Oxus Gold Plc Regulatory News (OXS)

24 Sep 2008 13:09



AIM Release

For immediate release:  24 September 2008

Oxus Gold plc 

(''Oxus'' or the ''Company'')

Interim Results for the twelve months ended 30 June 2008

Annual gold production increased by 8.5% to 80,203 ounces *

Annual gold sales increased by 13.8% to 74,147 ounces *

Profitability restored at both the operational (Amantaytau Goldfields) and corporate levels during the 6 month period ended 30 June 2008

Bankable feasibility study completed on the underground sulphides project and lead bank mandated to arrange the project finance

Placing of convertible loan notes raises cash for working capital 

Outstanding litigation and arbitration settled 

* 50% attributable to Oxus. 

Chief Executive Officer's Statement

I am delighted to report very significant progress in the second six months of this interim period to 30 June 2008. The results are interim as we have changed our accounting reference date to 31 December, to coincide with that of our joint venture, Amantaytau Goldfields ("AGF"), resulting in an 18 month reporting period that will end on 31 December 2008. 

Annual production at AGF has increased by 8.5% to 80,203 ounces of gold equivalent. Annual sales have increased by 13.8% to 74,147 ounces of gold equivalent. Fifty percent of these numbers are attributable to Oxus. Profitability has been restored at both the operational (AGF) and corporate levels over the last 6 months and, had AGF been able to refine its silver doré on a timely basis, cash flow and profitability would have been further improved. AGF is now building its own silver refinery, at low cost, which will solve this ongoing difficulty.

The litigation with Eurogold and the arbitration with the Kyrgyz Republic have both been settled, thereby freeing up human and financial resources to concentrate on the development of the Company's mining operations in Uzbekistan. The Company has sufficient cash in the bank to meet its working capital requirements and, since receiving Uzbek Government approval in December 2007 to proceed with our flagship underground sulphides project at AGF (the reason we invested in AGF in the first place), a Bankable Feasibility Study (BFS) has been completed and The Royal Bank of Scotland has been mandated as lead bank to arrange the necessary project finance for AGF. With the current turmoil in the financial markets, the exact timing and availability of this finance is difficult to predict. However, the necessary steps to complete the financing continue to progress in a satisfactory manner, as outlined in the section on new projects in the main body of this report.

AGF plans to quadruple gold production over the next two to three years to over 300,000 ounces per annum, and to produce at a significantly lower average total cost per ounce than at present. This will be achieved through the development of the underground mine, scheduled for first production in late 2009, and also the development of our second heap leach operation, at Asaukak. This latter operation is scheduled for first production in Q2 2009 and will complement the existing Vysokovoltnoye heap leach operation. The Company also expects to realise some of the undoubted exploration potential at AGF over the same period, impacting positively on the Company's attributable reserves and resources.

The Company will continue to focus on the strategic alliance with Zeromax, which will further enhance the development of AGF and which we believe will lead to other potential opportunities within Uzbekistan.

The directors believe that the Company can look forward with considerable optimism, and that as equity markets stabilise from the current period of uncertainty, it is hoped that the real underlying value of Oxus, backed up by increasing production and a significant reserve and resource base, will once again be reflected in the share price.

Richard Wilkins

Chief Executive Officer

22 September 2008

  REVIEW OF OPERATIONS

During the twelve month period to 30 June 2008 AGF increased production by 8.5% to 80,203 ounces of gold equivalent. Sales increased by 13.8% to 74,147 of ounces of gold equivalent. 

AGF has returned to profitability during the six month period ended on 30 June 2008 as shown in the table below, which has been extracted from AGF's unaudited accounts and 50% of which is attributable to Oxus.
	6 months ended  30/6/08	6 months ended   31/12/07	12 months ended 30/6/08	12 months  ended 30/6/07
	$000	$000	$000	$000
Revenue	33,796	24,034	57,830	37,770
Profit/(loss) after tax	920	(3,940)	(3,020)	(6,426)

(All references to $ and cents are to United States dollars.)

Carbon in Pulp (CIP) Plant Open Pit Oxide Operation

The following table summarises AGF's operating results in respect of the CIP plant:-

	6 months to 30/6/08	6 months to 31/12/07	6 months to 30/6/07	6 months to 31/12/06	12 months to 30/6/08	12 months to 30/6/07
Ore processed, tonnes	554,872	529,635	422,479	454,198	1,084,507	876,677
Average grade (g/t)	1.65	1.70	4.20	2.40	1.67	3.10
Average gold recovery (%)	80.29	83.20	56.0	80.60	81.79	68.40
Gold produced, ounces	23,689	24,242	24,138	35,235	47,931	59,373
Gold sales, ounces	26,646	15,134	37,675	27,499	41,780	65,174
Average gold price $ per ounce	910	756	651	608	854	633
Average production cash cost $ per ounce	742	857	576	536	801	559
Average total cost $ per ounce	1,003	1,019	666	623	1,011	642

 

The CIP plant continued to operate at a marginal loss for the 6 month period to 30 June 2008. With current cash production costs of $742 per ounce the operation is making a significant contribution to fixed overhead costs. This scenario is likely to continue for the balance of 2008. 

The decrease in gold production and the increase in cash costs for the 12 month period were primarily due to the lower grades processed, which were partially offset by higher tonnage throughput and higher metallurgical recoveries. An improvement in grade is planned from early 2009 as a result of moving the mining to the Uzunbulak open pit. This is also expected to improve the operating costs as this pit is much closer to the plant than the present mining from the Asaukak open pit.

Feedstock for the CIP plant came entirely from the Asaukak open pit where tonnages mined remained significantly higher than the tonnages processed. At 30 June 2008 1.1 million tonnes of ore at an average grade of 0.7 grammes per tonne (g/t) had been stockpiled for future heap leach processing. This heap leach project is scheduled to commence operations in Q1 2009 and produce gold in Q2 2009. 

During 2009 it is planned to cease oxide production from the CIP plant, and switch the plant over to production from the underground sulphide mine.  Oxide production will continue from the heap leach operations at lower cost.

Vysokovoltnoye Silver-Gold Open Pit Heap Leach Operation 

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

	6 months to 30/6/08	6 months to 31/12/07	6 months to 30/6/07	6 months to 31/12/06	12 months to 30/6/08	12 months to 30/6/07
Ore stacked, tonnes	281,825	186,853	235,765	198,608	468,678	434,373
Average silver grade (g/t)	78.20	98.82	96.20	97.72	86.42	97.48
Average gold grade (g/t)	0.89	0.94	1.08	1.04	0.93	1.06
Silver produced, ounces	251,438	790,291	315,648	74,351	1,041,729	389,999
Gold produced, ounces	2,982	9,696	4,157	2,552	12,678	6,709
Gold equivalent produced,  ounces	7,854	24,418	10,541	4,013	32,272	14,539
Gold equivalent refined and sold, ounces	10,436	21,931	-	-	32,367	-
Average silver price $ per ounce	17.67	13.43	-	-	14.95	-
Average gold price $ per ounce	912	721	-	-	787	-
Average production cash cost per ounce sold (gold equivalent)	389	389	-	-	389	-
Average total cost per ounce sold  (gold equivalent)	465	465	-	-	465	-
Gold equivalent conversion ratio	51.61	53.69	49.44	50.86	52.64	49.81

Stacking re-commenced in March after having stopped for much of the winter months due to the coldest weather for 40 years. Unit costs of production during this cold period escalated accordingly. Appropriate action is being taken to ensure continuous operations in future. By June production was back to scheduled levels and monthly production rates in excess of 3,000 gold equivalent ounces were achieved during June, July and August 2008, with the associated costs reducing back to 2007 comparable levels.

Sales for the 6 month period to 30 June 2008 came entirely from the December 2007 stockpile at the Almalyk refinery. The profit from this operation is therefore calculated at the average total cost for the period in which the stockpile was generated ($465 per ounce for sales during the six months ended 30 June 2008). Of the 16,322 ounces of gold equivalent stockpile at 31 December 2007, 10,436 ounces were sold. A further 7,854 ounces of gold equivalent have been added to the stockpile which contained 13,740 ounces gold equivalent at 30 June 2008. This stockpile has an associated average total cost of $803 per ounce gold equivalent and a value of approximately $13 million at 30 June 2008. Any profit or loss associated with selling this stockpile will be accounted for at the time of sale. The average total cost of $803 per ounce includes the higher costs of production in the early months of 2008 and the balance of the December 2007 stockpile carried forward.

As a consequence of the lack of available silver refining capacity in Uzbekistan, AGF is building its own silver refinery. The planned new refinery, which is scheduled to be operational in the second quarter of 2009, will eliminate this stockpile and ensure that future production of silver doré will generate cash flow and profits on a timely basis. The new refinery will have the capacity to produce approximately 100,000 ounces of refined silver per month (approximately 2,000 ounces of gold equivalent) and is expected to cost approximately $1.5 million to construct and commission. This production rate will cater for existing planned production plus a potential new silver project.

 

FINANCIAL RESULTS

The Group reports an increase in gross revenue, excluding attributable joint venture income, to $2.72 million in the twelve months to 30 June 2008 (2007: $2.39 million). The AGF joint venture contributed an attributable loss of $1.51 million for the period (2007: $3.21 million attributable loss), which amount included an attributable profit of $460,000 in the second six months of the period. Total Group earnings for the period showed an unaudited loss after taxation of $41.17 million (11.23 cents per share loss) against a loss of $18.97 million (6.25 cents per share loss) in 2007. The loss for the period included a profit of $1.84 million in the second six months of the period.

The results include exceptional charges of $34.6 million in the twelve month period to 30 June 2008, arising substantially from providing against the Group's entire investment in the Khandiza project amounting to $28.46 million. Also included are costs relating to the settlement of the Eurogold litigation of $8.75 million and a net settlement of $3.28 million with regard to the arbitration against the Kyrgyz Republic.

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

Total assets decreased to $92.53 million (2007: $184.06 million) including cash and cash equivalents of $17.31 million (2007: $10.88 million). During the period the Company issued 16,040,512 shares, comprising 2,221,621 shares issued to acquire the minority shareholders in Marakand Minerals Limited, and 5,066,666 shares issued as a result of options and warrants being exercised. Zeromax was issued 6,030,151 shares from the capitalisation of a $3 million working capital loan to the Company, and 2,722,074 shares were granted to Eurogold as part of the final litigation settlement. The total number of shares in issue at 30 June 2008 was 381,439,685.

On 14 May 2008 the Company completed a placement of 8.0% unsecured convertible loan notes in units of $250,000 each at par, due 2010, for gross proceeds of $18.5 million. The notes were issued to existing institutional and strategic shareholders and to new institutional investors.

The notes are convertible into new ordinary shares of the Company at 37 pence per share. At the holder's option, the notes may be converted on the earlier of a written request from the holder to convert, or first drawdown on the project finance facility to construct the underground sulphides project at AGF. The notes may also be redeemed on the earlier of first drawdown on the project finance facility, or two years. If all the notes are converted, the maximum number of new shares that would be issued is 26,315,789.

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

At 30 June 2008 the Group's loan facility from Nedbank had reduced to $8.75 million.

NEW PROJECTS

AGF Underground Sulphides Project

Project Description

The Project is an extension and expansion of the existing CIP operation and therefore benefits from the existing infrastructure, existing skilled labour force and management's experience of operating in the area. Wardell Armstrong International completed a Bankable Feasibility Study (BFS) on the Project in June 2008. 

The sulphide mine will be brought into production based only on the current sulphide reserves of the Severny and Centralny deposits and has not taken into account possible future production from the remaining resources of the deposits nor any potential future resources at depth. The project is scheduled to produce an average of 230,000 ounces of gold per annum from mid 2010. A drilling programme is planned in 2009 for these potential targets to increase the resources and convert them into reserves for future exploitation.

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

The mine design mainly utilises cut and fill mining methods with limited sub-level open stoping. The cut and fill mining method results in high physical extraction ratios and minimal dilution but is relatively expensive. Post BFS geotechnical work is being undertaken prior to underground development with a view to improving the economics further and reducing the production cost per ounce.

The ore will be processed using bio-oxidation technology provided by GoldFields, South Africa. The existing CIP plant will be modified to accept the sulphide ore. The existing milling, reagent handling, elution, electro-winning and smelting sections will be retained and upgraded while the leach feed thickener will be converted to accept flotation tails. The float concentrate will be bio-digested to break down the sulphide minerals, thickened and cyanide leached in a carbon in leach (CIL) section. The plant will be constructed in two phases. Phase 1 will consist of a single flotation bank and two bio-oxidation modules designed to treat 750,000 tonnes per annum of ore with the first module being commissioned by Q4 2009. Phase 2 will increase the plant capacity to 1.2 million tonnes per annum and will be commissioned in mid 2010. Overall plant recovery of 88% has been used in the BFS based on 96% float and 92% CIL recovery.

Mineral Resources

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

Initial Mining Reserves

Based on the above resource, JORC classified Proven and Probable reserves have been estimated for stoping blocks within a 3.5g/t cut-off at Severny and a 2.0g/t cut-off at Centralny to be 8.94 million tonnes at 6.99g/t containing 2.01 million ounces of gold.

The total reserve in this BFS for production scheduling is 7.16 million tonnes at 7.55g/t containing 1.74 million ounces of gold.

Upside potential

The BFS mine plan has an initial life of 7 years.  However, based on the wealth of data available from Soviet times and validated by Lonhro and Oxus, there is significant potential to increase the resource base substantially. Neither Centralny nor Severny have been closed off at depth and considerable potential exists for the delineation of mineralisation below existing development levels. A single deep drill hole at Amantaytau Severny intersected mineralisation at 870 metres below surface comprising a drilled width of 8 metres at 51.6g/t (the estimated true width based on the drill section is 1.73 metres).

Capital Costs

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

Operating costs

As from Q1 2010 operating costs are forecast to be $86.30 per tonne of ore mined and $402 per ounce of gold produced.

  Project Economics

The net present values of the Project are $544 million at 0% per annum, $329 million at 7% per annum and $266 million at 10% per annum. The internal rate of return is 51% and the payback is 24 months from start of production. The BFS is based on the COMEX forward gold price curve at the date of the BFS as supplied by Standard Bank London Ltd.

Project Funding and Status

Oxus intends that the Project will be 100% funded by debt finance. The Royal Bank of Scotland (RBS) has been appointed as lead arranger for a limited recourse senior debt facility to AGF. 

SRK has been appointed as the Independent Engineer, and have completed their site visits with their independent report scheduled to be delivered to RBS by the end of September 2008. Detailed design is in progress for the process plant and infrastructure. Tenders have been issued for long-lead items of equipment and the underground mining contract will be awarded by the end of September 2008. Geotechnical drilling is on-going on site and final Uzbek Government approvals are scheduled for November 2008. Following this, the remaining standard conditions precedent are expected to be completed in order to enable the first drawdown on the project finance. First gold production from the Project is expected in late 2009.

Asaukak Open Pit Heap Leach Project

The Asaukak heap leach project will complement the existing Vysokovoltnoye heap leach operation, thereby enabling AGF to continue producing gold from its oxide operations at a planned rate of approximately 70,000 ounces gold equivalent per annum, entirely from heap leach.

A feasibility study has been completed and the project is currently under construction with earthworks complete and all major items of equipment are either on site or ordered. A stockpile of 1.1 million tonnes at 0.7g/t is in place, containing 776,000 ounces of silver and 9,000 ounces of gold. The pads are scheduled for first stacking in Q1 2009 with first gold production in Q2 2009.

This heap leach project will also process ores from other satellite oxide deposits within a short haul distance and will then be moved to new pads further west. The project is forecast to recover 10,000 ounces of gold in 2009 and then average 30,000 ounces of gold per annum thereafter for the next ten years. 

ORE RESERVES AND MINERAL RESOURCES 

 

OXUS GOLD PLC PRECIOUS METAL ORE RESERVES AS OF 1st JULY 2008 (UNAUDITED)
	Proven Reserves						Probable Reserves					Proven + Probable
AMANTAYTAU GOLDFIELDS	Cut off	Mt	Grade g/t		Contained Kozs		Mt	Grade g/t		Contained Kozs		Mt	Grade g/t		Contained Kozs
	g/t Au		Au	Ag	Au	Ag		Au	Ag	Au	Ag		Au	Ag	Au	Ag
CIP and Heap Leach Oxides (Gold)
Asaukak (15% Dilution, 95% Ore Recovery)	1.0						0.32	2.1	1.6	22	16	0.32	2.1	1.6	22	16
Stockpiled ore at Asaukak	0.5	1.10	0.7		24							1.10	0.7		24
Stockpiled Asaukak ore at CIP plant	1.0	0.03	2.1		2							0.03	2.1		2
Uzunbulak (15% Dilution, 95% Ore Recovery)	0.8	0.09	1.9	3.8	5	11	0.91	1.7	2.5	51	72	1.00	1.8	2.6	56	83
Sarybatyr (15% Dilution, 95% Ore Recovery)	0.6	0.77	2.2		54		0.93	1.6		47		1.70	1.8		101
Sub-Total CIP and Heap Leach Oxides (Gold)		1.99	1.3		85	11	2.16	1.7		120	89	4.15	1.5		205	99
Heap Leach Oxides (Silver - gold)
Vysokovoltnoye OB4 (8% Dilution, 95% Ore Recovery)	0.6	0.66	1.3	28.0	28	591	1.77	1.2	26.2	69	1,493	2.43	1.2	26.6	97	2,083
Vysokovoltnoye OB7 (8% Dilution, 95% Ore Recovery)							1.66	1.0	51.3	56	2,736	1.66	1.0	51.3	56	2,736
Stockpiled ore at Vysokovoltnoye		0.82	0.3	29.5	9	776						0.82	0.3	29.5	9	776
Sub-Total Heap Leach Oxides (Silver - gold)		1.48	0.8	28.8	37	1,367	3.43	1.1	38.3	125	4,229	4.91	1.0	35.4	162	5,595
Total Oxide Reserves		3.47	1.1		122	1,377	5.59	1.4		244	4,317	9.06	1.3		366	5,695
Sulphides
Amantaytau Centralny (23.4% Dilution, 91.3% Ore Recovery)	2.0						2.21	4.7		332		2.21	4.7		332
Amantaytau Severny (28.3% Dilution, 99.0% Ore Recovery)	3.5	0.85	7.6		207		5.88	7.8		1,470		6.73	7.7		1,677
Total Sulphide Reserves		0.85	7.6		207		8.10	6.9		1,802		8.94	7.0		2,009
TOTAL AGF RESERVES					329	1,377				2,047	4,317				2,375	5,695
OXUS ATTRIBUTABLE AGF RESERVES (50%)					164	689				1,023	2,159				1,188	2,847
Note : Amantaytau Centralny sulphide reserves include 1.78Mt of 'transition' sulphides at an average grade of 4.73 g/t (271 Kozs gold) subject to further metallurgical testwork to optimise the process flowsheet
Asaukak and Vysokovoltnoye OB7 ore reserves take into consideration depletion up to 30th June 2008, but are unaudited until such time that the balance of reserves can be reconciled with the block models.

OXUS GOLD PLC PRECIOUS METAL RESOURCES AS OF 1st JULY 2008 (UNAUDITED)
JORC Classified		Measured Resources					Indicated Resources					Inferred Resources						Expl Results
Deposits	Cut off	Mt	Grade g/t		000 ozs		Mt	Grade g/t		000 ozs		Mt	Grade g/t		000 ozs			000 ozs
	g/t		Au	Ag	Au	Ag		Au	Ag	Au	Ag		Au	Ag	Au	Ag		Au	Ag
AMANTAYTAU GOLDFIELDS
Oxides
Asaukak	0.6						1.09	1.4	1.6	49	56	-	-	-	-	-
Uzunbulak	0.6	0.12	1.9	4.0	7	15	1.94	1.5	2.8	95	175	1.28	1.3	2.1	53	88
Amantaytau Centralny	0.4	0.29	2.4	-	22	-	0.29	2.4	-	22	-	0.31	1.6	-	15	-
Sarybatyr	0.6	0.74	2.5	-	59	-	0.89	1.8	-	51	-	0.79	2.2	-	55	-
Vysokovoltnoye OB4	0.6	1.22	1.3	34.1	50	1,332	3.63	1.2	27.7	140	3,236	0.59	1.4	22.6	27	430
Vysokovoltnoye OB7	*	-	-	-	-	-	2.39	1.0	51.8	80	3,980	0.38	0.9	14.7	11	180
Zapadny Amantaytau	0.6	1.23	1.5	-	58	-	0.46	1.1	-	16	-	0.06	1.2	-	2	-
AGF - 17 deposits	0.6	-	-	-	-	-	7.02	1.4	-	308	-	12.52	1.3	-	535	-		1,966	301
AGF - 7 Exploration Targets	0.6	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		453	25,114
Total Oxides		3.59	1.7		197	1,347	17.71	1.3		762	7,447	15.93	1.4		698	698		2,419	25,415
Sulphides
Severny	2.0	0.94	9.0	-	272	-	7.95	8.0	-	2,040	-	0.67	5.7	-	123	-
Centralny	2.0	1.99	4.8	-	304	-	2.62	4.5	-	376	-	3.11	4.3	-	428	-
Asaukak	0.6	0.10	2.2	3.3	7	10	2.82	1.9	1.8	173	161	1.30	1.9	1.8	78	76
Uzunbulak	0.6	0.06	3.6	5.6	6	10	1.50	1.9	3.6	93	172	8.08	2.8	5.6	736	1,451
Vysokovoltnoye OB4	0.6	3.71	1.3	33.7	151	4,019	7.28	1.1	35.9	265	8,389	3.85	1.1	32.1	133	3,981
Vysokovoltnoye OB7	*	-	-	-	-	-	7.32	0.9	62.5	204	14,709	6.76	0.8	45.1	164	9,805
AGF - 7 deposits (sulphides only)		-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		5,171	46,683
Total Sulphides		6.79	3.4		740	4,039	29.49	3.3		3,151	23,431	23.78	2.2		1,661	15,313		5,171	46,683
Total Amantaytau Goldfields		10.38	2.8	16.1	937	5,386	47.20	2.6	20.3	3,912	30,878	39.72	1.8	12.5	2,360	16,011		7,590	72,098
OXUS ATTRIBUTABLE - 50%		5.19	2.8	16.1	468	2,693	23.60	2.6	20.3	1,956	15,439	19.86	1.8	12.5	1,180	8,005		3,795	36,049

Soviet/Uzbek Classified Resources (Additional to JORC)

P1

P2

000 ozs

000 ozs

Au

Ag

Au

Ag

AGF Sulphides

5,841

314,60

3,745

45,110

OXUS ATTRIBUTABLE - 50%

2,921

157,30

1,873

22,555

Notes: Asaukak and Vysokovoltnoye OB7 resources take into consideration depletion up to 30th June 2008 in line with reserves, but are unaudited until such time as the resource balances can be reconciled with the block models.

Balance of Amantaytau Centralny oxides, and Amantaytau Zapadny oxides as remodelled by Gemcom

Northern Uzunbulak has a Soviet/Uzbek C1 resource of 0.14Mt @ 2.04g/t gold containing 9,000 ounces of gold

Exploration results comprise all Soviet/Uzbek B, C1 & C2 resources, and P1/P2 resources to 50m depth for oxide and 3 deposits for sulphide, not yet JORC resource classified

* Vysokovoltnoye OB7 resources evaluated above a cut-off of 25 g/t AgEq

Proven and Probable Ore Reserves as of 1 July 2008 are summarised as:

Oxide ores: 366,000 ounces gold and 5.695 million ounces silver

Sulphide ores: 2.009 million ounces gold

Total: 2.375 million ounces gold and 5.695 million ounces silver

50% of the above reserve is attributable to Oxus

The principal changes with regard to the oxide reserve at Asaukak are depletion due to mining of 66,000 ounces of gold and 50,000 ounces of silver. At Vysokovoltnoye reserves have been depleted by 1.77 million ounces of silver and 19,000 ounces of gold.

Amantaytau Centralny sulphide reserves include 1.78 million tonnes of 'transition' sulphides at an average grade of 4.73 g/t (271,000 ounces gold). These were omitted from the BFS pending further metallurgical testwork to optimise the process flowsheet, and this testwork is ongoing. Cut-off grade optimisation and detailed mine design is on-going and further reserves are likely to be converted from resources and brought into the production schedule in the near future.

Measured and Indicated Mineral Resources as of 1 July 2008 are summarised as:

Oxides: 959,000 ounces gold and 8.794 million ounces silver

Sulphides: 3.891 million ounces gold and 27.470 million ounces silver

Total: 4.849 million ounces gold and 36.264 million ounces silver

50% of the above resources are attributable to Oxus

Principal changes are depletion due to mining of 86,000 ounces of gold and 1.766 million ounces of silver at Asaukak and Vysokovoltnoye.

Inferred Mineral Resources as of 1 July 2008 are summarised as:

Oxides: 698,000 ounces gold and 698,000 ounces silver

Sulphides: 1.661 million ounces gold and 15.313 million ounces silver

Total: 2.359 million ounces gold and 16.011 million ounces silver

50% of the above resources are attributable to Oxus

EXPLORATION

AGF's CS14 drill rig has commenced drilling the deep sulphides at Amantaytau Severny, to confirm continuity of mineralization at depth, and increase inferred resources. Following on from the BFS, the CS14 drill rig has also been used to carry out geotechnical drilling associated with the forthcoming underground mine development.

Two reverse circulation (RC) rigs and equipment are being purchased and are scheduled to arrive on the mine during the second half of 2008. The rigs will be used for both in-pit grade control drilling, as well as resource definition drilling. Of particular importance will be the completion of RC drilling at the satellite oxide deposits in the Asaukak area (Aksai, Northern Asaukak, Sredinny and North-Eastern deposits), to enable resource block models and pit designs to be completed. These deposits will continue to provide feed for the Asaukak heap leach, once the existing stockpiles of low grade ore at Asaukak have been stacked. 

OTHER ACTIVITY

Zeromax Strategic Alliance

During the period Zeromax, Uzbekistan's largest private sector company, acquired a further 11,533,797 shares in the Company, and now owns 68,533,797 shares, representing 17.97% of the Company's outstanding share capital. Zeromax has subscribed for $6 million of the Company's unsecured convertible loan notes, of which $4.5 million has been paid. When fully paid, these convertible loan notes will convert into 8,534,850 new ordinary shares in the Company at a price of 37 pence per share. 

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

Amantaytau Goldfields / Oxus Gold Scholarship Foundation

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

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

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

Extractive Industries Transparency Initiative

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

As a result, the Company wishes to establish a practice of disclosing all payments made to governments via the annual financial statements and the publication in the local Uzbek press of relevant information relating to the financial operations of AGF.

  BOARD OF DIRECTORS

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

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

Also, with effect from 7 January 2008, the directors of the Company appointed Graham Hill, a mechanical engineer and currently project manager of the AGF underground sulphides project, as an alternate director.

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

ACCOUNTING REFERENCE DATE AND CHANGE OF AUDITORS

As stated in the Company's Interim Results for the period ended 31 December 2007, in order to bring its financial statements in line with those of AGF, the Group has decided to extend its current accounting reference period by six months. Accordingly a first set of interim results was published for the 6 months ending 31 December 2007 and this second set of interim results is being published for the 12 months ending 30 June 2008. Full audited accounts will be published for the 18 months ending on 31 December 2008. 

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

ANNUAL GENERAL MEETING

The Company's eighth annual general meeting (AGM) will be held on 5 December 2008 at 105 Piccadilly, London W1J 7NJ at 11.00 am. Audited accounts will not be presented to shareholders at this AGM. The audited accounts for the 18 month period to 31 December 2008 will be presented to shareholders for approval at the 2009 AGM, expected to be held no later than May 2009. Notices convening these meetings will be sent to shareholders in due course.

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

OXUS GOLD PLC
Jonathan Kipps – Finance Director	Tel: +44 (0) 207 907 2000
Richard Wilkins – Chief Executive Officer	Tel: +44 (0) 207 907 2000
CANACCORD ADAMS LIMITED
Mike Jones	Tel:+44 (0) 207 050 6500
Guy Blakeney	Tel:+44 (0) 207 050 6500
FAIRFAX I.S. Plc
Ewan Leggat	Tel:+44 (0) 207 598 5368
CONDUIT PR
Jane Stacey	Tel: +44 (0) 207 429 6606
Fiona HylandTel: +44 (0) 207 429 6614
Ed Portman	Tel: +44 (0) 207 429 6607

 

 

COMPETENT PERSONS' REVIEW 

The Ore Reserves and Mineral Resources have been compiled by the Company's geological 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 by their Competent Person Dr Phil Newall, BSc.,ARSM, Phd, CEng. FIMM. Appendix 5 gives more background on the Competent Persons.

 

Consolidated Income Statement
		Six months ended  30 June		Six months ended  31 Dec		Twelve months ended  30 June		Twelve months ended  30 June
		2008		2007		2008		2007
	Note	$000		$000		$000		$000
		Unaudited		Unaudited		Unaudited		Audited
Revenue	6	1,655		1,065		2,720		2,387
Direct expenses		-		-		-		-
Gross profit		1,655		1,065		2,720		2,387
Administrative expenses		(4,379)		(3,823)		(8,202)		(6,985)
Share-based payments		(406)		(102)		(508)		(218)
Foreign exchange loss		-		-		-		(223)
Exceptional costs and revenues:
Impairrment charge in respect of Khandiza project		-		(28,456)		(28,456)		-
Impairment charge in respect of investment in Marakand Minerals less minority interests acquired		-		(1,442)		(1,442)		-
Gain on sale of Norox Mining Company Limited and other assets		-		-		-		8,034
Legal and other costs arising from abortive 2002 financing		-		-		-		(7,347)
Gain on sale of investments		(195)		347		152		92
Revaluation gain on available-for-sale investments		68		1,087		1,155		-
Net Jerooy arbitration costs		4,922		(1,641)		3,281		(2,792)
Costs relating to the settlement of the Eurogold dispute		(292)		(8,462)		(8,754)		-
Other legal costs		(204)		(334)		(538)		(963)
Impairment losses recognised on investments held		-		-		-		(8,602)
Operating profit/(loss)	6	1,170		(41,761)		(40,592)		(16,617)
Share of profit/(loss) from joint ventures	7	460		(1,970)		(1,510)		(3,213)
Financial income		808		1,277		2,085		2,457
Financial expense		(602)		(557)		(1,159)		(1,538)
Net financial income		206		720		926		919
Profit/(loss) before tax		1,836		(43,011)		(41,175)		(18,911)
Taxation		2		(2)		-		(55)
Profit/(loss) for the period		1,838		(43,013)		(41,175)		(18,966)
Attributable to:
Equity shareholders of the parent		1,838		(43,013)		(41,175)		(18,908)
Minority interests		-		-		-		(58)
		1,838		(43,013)		(41,175)		(18,966)
Basic profit/(loss) per share - US cents	8	0.50		(11.77)		(11.23)		(6.25)
Fully Diluted		0.47		(11.77)		(11.23)		(6.25)
All amounts relate to continuing operations.

		30 June	30 June
Consolidated Balance Sheet	Note	2008	2007
		$000	$000
		Unaudited	Audited
Non-current assets			Restated
Intangible assets		-	3,068
Property, plant and equipment		418	608
Exploration and mining development properties	9	11,989	40,445
Investment in joint venture	10	37,723	42,527
Available-for-sale investments at market value		-	5,171
Available-for-sale investments at cost		895	895
		51,025	92,714
Current assets
Trade and other receivables		24,195	14,772
Available-for-sale investments		-	65,696
Cash and cash equivalents		17,308	10,881
		41,503	91,349
Total assets		92,528	184,063
Equity and liabilities
Equity attributable to ordinary shareholders
Share capital		6,482	6,104
Share premium		112,977	105,341
Capital reserve		22,260	20,571
Merger reserve		34,929	34,929
Revaluation reserve		-	-
Retained earnings		(125,453)	(84,278)
Total equity attributable to ordinary shareholders		51,196	82,667
Minority interests		-	4,431
Total equity		51,196	87,098
Non-current liabilities
Interest-bearing loans and borrowings		3,750	8,750
		3,750	8,750
Current liabilities
Interest-bearing loans and borrowings		5,000	5,000
Convertible loan notes	11	17,607	-
AGF Phase 2 project development fund		10,866	10,866
Trade and other payables		4,108	6,653
Proposed dividend		-	65,696
		37,582	88,215
Total equity and liabilities		92,528	184,063

Consolidated Cash Flow Statement	Note	Twelve months ended 30 June	Twelve months ended 30 June
		2008	2007
		$000	$000
		Unaudited	Audited
Cash flows from operating activities
Loss before tax for the year		(41,175)	(18,911)
Adjustments for:
Depreciation, depletion and amortization		198	2,405
Impairment charges		28,456	-
Interest paid		1,158	1,538
Equity-settled share-based payment expenses		508	185
Income attributable to joint venture		1,510	3,213
Non-cash movements in minority interests		-	469
Salaries and bonuses converted to shares		-	50
Revaluation gain on investments		(1,326)	-
Other reserve movements		2,682	(2,620)
Cash flows from operating activities before changes in working capital and provisions		(7,989)	(13,671)
(Increase)/decrease in trade and other receivables		(3,661)	(1,790)
Increase in trade and other payables		(2,682)	3
Cash absorbed by operating activities		(14,273)	(15,458)
Cash flows from investing activities
Investment in exploration and mining development properties		-	(8,864)
Net return of investment from joint venture		-	1,335
Acquisition of minority holding in Marakand Minerals Limited		(456)	-
Acquisition of property, plant and equipment		(8)	-
Convertible loan notes		15,000	-
Net funding of joint venture		-	(2,809)
Sale of investments		6,497	285
Net cash from investing activities		21,034	(10,053)
Cash flows from financing activities
Proceeds from the issue of share capital		5,622	29,213
Repayment of bank borrowings		(5,000)	(5,000)
Interest paid		(955)	(1,538)
Net cash from financing activities		(333)	22,675
Net increase/(decrease) in cash and cash equivalents		6,427	(2,836)
Cash and cash equivalents at 1 July		10,881	13,717
Cash and cash equivalents at 31 December		17,308	10,881

Statement of Changes in shareholders equity - Group

Share

Share

Capital

Revaluation

Merger

Retained

Shareholders

Minority

Total

For the period ended 30 June 2008	Capital	Premium	Reserve	Reserve	Reserve	Earnings	Equity	Interests	Equity
	$000	$000	$000	$000	$000	$000	US$000	US$000	US$000
	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited	Unaudited
			& Restated				& Restated		& Restated

Balance at 1 July 2006	4,774	77,407	22,614	(3,907)	34,929	326	136,143	4,020	140,163
Losses after tax for the year	-	-	-	-	-	(18,908)	(18,908)	(58)	(18,966)
Total recognised in income and expense for the year	-	-	-	-	-	(18,908)	(18,908)	(58)	(18,966)
Shares issued in the year	1,125	23,066	-	-	-	-	24,191	439	24,630
Warrants and options exercised	5	58	-	-	-	-	63	30	93
Equity-settled share-based payments	198	4,760	185	-	-	-	5,143	-	5,143
Conversion of Directors' remuneration to shares	2	50	-	-	-	-	52	-	52
Restatement Note 4	-	-	(2,228)	-	-	-	(2,228)	-	(2,228)
Transfer to income statement	-	-	-	3,907	-	-	3,907	-	3,907
Equity dividends	-	-	-	-	-	(65,696)	(65,696)	-	(65,696)
Balance at 30 June 2007	6,104	105,341	20,571	-	34,929	(84,278)	82,667	4,431	87,098
Losses after tax for the period	-	-	-	-	-	(41,175)	(41,175)	-	(41,175)
Total recognised in income and expense for the period	-	-	-	-	-	(41,175)	(41,175)	-	(41,175)
Shares issued in the period	278	6,204	-	-	-	-	6,482	-	6,482
Equity-settled share-based payments	-	-	499	-	-	-	499	-	499
Equity component of the convertible loan notes (note 11)			742				742		742
Warrants and options exercised (note 5)	100	1,433					1,533	-	1,533
Sale of the returned warrants			448				448	-	448
Arising from acquisition of Marakand Minerals	-	-	-	-	-	-	-	277	277
Minority interests acquired	-	-	-	-	-	-	-	(4,708)	(4,708)
Balance at 30 June 2008	6,482	112,978	22,260	-	34,929	(125,453)	51,196	-	51,196

Statement of Changes in shareholders equity - Group 

For the period ended 30 June 2008 - continued

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 together with reserves arising from the acquisition of minority interests and historic adjustments arising from corporate reconstructions prior to the adoption of international accounting standards. The capital reserve was restated in 2006.

The revaluation reserve comprises amounts held in equity in respect of the revaluation or devaluation of available-for-sale investments.

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

Retained earnings represent the cumulative (loss)/profit of the Group attributable to equity shareholders.

  

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 twelve months ended 30 June 2008 ('the Period') 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. The Period has been divided into two half years so as to provide greater information. These statements 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 twelve months 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 the financial 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.
	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.
	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 investor's 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 the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising 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. This is 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 in the US dollar 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 the opening 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 to the 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 reversed if the recoverable amount increases as a result of a reversal of the conditions that 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 subject to 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.
	Convertible loan notes
	The liability component of convertible loan notes is recognized as a liability in the balance sheet net of transaction costs. The corresponding interest on those loans is charged as interest expense in the income statement. On issuance of a convertible loan, the fair value of the liability component is determined using a market rate for an equivalent non convertible loan and this amount is classified as a financial liability measured at amortised cost until it is extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option that is recognized and included in shareholders' equity, net of transaction costs where these are significant. The carrying amount of the conversion option is not re-measured in subsequent years. Transaction costs are apportioned between the liability and equity components of the convertible loans based on the allocation of proceeds to the liability and equity components when the instruments are first recognized. Where the amount of transaction costs attributable to the conversion option is insignificant all transaction costs are allocated to the liability element. Convertible loan notes which are convertible into a fixed number of shares at a fixed price are accounted for as equity. Where such shares are not calculated based upon a fixed price, the convertible loan note is to be recognized as a liability on the balance sheet. Interest on the debt element of the loan is accreted over the term of the loan.
	Financing costs
	Financing costs comprise interest payable on bank loans and finance leases. Interest payable is recognised in the income statement as it accrues, using the effective interest method.

4	Restatement of the accounting treatment of returned warrants in the Company
	In the 2007 financial statements the Company accounted for the return of warrants to subscribe for shares in the company, as a financial asset of the Company. A value of $2,228,000 was attributed to the asset with a corresponding credit being taken to trade and other payables to reflect the increased amounts payable in respect of the settlement. The transaction took place in the 2006 financial year. The return of the warrants arose from the terms of a court order to reinstate previously cancelled warrants pursuant to litigation in respect of the 2002 abortive financing exercise as explained within the 2007 financial statements. The court order provided for the return of the warrants to the plaintiff also offering the plaintiff an alternative of receiving a higher cash award rather than to receive the benefit of the reinstated warrants. The plaintiff opted to take the cash alternative and the warrants were returned to the Company. The Company has reconsidered this treatment in the light of the general prohibition set out in the IAS32 that a company may not recognize a profit or a loss in respect of its own equity instruments. The Company has amended its treatment of the returned warrants and has recognized the value of these warrants as a deduction from the capital reserve of the Company. Effect on Equity of the restatement: $000 Derecognition of the financial asset (2,228) Deduction from the capital reserve 2,228

5	Sale of the returned warrants On 2 April 2008 the Company sold the returned warrants (note 4) to a number of existing shareholders and the warrants were immediately exercised. The total proceeds were $1,965,125. The effect of the sale and exercise of the returned warrants was: $000 Cash received 1,965 Share capital 100 Share premium 1,417 Capital reserve 448 1,965
6	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 other countries during the Period.

  

7	Share of profit / ( 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 unaudited financial statements for AGF.

		Six months ended  30 June	Six months ended  31 Dec	Twelve months ended  30 June	Twelve month ended 30 June
		2008	2007	2008	2007
		$000	$000	$000	$000
	Revenue	16,898	12,017	28,915	18,885
	Profit /(loss) before tax	651	(1,970)	(1,319)	(3,213)
	Taxation	(191)	-	(191)	-
	Profit/(loss) after tax	460	(1,970)	(1,510)	(3,213)
	Dividend paid	-	-	-	-
	Net earnings retained	460	(1,970)	(1,510)	(3,213)

8	Loss per share
	The calculation of the basic loss per share for the twelve month period to 30 June 2008 is based upon the net loss after tax and minority interests attributable to ordinary shareholders of $41,174,571 (30 June 2007: a loss of $18,908,000). The weighted average number of shares in issue for the12 month period of 366,763,448 (30 June 2007: 302,578,528).

		Twelve months ended 30 June	Twelve months ended 30 June
		2008	2007
	Basic profit / ( loss) per share	(11.23)	(6.25)
	Fully diluted	(11.23)	(6.25)
	Loss attributable to equity shareholders ($'000)	($41,175)	($18,908)
	Weighted average number of shares in issue	366,763,448	302,578,528

No diluted earnings per share are shown where a loss has been made in the period as the effect is anti-dilutive.

9	Exploration and mining development properties	Kyrgyz	Uzbek	Uzbek	Uzbek	Total
		Jerooy	AGF	Aristantau	Khandiza
				and
				Balpantau
		Group	Group	Group	Group	Group
		$000	$000	$000	$000	$000
	Cost
	At 1 July 2006	50,198	11,302	687	28,456	90,643
	Additions	8,864	-	-	-	8,864
	Disposals	(59,062)	-	-	-	(59,062)
	At 30 June 2007	-	11,302	687	28,456	40,445
	At 1 July 2007	-	11,302	687	28,456	40,445
	Additions	-	-	-	-	-
	Disposals	-	-	-	-	-
	Impairment	-	-	-	(28,456)	(28,456)
	At 30 June 2008	-	11,302	687	-	11,989

10	Investment in joint venture

			30 June	30 June	30 June
			2008	2008	2008
			$000	$000	$000
			Investment	Loans	Total
	At 1 July 2006		23,213	23,862	47,075
	Group's share of profits/(losses)		(3,213)	-	(3,213)
	Dividends received		-	-	-
	Amounts advanced		-	6,330	6,330
	Amounts repaid		-	(7,665)	(7,665)
	At 30 June 2007		20,000	22,527	42,527
	Group's share of profits/(losses)		(1,510)	-	(1,510)
	Dividends received			-	-
	Transferred to trade and other receivables			(6,079)	(6,079)
	Amounts advanced			9,488	9,488
	Amounts repaid			(6,703)	(6,703)
	At 30 June 2008		18,490	19,233	37,723

11 Convertible loan notes

On 14 May 2008 the Company completed a placement of unsecured convertible loan notes in units of $250,000 each at par, for gross proceeds of $18.5 million. Interest is payable on the notes at 8.00% per annum and the notes are convertible at the holder's option into new ordinary shares of the Company at £0.37 per share. If all the notes are converted, the total number of new shares that would be issued is 26,315,789. At 30 June 2008, $3.5 million of the principal amount remained outstanding, $2.0 million of which has been paid since the period end. In accordance with IFRS7 $17.6 million has been accounted for as current liabilities, and $0.7 million has been credited to the capital reserve, representing the deemed equity component of the loan.

12 Contingent asset

Under the terms of a sale and purchase agreement dated 11 May 2007 the Company is entitled to a payment of up to $80 million conditional upon KazakhGold Group Limited or a nominee acquiring a license to mine or acquiring a company or entity that has the benefit of a license to mine the Jerooy gold deposit in the Kyrgyz Republic, and commences development or production at the project. No amount has been recognised in these financial statements in respect of this contingent asset

APPENDIX 1  Please follow the link below to view;  OXUS GOLD PLC PRECIOUS METAL RESOURCES AS OF 1 JULY 2008  http://www.rns-pdf.londonstockexchange.com/rns/...

APPENDIX 2

Please follow the link below to view; OXUS GOLD PLC PRECIOUS METAL RESERVES AS OF 1 JULY 2008

http://www.rns-pdf.londonstockexchange.com/rns/...

APPENDIX 3  DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES EXTRACTED FROM THE JORC  CODE: (December 2004) (www.jorc.com) 

Exploration Results include data and information generated by exploration programmes that may be of use to investors. The Exploration Results may or may not be part of a formal declaration of Mineral Resources or Ore Reserves. 

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

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

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

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

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

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

A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic. 

  APPENDIX 4  SOVIET/UZBEK (RUSSIAN) CLASSIFICATION OF RESOURCES & RESERVES  The following description of the Russian classification of resources and reserves is from the report "Oxide resource potential of the Amantaytau-Vysokovoltnoye Orefield", prepared by P.S. Newall (BSc, PhD, CEng, MIMM), dated 16 October 2001, Ref: 61-0200. This report was prepared by CSMA Consultants Ltd, which is now Wardell Armstrong International.  In addition, an article on Russian mineral reporting by Stephen Henley reported in Mining Journal, London, August 20, 2004, provides a useful summary  Stephen Henley is principal of RESOURCES COMPUTING INTERNATIONAL LTD 

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

  The former Soviet system for classification of reserves and resources, developed in 1960 and revised in 1981, is still used today in the Commonwealth of Independent States. Essentially, it divides mineral concentrations into seven categories of three major groups, based on the level of exploration performed: explored reserves (A, B, C1), evaluated reserves (C2) and prognostic resources (P1, P2, P3). The following description of the resource and reserve classification is derived from a paper by S.A.Diatchkov (1994) and has been modified by WGM to relate to currently acceptable international standards. The classifications of the reserves described by Diatchkov are those that were developed by the former USSR authorities. In principle, they follow a succession of approximations that are applied to various stages of exploration. This means that reserves are assigned to classes based on the degree of reliability of data and indicate their comparative importance for the national economy. 

Reserves are classified into five main categories and designated by the symbols A, B, C1, C2 and P1. Capital letters are used to designate ores that are economic. Sometimes, the same group of letters are written in lower case (i.e. a, b, c) when the mineralisation is considered sub-economic. Alternatively, a simple classification into 'balansovye' (commercially exploitable reserves) and 'zabalansovye' (uneconomic resources) is used.

  Resources and Reserves include the first four categories, A, B, C1 and C2. The categories C1 and C2 are relevant to the AGF Licence Area and are defined here. 

  Category C1: 

The reserves in place have been estimated by a sparse grid of trenches, drillholes or underground workings. This category also includes reserves adjoining the boundaries of A and B reserves as well as reserves of very complex deposits in which the distribution cannot be determined even by a very dense sample grid. The quality and properties of the deposit are known tentatively by analyses and by analogy with known deposits of the same type. The general conditions for exploitation are partially known. 

Category C2:  The reserves have been extrapolated from limited data, probably only a single hole. This category includes reserves that are adjoining A, B, and C1 reserves in the same deposit.  Classification of CIS Mineral Deposits  Deposits of solid minerals in CIS are classified into five major groups, based largely on the character and size of the deposit. The ability to define the categories of reserves depends on the deposit group in which the deposit is classified. The deposits of the AGF licence area have been classified by GKZ (State Committee for Resources) as being confined to Group 3. APPENDIX 5  COMPETENT PERSONS  The resources and reserves stated in this report have been compiled or Approved by the following Competent Persons:  P S Newall, BSc, ARSM, PhD, CEng, FIMM  Wardell Armstrong International Ltd  Wheal Jane, Baldhu, Truro, Cornwall, TR3 6EH  Tel: +44 1872 560738 Fax: +44 1872 561079  Web: //www.wardell-armstrong.com  P Newall, is Senior Consulting Geologist and Director with WAI and has practised his profession as a mine and exploration geologist for over twenty years for both base and precious metals.  Gordon Wylie BSc (Hons) Geology, MAusIMM, FGSSA Gordon Wylie is a consultant and non-executive Director of Oxus Gold plc. Gordon has over 31 years experience in the mining and exploration industry. From 1998 to 2005 Gordon was in charge of AngloGold and latterly, AngloGold Ashanti's global 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 South Africa), then worked in Central Asia and other locations worldwide. Started work with the Oxus Group in 1996. In November 2003 was appointed as Technical Director of Marakand Minerals Limited, also acting as Geological Consultant to Marakand's parent company Oxus Gold plc.

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