TSG.L Regulatory News (TSG)

Trans-Siberian Gold plc

Final results for the year ended 31 December 2010

Highlights

·; Asacha expected to be in production by end July 2011

·; $18 million additional finance facility obtained for Asacha

·; $1.6 million raised in equity placing, $5.2 million debt converted to equity

Chairman's Statement

Trans-Siberian Gold plc ("TSG" or "the Company") (TSG.L) focused its resources in 2010 on maintaining a rapid pace of construction activities at the Asacha site.

The $25 million loan facility negotiated in 2009 and the additional facility of $18 million agreed with Sberbank in October 2010, together with financing provided by major shareholders facilitated a significant increase in the pace of development at Asacha in order to complete the construction of the mine and start gold production, now expected by the end of July 2011.

In 2010 mine development and preparation works, by-product extraction works and exploration works amounted to about 1,600 metres and more than 16,600 m3 of mining. 20,544 tonnes of ore was mined in 2010 during pre-production mining.

From 2008 to 30 April 2011 more than 4,500 metres, and more than 47,000 m3, of mine development were completed, with a total amount of ore ready for processing of more than 66,000 tonnes, with an average grade of 8.5 g/t and an estimated gold content of 560kg.

Underground activities also included the necessary wooden and metal support installation, fixing, bolting and shotcreting. Mine facilities including chambers for ore loading, the pump station, auxiliary ventilation unit and ore and waste passes were constructed. Electric cables were laid and pumping equipment and piping to deliver compressed air and water were installed.

The 2011 Mining Plan, which includes the start of extraction works, was approved by Rostechnadzor, the federal agency responsible for industrial and environmental safety, on 16 November 2010. According to that Plan, full-scale stoping will start in July 2011. Therefore in 2010 the Company finalised all major construction objects required for the timely commissioning and successful operation of the underground mine.

By the end of April 2011 the works at the plant site had reached the final stage. The plant building, including its metal framework, multi-layer roofing with thermal insulation, wall panels, outside concrete walls and foundations for technological equipment, is complete. Internal concrete walls, galleries and inspection platforms are close to completion. A specialist contractor has carried out the installation of the major plant equipment under the supervision of representatives of the Chinese manufacturer and plant designer, who have reported their positive conclusion on the mills' installation.

Contractors have also been working on the electric network, plant lighting, technological piping, ventilation, plant water supply system, heating and sewage. Finishing works, including painting, plaster boarding and installing doors and windows have started. The coarse ore bin and the conveyor gallery are also under construction.

At the tailings storage facility the activities were focused on dam construction, earth works and the laying of the geo-membrane screen. These works were affected by exceptionally heavy summer rain, which caused significant over watering of subsurface soils despite the drainage measures taken. In order to catch up, more heavy bulldozers, excavators, dump trucks and other equipment were acquired to increase the productivity of soil removal. The work was undertaken 24 hours a day, allowing the night time employment of machinery from other objects. These steps, together with favourable weather conditions during autumn 2010, should allow the tailings storage to be operational when gold production is scheduled to commence.

Construction of the other major infrastructure items is close to completion. The buildings for the repair shop, sewage waters treatment facility, pump water station and fire station have been erected. Construction of water, power and heat supply networks and sewage pipelines is under way. Four diesel generators have been installed and a grid line built to the mine site. Tanks for the fuel storage facility, fire station and pump water station have also been installed. The construction of the cyanide storage facility was completed and commissioned in February 2011. The contract for cyanide purchasing has been signed, with the first delivery of cyanide to Kamchatka in April 2011.

In October 2010 the Company reached agreement with Sberbank for an additional five year $18 million loan facility for the Asacha project. In order to prevent any delays to construction at Asacha while the outstanding conditions of the new loan were satisfied, TSG's largest shareholder UFG Asset Management (UFG) provided the Company with loan finance of $2 million on commercial terms. In 2011 UFG and TSG's other major shareholder AngloGold Ashanti (AGA) have provided further loan facilities in aggregate $4.3 million.

In August 2010 the Company acquired the remaining minority shareholding in its subsidiary ZAO Trevozhnoye Zarevo (TZ) at a cost of $500,000 in accordance with the terms of its original acquisition of TZ, thereby increasing its interest in the Asacha and Rodnikova projects from 95.03% to 100%.

Financial review

The Company is in the exploration and development phase of its gold projects in Russia. It therefore received no operating income from those projects during 2010.

The Group recorded a loss from operations for the year of $3.6 million (2009: $5.3 million), after crediting a $270,000 exchange gain (2009: $2.2 million loss). Administration expenses amounted to $1.3 million in UK and $2.8 million in Russia (2009: $1.2 million and $1.9 million respectively), in aggregate $4.1 million (2009: $3.1 million).

Finance income was $50,000 (2009: $104,000). Finance costs were $104,000 (2009: $187,000), net of $1.6 million (2009: $231,000) interest capitalised.

Total non-current assets increased from $83.3 million to $103.7 million. Property, plant and equipment increased by $12.7 million to $73.1 million, principally reflecting additional $13.0 million assets under construction at Asacha. Capitalised exploration and evaluation expenditure increased from $18.9 million to $29.9 million.

Recoverable Value Added Tax (VAT) at 31 December 2010 was $5.1 million (2009: $4.0 million), of which $4.4 million (including $830,000 outstanding since prior to 2005 which is recoverable only after the completion of construction at Asacha) is expected to be received during 2011.

Loans and borrowings at 31 December 2010 totalled $32.9 million (2009: $7.3 million), comprising $30.9 million drawn down under two five year bank loans for the Asacha project (a $25 million facility arranged in 2009 and a further $18 million facility agreed in 2010) and $2 million outstanding on a facility provided by UFG.

On 23 March 2010 the outstanding amounts of two loans provided to TSG by UFG in 2009, in aggregate $4.4 million including accrued interest, were converted into TSG shares at 30.8p per share, being the volume weighted average price of TSG's shares for the period of 60 business days prior to UFG's exercise of its option to convert the outstanding loan amounts. On the same day $842,000 owed to AGA in respect of specialist technical consultancy services was converted into TSG shares and additional shares to a value of $1.6 million were placed with AGA, in each case also at 30.8p per share.

Asacha project costs

The total project cost until Asacha is cash flow positive is now estimated at $130.2 million, net of $10.1 million VAT recoveries, compared to the April 2011 estimate of $129.3 million, net of $10.2 million VAT recoveries. The additional cost of $900,000 includes increased plant costs of $300,000 and pre-operating expenditure of $300,000. The total project cost includes pre-commissioning mining and plant costs of $3.9 million, other pre-operating expenditure of $37.4 million, "first fill" equipment spares and consumables of $1.0 million and contingency of $0.5 million. A further $27.6 million of capital expenditure, including contingency of $4.5 million, will be incurred after the commencement of production, principally completion of the powerline, mine development and the second phase of tailings storage.

At a gold price of $1,000/oz, Life of mine ("LOM") cash costs on an all equity basis on total gold production of 590,000 oz are forecast at $227/oz, before taking account of a $34/oz credit from silver production (assuming a silver price of $20/oz.) Cash costs including all royalties and taxes (in total $94.1 million, net of VAT recoveries) on an all equity basis are forecast at $386/oz. Total costs on the same basis, after depreciation of all capital expenditure (including $27.6 million post start up) and pre-start up mining and other operating expenditure, are forecast at $658/oz, giving a $342/oz margin at a gold price of $1,000/oz.

Actual expenditure on the project up to March 2011 amounted to $118.2 million, net of $8.7 million VAT recovered. The remaining costs prior to the commencement of production are estimated at $12.0 million, net of further VAT recoveries of $1.4 million, comprising:

Based upon detailed financial projections the Directors believe that the Group's existing debt facilities are sufficient to cover this final phase of development. If the project is subject to unforeseen delays, the Directors are confident that short-term financing can be obtained to bridge any funding gaps.

Rodnikova

Activities at Rodnikova were limited as the Company concentrated its resources on bringing Asacha into production. No field work at the deposit was conducted in 2010. The geologic results obtained during the 2008 drilling programme were processed and evaluated and the Report on Mineral Reserves and pre-feasibility study were developed. In March 2011 the Report on Mineral Reserves and the pre-feasibility study for the Rodnikova deposit were submitted to the Kamchatka authorities. After consideration of the report, the Kamchatka authorities have generally approved it and have recommended its submission for final approval to the State Commission on Reserves.

- Ends -

Contacts:

TSG +44 (0) 1480 811871

Simon Olsen

Seymour Pierce +44 (0) 20 7107 8000

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 directors believe that the two bank debt facilities, $25 million obtained in September 2009 and refinanced in December 2009 and $18 million agreed in October 2010, and debt facilities totalling $6.3 million made available by the Company's major shareholders (including $4.3 million agreed in April 2011) will provide adequate financing for the Group until the Asacha mine is cash flow positive. However, should the Asacha project be subject to delays or cost overruns, further funds would be required to complete the development. The directors are confident that short-term funding can be obtained to bridge any funding gaps.

2. Exploration and evaluation costs

Movements on deferred exploration and evaluation expenditure, by location of the property, are as follows:

i Additions include capitalised PPE depreciation (see Note 3ii).

ii Expenditure written off represents an agreed reduction in the cost of technical consultancy services provided by AngloGold Ashanti Limited.

Under the Licencing Agreement as revised in 2006, the Company's subsidiary ZAO Trevozhnoye Zarevo (TZ) was required to bring the Asacha mine into operation at its projected capacity in accordance with the technical design at a rate of at least 1,000 kg of gold per annum by 31 December 2008. That requirement was partially fulfilled in 2008, with the commencement of mining activities and first ore extraction. In December 2008 the Kamchatka regional governmental commission noted the delay in mining but concluded that work to finalise construction should continue to put the gold plant into operation in 2009. Government authorities have since been kept advised of the development of the project and although it is expected that, due to funding constraints arising in 2008-09, construction at Asacha will now be completed by the middle of 2011 with gold production commencing by the end of July 2011, the Company believes that there will be no adverse consequences of the delay. Discussions in respect of any required amendments to the licence have already commenced with the appropriate authorities and it is expected that these will be concluded after the start up.

3. Property, plant and equipment

i Assets under construction comprise $5,492,166 (2009: $5,482,371) in relation to the construction of an access road to Asacha, $51,750,233 (2009: $43,448,977) for building construction and infrastructure, and $10,178,029 (2009: $5,489,326) for plant and equipment at Asacha.

ii $1,551,553 (2009: $1,272,854) 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.

4. Borrowings

Movement in borrowings is analysed as follows:

On 19 October 2009 ZAO Trevozhnoye Zarevo (TZ) began to draw down a three year $25 million loan facility for the Asacha project from a Russian bank at an annual interest rate of 14.5%. This initial borrowing was refinanced with a five year facility from Sberbank on 30 December 2009 at an annual interest rate of 11.75%. The annual interest rate reduced to 10.5% in May 2010. Repayments are scheduled to commence in December 2011.

On 27 October 2010 TZ agreed a further loan facility of $18 million for the Asacha project with Sberbank at an annual interest rate of 10.5%. Repayments are scheduled to commence in September 2012.

On 29 May 2009 UFG Asset Management (UFG), a related party by virtue of its then 51.55% holding in the shares of the Company, provided TSG with a loan facility of $3 million on commercial terms. On 8 December 2009 TSG drew down a second loan facility of $3.5 million provided on commercial terms by UFG in order to facilitate the refinancing of TZ's $25 million loan facility discussed above. Following completion of the refinancing of TZ's facility, TSG repaid $2.5 million to UFG on 30 December 2009.

Each of the facilities was repayable in two equal tranches, the first on the earlier of the first anniversary of the commencement of gold production at Asacha and 30 September 2011, and the second on the earlier of the second anniversary of the commencement of gold production at Asacha and 30 September 2012, each facility agreement including an option for UFG, 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. On 25 February 2010 UFG served notice of its option to convert the outstanding amounts of both facilities. On 23 March 2010 the loans, in aggregate $4,366,781 including accrued interest, were converted into TSG shares as discussed in Note 5.

In consideration of the May 2009 facility, 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 2009 or 2010 or after the reporting date.

On 26 October 2010 UFG, a related party by virtue of its then 53.36% holding in the shares of the Company, provided TSG with a loan facility of $2 million on commercial terms, repayable in two equal tranches, respectively on the fourth and fifth anniversaries of the commencement of gold production at Asacha. The facility agreement includes an option for UFG, 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.

After the reporting date, UFG and AngloGold Ashanti Limited, also a related party by virtue of its 30.7% holding in the shares of the Company, agreed to provide additional facilities, in aggregate $4.3 million, as discussed in Note 6.

5. Share capital and premium

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

On 23 March 2010 3,533,534 ordinary shares were issued at 30.8 pence per share for a total cash consideration, before issuing costs, of £1.1 million ($1,636,956) to AngloGold Ashanti Limited (AGA).

Also on 23 March 2010 11,222,805 ordinary shares were issued, also at 30.8 pence per share, to UFG Asset Management (UFG) and to AGA in settlement of the Company's indebtedness, in aggregate $5,209,133 including accrued interest. 9,408,002 shares were issued to UFG in consideration of the conversion of the outstanding amounts of two loan facilities as discussed in Note 4. 1,814,803 ordinary shares were issued to AGA in settlement of technical consultancy services provided by AGA.

6. Events after the reporting date

On 8 April 2011 UFG Asset Management (UFG) provided TSG with a loan facility of $2 million on commercial terms, repayable in two equal tranches, respectively on the fourth and fifth anniversaries of the commencement of gold production at Asacha. The facility agreement includes an option for UFG, 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.

On 18 April 2011 AngloGold Ashanti Limited (AGA) agreed to provide the Company with a loan facility of $2.3 million on commercial terms, repayable on the same dates, and with the same conversion option, as the UFG loan discussed above.

7. 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 2010 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 2009 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. The audit report for the year ended 31 December 2009 did contain an emphasis of matter in respect of going concern to which the auditors drew attention without qualifying their report.