TSG.L Regulatory News (TSG)

Trans-Siberian Gold plc

Asacha project update

London: 2 March 2011 - Trans-Siberian Gold plc ("TSG" or "the Company") (TSG.L)reports on the progress of construction at the Asacha site.

Underground mine development is continuing as planned. During January 2011 more than 130 metres and 1,500 m3 of mine development were completed. The ore stockpile at 31 January 2011 comprised more than 62,000 tonnes.

By mid February 2011, more than half of the plant building's internal concrete walls had been completed. The building's multi-layer roofing with thermal insulation was close to completion with 100% of the lower layer installed. Construction of ventilation and heating systems is underway. The coarse ore bin's concrete parts are also under construction. 

In spite of snowstorms and strong winds earthwork and geomembrane laying activities on the tailings storage facility have continued.

The thermally insulated repair shop building is ready, except for completion of its supply system, concrete floor and equipment foundations. Cold storage hangars have been completed and the sewage treatment facility awaits installation of its power supply, ventilation and heating. Construction of the site's water, heat supply and sewage networks is in progress. The powerline from the site's diesel generators to the mine has been completed. The license for cyanide storage has been granted and the facility commissioned.

As a result of a 30% increase in diesel fuel costs, additional soil replacement works for tailings storage and the water treatment pond and additional operating expenditure due to the extended construction period, the total capital cost of the Asacha project prior to commencement of production is now estimated at $128.5 million, net of $10.2 million VAT recoveries, compared to the September 2010 estimate of $124.5 million (net of $8.3 million VAT recoveries). The total project cost includes pre-commissioning mining and plant costs of $4 million, other pre-operating expenditure of $36.8 million, "first fill" equipment spares and consumables of $1 million and contingency of $0.6 million.

At a gold price of $850/oz, Life of mine ("LOM") cash costs on an all equity basis on total gold production of 590,000 oz are forecast at $218/oz, before taking account of a $17/oz credit from silver production (based on an assumed silver price of $10/oz). Cash costs including all royalties and taxes (in total $72.9 million, net of VAT recoveries), on an all equity basis are forecast at $342/oz. Total costs on the same basis, after depreciation of all capital expenditure (including $27.5 million post start up) and pre-start up mining and other operating expenditure, are forecast at $609/oz, giving a $241/oz margin at a gold price of $850/oz.

Actual expenditure on the project up to December 2010 amounted to $112 million, net of $7.7 million VAT recovered. The remaining costs prior to the commencement of production are estimated at $16.5 million, net of further VAT recoveries of $2.5 million, comprising:

A further $27.5 million of capital expenditure is expected to be incurred after the commencement of production (including $6.3 million on mine development, $5.1 million on the plant, tailings storage and solid waste landfill, $11.6 million for the completion of the external power line and $4.5 million contingency).

Ends

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