TSG.L Regulatory News (TSG)

8 June 2020

Trans-Siberian Gold plc

("TSG", the "Company", or the "Group")

Final Audited Results

Trans-Siberian Gold plc (TSG.LN), a low cost, high grade gold producer in Kamchatka, Russia, is pleased to announce its audited financial results for the year ended 31 December 2019.

Financial Highlights:

· Record-breaking revenues of $63.1 million, up 5.5% (2018: $59.8 million)

· EBITDA of $26.4 million, up 10.5% (2018: $23.9 million)

· Profit Before Tax of $12.6 million (2018: $17million)

· Proposed final dividend of $0.023 per share amounting to $2 million in aggregate (2018: $1 million)

· Total dividend pay-out for the year of $4 million (subject to final dividend approval at the AGM) (2018: $7.7 million)

Operational Highlights:

· Record annual production of gold in dore at 43,479 oz. a 3.2% increase YoY (2018: 42,128 oz.)

· Maintained low cash cost per oz. gold sold at $513 (2018: $516)

· Further improvement in All-in Sustaining Costs per oz. gold $941 (2018: $1,049)

· Cost of sales per oz. of gold at $878 (2018: $788)

· Awarded licence for Rodnikova deposit

· Zero fatalities occurred in FY 2019

2020 Outlook:

· Limited impact of COVID-19 on operations in 2020 to date with production uninterrupted

· Reiterated full year 2020 gold production guidance of 38,000-42,000 oz

· Strengthened short-term liquidity of the Group with $10 million loan facility secured on attractive terms

A copy of the Company's Annual Report and Financial Statements is available on the Company's website: www.trans-siberiangold.com 

Charles Ryan, Non-Executive Chairman of TSG, commented:

"2019 was a year of significant development for Trans-Siberian Gold, as we made substantial progress in executing our strategy to drive shareholder value and continue generating industry-leading shareholder returns. We achieved our highest ever revenue of $63.1 million, delivering solid EBITDA growth in a record year for gold. By acquiring a premier and strategically positioned asset, the Rodnikova deposit, we have secured near term prospects for organic growth, while continuing to pursue selective accretive M&A opportunities.

COVID-19 represents a period of significant uncertainty for our industry. Whilst our operations remain unaffected, we remain vigilant and are managing our operations with the highest degree of responsibility to mitigate the spread of the virus, to safeguard our employees and ensure business continuity."

ENDS

About TSG

TSG is focused on low cost, high grade mining operations and stable gold production from its 100% owned Asacha Gold Mine in Far East Russia. The Group also holds the licence for the development and exploration of the Rodnikova deposit, one of the largest gold fields in South Kamchatka.

Additional information is available from the Company's website: www.trans-siberiangold.com

Market Abuse Regulations

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

Disclaimer

This announcement contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should" or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets, fluctuations in interest and/or exchange rates and metal prices; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements.

Chairman's Statement

I am pleased to present the Company's annual report and accounts for the year ended 31 December 2019, a significant year for Trans-Siberian Gold.

I am very proud of the achievements delivered by the Company this year.

In 2019, we once again achieved record production.

Executing our strategy

2019 was a year of significant development for Trans-Siberian Gold as we execute our strategy to drive shareholder value.

We have continued to improve our operational performance, expand our portfolio of gold assets and delivered shareholder returns through dividends and a share buyback.

Operations

In the eighth full year of our operations at the Asacha mine we achieved our highest ever revenue of $63.1 million, building on our successes from 2018 (revenue: $59.8 million). The average realised price of gold sold in 2019 was $1,399/oz, a 10.6% increase from $1,265/oz in 2018.

2019 saw a continuation of the favourable grades mined towards the end of 2018. Consistent good grade performance, coupled with sustained high recoveries throughout the year, resulted in 43,479 oz of gold produced in 2019. Towards the end of the year, mining operations were conducted in the south and north flanks of the Main Zone, which comprises weaker and more erratic gold mineralisation, and the resulting blend of lower grade stoping ore with existing stockpiled ore led to lower average grades in Q4.

2019 also saw us report a re-evaluation of our resources, including a downgrade of the Mineral Resource Estimate (MRE) for the Asacha mine. Notwithstanding this, we are grateful to have attained greater certainty in our resource base, and to have improved our understanding of the ore body. We remain confident that we have both the resources and the expertise to upgrade the mineral resource at Asacha, and are heartened by initial developments of our new drilling campaign around Vein 25.

In April 2019, we acquired the licence for the exploration and development of the Rodnikova gold deposit, one of the largest gold fields in South Kamchatka, for a tenure of 20 years. Located strategically close to our Asacha mine, we are well placed to develop this highly prospective deposit. The quality of the deposit was confirmed with the issuance of a JORC-compliant mineral resource estimate in February 2020, and the initiation of the Scoping Study for Rodnikova.

In addition to our focus on operational excellence we maintain a high level of focus on safety at our operations and I am pleased to report zero fatalities among our employees in 2019. We strongly prioritise the safety and wellbeing of all our employees and make every effort to ensure that the highest standards of health and safety are maintained.

Financial Performance

We upheld our position as one of the highest-yielding stocks on the London Stock Exchange, and in respect of 2019 we have paid and propose to pay a total of $4 million to our shareholders in dividends.

We further increased our value for shareholders in May 2019 with the completion of an accretive 21% share buyback at an attractive discount, resulting in added value for all our shareholders. UFG remains a supportive shareholder in the Company with a holding of approximately 65%.

Gold industry trends

2019 was a fantastic year for gold. The average market gold price in 2019 was $1,393/oz, peaking at a six-year high of $1,557/oz in September.

The World Gold Council noted that 2019 saw gold's best performance since 2010, rising by 18.4% in USD terms over the year and outperforming major global bond and EM stock benchmarks. Demand for gold increased, with central banks representing a key driver, accumulating over 668 tons in gold purchases in 2019, primarily during the first half of the year.

2020 has seen both significant pricing rallies and a certain level of volatility as the market reacts to uncertainty related to the Covid-19 pandemic. Gold-backed ETFs have seen prominent inflows in the first part of the year, propelling prices to $1,764/oz in May.

The Board remains confident in the demand for gold in the long term.

Governance

We are proud of the processes we have in place to ensure the highest standards of corporate governance, and in November 2019 our relationship with our majority shareholder, UFG Asset Management, was strengthened through the signing of a Relationship Agreement. UFG is one of the leading Russia-dedicated Western multi asset investment managers, and a long-term supportive majority shareholder of our company.

We welcomed a request from the Church of England Pensions Board in 2019 to provide greater disclosure on the management of our tailings storage facilities (TSFs). We are committed to increasing our own transparency and providing our shareholders with full disclosure, and support the general movement towards greater transparency in the sector.

In 2019, we were pleased to welcome our Chief Operating Officer, Eugene Antonov, to the Board of Directors.

Outlook and priorities

The current situation surrounding Covid-19 represents significant uncertainty for our industry. We are following government guidelines in our efforts to mitigate the spread of the virus, and are managing our operations with the highest degree of responsibility.

Our key priority in 2020 is to maintain stable gold production and cost performance at our flagship asset, the Asacha Gold mine. We continue to progress our drilling campaign, and are focused on the expansion of our resources at Asacha, with plans currently underway to commence mining in the East Zone of the deposit.

In addition to this, we are progressing with our evaluation of Rodnikova and the scoping study for the development of the deposit, and look forward to providing updates on this exciting prospect.

I would like to take this opportunity to express my heartfelt thanks to all our employees. Particularly in light of the current uncertainty we now face related to Covid-19, ensuring the health and wellbeing of our people remains our first priority.

We remain committed to our strategic goals, and we are well placed to pursue opportunities that will complement our portfolio and continue to offer sustainable returns to our shareholders.

Charles Ryan

Chairman

5 June 2020

Strategic Report

The Directors present the Strategic Report for the year ended 31 December 2019.

Strategy

The Group seeks to provide investors with access to a company capable of generating industry-leading shareholder returns, while maintaining a commitment to operational excellence and its social and environmental responsibilities. The Group's current corporate strategy is based on the following three pillars:

1.Enhance existing operations

2.Utilise stable platform for future growth opportunities

3.Pursue selective accretive M&A opportunities

Principal activities

Trans-Siberian Gold plc is a UK-based resources company, whose Asacha Gold Mine in the Far East of the Russian Federation has been in production since September 2011.

The Company is a public limited company, operating under the laws of England and Wales (the principal legislation being the Companies Act 2006), incorporated and registered in England and Wales with registered number 1067991 and domiciled in the United Kingdom.

TSG is committed to creating value for all stakeholders on a sustainable basis. For shareholders, value is derived from capital appreciation in the company's share price and distributions in the form of dividends and share buybacks. Value is created by supporting Russia's Far East economy through taxes paid, employment and investment in communities.

How we deliver our strategy & create value

The Group makes use of various inputs and assets in our business activities to create shareholder value. Our business is focused on low-cost gold production and enabling investments. The outputs represent the delivery of our business strategy.

Operating and Financial Review

TSG is focused on low cost, high-grade mining operations and stable gold production from its 100% owned Asacha Gold Mine in Kamchatka, Far East Russia.

The Group also holds the licence for the development and exploration of the Rodnikova Gold Deposit, estimated to be one of the largest goldfields in Kamchatka.

Asacha Gold Mine

Production

In 2019, the eighth full year of its operations, Asacha achieved an all-time record annual production of 43,479 oz. of gold in doré (2018: 42,128 oz.) and an all-time record annual production of 111,557 oz. of silver in doré (2018: 105,069 oz).

The average processed ore gold grade in 2019 was 7.8 g/t, 5% above the 2018 average 7.4 g/t, principally as a result of the improvements in mine development and availability of multiple stopes in the first part of the year. The availability of multiple high grade stopes prepared earlier facilitated the continued delivery of high grade stoping ore to the processing plant in the first part of the year. However, in the fourth quarter, mining was mostly conducted in the south and north extreme flanks of RL100 and below; in the Main zone, gold mineralisation becomes weaker and more erratic at depth. This vertical zonation is typical of epithermal systems. Lower grade stoping ore was required to be blended with existing stockpiled ore, which resulted in a lower average mill feed grade during the period.

In the first quarter of 2019, the average processed ore gold grade was 8.8 g/t, following a record high of 9.1 g/t in the fourth quarter of 2018. In the second and third quarters, the average grade remained high at 8.4 and 8.3 g/t respectively; however, in the fourth quarter, the grade declined to 6.0 g/t.

Average dilution excluding rockfalls improved from 36% in 2018 to 35% in 2019, as a result of mining process optimization, including improved ground support techniques. In the first quarter of 2019 significant efforts were focused on the construction of a permanent pumping station at level 100m which was completed in May 2019. The water ingress problem has materially reduced since the pumping station has been constructed and commissioned.

In the first half of 2019 TSG performed 3 weeks planned maintenance of the mill and other plant equipment which was done on schedule and on budget. This period of planned downtime was completed and had very little impact on operations. Different types of mill liners and grinding media were tested throughout 2019 in order to reduce future scheduled mill downtime.

In February 2019 the Company changed refineries and now refines its doré at the Novosibirsk refinery (having previously used a refinery in Krasnoyarsk). More information about the Novosibirsk Refinery is available at: https://affinaz.ru/en/home/. This change has resulted in a substantial decrease in laboratory variances.

Ore processing at the Asacha plant involves:

· two-stage grinding with semi- autogenous grinding at the first stage, ball milling at the second stage, pulp classification in hydrocyclones by 0.75mm size and hydrocyclones' slurry thickening in a high-capacity thickener;

· cyanidation and carbon-in-leach process;

· electric elution of loaded carbon by basic solutions under pressure using IPS technology, acid treatment and thermal regeneration of carbon;

· melting of cathode deposits into doré alloy; and

· cyanide destruction of slurry tailings by chlorination and storing of neutralised tailings as diluted slurry.

Mining and production at Asacha in 2019 is shown in the following table:

In 2020, the Company expects to achieve gold production in the range 38,000-42,000 oz. (2019: 43,479 oz.). The expectation of a modest decrease in mine production year-on-year due to gold mineralisation in the Main Zone becoming lower in grade and more erratic at depth. Lower grade stoping ore is required to be blended with existing stockpiled ore, which results in a lower average mill feed grade. The mine plan and management budget for 2020 anticipates lower grades in the first half of the year. In line with our budget the Group plans to commence mining in the East Zone of the Asacha Gold Mine, which contains significantly higher grade ore, in the second half of 2020.

Employees and safety

At 31 December 2019 TSG's subsidiary TZ employed 604 staff, including personnel working in two shifts at the site (2018: 702 people).

Efforts to improve the health and safety culture at Asacha continued. There were no fatalities at the mine and 7 light injuries in 2019 (2018: 3 light injuries, 1 fatality). The Company continues to invest in employee training and development, providing to the employees various training courses, such as labour and fire safety, accident response and emergency management, safety and the safety of hydro-technical facilities. After the period end, regrettably a non-operational fatality occurred due to a road traffic accident between the Asacha Gold Mine and Petropavlovsk- Kamchatskiy.

Reserves and Resources

As at 1 December 2019, the total mineral resource estimate for Asacha (Measured, Indicated and Inferred), as reported in accordance with the JORC Code (2012) was 552,000 tonnes with an average gold grade of 17.63 g/t and silver grade of 38.03 g/t, for approximately 313,000 oz. of gold and 675,000 oz. of silver.

The mineral resource estimate for the Asacha Gold Mine was updated by Seequent UK Ltd ('SUKL') as at 1 December 2019. SUKL has updated the resource estimate of Asacha at the end of every year from 2012. The purpose of these updates is to incorporate new data available from exploration, drilling, mining development and to account for mining depletion. SUKL's full report is available on the Company's website. The resource at Asacha occurs in two zones: Main zone (currently being mined) and East zone (not yet mined but expected to commence in 2020).

The Main zone hosts six defined veins, with the majority of the resource contained in two of these, QV1 and QV2. Three veins have been defined in the separate East zone of which QV25 is most significant. The Main zone has a strike length of approximately 1500m, whilst the V25 South and V25 North in the East zone now have resources defined over a total of approximately 800m

Asacha JORC mineral resource - 1 December 2019

Notes:

· Resources are reported above 4m*g/t Au cut-off grade

· Resources are reported after mining depletion

· Tonnage and grades have been rounded to reflect an appropriate level of precision

· Rounding may mean that columns do not sum exactly

· Mineral Resources are classified according to the definitions of the JORC Code

· The Competent Person for this report of Mineral Resources is Carrie Nicholls, Senior Consultant of Seequent UK Ltd ('SUKL'). Carrie Nicholls is a geologist with more than 15 years of experience in geostatistical analysis, geological modelling and resource estimation. She holds a B.Sc. (Hons) degree in geology from Bristol University, UK and a M.Sc. in Mineral Resources from the University of Wales, Cardiff, UK. She is a member of the AusIMM and Geological Society of London, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity undertaken to qualify as a Competent Person.

Sources of change between 2018 and 2019 resource estimates

The total (Measured + Indicated + Inferred) declared Mineral Resource Estimate has decreased from 553,000 oz Au and 1,314,000 oz Ag reported as at 31 December 2018 to 313,000 oz Au and 675,000 oz Ag as at 1 December 2019.

Mining depletion, Sterilisation & Rockfall

The Main zone was depleted in the usual manner and consistent with previous estimates. Additionally, this included areas that TSG considered will not be mined due to stability issues, sterilisation and areas that are deemed uneconomic. In previous estimates, SUKL have included some remnant areas of mineralisation around the periphery of the upper levels of the mine. However, following the collapse of the older workings on the Main zone there is no longer any realistic prospect that these areas of remnant mineralisation can be safely recovered due to geotechnical instability.

Difference due to data and interpretation (including drilling)

The mineral resource model has been updated to incorporate new diamond drilling on QV1 and QV2 in the Main zone and QV25 in the East zone.

On the Main Zone, 94 core drill holes for 6,894m were drilled underground from the 100m level to infill below 100m, targeting vein extensions on both QV1 and QV2. This represents a large increase in the amount of drilling available on Main Zone targets below the 100m

level. In addition, 329.8m of channel sampling in 136 separate channels were collected, mainly from the north end of the Main Zone on QV1 at the 100m level, and from the southward extensions of development on QV2 between 100 and 150m. In the Main Zone, gold mineralisation is becoming weaker and more erratic with depth, with an increase in the presence of base-metals minerals. This vertical zonation is typical of epithermal systems.

Difference due to estimation parameters

Top caps have historically been applied to the MRE to allow for the highly skewed grade distributions that typically occur in epithermal deposits, with annual reconciliation against production used

to validate the choice of cap value. Over the previous 12 months, as mining progressed into less well drilled and lower grade parts of the Main Zone below the 150m level, more localized reconciliation against production sampling indicated that mineral resources were locally overestimated, likely due to insufficient constraint on high grade samples. A complete re-analysis of estimation parameters for all veins was undertaken, in particular the treatment of extreme grades through top-capping. Consequently, a more stringent top capping has been used for this estimate than in previous models.

Cut-off Grade

Previously SUKL have reported the in-situ resource using an Au grade cut-off of 4g/t. In the lower levels of the mine, veins are thinner, and it is more appropriate to apply a dual cut-off on both contained metal (linear grade=grade*thickness) and grade. The updated MRE is reported above a dual cut-off of 4m*g/t (vein thickness*Au grade) and 4 g/t Au. The effect of this change is minimal.

The following table gives a breakdown of adjustments:

Exploration

In the fourth quarter of 2019, the Group commenced a major exploration drilling programme. A total of approximately 22,000m of surface drilling will target the lateral extents of the Main zone and QV25 as well as approximately 6 exploration targets following data compilation and re-interpretation. A further 2,000m of underground drilling will be conducted on the Main zone at depth.

The low sulfidation epithermal style of mineralisation found at the Asacha Gold Mine is favourable for high-grade deposits. The Asacha licence area and more widely, the regional district, remain under explored which the Company believes presents an opportunity to increase gold resources. As such, the Company has ramped up the scope and scale of its exploration activities.

The Company announced drilling results on 15 January 2020 and 27 April 2020 from the drilling programme. To date the highlights include: Discovery of an extension of Vein 25, 'Vein 25 North', just 100 metres to the north of the original Vein 25, now designated as Vein 25 South

Initial drilling results have provided some high-grade intersections on Vein 25 North, including:

133 g/t Au, 57 g/t Ag over 4 m Hole ID C1915

22 g/t Au, 69 g/t Ag over 1 m Hole ID C1918

89 g/t Au, 109 g/t Ag over 0.5 m Hole ID C2002

10 g/t Au, 244 g/t Ag over 2.5 m Hole ID C2006

13 g/t Au, 194 g/t Ag over 2.3 m Hole ID C2009A

59 g/t Au, 99 g/t Ag over 1.8 m Hole ID C2010

235 g/t Au, 134 g/t Ag over 1.4 m Hole ID C2012

56 g/t Au, 366 g/t Ag over 5.6 m  Hole ID C2037

51 g/t Au, 55 g/t Ag over 5.5 m Hole ID C2020

49 g/t Au, 98 g/t Ag over 5.4 m Hole ID C2050

61 g/t Au, 176 g/t Ag over 4.0 Hole ID C2047

18 g/t Au, 229 g/t Ag over 8.1m Hole ID C2053

83 g/t Au, 231 g/t Ag over 1.2 m Hole ID C2043

38 g/t Au, 450 g/t Ag over 2.1 m Hole ID C2049

35 g/t Au, 225 g/t Ag over 1.4 m Hole ID C2045

10 g/t Au, 90 g/t Ag over 4.8 m Hole ID C2022

30 g/t Au, 255 g/t Ag over 1.3 m Hole ID C2035

26 g/t Au, 21 g/t Ag over 1.2 m Hole ID C2011

Rodnikova

On 23 April 2019, the Russian Federal Agency for Subsoil Use ('Rosnedra') issued a 20-year licence to TZ for the development and exploration of Rodnikova. The acquisition cost of the deposit was $3 million. Taking into consideration the fact that the Asacha and Rodnikova deposits are believed to have similar geology and mineralogy, the Company will determine the suitability of utilising the existing processing techniques and plant at Asacha for the ore at Rodnikova.

The Company engaged SRK to produce an updated JORC-compliant Mineral Resource Estimate for Rodnikova which was published in February 2020.

Rodnikova Gold Deposit JORC mineral resource - 10 February 2020

Notes:

• Mineral Resources are reported in accordance with guidelines and provisions of the JORC Code.

• Mineral Resources were estimated at a cut-off grade of 3.0 g/t within underground mining outlines.

• The Competent Person for this report of Mineral Resources is Mr Robin Simpson, an employee of SRK Consulting (Russia) Ltd. Mr Simpson is a Member of the Australian Institute of Geoscientists (AIG), and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity undertaken to qualify as a Competent Person.

Location

The Rodnikova Gold Deposit is located in the south-eastern part of the Kamchatka Peninsula, in the South Kamchatka ore region, in the Yelizovo administrative district of the Kamchatka Region. There is a 120km road from Petropavlovsk-Kamchatsky to the Rodnikova Gold Deposit, including 65km of asphalt road. The Rodnikova Gold Deposit is approximately 61 km from the Company's operating Asacha Gold Mine.

Previous Exploration

The main exploration works on the Rodnikova Gold Deposit and its flanks included reconnaissance exploration, diamond drilling (223 drill-holes for 47,377m), core sampling, development of two adit levels totalling 822m, with a collection of channel and chip samples, excavation of trenches to trace vein continuity along the strike and channel sampling. The main exploration stages on the deposit were completed in the 1980-1990s. Additional drilling within Rodnikovy mineralised zone and at its flanks were undertaken as part of the 2005-2007 exploration program.

The main exploration reports, drawings and primary field documentation for the Rodnikova Gold Deposit are kept in the regional archives of the Ministry of Natural Resources. SRK is of the opinion that exploration works were generally performed at the level to meet the state standards of the Soviet Union and Russia, and these standards are appropriate for collecting information to be used for Mineral Resource estimation.

The database used to construct the resource model contains information on 223 drill-holes, 332 trenches, 440 clearings and 83 cross-cuts, 15,027 core samples and 12,060 channel samples.

Rodnikovy

Gold mineralisation at the Rodnikova deposit is mainly associated with hydrothermal-metasomatic formations.

The Rodnikovy vein zone is localised in a N-S trending disjunctive fault. The fault thickness is 50-120m, the estimated length is 3km. The fault zone hosts veins: 42, 43, 44, 52 and 53 which are accompanied by apophyses and numerous quartz veinlets. The main plane of the ore-controlling fault is occupied by Vein 44 which is adjoined at various angles from the side of the hanging wall by the remaining veins that form the main branching structure of tensile fracturing.

The main veins are Veins 43 and 44 which contain 80% of the mineralisation of the Rodnikovy vein zone. The maximum thickness of the ore body is 23m and is observed on the 220m level. Gold grade ranges from tenths of a gram per ton to 90-130 g/t, with most samples showing grades within a 4-70 g/t range.

Mineralisation at the Rodnikova deposit is a typical quartz low-sulphidation gold and silver. Gold and associated silver are the only valuable ore components of significance. The main vein minerals are: quartz (42.5-75%), adularia (9.5-16%) and carbonate (5-28.6%). Diagnostic leach data shows that most of the gold in analysed ore (88.7%) is amenable to cyanidation (in the presence of a sorbent). Associated silver is mostly present in a cyanide-amenable form (82.2%).

Vilyuchinsky

The Vilyuchinsky site is located in the north-western part of the ore field, 4 km from the Rodnikovy site, on the watershed of the Bystraya-Paratunka and Vilyucha rivers.

Two systems of ore-controlling faults (sub-meridional and north-eastern) were identified within the site. Of major importance is the system of the N-E trending disjunctive faults that form the Vilyuchinsky ore-bearing vein zone of 400-500m wide traced over some 3km. Productive mineralisation is mainly confined to shallow veins that form tensile fractures (Vein 9). Vein 9 has an average thickness of 2.9m, a strike length of 450m and a dip length of 90m. The average gold grade is 9.82 g/t, silver grade is 67.83 g/t. 80% of mineralisation at Vilyuchinsky is concentrated within Veins 9, Regina, 6 and 13.

Financial Review

Revenue from the sales of 43,782 oz. (2018: 45,956 oz.) of refined gold was $61.3 million (2018: $58.2 million), and of 115,801 oz. of refined silver (2018: 108,749 oz.) was $1.8 million (2018: $1.6 million) demonstrating growth of 5.4% and 12.4% respectively.

Average realised prices were $1,399 per oz. gold and $16.0 per oz. silver (2018: $1,265 per oz. gold and $15.1 per oz. silver). All sales were made on spot basis.

Cost of sales was $40.3 million (2018: $37.9 million), the $2.4 million increase consisting of $2 million additional mining tax due to changes in tax allocation policy as well as higher depletion and depreciation costs. Cost of sales per oz. gold, net of silver credits revenue, was $878 (2018: $788) reflecting the increased absorption of the depletion and depreciation costs.

Cash cost per oz. gold excluding depletion and depreciation, net of the silver credit and excluding royalty, was $513 (2018: $516). All-In Sustaining Costs ('AISC') per oz. gold were $941 (2018: $1,049).

The Group recorded an operating profit for the year of $14.4 million (2018: $18.0 million). In 2018 the operating profit included a reversal of previously recognised impairment provision for ore stockpiles in the amount of $4.0 million. Excluding the reversed impairment in the comparative year, the operating profit in 2019 has increased by 3.1% in 2019.

Administrative expenses amounted to $8.8 million (2018: $8.4 million). Finance income was $0.07 million (2018: $0.03 million). Finance costs were $1.6 million (2018: $1.1 million).

Financial Position

Total equity was $78.2 million at 31 December 2019 compared to $87.2 million at 31 December 2018, after payment of a special interim dividend of $5.7 million ($0.052 per ordinary share) on 28 February 2019, a 2018 final dividend of $0.8 million ($0.009 per ordinary share) paid on 9 August 2019 and an interim dividend of $2 million ($0.023 per ordinary share) paid on 30 October 2019, and share buy back of $9.4 million on 12 July 2019.

Total non-current assets decreased from $93.8 million to $88.5 million. Mining properties decreased by $3.4 million to $44.0 million, reflecting additional progress in mining and mine development, offset by $5.4 million depletion charge. Property, plant and equipment decreased from $43.7 million to $39.2 million, primarily due to additions in buildings ($0.7 million), plant and machinery ($0.3 million), vehicles and mobile equipment ($1.9 million) and assets under construction ($1.5 million), offset by $8.6 million depreciation charges and $1.0 million disposals.

Current assets increased from $23.9 million to $28.8 million. Inventories at Asacha at 31 December 2019 comprised $1.7 million gold and silver in production (2018: $1.4 million), $6.3 million ore stocks (2018: $5.2 million), of which $1.4 million (2018: $2.7 million) has been recognised as a non-current asset and $8.7 million fuel and other materials and supplies (2018: $7.9 million), in aggregate $16.7 million (2018: $14.6 million).

Cash and cash equivalents decreased from $9.7 million to $8.7 million.

Loans and borrowings at 31 December 2019 totalled $25.1 million (2018: $17.1 million), comprising $22.9 million of bank loans (2018: $17.1 million) and $2.2 million of equipment loans (2018: $nil).

Current liabilities at 31 December 2019 totalled $15.8 million (2018: $12.5 million), the increase principally reflecting a $3.3 million increase in borrowings repayable within one year of the reporting date.

The deferred tax liability of $6.7 million (2018: $6.4 million) represents temporary differences between accounting and tax treatment of various assets and liabilities, which may be carried forward to reduce the Group's future tax liability. The Group's gearing ratio at 31 December 2019 was 17.34% (2018: 7.79%).

Management

OOO Trans-Siberian Gold Management, TSG's 100%-owned subsidiary in Moscow, provides managerial, technical, financial and procurement services to TZ and currently has 21 staff, including 2 technical managers based at Asacha and TZ's Managing Director. TSG's Chief Executive Officer and Chief Operating Officer are based in Moscow.

Admission to Advanced Special Economic Zone

In September 2019, TSG signed an agreement with Russia's Far East Development Corporation officially confirming the Company's residency in the Kamchatka Advanced Special Economic Zone ('ASEZ'). Ratifying agreements were also signed with the Government of Kamchatka.

The ASEZ programme was established by the Russian government in 2014 with the aim of encouraging new investments in the Far East of Russia and aiding economic growth by providing preferential business terms to organisations operating within the region. The programme currently comprises 20 priority development areas, including Kamchatka, where TSG operates.

As a confirmed resident of ASEZ, TSG will benefit significantly from reduced income taxes, metals royalties, property taxes and land taxes for a certain period of time. The Company estimates that the potential benefits of inclusion within the Special Economic Zone may contribute to approximately $6 million in cost savings over the next 7 years. Additionally, the Company may be entitled to an accelerated process for the refund of VAT expenses incurred.

In accordance with the agreement, TSG will implement development and construction of an extension to the Asacha Gold Mine, known as Vein 25. Additionally, TSG will invest in a ventilation unit and procure additional mining equipment for the mine. The Company expects to invest up to $21.2 million until 2024 which will lead to the creation of approximately 68 new jobs within the region. These capital investments are in line with management expectations.

Share Buyback

On 2 May 2019, the Company entered into conditional agreements with two of its major shareholders (Destin Investment Management Limited and UFG PE Fund I, L.P) to buy back 22,894,565 of its existing ordinary shares representing approximately 20.8% of the Company's issued share capital by means of an off-market share buyback at a price of 33 pence per share for an aggregate purchase price of £7.6 million.

As part of the transaction a further 11,478,410 of the Company's existing ordinary shares, representing approximately 10.4% of the Company's issued share capital, were sold by the same shareholders to other members of the UFG Group, Directors and to new investors. The buyback was paid out of the Company's existing distributable profits and funded by a term loan facility of RUB 604.5 million (approximately $9.6 million) with VTB Bank, obtained by TZ. Further details regarding the Company's indebtedness are set out in note 23 to the Financial Statements. The share sales, together with the buyback, have reduced the dominance by UFG of the share register and have benefited shareholders as a whole. On 12 July 2019, the Company announced that the off-market buyback (as described above) had been completed. The shares subject to the buyback are currently held in treasury. Further details regarding the Company's share capital and ownership are set out in note 27 to the Financial Statements.

Going concern

The Group's operations are cash generative and management tightly control the level of committed expenditure to ensure that the Group has sufficient resources available to meet its liabilities as they fall due.

Regular cash forecasts are reviewed to assess the potential impact of factors such as changes in commodity prices, production rates and the timing of capital expenditure.

The Group has reported an operating profit for the year of $14.4 million, which is stated after significant non-cash depreciation and other non-cash items. The Directors have reviewed the Group's cash flow forecast for the period to 31 December 2021 and they believe that, taking account of the potential impact from the Covid-19 pandemic as well as reasonably possible changes in commodity prices, trading performance and expenditure, scheduled repayment of bank loan facilities and the proposed payment of the final dividend, the Group has adequate resources to continue in operational existence for the foreseeable future. At the date of this report the Group's operations have seen little direct impact from the Covid-19 pandemic. Management have carried out multiple scenario analysis of potential downsides including future production, workforce and supply chain disruptions. Whilst the future impact of the pandemic remains unknown, based on the scenario analysis performed, the Group has sufficient resources to adapt to the potential challenges it may face, and therefore the Directors are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

Events after the reporting date

Energy subsidy

On 3 January 2020, TSG announced the signing of an agreement with Kamchatskenergo, the main provider of electrical power in Kamchatka and a subsidiary of the RusHydro Group, for the supply of electricity on low- tariff rates in 2020. The programme of electricity subsidies supports a policy aimed at encouraging investment into the Far East of Russia and aiding economic growth in the region, following the implementation of incentive measures introduced by the Russian Government. The agreement confirms that Kamchatskenergo will continue to supply electricity to the Asacha Gold Mine at a reduced tariff of RUR 4.75/ kWh (approximately US$0.077/kWh).

Mineral Resource Estimate for Asacha

In January 2020, the Group published a JORC-compliant update of the Mineral Resource Estimate (MRE) for the Asacha Gold Mine, incorporating new data available from exploration, drilling and mining development and accounting for mining depletion. The MRE, which was produced by Seequent UK Ltd (SUKL) as at 1 December 2019, incorporated new resource drilling on QV1 and QV2 in the Main zone and QV25 in the East zone. Following preliminary internal estimates, indicating that the existing in-situ resource could have been overestimated, a complete re-analysis of the MRE model was undertaken. This resulted in a reduction to the MRE from 553,000 oz Au and 1,314,000 oz Ag reported as at 31st December 2018 to 313,000 oz Au and 675,000 oz Ag as at 1 December 2019. SUKL's full report is available on the Company's website at: www.trans-siberiangold.com An impairment review was conducted.

Underground and surface drilling campaigns are continuing at the Asacha mine during 2020. A total of approximately 22,000m of surface drilling will target the lateral extents of the Main zone and QV25. A further 2,000m of underground drilling will be conducted on the Main zone at depth.

On 15 January 2020, TSG announced the discovery of a new vein extension, Vein 25 North, at the Asacha mine. The new vein is located approximately 400 metres north of Vein 25, within the East zone of the Asacha mine and has delivered encouraging drilling results. The Company has ramped up the scope and scale of its exploration activities and drilling continued over the winter, with a second drill mobilised to site. While drilling V25N at depth, a new vein system was discovered about 150 metres to the East.

In addition to the north extension of Vein 25, five other target areas will be drill tested during 2020. To achieve this objective, the Board of Directors has approved a 2019-2020 drilling program of 25,000 metres. The drill programme has the potential to be expanded further and TSG has retained Jacquelin Gauthier, a Canadian geologist with significant experience and successes in high-grade epithermal environments, to provide oversight of the development and execution of the Company's ramped-up exploration plan.

Mineral Resource Estimate for Rodnikova

On 10 February 2020, TSG published a JORC compliant MRE for the Rodnikova Gold Deposit produced by SRK Consulting (Russia) Ltd for the Company's wholly owned subsidiary, TZ. The MRE was developed in accordance with the recommendations and guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (the JORC Code, 2012 Edition).

The MRE confirmed Total Indicated & Inferred Resources of 6.3Mt at a grade of 5 g/t of gold, for total contained +1Moz of gold, of which Indicated Mineral Resources of 3.1Mt at a grade of 5.3 g/t gold, for contained 519,000 oz gold and Inferred Mineral Resources of 3.2Mt at a grade of 4.8 g/t gold, for contained 491,100 oz gold. In addition, the MRE confirmed Total Indicated & Inferred Resources of 6.3Mt at a grade of 36.79 g/t of silver, for total contained 7.4M oz of silver. SRK's full report is available on the Company's website at: www.trans-siberiangold.com

TZ is using the MRE for Rodnikova as an input for a Scoping Study, due to be published in 2020. The outcomes of this internally-produced study will inform a decision about whether or not further drilling and sampling is justified, in order to improve the level of confidence in the current Mineral Resource Estimate, and in particular to increase the portion of Indicated Mineral Resources (which could potentially convert to Reserves if a Pre-Feasibility Study is prepared).

Exploration Drilling

The Company published drilling results on 15 January 2020 and 27 April 2020. Further details are set out in the Operational Review.

Covid-19

Whilst our operations to date have seen little direct impact from the Covid-19 pandemic, we have focused on implementing measures to ensure the safety of our employees and contractors, the integrity of our operational facilities and to prepare the business to face potential challenges that emerge. The potential impacts are currently unknown but could include production disruption due to government restrictions, impacts on our workforce and supply chain disruption. Supply chains and logistics for people, supplies and parts are under pressure and continually changing.

We are proud to be a significant employer in the Kamchatka region of the Far East of Russia. The health and wellbeing of all our employees remains our utmost priority, and we are closely monitoring the development of this global health crisis and its potential impact on our people and operations.

We have risk mitigation policies in place aimed at communicating the best precautionary measures to our staff to prevent the spread of the virus. All personnel go through 14-day quarantine before entering the mine site. We continue to follow the latest government advice in all our jurisdictions with regard to the current running of our operations.

Current events have resulted in material changes to commodity prices and foreign exchange rates, which are expected to impact positively on the overall profitability of the Group. The Company's dollar-denominated revenue from gold sales remains strong in a supportive gold price environment. The recent oil price decline is expected to considerably reduce the Group's energy costs, and the connected devaluation of the Russian rouble is equally anticipated to contribute

to overall cost improvement, as the majority of the Group's operational costs are rouble-denominated.

The actions implemented to mitigate the risks associated with the Covid-19 pandemic are set out on in 'Risk Review' of the Annual Report & Financial Statements.

Additionally, the Group has made a donation of RUB5,000,000 to support the purchase of protective health care supplies in Kamchatka, Far East Russia.

Bank borrowings

On 29 May 2020, TSG's wholly owned subsidiary TZ entered into an agreement with VTB Bank for a revolving credit line with a limit of $10 million for a period of 3 years instead of a credit line with a limit of $5 million expiring on 20 June 2020. A credit line has been entered into to ensure the short-term liquidity of the Group.

Key Performance Indicators

KPI's are how we measure our progress of delivering our strategy.

The following table sets out the key performance indicators monitored by TSG's Board of directors:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2019

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2019

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

COMPANY INFORMATION