Oxus Gold Plc Regulatory News (OXS)

27 Mar 2008 07:01

Oxus Gold PLC27 March 2008 Oxus Gold plc Interim Results for the six months ended 31 December 2007 • Oxus reports a loss of $43.01 million for the 6 month period attributable to equity shareholders (2006: a loss of $4.22 million). The result includes exceptional charges of $38.90 million. • Amantaytau Goldfields ("AGF") reports $3.94 million loss for the six month period to 31 December 2007 (2006: a loss of $2.44 million) and $7.93 million loss in the year ended 31 December 2007 (2006: $8.85 million profit), 50% attributable to Oxus. • AGF holds stockpiled dore awaiting refining at 31 December 2007 with a sales value of approximately $20.00 million and an unaccounted profit of approximately $6.85 million, 50% attributable to Oxus. • AGF produced 33,938 ounces of gold and 790,291 ounces of silver in the six month period to 31 December 2007 and 62,395 ounces of gold and 1,138,146 ounces of silver in the year to 31 December 2007. • AGF sold 24,188 ounces of gold and 691,264 ounces of silver in the six month period to 31 December 2007 and 61,863 ounces of gold and 691,264 ounces of silver in the year to 31 December 2007. • AGF sold 24,188 ounces of gold and 691,264 ounces of silver in the six month period to 31 December 2007 and 61,863 ounces of gold and 691,264 ounces of silver in the year to 31 December 2007. • Approval obtained from Uzbek Government to proceed with the AGF Phase Two underground sulphides project. • Wardell Armstrong International ("WAI") commissioned to update underground sulphides project feasibility study based on revised base case of increased tonnage. • Dividend in specie equivalent to 17.98 US cents per share paid through the distribution of KazkhGold Global Depositary Receipts ("GDRs"). • Acquisition of 100% of Marakand Minerals Limited ("Marakand") completed and Marakand's admission to AIM cancelled. • Zeromax increases its stake in Oxus to 17.0% pursuant to the strategic alliance. • Agreement reached with Eurogold Limited to settle outstanding litigation. • Oxus awarded jurisdiction in arbitration against the Kyrgyz Republic in respect of the Jerooy project. (All references to $ and cents are to United States dollars.) Report on Activities Financial Results LONDON: 27 March 2008 - Oxus Gold plc ("Oxus", the "Company" or "the Group")reports its unaudited results for the 6 months ended 31 December 2007 (the"period"). The Group reports a reduction in gross revenue, excludingattributable joint venture income, to $1.06 million (2006: $2.14 million),resulting primarily from the loss of anticipated fee income following the saleof the Jerooy project. The AGF joint venture contributed an attributable loss of$1.97 million for the period (2006: $1.22 million attributable loss) althoughapproximately $3.43 million of attributable profit locked up in stockpiled dorewas not accounted for during the period and would otherwise have allowed AGF toreport a profit. Total group earnings for the period showed an unaudited lossafter taxation of $43.01 million (11.77 US cents per share loss) against a lossof $4.22 million (1.41 cents per share loss) in the corresponding period to 31December 2006. The results include exceptional charges of $38.90 million arising substantiallyfrom providing against the Group's entire investment in the Khandiza projectamounting to $28.46 million, costs relating to the settlement of the Eurogoldlitigation of $8.46 million and the costs of arbitration in the case against theKyrgyz Republic of $1.64 million. The Group has made a full provision against the carrying value of its investmentin the Khandiza project given the continued uncertainty over the Group'sinvolvement in the future development of the project. During the period the Company paid a dividend equivalent to $65.69 million(2006: nil). The dividend was paid in specie on 2 July 2007 with thedistribution to shareholders of the majority of the KazakhGold GDRs received asconsideration for the sale in June 2007 of the Jerooy project and certain otherassets. The dividend was equal to 17.98 cents per share. Total assets decreased to $78.38 million (2006: $173.79 million) including cashand cash equivalents of $2.36 million (2006: $3.11 million). During the periodthe Company issued 2,254,954 shares, comprising 2,221,621 shares issued toacquire the minority shareholders in Marakand Minerals Limited, and 33,333shares issued as a result of options being exercised. The total number of sharesin issue at 31 December 2007 was 367,654,127. At 31 December 2007 the Group's loan facility from Nedbank was reduced to $11.25million. Operations During the period under review operations at the CIP plant reported losses,primarily due to high mining costs associated with the pre-stripping of theAsaukak open pit, and lower gold grades, despite an improvement in goldrecoveries. Operations at the Vysokovoltnoye silver-gold heap leach project wereprofitable although significant stockpiles of precious metals in dore hadaccumulated at the Almalyk refinery by 31 December 2007 as a result of Almalyk'sinability to refine the dore in accordance with the terms of the agreedcontract. This stockpile also included 4,296 ounces of gold contained withinhigh silver content dore produced by the CIP plant. As a result AGF's cashflowwas disrupted and overall profitability was negatively impacted, resulting in areported loss for the period. At Asaukak, lower grade ore is now being stockpiled for future heap leachprocessing and sufficient higher grade ore is now being accessed which, assistedby a higher gold price, should allow the CIP plant to operate profitably for afurther 15 months whilst it is being modified to process sulphide ore. Theproposed Asaukak heap leach project is planned to come into production at theend of 2008. The dore stockpile at Almalyk is currently being refined during2008, and negotiations are underway with the Almalyk refinery and with the UzbekGovernment to increase the refining capacity at Almalyk and / or to allow AGF toexport silver dore for refining outside Uzbekistan. Total ore mined (excluding Vysokovoltnoye) increased by 71% from 708,902 tonnesin the first half of 2007 to 1,212,770 tonnes in the second half of 2007. Wasteto ore ratios during the period averaged 7.44 to 1.00. During the six months to31 December 2007 a total of 562,047 tonnes of higher grade ore was hauled to theCIP plant, of which 529,635 tonnes at a grade of 1.7 grammes per tonne ("g/t")were processed with a gold recovery of 83.2% to produce 24,242 ounces of gold.For the year to 31 December 2007 1,921,672 tonnes of ore were mined of which845,177 tonnes at a grade of 2.7 g/t were treated to recover 48,379 ounces ofgold at an average recovery of 67.0%. An estimated 832,835 tonnes of low gradeore averaging 0.65 g/t gold, and containing over 17,000 ounces gold, remains instockpiles at Asaukak, most of which is being set aside for futureheap-leaching, when the Asaukak Heap Leach comes into production. At the Vysokovoltnoye silver-gold deposit, 181,640 tonnes of ore were mined inthe second half of 2007. A total of 186,853 tonnes of ore was crushed,agglomerated and stacked, at an average grade of 98.82 g/t of silver and 0.94 g/t of gold. Waste to ore ratios during the period averaged 1.58 to 1.00. Silverdore production increased from 364,344 ounces in the first half of 2007 to856,965 ounces during the second half. For the year to 31st December 2007 atotal of 1,221,309 ounces of dore containing 1.11 million ounces of silver and14,016 ounces of gold was produced. This included concentrates stockpiled during2005 and 2006. It also included 477,254 ounces of unrefined silver and 7,433ounces of unrefined gold stockpiled at Almalyk pending refining. The value ofthe gold and silver stockpiled at Almalyk was approximately $20 million as at 31December 2007 (including the CIP gold dore with high silver content). Theestimated unaccounted profit locked up in this stockpile was $6.85 million at 31December 2007, 50% attributable to Oxus. Had this stockpile been refined inaccordance with the terms of the contract with Almalyk, and the resultantbullion exported and sold, AGF would have reported an estimated profit for theperiod of $2.91 million, and an estimated loss for the year of $1.08 million. Amantaytau Goldfields Phase 1 oxides project The following table summarises AGF's operating results in respect of the CIPplant: +--------------------------+-------------+-------------+-----------+-----------+| |Six months to|Six months to| Year to 31| Year to 31|| | 31 December| 31 December| December| December|| | 2007| 2006| 2007| 2006|+--------------------------+-------------+-------------+-----------+-----------+|Ore mined, tonnes | 1,212,770 | 454,198 |1,921,672 |1,225,355 |+--------------------------+-------------+-------------+-----------+-----------+|Ore processed, tonnes | 529,635 | 561,135 | 845,177 |1,375,464 |+--------------------------+-------------+-------------+-----------+-----------+|Average gold grade (g/t) | 1.7 | 2.4 | 2.7 | 3.0 |+--------------------------+-------------+-------------+-----------+-----------+|Average gold recovery (%) | 83.2 | 80.6 | 67.0 | 73.4 |+--------------------------+-------------+-------------+-----------+-----------+|Gold produced, ounces | 24,242 | 35,236 | 48,379 | 98,054 |+--------------------------+-------------+-------------+-----------+-----------+|Gold sales, ounces | 15,134 | 27,499 | 52,809 | 90,342 |+--------------------------+-------------+-------------+-----------+-----------+|Average gold price $ per | 756 | 608 | 681 | 598 ||ounce | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average cash cost $ per | 857 | 536 | 656 | 392 ||ounce | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average total cost $ per | 1019 | 623 | 759 | 445 ||ounce | | | | |+--------------------------+-------------+-------------+-----------+-----------+ The following table summarises AGF's operating results for the Vysokovoltnoyeopen-pit silver heap-leach project: +--------------------------+-------------+-------------+-----------+-----------+| |Six months to|Six months to| Year to 31| Year to 31|| | 31 December| 31 December| December| December|| | 2007| 2006| 2007| 2006|+--------------------------+-------------+-------------+-----------+-----------+|Ore mined, tonnes | 181,640 | 213,560 | 218,040 | 450,900 |+--------------------------+-------------+-------------+-----------+-----------+|Ore stacked, tonnes | 186,853 | 198,608 | 422,618 | 375,689 |+--------------------------+-------------+-------------+-----------+-----------+|Average silver grade (g/t)| 98.82 | 128.53 | 83.48 | 120.87 |+--------------------------+-------------+-------------+-----------+-----------+|Average gold grade (g/t) | 0.94 | 1.33 | 0.88 | 1.24 |+--------------------------+-------------+-------------+-----------+-----------+|Silver contained in dore, | 790,291 | 49,830 |1,138,146 | 54,937 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Gold contained in dore, | 9,696 | 699 | 14,106 | 1,490 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Silver refined and sold, | 691,264 | 0 | 691,264 | 0 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Gold refined and sold, | 9,054 | 0 | 9,054 | 0 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Silver stock unrefined, | 477,254 | 57,540 | 477,254 | 57,540 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Gold stock unrefined, | 7,433 | 2,362 | 7,432 | 2,362 ||ounces | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average silver price $ per| 13.43 | - | 13.43 | - ||ounce | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average gold price $ per | 721 | - | 721 | - ||ounce | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average cash cost $ per | 7.26 | - | 7.26 | - ||ounce (Silver equivalent) | | | | |+--------------------------+-------------+-------------+-----------+-----------+|Average total cost $ per | 8.66 | - | 8.66 | - ||ounce (Silver equivalent) | | | | |+--------------------------+-------------+-------------+-----------+-----------+All sales of refined metal were at spot price Net profit and (loss) after tax and debt service $m +---------------------------+------------+-------------+------------+------------+|CIP plant | (7,063) | (2,440) | (11,049) | 8,855 |+---------------------------+------------+-------------+------------+------------+|Vysokovoltnoye | 3,123 | 0 | 3,123 | 0 |+---------------------------+------------+-------------+------------+------------+|AGF Overall | (3,940) | (2,440) | (7,926) | 8,855 |+---------------------------+------------+-------------+------------+------------+ Underground Sulphides Project Formal approval was obtained in December 2007 from the Uzbekistan Government toproceed with the AGF Phase 2 underground sulphides project. A pre-feasibilitystudy into the mining and processing of the substantial AGF sulphide resourcewas completed by WAI in September 2005. WAI are currently updating and upgradingthis study to a bankable feasibility study ("BFS") based on an increasedproduction scenario. This new study is scheduled for completion in the secondquarter of 2008. The AGF underground sulphides project is designed to mine the deeper sulphideores below the mined out oxide open pits at Amantaytau Centralny, and to agreater extent, the adjacent Amantaytau Severny sulphide ores which have beenexplored via a shaft to 359m depth below surface. These sulphides are currentlystated (at 30th June 2007) to contain Proven and Probable Reserves, above acut-off grade of 3.5 g/t gold, of 9.71 million tonnes at an average grade of 7.7g/t containing 2.41 million ounces of gold. This reserve is within a combinedMeasured and Indicated Resource above a 3.5 g/t cut-off of 10.32 million tonnesat an average grade of 9.0 g/t gold containing 2.98 million ounces of gold.There is an additional Inferred Resource above a 3.5 g/t cut-off of 2.05 milliontonnes at an average grade of 7.6 g/t containing a further 0.50 million ouncesof gold. On completion of the BFS, these reserves and resources will be restatedin line with the forthcoming BFS project economics and mining strategy. Both theAmantaytau Centralny and Severny sulphides are open at depth; at AmantaytauSeverny, Soviet drilling encountered 51.6 g/t of gold over a drilledintersection of 8 metres (approximate true width of 1.5 metres) at 500 metresbelow the currently explored ore bodies (at about 860 metres below surface). Theexisting reserves and resources, at 30 June 2007, are JORC compliant and areincluded in the tables in Appendices 1 and 2, as well as being available on theOxus website. In December 2007 it was reported that the initial sulphide feed to the plantwould be extracted from an expanded open pit which had previously been mined foroxide ore. Further mine planning since December 2007 with respect to theaccelerated exploitation of the underground ore bodies now allows forunderground mining to start in both the Centralny and Severny deposits beforethe commissioning of the new sulphide plant. Underground mining is, subject tofinance, now scheduled to commence at Centralny in March 2009 followed twomonths later at Severny. This has the advantage of processing the higher gradeunderground ore sooner and also greatly reduces the cost of extensive wastestripping in the open pit. The stripping in the open pit will now be limited toproviding suitable pit slopes and an apron for the safe establishment of the twodecline portals from the pit bottom. This operation will yield a small tonnageof oxide and sulphide ore. In addition, starting the declines from the bottom ofan existing pit has the advantages of shortening the decline length, therebyaccessing high grade ore sooner and also eliminating the need to excavate alarge box cut in poor ground on surface, saving on both capital expenditure andtime. As there will be sulphide ore available prior to commissioning of the plant, thecritical element for the project is now the construction of the sulphideprocessing plant. The sulphide processing plant will now consist of sections of the existing oxideplant plus new modules necessary for sulphide ore processing. The existing silo,crusher, mills, thickener, elution section, reagent handling systems and smelthouse will be used for sulphide ore processing. The new plant can be constructedand commissioned without significantly affecting the existing plant productionas the modifications are "plug-in" additional processing modules. Using majorsections of the existing plant not only reduces capital expenditure but willalso decrease the overall plant construction time as long lead times, associatedwith ordering major pieces of equipment such as mills, will be minimised. It isnow planned to start feeding sulphide ore to the plant in July 2009. After theinitial build-up period it is planned to start with an annual throughput of750,000 tonnes and to increase this to 1,200,000 tonnes per annum from 2012 asthe underground production is expanded. Gold will be extracted using biologicaloxidation technology developed by Goldfields, which is also currently beingintroduced at an Uzbek State mine nearby in the Kyzilkum region. It is not envisaged that the capital and operating costs will vary significantlyfrom those reported in December 2007 and it is expected that the BFS willre-confirm the excellent financial projections of this very robust project. Acomprehensive economic model has also been prepared which will form the basecase for these financial projections. The total estimated capital cost of wastestripping, the modification of the existing plant and the underground minedevelopment remains at $150 million, initially producing some 250,000 ounces ofgold per annum from 2010 onwards at a total cash cost (including taxes) of $268per ounce. These estimates, derived from the 2005 feasibility study, will beupdated in the BFS. Discussions are well underway with a number of majorfinancial institutions with regard to financing this $150 million capitalrequirement by way of debt, primarily directly into AGF, supplemented by afacility in Oxus which will be advanced to AGF as a shareholder loan. Ongoing Oxide Heap Leach Production The main priority for AGF for 2008 and 2009 is the development of theunderground sulphides project and the associated modification of the existingoxide CIP plant into a sulphide processing plant. Future oxide gold productionwill be generated from heap leach operations utilizing the numerous satellitedeposits. In addition to the existing one million tonnes a year Vysokovoltnoyesilver-gold project, which - including satellite deposits - is forecast toproduce approximately 40,000 ounces per year of gold and gold equivalent silverfor at least the next 10 years, a one million tonnes a year gold heap leachfacility is being built in 2008 adjacent to the Asaukak open pit mine. For theinitial 12 months low grade ore will be fed from stockpiles situated at theAsaukak pit, and this operation is forecast to produce approximately 30,000ounces of gold per year commencing in early 2009. After the initial 12 months,ore will be sourced from several satellite deposits and after 3 years it isplanned to relocate the processing plant to similarly treat the balance of thesatellite deposits. The pre-production capital cost of the Asaukak heap leachproject is estimated at $5 million. The total average cash cost (includingtaxes) of this ongoing oxide production is expected to be approximately $400 perounce. As described, ongoing oxide production will exploit various satellite oxidedeposits within the licence area, and further exploration drilling and shallowopen pit mining can be expected at a number of deposits close to Asakauk, namelyAksai, North Asaukak, Sreddiny, North Aksai, North Daugystau and West Karasaifollowed by other outlying deposits. Gold production from these deposits isprojected to continue until at least 2028. With ongoing oxide production expected to continue at approximately 70,000ounces per annum, and sulphide production expected to contribute approximately250,000 ounces per annum from 2010, AGF is now scheduled to be producing inexcess of 300,000 ounces of gold annually from 2010, at significantly loweroperating costs than those currently being experienced. Exploration and Grade Control Exploration activities continued on a reduced basis during the second half of2007. Core drilling using AGF's CS14 drill rig was undertaken at the western endof the Asaukak open-pit to confirm a 150 metre extension of mineralizationbetween the existing pit and a fault zone. This constitutes a small resource,which, in addition to the stockpiled low grade ore from the Asaukak pit, will beconsidered as initial feed for the proposed Asaukak heap leach operation. Grade control in the Asaukak pit and at Vysokovoltnoye continued using trench /rip-line sampling, as well as blast-hole drill sampling in the Asaukak pit, asfollows: Asaukak pit - 809 trenches (44,909 metres of trenching, from which 34,053samples were assayed) - 363 blast-holes (from 3,630 metres of drilling, 1097 samples were selected forassay); Vysokovoltnoye -111 trenches (4,375 metres of trenching, from which 2,167samples were assayed); At Vysokovoltnoye diamond drilling was undertaken to intersect theoxide-sulphide transition zone around the base of the designed open-pit, toprovide drill core for detailed geological logging, analysis and metallurgicaltestwork. Drilling to provide data for the underground sulphide project BFS was completedduring the period, including: •Determination of rock conditions along the line of the proposed access declines for the Amantaytau Severny underground mine, •Obtaining core for representative metallurgical samples of the sulphidic ores below the mined out oxides in the Amantaytau Centralny pits. During 2008, AGF intends to increase significantly its mine and explorationdrilling, in line with its operational and strategic plans, including: • Increasing the amount of RC grade control drilling at Asaukak, Vysokovoltnoye and any remaining near surface open-pitable resources at Amantaytau Centralny - this will include the upgrade of Inferred Resources to Measured and Indicated Resources; • Further trenching, and RC drilling of deposits in the Asaukak area (Aksai, North Asaukak, Sreddiny, North Aksai, North Daugystau and West Karasai deposits), followed by modeling, pit design and engineering to generate and upgrade resources and then convert to reserves for the Asaukak heap leach project; • Ongoing exploration around Vysokovoltnoye to further optimise and extend the life of the Vysokovoltnoye silver-gold heap-leach operation; • Surface deep-hole drilling of sulphide ores below the existing reserves at Amantaytau Severny (using AGF's CS14 rig) in order to increase the size of the Inferred Resource. This will be part of an ongoing programme to assess the viability of mining at deeper levels, as indicated by the Soviet drillhole which intersected high gold grades 860 metres below surface; • Preparation for underground core drilling (using AGF's U6 electro-hydraulic coring rig) from the Severny and Centralny declines and adjacent developments, for upgrade of Inferred Resources to Measured and Indicated, together with stope definition drilling in advance of stope access development. Due to changes required in line with the mining strategy in the undergroundsulphide project BFS, an update to the resource and reserve statements fromthose prepared at 30 June 2007 will be prepared as soon as the BFS is complete. As at 30th June 2007, AGF had Proven and Probable Reserves totaling 2.8 millionounces of gold and 6.7 million ounces of silver, by far the greatest value beingin the Amantaytau Severny and Centralny sulphide project. The oxide reservesavailable for treatment at the CIP plant are nearing exhaustion and in futurelow grade oxides will be treated at a heap leach facility. AGF's reserves are contained within a Measured and Indicated Resource base of4.8 million ounces of gold and 38 million ounces of silver, plus a further 2.4million ounces of gold and 16 million ounces of silver in the Inferred Category,as well as significant Exploration Potential. Oxus has a 50% share in AGF's resources and reserves, which are JORC compliantand are posted on the Oxus website and signed off by the relevant CompetentPersons, as well as being attached to this Interim Statement as Appendix 1 andAppendix 2. Other activity Zeromax strategic investment In November 2006 the Company announced that it had signed a subscriptionagreement with Zeromax GmbH, Uzbekistan's largest private-sector company, tobring Zeromax into Oxus as a strategic investor and alliance partner. Pursuantto that agreement Zeromax purchased 57,000,000 new ordinary shares in theCompany at 21.5p per share. During the period Zeromax acquired a further 5,503,646 ordinary shares in theCompany at a total consideration of 80 pence per share from RAB SpecialSituations (Master) Fund Limited ("RAB") pursuant to a partial exercise of anoption entered into between Zeromax and RAB on 6 December 2007. Zeromax now owns17.0% of the Company and has stated its intention to increase this holding indue course. The option between Zeromax and RAB was not extended beyond 29February 2008 and has consequently lapsed. Zeromax is owned by Miradil S. Djalalov, a Tashkent entrepreneur who founded thecompany in 2000. It operates in Uzbekistan through a series of joint venturesand investments in the oil & gas, mining, agriculture and textile sectors andhas forged strong working relationships with the Uzbek Government. On 7 January2008 Mr Djalalov joined the board of the Company as a non-executive director.The Company continues to work very closely with Zeromax and is optimistic thatthe alliance will enhance the development of AGF as well as leading to theacquisition of new projects in Uzbekistan. Eurogold On 19 February 2008 the Company announced that it has reached agreement withEurogold Limited to settle the proceedings commenced in the Australian FederalCourt in 2006 by Eurogold. The proceedings were commenced following Oxus'decision to terminate its purchase agreement with Eurogold for its Ukrainiangold assets due to its belief that a material adverse change had occurred to thebusiness and assets of Eurogold from what it had understood the position to bewhen it entered into the agreement. The Company believes that it was in the best interests of shareholders to settlethe dispute at this time and to focus on the development of the AGF undergroundsulphides project, rather than incur the potential time, costs and disruption ofcontesting a court case in Australia, and the likelihood of limited recovery ofsignificant costs in the event of a favourable court decision. Under the terms of the settlement, Oxus has agreed to pay Eurogold A$7.95million, of which approximately A$6.78 million will be cash and the balance ofapproximately A$1.17 million will be met by an issue of Oxus shares to bedelivered to Eurogold on or before 21 May 2008. The cash component consists ofA$5.06 million payable on or before 31 March 2008 and A$1.72 million from theproceeds of the recent sale of the Company's entire shareholding in Eurogold of43,188,100 shares. This latter amount is to be paid to Eurogold on or before 6May 2008. $8.46 million inclusive of $1.14 million for legal costs has been provided inthe interim accounts to 31 December 2007 in respect of this settlement. Againstthis, $0.11m has been recognised in this period as revaluation gain on theEurogold shares and a further $0.581m will be recognised in the next financialperiod as gain realised on the sale of the Eurogold shares. Marakand Minerals Limited Marakand Minerals Limited is now 100% owned by the Company. On 20 December 2007the Company completed the acquisition of the remaining ordinary shares ofMarakand that it did not previously own, and on 22 January 2008 the Companyapplied for the cancellation of admission of the ordinary shares of Marakandfrom trading on the AIM market of the London Stock Exchange. Oxus previouslyowned 84.04% of the issued shares of Marakand and its acquisition of theremaining shares was completed on the basis of 0.135 new Oxus share for eachMarakand share, resulting in 2,221,621 new ordinary Oxus shares being issued.This issue of shares included shares issued in trust for those Marakandshareholders who did not return their acceptance forms and / or transferdocuments as requested. Marakand shareholders who have still not received theirnew Oxus shares should contact Capita Registrars, as registrars for Marakand, inorder to claim their new Oxus shares. Marakand is a mining exploration and development company which has focused onbase metals and silver. Its principal asset is its interest in the Khandizapolymetallic deposit in South East Uzbekistan, and the surrounding explorationareas. In October 2004, Marakand completed and submitted a feasibility study tothe Uzbek Government and in 2005 completed an Environmental and Social ImpactAssessment on the project. Marakand has evaluated the surrounding South EastUzbekistan region and identified a number of priority exploration targets.Marakand, together with Oxus, owns the rights to the results of this work,including the feasibility study. In August 2006 the Uzbek Government transferred the Khandiza mineral reservesfrom Goscomgeology to the state owned Almalyk Mining and Metallurgical Combinat,resulting in the proposed joint venture with Goscomgeology falling away. As aresult Marakand's involvement in the future development of the Khandiza depositcontinues to be uncertain. The Group will continue to push for the recognition of its rights with regard tothe Khandiza deposit, which might include the payment of compensation underUzbek law in the event that the Group does not become involved in the futuredevelopment of the project. Nevertheless, the directors have considered itprudent under the circumstances to make a full provision against the carryingvalue of the Khandiza asset, and accordingly $28.46 million has been provided inthe interim accounts to 31 December 2007. Arbitration against the Kyrgyz Republic During the period the Company continued its claim in arbitration against theKyrgyz Republic under the United Kingdom - Kyrgyz Republic Bilateral InvestmentTreaty. Oxus is seeking to recover its loss of profits arising from thecancellation of the mining licence for the Jerooy gold project, less the amountit received in mitigation from the sale of its Kyrgyz assets to KazakhGold GroupLimited in June 2007. The Kyrgyz Republic challenged the jurisdiction of thearbitral tribunal at a hearing of the tribunal in October 2007, which matter hasnow been determined by the arbitral tribunal in favour of Oxus. The Companycontinues to own all rights arising from this arbitration. The Company hasagreed to withdraw the claim if the deferred cash consideration of up to $80million is received from KazakhGold in the event that KazakhGold or a nomineeacquires, or acquires the benefit of, a licence to enable it to continue withthe development of the Jerooy gold project in the Kyrgyz Republic. During theperiod the Company incurred expenses of $1.64 million in respect of thearbitration. Board of Directors On 7 January 2008 Bill Trew stepped down as Chief Executive Officer and resignedas a director of the Company in order to pursue other business interests.Richard Wilkins, a founder director of the Company, was appointed CEO in hisplace. In addition, Miradil Djalalov, the managing director and owner of Zeromax, theCompany's strategic alliance partner in Uzbekistan, joined the board as anon-executive director, and John Donald joined the board as an executivedirector and Chief Operating Officer. John Donald, a mining engineer, waspreviously COO and a director of the Company until his retirement in September2004. Also with effect from 7 January 2008, the directors of the Company appointedGraham Hill, General Director of AGF, as an alternate director. On 3 March 2008, Douglas Sutherland, non-executive director and Acting Chairmanof the Company, assumed the role of non-executive Chairman. Dividend in Specie In June 2007 the Company received 3,541,666 new ordinary shares in KazakhGold asconsideration for the sale of the Jerooy project and certain other assets toKazakhGold Group Limited. These shares were converted into KazakhGold GDRs whichtrade on the London Stock Exchange on the basis of one share being equal to oneGDR. Following an extraordinary general meeting of the Company on 20 June 2007 theshareholders approved a dividend in specie equivalent to one GDR for every 110Oxus shares held on the record date, 22 June 2007. On 2 July 2007 a total of3,321,344 GDRs were allocated to the dividend in specie, representing a value of$65.69 million, or 17.98 cents per share. The Company continues to hold GDRs on behalf of those few shareholders who havestill not claimed their dividend. These GDRs, which can only be heldelectronically, will continue to be held by the Company until the relevantshareholder provides Capita Registrars, the Company's registrars, with theappropriate electronic CREST account details. Accounting Reference Period In order to bring its financial statements in line with those of AGF, the Grouphas decided to extend its current accounting reference period by six months. Asecond set of Interim Results will be published for the 6 months ending 30 June2008 and audited financial statements will be prepared for the 18 month periodending 31 December 2008. Rule 9 of the City's Code on Takeovers and Mergers There has recently been press speculation regarding Aim listed companies thatappear not to be subject to the City's Code on Takeovers and Mergers, with theresult that a mandatory bid would not be triggered when a shareholder reaches a30% stake in the company's shares. Without the check on stake building providedby Rule 9, minority shareholders can miss out on the premium they would normallyexpect to receive where another shareholder gains control of the company Oxus considers itself to be subject to the City's Code, and as such, subject toRule 9 although the Panel is yet to formally determine whether the Code appliesto Oxus. Outlook The outlook for AGF is now extremely promising. AGF is now focusing on the development of the underground sulphides project andthe expansion of its heap leach operations for future oxide production. By 2010AGF is expected to be producing in excess of 300,000 ounces of gold annually ata significantly lower average total cash cost than at present. Initial discussions with several major lending institutions have beenencouraging and the Company is confident that it will be able to secure therelevant capital to develop the underground sulphides project on time and withminimum dilution to existing shareholders. The exploration potential at AGFremains excellent and with formal approval to proceed with the undergroundsulphides project now having been received, appropriate exploration programmesare being put in place to ensure that the reserve base is maintained as miningactivity increases. The 2006 State tax audit is now a matter for the past and AGF's tax base is nowfully aligned with the Uzbek Tax Code. The CIP plant is expected to operateprofitably for its remaining 15 months as an oxide plant, and although AGF wasunable to report an overall profit for the period due to the inability to refinesilver dore at Almalyk on time, resulting in a deferral of cash flow and profitsinto 2008, this issue is also currently being addressed. The increase in Zeromax's shareholding in the Company and the recent appointmentof Miradil Djalalov to the board illustrates the strength of the strategicalliance between the two companies which it is believed will further enhance thedevelopment of AGF and lead to other potential opportunities within Uzbekistanfor the Company. Oxus has also tidied up a number of outstanding litigation issues therebyfreeing up corporate resources to focus more fully on the expansion of miningoperations. With production expected to increase significantly over the nextcouple of years, and operating costs expected to reduce substantially, theCompany can genuinely look forward with optimism. For further information please visit www.oxusgold.co.uk or contact: OXUS GOLD PLC Jonathan Kipps - Finance Director Tel: +44 (0) 207 907 2000Richard Wilkins - Chief Executive Officer Tel: +44 (0) 207 907 2000 CANACCORD ADAMS LIMITED Mike Jones Tel +44 (0) 207 050 6500Robin Birchall Tel: +44 (0) 207 050 6500 BANKSIDE CONSULTANTS Keith Irons Tel: +44 (0) 207 367 8888Oliver Winters Tel: +44 (0) 207 367 8888 COMPETENT PERSONS' REVIEW The Ore Reserves and Mineral Resources have been compiled by the Company'sgeological staff (which includes, in a consulting capacity, Competent Persons; Bill Charter BSc. CGeol. FGS, CEng, MIMM and Gordon Wylie BSc (Hons) Geology,MAusIMM, FGSSA) and were reviewed by Wardell Armstrong International Ltd bytheir Competent Person Dr Phil Newall, BSc.,ARSM, Phd, CEng. FIMM.. Appendix 5gives more background on the Competent Persons. A summary of the Group's financial results follow: Consolidated Income Statement Six months Six months Year ended ended 31 ended 31 30 June December December 2007 2006 2007 Note US$000 US$000 US$000 Unaudited Unaudited Audited Revenue 4 1,065 2,144 2,387 Direct expensesExploration and evaluation expenditure - - - --------- --------- --------- Gross profit 1,065 2,144 2,387 Administrative expenses (3,823) (3,207) (6,985)Share-based payments (102) 160 (218)*Foreign exchange loss - (222) (223) Exceptional costs and revenues:Impairrment charge in respect of 5 (28,456) - -Khandiza project Impairment charge in respect of 13 (1,442) - -investment in Marakand Minerals lessminority interests acquired Gain on sale of Norox Mining Company - - 8,034Limited and other assets Gain on sale of investments 347 313 92Revaluation gain on available-for-sale 1,087 - -investmentsJerooy arbitration costs 14 (1,641) - (2,792)Costs relating to the settlement of the 6 (8,462) - -Eurogold disputeOther legal costs (334) - (963)Impairment losses recognised on - - (8,602)investments held --------- --------- ---------Operating loss 4 (41,761) (3,162) (16,617) --------- --------- --------- Share of loss from joint ventures 7 (1,970) (1,220) (3,213) --------- --------- --------- Financial income 1,277 926 2,457Financial expense (557) (758) (1,538) --------- --------- ---------Net financial income 720 168 919 --------- --------- --------- Loss before tax (43,011) (4,214) (18,911) Taxation (2) (2) (55) --------- --------- ---------(Loss)/Profit for the period (43,013) (4,216) (18,966) --------- --------- --------- Attributable to:Equity shareholders of the parent (43,013) (4,232) (18,908)Minority interests - 16 (58) --------- --------- --------- (43,013) (4,216) (18,966) --------- --------- --------- Basic loss per share - US cents 8 (11.77) (1.41) (6.25) --------- --------- --------- All amounts relate to continuing operations. Consolidated Balance Sheet 31 December 31 December 30 June 2007 2006 2007 Note US$000 US$000 US$000 Unaudited Unaudited AuditedNon-current assets Restated Intangible assets 13 - 3,068 3,068Property, plant and equipment 509 1,629 608Exploration and mining development 9 11,989 99,066 40,445propertiesInvestment in joint venture 10 33,873 44,990 42,527Available-for-sale investments at - 3,348 5,171market valueAvailable-for-sale investments at 895 895 895cost --------- --------- --------- 47,266 152,996 92,714 --------- --------- ---------Current assetsTrade and other receivables 11 21,502 17,689 14,772Available-for-sale investments 5,023 - 65,696Derivative financial instruments 2,228 - 2,228Cash and cash equivalents 2,359 3,108 10,881 --------- --------- --------- 31,112 20,797 93,577 --------- --------- --------- Total assets 78,378 173,793 186,291 --------- --------- ---------Equity and liabilities Equity attributable to ordinaryshareholdersShare capital 6,208 4,942 6,104Share premium 107,645 80,857 105,341Capital reserve 22,901 22,449 22,799Merger reserve 34,929 34,929 34,929Revaluation reserve - (3,907) -Retained earnings (127,291) (3,890) (84,278) --------- --------- ---------Total equity attributable to ordinary 44,392 135,380 84,895shareholdersMinority interests - 4,009 4,431 --------- --------- ---------Total equity 44,392 139,389 89,326 --------- --------- --------- Non-current liabilitiesInterest-bearing loans and borrowings 6,250 11,250 8,750AGF Phase 2 project development fund - 1,553 -Obligations under finance leases - 602 - --------- --------- --------- 6,250 13,405 8,750 --------- --------- --------- Current liabilitiesInterest-bearing loans and borrowings 5,000 5,000 5,000AGF Phase 2 Project Development Fund 10,866 9,314 10,866Trade and other payables 11,870 6,685 6,653Proposed dividend - - 65,696 --------- --------- --------- 27,736 20,999 88,215 --------- --------- --------- Total equity and liabilities 78,378 173,793 186,291 --------- --------- --------- Consolidated Cash Flow Statement Six months Six months Year ended ended 31 ended 31 30 June December December 2007 2006 2007 Note US$000 US$000 US$000 Unaudited Unaudited Audited RestatedCash flows from operating activitiesLoss before tax for the year (43,013) (4,214) (18,911) Adjustments for:Depreciation, depletion and 99 103 2,405amortisationImpairment charges 28,456 - -Interest paid 557 758 1,538Equity-settled share-based payment 102 (160) 185expensesIncome attributable to joint venture 1,970 1,220 3,213Non-cash movements in minority - - 469interestsSalaries and bonuses converted to - 32 50sharesRevaluation gain on investments (1,087) (313) -Other reserve movements - (16) (2,620) --------- --------- ---------Cash flows from operating activities (12,916) (2,590) (13,671)before changes in working capital andprovisions Increase in amounts due from joint (1,722) (1,398) (2,809)venture(Increase)/decrease in trade and other 1,677 (5,254) (1,790)receivablesIncrease in trade and other payables 6,355 420 3 --------- --------- ---------Cash absorbed by operating activities (6,606) (8,822) (18,267) --------- --------- --------- Cash flows from investing activitiesInvestment in exploration and mining - (4,928) (8,864)development propertiesNet return of investment from joint - 28 1,335ventureAcquisition of minority holding in 12 (456) - -Marakand Minerals LimitedSale of investments 1,582 285 285 --------- --------- ---------Net cash from investing activities 1,126 (4,615) (7,244) --------- --------- --------- Cash flows from financing activitiesProceeds from the issue of share 15 3,586 29,213capitalRepayment of bank borrowings (2,500) - (5,000)Interest paid (557) (758) (1,538) --------- --------- ---------Net cash from financing activities (3,042) 2,828 22,675 --------- --------- --------- Net decrease in cash and cash (8,522) (10,609) (2,836)equivalentsCash and cash equivalents at 1 July 10,881 13,717 13,717 --------- --------- ---------Cash and cash equivalents at 31 2,359 3,108 10,881December --------- --------- --------- Statement of Changes in shareholders equity-GroupFor the period ended 31 December 2007 Total Share Capital Revaluation Merger Retained Shareholders Minority Total Capital Premium Reserve Reserve Reserve Earnings Equity Interests Equity US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited -------- -------- -------- -------- -------- --------- --------- -------- -------- Balance at 1 July 2007 6,104 105,341 22,799 - 34,929 (84,278) 84,895 4,431 89,326Losses after tax for the period - - - - - (43,013) (43,013) - (43,013) -------- -------- -------- -------- -------- --------- --------- -------- --------Total recognised in income and - - - - - (43,013) (43,013) - (43,013)expense for the periodShares issued in the period 104 2,304 - - - - 2,408 - 2,408Equity-settled share-based - - 102 - - - 102 - 102paymentsArising from acquisition of - - - - - - - 277 277Marakand MineralsMinority interests acquired - - - - - - - (4,708) (4,708) -------- -------- -------- -------- -------- --------- --------- -------- ---------Balance at 31 December 2007 6,208 107,645 22,901 - 34,929 (127,291) 44,392 - 44,392 -------- -------- -------- -------- -------- --------- --------- -------- --------- Statement of Changes in shareholders equity - GroupFor the period ended 31 December 2006 Total Capital Share Capital Revaluation Merger Retained Shareholders Minority Total Premium Reserve Reserve Reserve Earnings Equity Interests Equity US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Restated Restated Restated Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited -------- -------- -------- -------- -------- --------- --------- -------- -------- Balance at 1 July 2006 4,774 77,407 22,614 (3,907) 34,929 326 136,143 4,020 140,163Losses after tax for the period - - - - - (4,216) (4,216) (16) (4,232) -------- -------- -------- -------- -------- --------- --------- -------- --------Total recognised in income and - - - (3,907) - (4,216) (4,216) (16) (4,232)expense for the periodShares issued in the period 167 3,419 - - - - 3,586 - 3,586Equity-settled share-based - - (165) - - - (165) 5 (160)paymentsConversion of Directors 1 31 - - - - 32 - 32remuneration to sharesTransfer to income statement - - - - - - - - - -------- -------- -------- -------- -------- --------- --------- -------- --------Balance at 31 December 2006 4,942 80,857 22,449 (3,907) 34,929 (3,890) 135,380 4,009 139,389 -------- -------- -------- -------- -------- --------- --------- -------- -------- Statement of Changes in shareholders equity-Group For the year ended 30 June 2007 Total Capital Share Capital Revaluation Merger Retained Shareholders Minority Total Premium Reserve Reserve Reserve Earnings Equity Interests Equity US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 Restated Restated Restated Audited Audited Audited Audited Audited Audited Audited Audited Audited Balance at 1 July 2005 4,581 65,540 19,660 (1,117) 34,929 (857) 122,736 12,858 135,594Profit after tax for the year - - - - - 2,398 2,398 (288) 2,110On consolidation of minority - - - - - (1,215) (1,215) - (1,215)interests -------- -------- -------- -------- -------- --------- --------- -------- -------Total recognised in income and - - - - - 1,183 1,183 (288) 895expense for the yearShares issued to acquire 167 11,105 (9,595) - - - 1,677 - 1,677Marakand sharesGoodwill arising on purchase of - - 3,068 - - - 3,068 - 3,068Marakand sharesArising on revaluation of - - 8,117 - - - 8,117 - 8,117exploration rights in MarakandArising on revaluation of - - - (2,790) - - (2,790) - (2,790)investmentsArising on consolidation of - - - - - - - (8,579) (8,579)minority interestsWarrants and options exercised 15 228 - - - - 243 - 243Equity-settled share-based 10 493 1,364 - - - 1,867 29 1,896paymentsConversion of Directors 1 41 - - - - 42 - 42remuneration to shares -------- -------- -------- -------- -------- --------- --------- -------- -------Balance at 30 June 2006 4,774 77,407 22,614 (3,907) 34,929 326 136,143 4,020 140,163(restated) -------- -------- -------- -------- -------- --------- --------- -------- ------- Balance at 1 July 2006 4,774 77,407 22,614 (3,907) 34,929 326 136,143 4,020 140,163Losses after tax for the year - - - - - (18,908) (18,908) (58)(18,966) -------- -------- -------- -------- -------- --------- --------- -------- -------Total recognised in income and - - - - - (18,908) (18,908) (58 (18,966)expense for the yearShares issued in the year 1,125 23,066 - - - - 24,191 439 24,630Warrants and options exercised 5 58 - - - - 63 30 93Equity-settled share-based 198 4,760 185 - - - 5,143 - 5,143paymentsConversion of Directors 2 50 - - - - 52 - 52remuneration to sharesTransfer to income statement - - - 3,907 - - 3,907 - 3,907Equity dividends - - - - - (65,696) (65,696) (65,696) -------- -------- -------- -------- -------- --------- --------- -------- -------Balance at 30 June 2007 6,104 105,341 22,799 - 34,929 (84,278) 84,895 4,431 89,326 -------- -------- -------- -------- -------- --------- --------- -------- ------- Share capital is the amount subscribed for shares at nominal value. Share premium represents the excess of the amount subscribed for share capitalover the nominal value of these shares net of share issue expenses. Capital reserve represents the credit to equity in respect of share-basedpayments together with reserves arising from the acquisition of minorityinterests and historic adjustments arising from corporate reconstructions priorto the adoption of international accounting standards. The capital reserve wasrestated in 2006. The revaluation reserve comprises amounts held in equity in respect of therevaluation or devaluation of available-for-sale investments. The merger reserve comprises gains arising from a Group corporate reconstructionin 2001. Retained earnings represent the cumulative (loss)/profit of the Groupattributable to equity shareholders. Notes forming part of the financial statements 1 Corporate information Oxus Gold Plc ("the Company") is a company incorporated in England. 2 Basis of preparation These interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 31 December 2007 have been prepared on a basis consistent with the accounting policies set out in the Group's consolidated annual financial statements for the year ended 30 June 2007. They have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 30 June 2007. The auditors' report on those consolidated financial statements was unqualified and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report. As permitted, the Company has chosen not to adopt IAS34 'Interim Financial Reporting'. The comparative figures presented are for the six months ended 31 December 2006 and the full year ended 30 June 2007. The Group's consolidated annual financial statements for the year ended 30 June 2007 were prepared using the recognition and measurement principles of International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union and also in accordance with the Companies Act 1985. 3 Significant accounting policies Basis of consolidation Where the Company has the power, either directly or indirectly, to govern thefinancial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. 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'. Goodwill arising from business combinations is assessed for impairment. This policy was retroactively applied to the 2006 financial statements whichhave been restated within the financial statements for the period to 31 December 2006 and the year to 30 June 2006. 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 purchaseof 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. Joint ventures Jointly controlled entities are included in the financial statements using equity accounting. Any premium paid for an interest in a jointly controlled entity above the fair value of the group's share of identifiable assets, liabilities and contingent liabilities is treated as goodwill 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. Revenue The Group enters into contracts for the provision of management services to associated companies, joint ventures and third parties. Revenue is recognised as billed according to the terms of the individual agreements. All current agreements are for monthly billings without retention. There are no 'stage of completion' arrangements within these agreements. Foreign currency In accordance with IAS21, transactions entered into by group entities in a currency other than the currency of the primary economic environment in which it operates (the functional currency) are recorded at the rates ruling when thetransactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differencesarising on the retranslation of unsettled monetary assets and liabilities are similarly recognised immediately in the income statement. The presentational currency for the Group consolidated financial statements is the US dollar. Thisis also the functional and presentational currency of the Company and is considered by the Board also to be appropriate for the purposes of preparing the Group financial statements. On consolidation, the results of overseas operations which are not reporting inUS dollars are translated into US dollars, the presentational currency of the Group, at rates approximating to those ruling when the transaction took place. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Goodwill and fair value adjustments arising on the acquisition of an overseas entity are treated as assets and liabilities of the overseas entity and translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at theopening rate and the results of overseas operations at the actual rate are recognised directly in equity. Financial assets - available for sale investments Investments held for long-term benefit, which are not subsidiaries or joint ventures, are included in non-current assets at market value, where an active market exists, or at cost less any provision for impairment where there is no active market in the particular financial assets held and the current value is difficult to determine. Exploration and mining development properties Where the Group has incurred expenditure in respect of acquisition and development of exploration and mining development properties that have not reached the stage of commercial production the expenditure incurred is treated as a tangible asset with the cost being deferred until commercial production commences. Costs incurred prior to the first time adoption of international accounting standards include amounts carried at a valuation which has been adopted as a 'deemed value' and treated as historic cost. Once a decision is made to proceed with the development of a mining project,further expenditure on exploration and mining development properties, other than that on buildings, machinery and equipment which are capitalised under 'property, plant and equipment', is capitalised under non-current assets as mining properties, together with any amount transferred from exploration and mining development properties. Mining properties are amortised over the estimated life of the reserves on a 'unit of production' basis. Where the projects are determined not to be commercially viable the related costs are written off to the income statement. Impairment of non-financial assets The carrying amount of the non-current assets of the Group, including 'goodwill', 'exploration and mining development properties' and 'mining properties', is compared to the recoverable amount of the assets whenever events or changes in circumstances indicate that the net book value may not be recoverable. The recoverable amount is the higher of value in use and the fair value less cost to sell. In assessing the value in use, the expected future cash flows from the assets is determined by applying a pre-tax discount rate tothe anticipated pre-tax future cash flows. Impairment is recognised in the income statement to the extent that the carrying amount exceeds the assets' recoverable amount. The revised carrying amounts are amortised in line with Group accounting policies. A previously recognised impairment loss is reversedif the recoverable amount increases as a result of a reversal of the conditionsthat originally resulted in the impairment. This reversal is recognised in the income statement and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years. Assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units) for purposes of assessing impairment. The estimates of future discounted cash flows are subjectto risks and uncertainties including the future gold price. It is therefore reasonably possible that changes could occur which may affect the recoverability of assets. Interest-bearing loans and borrowings Bank borrowings are initially recognised at the amount advanced less any transaction costs directly attributable to the borrowings. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. Interest expense in this context includes initial transaction costs and premiums payable on redemption as well as any interest or coupon payable while the liability is outstanding. Financing costs Financing costs comprise interest payable on bank loans and finance leases. Interest payable is recognised in profit or loss as it accrues, using the effective interest method. 4 Segmental analysis The Group operated in the period in one segment, the mining and production of gold and other precious metals, and in one principal geographic area: Uzbekistan. No significant operating activities took place in Kyrgyzstan, Romania or Turkey in the period. 5 Investment in Khandiza The Group has made a full provision against the carrying value of its investment in the Khandiza project as, with the passage of time, it has become increasingly uncertain whether the Group will be invited to participate in the future development of this asset. 6 Eurogold On 19 February 2008 the Company reached agreement with Eurogold Limited ("Eurogold") and its wholly owned subsidiary Eurogold Holdings ("Bermuda") Limited ("EHBL") to settle the proceedings commenced in 2006 by Eurogold and EHBL. The proceedings were commenced following Oxus' decision to terminate its purchase agreement with Eurogold for its Ukrainian gold assets. As previously disclosed, Oxus believed, at termination, that a material adverse change had occurred to the business and assets of EHBL from what it understood the position to be when it entered into the agreement. Under the terms of the settlement, Oxus has agreed to pay Eurogold A$7.95m of which approximately A$6.78m will be cash and the balance of approximately A$1.17m will be met through the issue of Oxus shares, delivered to Eurogold on or before 21 May 2008. 31 DecemberThe charge to the income statement is comprised of: 2007 US$000 Legal settlement 7,325Legal fees and associate costs 1,137 ----------------- 8,462 ----------------- A mark-to-market gain on the Eurogold shares of $112,000 has been recognised for the period and is included within "revaluation gain on available-for-sale investments" in the income statement. A further gain of $581,000 was made on the actual sale of these shares after 31 December 2007. This gain will be recognised in the income statement for the period 1 January 2008 to 30 June 2008. 7 Share of loss from joint ventures The Group's joint venture operations are conducted through Amantaytau Goldfields AO ("AGF"). The information disclosed below shows the amounts attributable to the Group and has been extracted from the financial statements for AGF. Six months Six months Year ended ended 31 ended 31 30 June December December 2007 2006 2007 US$000 US$000 US$000 Revenue 12,017 7,665 18,885 --------- --------- --------- Loss before tax (1,970) (1,220) (3,213)Taxation - - - --------- --------- ---------Loss after tax (1,970) (1,220) (3,213)Dividend paid - - - --------- --------- ---------Net earnings retained (1,970) (1,220) (3,213) --------- --------- --------- 8 Loss per share The calculation of the basic loss per share for the six month period to 31 December 2007 is based upon the net loss after tax and minority interests attributable to ordinary shareholders of US$43,013,000 (31 December 2006 a loss of US$4,232,000) and a weighted average number of shares in issue for the period of 365,401,091 (31 December 2006: 299,535,057). The calculation of the basic loss per share for the year to 30 June 2007 is based upon the net loss after tax and minority interests attributable to ordinary shareholders of US$18,908,000 and a weighted average number of shares in issue for the year of 302,578,528. Six months Six months Year ended 30 ended 31 ended 31 June December December 2007 2006 2007 US$000 US$000 US$000 Basic loss per share (11.77) (1.41) (6.25) --------- --------- --------- Loss attributable to equity shareholders ($43,013,000) ($4,232,000) ($18,908,000) --------- --------- --------- Weighted average number of shares in 365,401,091 299,535,057 302,578,528issue --------- --------- --------- No diluted earnings per share is shown as a loss has been made in each period and the effect is anti-dilutive. 9 Exploration and mining development properties Kyrgyzstan Uzbekistan Uzbekistan Uzbekistan Total Jerooy Amantaytau Aristantau Khandiza and Balpantau Group Group Group Group Group US$000 US$000 US$000 US$000 US$000 Cost At 1 July 2006 50,198 11,302 687 28,456 90,643 Additions 8,423 - - - 8,423 Disposals - - - - - -------- --------- -------- -------- -------- At 31 December 2006 58,621 11,302 687 28,456 99,066 -------- --------- -------- -------- -------- At 1 January 2007 58,621 11,302 687 28,456 99,066 Additions 441 - - - 441 Disposals (59,062) - - - (59,062) -------- --------- -------- -------- -------- At 30 June 2007 - 11,302 687 28,456 40,445 -------- --------- -------- -------- -------- At 1 July 2007 - 11,302 687 28,456 40,445 Additions - - - - - Disposals - - - - - Impairment - - - (28,456) (28,456) -------- --------- -------- -------- -------- At 31 December 2007 - 11,302 687 - 11,989 -------- --------- -------- -------- -------- 10 Investment in joint venture 31 December 31 December 31 December 2007 2007 2007 US$000 US$000 US$000 Note Investment Loans Total At 1 July 2006 23,213 23,862 47,075Groups share of profits/(losses) 7 (1,220) - (1,220)Dividends received - - -Amounts advanced - 865 865Amounts repaid - (1,730) (1,730) --------- --------- ---------At 31 December 2006 21,993 22,997 44,990Groups share of profits/(losses) 7 (1,993) - (1,993)Dividends received - - -Amounts advanced - 5,465 5,465Amounts repaid - (5,935) (5,935) --------- --------- ---------At 30 June 2007 20,000 22,527 42,527Groups share of losses 7 (1,970) - (1,970)Dividends received - - -Transferred to trade and other 11 - (7,000) (7,000)receivablesAmounts advanced - 3,816 3,816Amounts repaid - (3,500) (3,500) --------- --------- ---------At 31 December 2007 18,030 15,843 33,873 --------- --------- --------- 11 Trade and other receivables 31 December 31 December 30 June 2007 2006 2007 US$000 US$000 US$000 Trade debtors 536 6,538 674Amounts due from joint venture 20,638 10,517 12,232Other debtors 327 554 1,857Prepayments 1 80 9 --------- --------- --------- 21,502 17,689 14,772 --------- --------- --------- 12 Acquisition Marakand Mineral Limited On 17 October 2007 the Company announced that it had made an offer to acquire the shares of the minority shareholders of Marakand Minerals Limited ("MML"), which was listed on the London Alternative Investment Market, representing 15.96% of the ordinary share capital of MML that it did not currently own. This offer was accepted. The terms of the offer were 0.135 Oxus Gold Plc ordinary shares to be exchanged for every 1 MML share held. On 17 October 2007 the closing price of Oxus Gold Plc ordinary shares was £0.5175 which valued the offer at £0.074 for each MML share. The market price of the MML shares on 18 October 2007 was £0.0588 per share. The fair values on 17 October 2007 of the proportion of identifiable net assets and liabilities acquired were as follows: 31 December 31 December 31 December 2007 2007 2007 US$000 US$000 US$000 Book Fair Value Fair Value Adjustment Value Feasibility Studies 1,503 - 1,503Trade and other receivables 1 - 1Trade and other payables (49) - (49)Cash and cash equivalents 1 - 1Acquisition on group minority interest (277) - (277) --------- --------- ---------Net identifiable assets and liabilities 1,179 - 1,179 --------- --------- --------- Consideration shares 2,349Estimated costs and fees 456 ---------Total consideration 2,805 --------- Goodwill (see note 13) 1,626 --------- 13 Impairment charge - Marakand Minerals Limited 31 December 2007 US$000 Goodwill at 30 June 2007 3,068 Acquired in period (note 12) 1,626 Minority interests acquired (4,708) Feasibility study 1,503 Other assets and liabilities (47) --------- 1,442 --------- 14 Contingent assets and liabilities Under the terms of the sale and purchase agreement dated 11 May 2007 KazakhGoldGroup Limited will pay additional consideration of up to $80 million conditionalupon KazakhGold Group Limited or a nominee acquiring a licence to mine oracquiring a company or entity that has the benefit of a licence to mine theJerooy deposit and commences development or production at the project. On theachievement of this benefit and upon receipt of the additional consideration theGroup will withdraw its arbitration claim against the Kyrgyz Republic in respectof the Jerooy deposit. Should the project not proceed the Group has committed to reimburse MAED Limited$1 million in respect of plant design work undertaken at the Jerooy site inKyrgyzstan if this plant is dismantled and moved elsewhere. No amounts have been recognised in these financial statements for either ofthese contingencies. Jerooy arbitration claim Oxus continues to pursue its claim against the Kyrgyz Republic under the UnitedKingdom - Kyrgyz Republic Bilateral Investment Treaty in arbitration. Oxus isseeking to recover its loss of profits less the amount it received in mitigationfrom the KazakhGold transaction. The Arbitral Tribunal has issued an award to the Group confirming itsjurisdiction in respect of this claim. The next stage in proceedings will be thefiling of a defence by the Kyrgyz Republic against the Group's claim (unless theKyrgyz Republic decides to challenge the jurisdiction award). The Group has not recognised any benefit potentially receivable in respect ofthis arbitration. The arbitration expenses in the six month period to 31December 2007 amounted to $1,641,000. APPENDIX 1 Please follow the link below to view; http://www.rns-pdf.londonstockexchange.com/rns/8558q_-2008-3-26.pdf OXUS GOLD PLC PRECIOUS METAL RESOURCES AS OF 1st JULY 2007 APPENDIX 2 Please follow the link below to view; http://www.rns-pdf.londonstockexchange.com/rns/8558q_2-2008-3-26.pdf OXUS GOLD PLC PRECIOUS METAL RESERVES AS OF 1st JULY 2007 APPENDIX 3 DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES EXTRACTED FROM THE JORCCODE: (December 2004) (www.jorc.com) Exploration Results include data and information generated by explorationprogrammes that may be of use to investors. The Exploration Results may or maynot be part of a formal declaration of Mineral Resources or Ore Reserves. A 'Mineral Resource' is a concentration or occurrence of material of intrinsiceconomic interest in or on the Earth's crust in such form, quality and quantitythat there are reasonable prospects for eventual economic extraction. Thelocation, quantity, grade, geological characteristics and continuity of aMineral Resource are known, estimated or interpreted from specific geologicalevidence and knowledge. Mineral Resources are sub-divided, in order ofincreasing geological confidence, into Inferred, Indicated and Measuredcategories. An 'Inferred Mineral Resource' is that part of a Mineral Resource for whichtonnage, grade and mineral content can be estimated with a low level ofconfidence. It is inferred from geological evidence and assumed but not verifiedgeological and/or grade continuity. It is based on information gathered throughappropriate techniques from locations such as outcrops, trenches, pits, workingsand drill holes which may be limited or of uncertain quality and reliability. An 'Indicated Mineral Resource' is that part of a Mineral Resource for whichtonnage, densities, shape, physical characteristics, grade and mineral contentcan be estimated with a reasonable level of confidence. It is based onexploration, sampling and testing information gathered through appropriatetechniques from locations such as outcrops, trenches, pits, workings and drillholes. The locations are too widely or inappropriately spaced to confirmgeological and/or grade continuity but are spaced closely enough for continuityto be assumed. A 'Measured Mineral Resource' is that part of a Mineral Resource for whichtonnage, densities, shape, physical characteristics, grade and mineral contentcan be estimated with a high level of confidence. It is based on detailed andreliable exploration, sampling and testing information gathered throughappropriate techniques from locations such as outcrops, trenches, pits, workingsand drill holes. The locations are spaced closely enough to confirm geologicaland/or grade continuity. An 'Ore Reserve' is the economically mineable part of a Measured and/orIndicated Mineral Resource. It includes diluting materials and allowances forlosses which may occur when the material is mined. Appropriate assessments andstudies have been carried out, and include consideration of and modification byrealistically assumed mining, metallurgical, economic, marketing, legal,environmental, social and governmental factors. These assessments demonstrate atthe time of reporting that extraction could reasonably be justified. OreReserves are sub-divided in order of increasing confidence into Probable OreReserves and Proved Ore Reserves. A 'Probable Ore Reserve' is the economically mineable part of an Indicated, andin some circumstances Measured Mineral Resource. It includes diluting materialsand allowances for losses which may occur when the material is mined.Appropriate assessments and studies have been carried out, and includeconsideration of and modification by realistically assumed mining,metallurgical, economic, marketing, legal, environmental, social andgovernmental factors. These assessments demonstrate at the time of reportingthat extraction could reasonably be justified. A 'Proved Ore Reserve' is the economically mineable part of a Measured MineralResource. It includes diluting materials and allowances for losses which mayoccur when the material is mined. Appropriate assessments and studies have beencarried out, and include consideration of and modification by realisticallyassumed mining, metallurgical, economic, APPENDIX 4 SOVIET/UZBEK (RUSSIAN) CLASSIFICATION OF RESOURCES & RESERVES The following description of the Russian classification of resources andreserves is from the report "Oxide resource potential of theAmantaytau-Vysokovoltnoye Orefield", prepared by P.S. Newall (BSc, PhD, CEng,MIMM), dated 16 October 2001, Ref: 61-0200. This report was prepared by CSMAConsultants Ltd, which is now Wardell Armstrong International. In addition, an article on Russian mineral reporting by Stephen Henley reportedin Mining Journal, London, August 20, 2004, provides a useful summary Stephen Henley is principal of RESOURCES COMPUTING INTERNATIONAL LTD S. Henley PhD, Ceng, FIMMM, FGSResources Computing International LtdMatlock, Derbyshire, UKStephen.henley@resourcescomputing.com Soviet System of Resource/Reserve Classification The former Soviet system for classification of reserves and resources, developedin 1960 and revised in 1981, is still used today in the Commonwealth ofIndependent States. Essentially, it divides mineral concentrations into sevencategories of three major groups, based on the level of exploration performed:explored reserves (A, B, C1), evaluated reserves (C2) and prognostic resources(P1, P2, P3). The following description of the resource and reserveclassification is derived from a paper by S.A.Diatchkov (1994) and has beenmodified by WGM to relate to currently acceptable international standards. Theclassifications of the reserves described by Diatchkov are those that weredeveloped by the former USSR authorities. In principle, they follow a successionof approximations that are applied to various stages of exploration. This meansthat reserves are assigned to classes based on the degree of reliability of dataand indicate their comparative importance for the national economy. Reserves are classified into five main categories and designated by the symbolsA, B, C1, C2 and P1. Capital letters are used to designate ores that areeconomic. Sometimes, the same group of letters are written in lower case (i.e.a, b, c) when the mineralisation is considered sub-economic. Alternatively, asimple classification into 'balansovye' (commercially exploitable reserves) and'zabalansovye' (uneconomic resources) is used. Resources and Reserves include the first four categories, A, B, C1 and C2. Thecategories C1 and C2 are relevant to the AGF Licence Area and are defined here. Category C1: The reserves in place have been estimated by a sparse grid of trenches,drillholes or underground workings. This category also includes reservesadjoining the boundaries of A and B reserves as well as reserves of very complexdeposits in which the distribution cannot be determined even by a very densesample grid. The quality and properties of the deposit are known tentatively byanalyses and by analogy with known deposits of the same type. The generalconditions for exploitation are partially known. Category C2: The reserves have been extrapolated from limited data, probably only a singlehole. This category includes reserves that are adjoining A, B, and C1 reservesin the same deposit. Classification of CIS Mineral Deposits Deposits of solid minerals in CIS are classified into five major groups, basedlargely on the character and size of the deposit. The ability to define thecategories of reserves depends on the deposit group in which the deposit isclassified. The deposits of the AGF licence area have been classified by GKZ(State Committee for Resources) as being confined to Group 3. APPENDIX 5 COMPETENT PERSONS The resources and reserves stated in this report have been compiled or Approvedby the following Competent Persons: P S Newall, BSc, ARSM, PhD, CEng, FIMMWardell Armstrong International LtdWheal Jane, Baldhu, Truro, Cornwall, TR3 6EHTel: +44 1872 560738 Fax: +44 1872 561079Web: //www.wardell-armstrong.com P Newall, is Senior Consulting Geologist and Director with WAI and has practisedhis profession as a mine and exploration geologist for over twenty years forboth base and precious metals. Gordon Wylie BSc (Hons) Geology, MAusIMM, FGSSA Gordon Wylie is a consultant and non-executive Director of Oxus Gold plc. Gordonhas over 31 years experience in the mining and exploration industry. From 1998to 2005 Gordon was in charge of AngloGold and latterly, AngloGold Ashanti'sglobal exploration programme and was appointed Executive Officer in early 2004 William J Charter, BSc, CGeol, FGS, CEng, MIMM Bill Charter has over 29 years experience in mining and exploration industry.Having gained experience with Anglo American Corporation (in Fiji and SouthAfrica), then worked in Central Asia and other locations worldwide. Started workwith the Oxus Group in 1996. In November 2003 was appointed as TechnicalDirector of Marakand Minerals Limited, also acting as Geological Consultant toMarakand's parent company Oxus Gold plc. This information is provided by RNS The company news service from the London Stock Exchange