TSG.L Regulatory News (TSG)

17 Aug 2006 09:10

Trans-Siberian Gold PLC17 August 2006 Trans-Siberian Gold plc Funding options under review LONDON: 17 August 2006 - On 19 June 2006 Trans-Siberian Gold plc ("TSG" or "theCompany") (TSG.L) announced that it expected to submit proposals to shareholdersfor an equity fund raising to be completed during the third quarter of 2006. TSGnow reports that, given current market circumstances, it is not possible toraise the required level of equity funding, at this time, on acceptable terms.Consequently, the board of directors has elected to consider a number offinancing alternatives. This is expected to take approximately one month tocomplete. The project financing for Asacha, for which an indicative term sheet for up toUS$50 million was signed with Standard Bank plc ("Standard") earlier this year,is progressing well. Completion of the technical review by Standard'sIndependent Technical Adviser is expected by the beginning of September. Thetreatment plant throughput has been increased by 10% to 220,000 tons per annum,thereby improving the revenue generation of the project. This change in scope,together with design delays and high Russian inflation, has increased thecapital and pre-production operating cost from US$100 million to US$108 million,(including recoverable VAT of US$12 million and a contingency of US$7 million)of which US$26 million has already been spent. Subject to completion of the financing, underground development and plantconstruction will commence in the fourth quarter of this year with first goldproduction in the second half of 2008. It is still anticipated that the resourcewill be increased by 50%, mainly from the northern extension of the existingorebody. Taking that into account it is expected that the mine will produceapproximately 100,000 ounces of gold per annum for about 10 years at a totalcash cost of US$200/oz (including royalties) in real terms. At Veduga a number of factors have changed since the announcement in October2005. These include a higher gold price, the probable availability of grid power(which will result in a 60-70% reduction in power costs through the substitutionof grid power for diesel generated power) and anticipated improved metallurgicalconcentration. Work is ongoing to prove up these parameters and furtherexploration is planned to increase the size of the resource. These activitiesshould be complete by the third quarter of 2007. The Company continues to believe in the value of these two main assets as wellas the potential of the exploration assets at Rodnikova and Bogunay andconsequently deems it appropriate to consider possible funding options that donot require a significant dilution of existing shareholders. Ends Contacts: Jonathan Best - TSG +27 825 598018Simon Olsen - TSG +44 (0) 1223 265760 Keith Irons - Bankside +44 (0) 20 7367 8873Oliver Winters - Bankside +44 (0) 20 7367 8874 This information is provided by RNS The company news service from the London Stock Exchange