TSG.L Regulatory News (TSG)

Trans-Siberian Gold plc

Final results for the year ended 31 December 2014

Notice of Annual General Meeting

Highlights

· Production 36,089 oz. gold, 44,610 oz. silver, increases of 21.6% and 14.3% respectively

· Asacha plant processed average 13,046 tonnes per month

· Average gold grade in ore delivered to plant 7.68 g/t, 22.1% improvement (2013: 6.29 g/t)

· Cost of sales per oz. gold reduced by 42.0%

· Cash cost per oz. gold sold reduced by 42.4%

Trans-Siberian Gold plc ("TSG" or "the Company") reports that Asacha's third full year of operation produced 36,089 oz. (2013: 29,670 oz.) of refined gold and 44,610 oz. (2013: 39,026 oz.) of refined silver. The main operational issue during the year continued to be the reduction of the grade of ore delivered to the plant as a result of dilution in the mine. In 2014 the mine continued to implement the recommendations of a 2012 mine audit and tried additional methods intended to lower dilution and increase ore grades, including changes in stoping and blasting and improved control of mining activities, with the ore previously stored underground moved to the surface stockpile. The average gold grade in ore delivered to the plant was 7.68 g/t, 22.1% above the 2013 gold grade, the fourth quarter's 8.74 g/t the best quarterly result in three years.

Mining and production at Asacha in 2014:

In September 2013 the Federal Agency on Subsoil Use extended the Asacha licence until 1 September 2018, reflecting the seven year mine life envisaged by the mine's original design documentation. TSG's subsidiary ZAO Trevozhnoye Zarevo (TZ)intends to apply for a further extension to the licence term, taking account of the results of the significant exploration at Asacha in the period since its resources were approved by the Russian State Geological Commission for Reserves (GKZ) in 2002. This process has commenced with preliminary consultations with GKZ as the first stage towards the legal recognition of the increase in reserves. This will be followed by the required design changes to the project, such work to be undertaken by an external design institute, after which TZ will seek the necessary approvals and agreements from various government bodies and agencies.

In the first quarter of 2015 mine development comprised approximately 1,152 metres, while ore extraction (including ore from stoping and mine development) amounted to 43,598 metric tonnes. Plant throughput averaged 13,233 tonnes per month (5.8% above planned 12,500 tonnes).

In 2012 the federal authorities prescribed the finalisation of the design documentation and the commencement of work at the Rodnikova deposit by April 2014, failing which the federal authorities would consider the termination of the licence. It was unclear whether there was adequate time or available funding to comply with these requirements, wherefore a full impairment provision was recognised in the 2012 financial statements in respect of Rodnikova's exploration and evaluation costs. A design institute's pre-feasibility study indicated that exploitation of the deposit would not be economically justified at the lower gold prices which have prevailed since the second half of 2013. TZ applied to the federal authorities for an extension of the licence term beyond its scheduled expiry on 1 September 2014 in order to evaluate the cost effectiveness of various technical solutions to improve the project's economics identified by the design institute, however on 5 September 2014 TZ was informed that the licence had been terminated. This termination has had no material impact on the Group's 2014 results.

Group Mineral Resources

The Company's Asacha property contains approximately 800,000 oz. of gold and about 1.9 million oz. of silver in total mineral resources calculated to JORC standards. The resource estimate for the Asacha deposit was updated by QG Pty Ltd (QG) to the end of December 2014 to incorporate new data from mining development and to account for mining depletion during 2014. A copy of QG's report is available on TSG's website.

Asacha's Main zone hosts six defined veins. Three veins have been defined in the separate East zone, with mineralisation generally of lower tenor and width. Asacha's Resources estimates were classified according to the guidelines of the JORC Code (2012). Classification took account of data quality, confidence in geological interpretation and confidence in block estimations. Some of these aspects are necessarily subjective. Classifications were applied by digitisation of polygon boundaries between classes in long section view. Resources were only classified and reported within constrained vein volumes.

Based on the presence of the operating mine and mill, existing mine economics, the potential for incremental development access to deeper and more distal parts of the orebody, and the potential for further exploration success, QG opined that all of the vein resources defined at Asacha have a reasonable prospect of eventual economic extraction and that a comparison of reported mill production to the undiluted resource model indicates that the achieved tonnage is in line with expectation, after likely mining dilution is taken into consideration.

4 g/t cut-off

The information in this announcement relating to Asacha's mineral resources is based on information compiled by Michael Stewart.

Michael Stewart is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. He is a full time employee of QG Pty Ltd, and has no interest in, and is entirely independent of, TSG. Michael Stewart has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code).

Mr Stewart is a Qualified Person under the AIM Rules and consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

Financial Review

The result for the year is a loss after tax of $127,000 (2013 loss: $15.7 million). The directors do not recommend payment of a dividend (2013: nil).

Revenue from the sale of 36,131 oz. of refined gold (2013: 30,889 oz.) and 44,395 oz. of refined silver (2013: 40,909 oz.) was $45.4 million and $801,000 respectively (2013: $43.3 million and $926,000). Average realised prices were $1,256 per oz. gold and $18 per oz. silver (2013: $1,402 per oz. gold and $23 per oz. silver). Cost of sales was $31.6 million (2013: $46.4m), the 31.8% reduction principally reflecting a $5.6 million reduction in the depletion charge and the impact of the significant depreciation of the Russian rouble in the second half of 2014, partially offset by the 16.9% increase in gold oz. sold. The depletion charge included $nil (2013: $7.5 million) in respect of mining preparatory and development works undertaken prior to the commencement of production at Asacha which were fully amortised between 2011 and 2013. Cost of sales per oz. gold, net of the credit from silver sales revenue, was $853 (2013: $1,471). Cash cost per oz. gold including depletion, net of the silver credit and excluding royalty, was $592 (2013:$1,029).

Additional impairment provisions totalling $4.1m (2013: $5.4m) have been recognised against the ore stockpile, reflecting the impact of a lower gold price on lower grade material. These comprise $4.1 million (2013: $4.5 million) against the surface ore stockpile, reflecting the difference between its expected net realisable value at the 31 December 2014 gold price of $1,184/oz. and cost, including processing, refining and royalties and a provision of $nil (2013: $912,000) against an underground ore stockpile which was moved to the surface ore stockpile during 2014. At a gold price of $1,184/oz., the processing and refining of the ore stockpile will be cash generative, wherefore it is expected that the entire stockpile will be processed, with some material likely to be blended with higher grade material.

The Group recorded an operating profit for the year of $4.4 million (2013 operating loss: $13.3 million), after recognising the $4.1 million increase in the inventory impairment provision discussed above, $58,000 impairment charges against assets under construction and exploration and evaluation expenditure at the Rodnikova property (2013: $296,000) and an exchange loss of $485,000 (2013 exchange gain: $1.3 million). Administrative expenses amounted to $5.6 million (2013: $6.8 million). Russian administrative expenses, which included the write off of non-recoverable Value Added Tax (VAT) of $37,000 (2013: $750,000), amounted to $4.6 million ($5.8 million). UK administrative expenses were $987,000 (2013: $1.0 million).

Finance income was $99,000 (2013: $14,000). Finance costs were $3.3 million (2013: $3.2 million).

Total non-current assets decreased from $99.5 million to $91.0 million. Mining properties of $27.0 million (2013: $27.1 million) reflected $3.1 million additional mining and mine development, offset by depletion of $3.2 million. Property, plant and equipment decreased by $9.1 million to $54.5 million, primarily due to depreciation charges. Inventories at Asacha at 31 December 2014 comprised $2.8 million gold and silver in production (2013: $2.3 million), $4.6 million ore stocks (2013: $5.0 million), of which $4.4 million (2013: $2.3 million) has been recognised as a non-current asset and $2.9 million fuel and other materials and supplies (2013: $2.6 million), in aggregate $10.3 million (2013: $9.9 million). As discussed above ore stocks are stated net of impairment provisions totalling $9.6 million (2013 $5.4 million), comprising $9.1 million (2013: $2.2 million) allocated against non-current assets and $478,000 (2013: $3.2 million) against current assets. Recoverable VAT at 31 December 2014 was $527,000 (2013: $806,000), all of which is expected to be received during 2015.

Loans and borrowings at 31 December 2014 totalled $26.1 million (2013: $28.5 million), comprising $24.9 million (2013: $26.2 million) outstanding under two five year facilities, totalling $43.0 million, provided by Sberbank for the development of the Asacha project, $1.1 million short term loan finance (2013: $995,000), including accrued interest, provided by TSG's major shareholders UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA), $nil other loans (2013: $827,000) and $138,000 finance lease obligations (2013: $490,000).

Asacha mine

A further $14.6 million of capital expenditure, including contingency of $2.0 million, will be incurred between 2015 and 2018, comprising:

At a gold price of $1,200/oz., Life of mine ("LOM") cash costs on an all equity basis on total expected gold production of 584,000 oz. are forecast at $677/oz., before taking account of a $29/oz. credit from silver production (assuming a silver price of $16/oz. over the remaining mine life). Cash costs including all royalties and taxes (in total $29.5 million, net of VAT recoveries) on an all equity basis are forecast at $728/oz. Total costs on the same basis, after depreciation of all capital expenditure (including $30.5 million post start up) and including all pre-start up mining and other operating expenditure, are forecast at $1,015/oz., giving a $185/oz. margin at a gold price of $1,200/oz.

In light of the fall in the gold price since 2013 and the continuing problem with ore dilution which affected the mine's operating performance in the year the Board carried out an impairment review of the mine's economic model, assuming a gold price of $1,200/oz., an expected economic life of 10 years and a 10.8% discount factor, to determine whether there had been any impairment in the Group's mining properties and/or property, plant and equipment or the Company's investment in its 100% owned subsidiary ZAO Trevozhnoye Zarevo (TZ) which holds the licence for the mine. The Board concluded that no impairment had arisen in respect of the Group's mining properties or property, plant and equipment but that an impairment provision of $34.4 million (2013: $nil) was required against the Company's investment in TZ.

Events after the reporting date

On 20 March 2015, in addition to the $300,000 loan repayment due on that date, TZ prepaid $2.2 million of its two loan facilities for the Asacha project, which had been scheduled to be repaid on in 2018. On 25 March 2015 and 27 March 2015 TZ made further prepayments of $800,000 and $900,000, respectively due on 20 June 2015 and 20 December 2015. No further repayments of those facilities are due in 2015.

On 2 March 2015 TSG's major shareholders UFG Asset Management and AngloGold Ashanti Limited agreed to extend the repayment dates of their respective loan facilities (UFG $570,000, AGA $321,000) to 31 March 2015. Both facilities were repaid in full on 12 March 2015.

Annual General Meeting

The 2014 Annual Report and Accounts have been sent to TSG's shareholders, to be submitted for their approval at the Company's AGM, which will be held in London on 29 June 2015 at 11:30 am at the offices of BDO LLP, 55 Baker Street, London W1U 7EU.

Copies of the annual report and annual accounts are available at the company website at http://www.trans-siberiangold.com/.

Ends

Contacts:

TSG +44 (0) 1480 811871

Simon Olsen +44 (0) 7770 484965

Cantor Fitzgerald Europe +44 (0) 207 894 7000

Stewart Dickson (Corporate Finance)

Jeremy Stephenson (Corporate Broking)

Trans-Siberian Gold plc

Consolidated Statement of Financial Position

Trans-Siberian Gold plc

Consolidated Statement of Comprehensive Income

Trans-Siberian Gold plc

Consolidated Statement of Cash Flows

Notes

1. Going concern

The Group has reported an operating profit for the year of $4.4 million, which is stated after significant non-cash depreciation and impairment charges. The Directors have reviewed the Group's cash flow forecast for the period to 31 December 2016 and they believe that, taking account of reasonably possible changes in commodity prices, trading performance and expenditure and scheduled repayment of bank loan facilities, the Group has adequate resources to continue in operational existence for the foreseeable future, wherefore the directors are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

2. Mining properties

Mining properties assets relate to the Asachinskoye (Asacha) mining licence held by the Company's subsidiary ZAO Trevozhnoye Zarevo (TZ).

The licence includes the right to extract gold and silver and, pursuant to the decision of the Federal Agency on Subsoil Use on 12 September 2013, its term has been extended for four years until 1 September 2018, reflecting the seven year mine life envisaged by the mine's original design documentation. TZ intends to apply for a further extension to the licence term, taking account of the results of exploration at Asacha since its resources were approved by the Russian State Geological Commission for Reserves in 2002.

In light of the fall in the gold price since 2013 and the continuing problem with ore dilution which affected the mine's operating performance in the year the Board carried out an impairment review of the mine's economic model, assuming a gold price of $1,200/oz., an expected economic life of 10 years and a 10.8% discount factor, to determine whether there had been any impairment and are satisfied that no impairment has arisen in respect of mining properties.

3. Property, plant and equipment

i. Assets under construction comprise $512,576 (2013: $1,781,801) for building construction and infrastructure at Asacha and $nil (2013: $78,477) for plant and equipment at Asacha. As discussed in Note 4, a 100% impairment provision was recognised in 2013 in respect of Assets under construction at Rodnikova.

ii. $1,004,623 of the depreciation charge is included in additions to mining properties. $157,357 (2013: $638,165) of the depreciation charge related to property, plant and equipment used on exploration and evaluation projects or assets under construction and was capitalised in exploration and evaluation costs or property, plant and equipment in accordance with the Group's accounting policy. $1,949,178 (2013 $1,974,209) of the depreciation charge is included in inventories.

iii. The net carrying amount of property, plant and equipment includes the following amounts in respect of assets held under finance leases

In light of the gold prices which have prevailed since 2013 the Board carried out an impairment review of the mine's economic model as discussed in Note 2 and are satisfied that no impairment has arisen in respect of property, plant and equipment.

4. Deferred exploration and evaluation costs

Deferred exploration and evaluation expenditure relates to the "Asacha East" zone, a separate orebody within the Asacha mineral rights licence discussed in Note 2, and the Rodnikova mining licence, also held by the Company's subsidiary ZAO Trevozhnoye Zarevo (TZ) which was terminated in September 2014.

i Additions include capitalised PPE depreciation.

Under the Rodnikova Licencing Agreement as revised in 2006, TZ was required to complete the exploration programme of the licence area and to submit a geological report containing reserve calculations for approval by the state geological authorities before 31 December 2008 and to prepare a feasibility study for the development of the deposit before 31 March 2010. A pre-feasibility study containing the required reserve calculations was submitted in December 2008. The comments and recommendations of the State Expert Commission for Reserves were received in August 2009. During 2010 the geological report and the pre-feasibility study were revised to take account of further geological exploration results. The final report on Rodnikova's Mineral Reserves and the pre-feasibility study were approved by the authorities in 2011.

In 2012 the Federal Service for Supervision of Natural Resources Management prescribed the implementation of two provisions of the Rodnikova licence by April 2014, first the finalisation of the design documentation, secondly the commencement of work at the deposit, failing which the federal authorities would consider the termination of the licence. Although TZ sought to comply with these requirements, it was unclear in 2012 whether there was adequate time or available funding to do so. Therefore a full impairment provision was recognised in 2012 in respect of Rodnikova's deferred exploration and evaluation costs. A design institute's pre-feasibility study indicated that, at the lower gold prices which have prevailed since the second half of 2013, exploitation of the Rodnikova deposit would not be economically justified. TZ applied to the federal authorities for an extension of the licence term beyond its scheduled expiry on 1 September 2014 in order to evaluate the cost effectiveness of various technical solutions to improve the project's economics identified by the design institute, however on 5 September 2014 the Company was informed that the licence had been terminated.

5. Deferred tax

Deferred income tax at 31 December relates to the following:

6. Inventories

Gold in progress, silver in progress and ore stocks include mining properties depletion $90,000 (2013: $180,000). Ore stocks are stated net of impairment provisions totalling $9.6 million (2013: $5.4 million) including a 100% provision of $nil (2013: $912,000) against a low grade underground ore stockpilewhich was moved to the surface ore stockpile during 2014. The $9.6 million provision (2013: $4.5 million) against the surface ore stockpile, part of which has been classified as non-current inventories, reflects the difference between its expected net realisable value at a gold price of $1,184/oz. and cost, including processing, refining and royalties.

7. Borrowings

Movement in borrowings is analysed as follows:

In 2009 and 2010 ZAO Trevozhnoye Zarevo (TZ) arranged two loan facilities for the Asacha project, in total $43 million, with the Russian bank Sberbank. Repayments under the initial five year $25 million facility and the second $18 million facility, each of which bears an annual interest rate of 10.5%, commenced in November 2011 and September 2012 respectively. The loans are secured by pledges over certain moveable assets and the shares of TZ and OOO Trans-Siberian Gold Management, TSG's other subsidiary. On 20 September 2013 Sberbank agreed to extend the terms of the two loan facilities to December 2018. Repayment of the $26.5 million then outstanding under the two facilities commenced in March 2014. In accordance with IAS39, the fees and commissions paid to Sberbank in respect of the loan restructuring are amortised over the extended terms of the facilities, resulting in a net present value adjustment of $354,000 (2013: $433,000). It was agreed that a gold price hedge programme would be implemented for the revised term of the facilities, with gold price protection for the initial 12 month period to be put in place by 1 November 2013. It was subsequently agreed with the bank to defer the start of the price protection programme with an amendment to the interest rate until such commencement at an annual cost of approximately $250,000.

In June 2012 UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA), each a related party by virtue of their then respective 55.42% and 31.17% holdings in the shares of the Company, agreed to provide TSG with short term facilities, in aggregate $781,000, on commercial terms including interest at 8%. In September 2012 the terms of the two facilities were extended to 1 March 2013, the revised facility agreements each including an option for the lender, subject to the requisite approval of TSG's shareholders, to convert any part of the outstanding loan into TSG shares at a price equivalent to the volume weighted average price of TSG's shares for the period of 60 business days prior to notice of such conversion, exercisable prior to scheduled repayment. In January 2013 the two facilities were increased to an aggregate $891,000. The terms of the two facilities were further extended, ultimately to 31 March 2015. Both facilities were repaid in full on 12 March 2015.

In consideration of a loan facility provided by UFG in 2009, the Company also agreed, subject to obtaining the necessary shareholder approvals, to issue warrants to subscribe for additional TSG shares to UFG on terms to be agreed and considered as fair and reasonable by the Company's Board (excluding those directors connected to UFG) after consultation with TSG's Nominated Adviser. No warrants were issued in 2013 or 2014 or after the reporting date.

8. Share capital and premium

All shares are ordinary shares with a par value of 10 pence.

9. Revenue

10. Cost of sales

11. Directors' remuneration and other interests

The aggregate remuneration of the directors of the Company was as follows:

The following table shows the directors who served during the year or in the previous year together with an analysis of their remuneration:

Bonuses were awarded in 2013 to Mr Khilov and Mr Olsen in respect of their performance in 2012 but with payment deferred until 2014. The terms of Mr Olsen's employment contract include a salary sacrifice arrangement, whereby, in consideration of a £23,113 (2013: £22,660) reduction in his annual salary, the Company makes contributions to his personal pension plan.

Mr Khilov's employment contract includes an entitlement to two cash bonus payments, each in amount equivalent to eight months' salary then payable, for which the performance criteria agreed by the Remuneration Committee on 29 August 2014 comprise Asacha plant production, average gold grades in ore delivered to the Asacha plant and full cash cost targets, full cash cost being the total cost of sales excluding depletion, depreciation and royalty less revenue from sales of silver (net of royalty) divided by gold ounces sold. In each case, all the required performance criteria must be satisfied over a twelve month period.

The following tables show the beneficial interests of the directors who held office at the end of the year in the ordinary shares of the Company (except for the beneficial interests of Messrs Sasson and Ryan by virtue of their connection with the Company's major shareholder UFG Asset Management) and the interests of directors in share options:

$ exercise prices are shown for indicative purposes only, calculated at 31 December 2014 exchange rates.

All options were granted in respect of qualifying services under an employee share option scheme approved by special resolution of the Company on 18 August 2008. Exercise of 50 per cent of the Options was subject to approval of the Asacha plant by the State Commission and first production of gold at Asacha. Exercise of the remaining 50 per cent of the Options was subject to the Asacha plant achieving throughput of 10,000 tonnes for two consecutive months.

12. Events after the reporting date

On 20 March 2015, in addition to the $300,000 loan repayment due on that date, ZAO Trevozhnoye Zarevo (TZ) prepaid $2.2 million of its two loan facilities for the Asacha project, which had been scheduled to be repaid in 2018. On 25 March 2015 and 27 March 2015 TZ made further prepayments of $800,000 and $900,000, respectively due on 20 June 2015 and 20 December 2015. No further repayments of those facilities are due in 2015.

On 2 March 2015 TSG's major shareholders UFG Asset Management and AngloGold Ashanti Limited agreed to extend the repayment dates of their respective short term loan facilities (UFG $570,000, AGA $321,000) to 31 March 2015. Both facilities were repaid in full on 12 March 2015.

13. Basis of accounting and presentation of financial information

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. However this announcement does not in itself contain sufficient information to comply with IFRS.

The financial information does not constitute the Group's statutory financial statements as defined in section 434 of the Companies Act 2006 but is derived from those accounts. The financial information for the year ended 31 December 2014 has been extracted from the audited accounts of Trans-Siberian Gold plc which will be delivered to the Registrar of Companies in due course. The auditors reported on those accounts and their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The financial information for the year ended 31 December 2013 has been extracted from the audited accounts of Trans-Siberian Gold plc which have been delivered to the Registrar of Companies. The auditors reported on those accounts and their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.