relevant licences will be issued.

Carrying values of property, plant and equipment.

The Group monitors internal and external indicators of impairment relating to its property, plant and equipment. Management has considered whether any indicators of impairment have arisen over certain assets relating to these assets. After assessing these, management has concluded that no impairment has arisen in respect of these assets during the period and subsequently since 31 December 2009. The value of these assets is also subject to the same risks as affect capitalised mining costs and mining resources.

Useful lives of intangible assets, exploration and development mining properties, mining properties and property, plant and equipment

Intangible assets, mining properties and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Due to the long lives of certain assets, changes to the estimates used can result in significant variations in the carrying value.

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets, including property, plant and equipment, mining properties, and investments in joint-ventures to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money, the projected value of gold and silver and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

In determining the fair value certain estimates are used including production estimates, sustainability of the relevant project, country risk as reflected in the relevant discount rate, gold prices and the continuity of mining licenses. These estimates may differ to a material extent to the actual conditions experienced in future periods.

Income taxes and withholding taxes

The Group, through its AGF joint venture is subject to income tax and withholding tax in Uzbekistan and significant judgment is required in determining the provision for these taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when, despite the Group's belief that its tax return positions are supportable, the Group believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made. These risks are also discussed in more detail in note 32, Uzbekistan taxation contingencies.

Legal proceedings and contractual disputes

In accordance with IFRSs the Group only recognises a provision where there is a present obligation from a past event, a transfer of economic benefits is probable and the amount of costs of the transfer can be estimated reliably. In instances where the criteria are not met, a contingent liability may be disclosed in the notes to the financial statements. Realisation of any contingent liabilities not currently recognised or disclosed in the financial statements could have a material effect on the Group's financial position. Additionally the recoverable value of the Group's investments in exploration and development mining properties and joint ventures may be impacted by the result of these proceedings. Application of these accounting principles to legal cases requires the Group's management to make determinations about various factual and legal matters beyond its control. The Group reviews outstanding legal cases following developments in the legal proceedings and at each balance sheet date, in order to assess the need for provisions or impairment in its financial statements. Among the factors considered in making decisions on provisions are the nature of litigation, claim, dispute or assessment, the legal process and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of legal advisers, experience on similar cases and any decision of the Group's management as to how it will respond to the litigation, claim, dispute or assessment.

Share-based payments

In order to calculate the charge for share-based payments as required by IFRS2, the Group makes estimates principally relating to assumptions used in its option-pricing model as set out in note 25.

5. Segmental analysis

Business segments

The Group has 2 reportable segments under IFRS 8:

- Precious Metals segment, comprising gold & silver operations at different stages, from field exploration through to mine development and precious metals production. The Precious Metals segment includes the Group's principal mining, development and exploration activities in Uzbekistan through its interest in AGF.

- The Corporate segment includes the corporate cost centre primarily serving administrative and fund raising functions to support the Precious Metals segment.

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

Segment information

Segment information about the Group's reportable segments is presented below.

As at 31 December 2008 segment assets and liabilities were as follows:

6. Operating loss

Operating loss for the year has been arrived at after charging / (crediting):

(1) The amount in respect of share-based payments is non-cash and relates solely to equity settled arrangements.

7. Staff costs

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group, including the head of the representative office in Tashkent, Uzbekistan.

8. Directors' remuneration

Details of share options and interests in the Company's shares of each director are shown in the directors' report on page 5.

From 1 October 2008 all the directors elected to receive approximately 20% of their salaries in shares of the Company, rather than cash.

Other benefits represent payments in lieu of pension contributions, private medical insurance and life assurance. The Company offers no other benefits in kind.

9. Gain on sale of investments

In April 2010 the Group sold the balance of its investment in Tethys Petroleum Limited for gross proceeds of $1,522,000 and a gain on sale of $1,074,000. Gains which arose from changes in fair value of $195,000 accumulated in the investments revaluation reserve were recycled to income statement.

10. Penalty interest on joint venture dividends receivable

In June 2006 the AGF shareholders resolved to pay dividends based on the operating results of AGF for 2005. As at 31 December 2010, AGF had not paid the dividends to certain shareholders, including Oxus Resources Corporation. Therefore, in accordance with a resolution approved by the AGF shareholders in April 2010, a penalty for late payment of dividends has been accrued as payable by AGF. For the year ended 31 December 2010 an amount of $474,000 (2009: $1,531,000) has been accrued by the Group as penalty interest receivable and recognised as an exceptional item.

11. Costs of aborted CITIC financing

In January 2010 the Company announced that it had signed a conditional agreement with a consortium of Chinese investors to invest and arrange financing in a total aggregate amount of up to approximately $185 million (the "Financing"). The funds were to be used to provide working capital to the Company and to finance and develop AGF's operations in Uzbekistan, including the expansion of open pit heap leach mining operations, the development of one or more underground mines, and an accelerated exploration programme. The Company's shareholders approved the terms of the Financing at an EGM held on 26 January 2010. As discussed in the directors report and in note 39, on 31 December 2010 the agreement lapsed.

Costs totalling $367,000 in relation to the Financing have been recognised as an exceptional cost in the year ended 31 December 2010.

12. Legal costs and settlement of claims

A former director, William Trew, sued the Company for £175,000 plus interest alleged to be outstanding under the terms of a settlement agreement governing his resignation in December 2007. In addition, MAED Limited, a Company in which Mr. Trew has a material beneficial interest, brought a claim against the Company for an amount of $374,000 plus interest, alleging that it was entitled to an early completion bonus under a contract relating to the construction of a plant at AGF during 2003 and 2004. The Company was vigorously defending these claims but in March 2010 reached an amicable arrangement with Mr. Trew and MAED Limited to settle. As a result there is no further dispute between the parties.

The costs associated with the litigation comprised $1,107,000 (2009: $538,000) and are disclosed separately as an exceptional cost in the year ended 31 December 2010.

13. Share of profit from joint venture

The Group's joint venture operations are conducted through Amantaytau Goldfields AO ("AGF"). The information disclosed below has been extracted from the latest unaudited financial statements of AGF prepared in accordance with IFRS as of and for the year ended 31 December 2010 and audited financial statements of AGF prepared in accordance with IFRS for the year ended 31 December 2009. See note 20 and the Financial and Operating Review on page 3 for further information.