TSG.L Regulatory News (TSG)

Trans-Siberian Gold plc

Proposed exercise of conversion option in respect of

 US$4.4 million existing debt

LONDON: 3 October 2011 - Trans-Siberian Gold plc ("TSG" or "the Company") (TSG.L) reports that it has been notified by the Company's major shareholder UFG Private Equity Fund I, LP ("UFG") that UFG wishes to exercise its option to convert the outstanding balance of two loan facilities provided to TSG into ordinary shares in the Company. The current aggregate balance of the two facilities is U$4.4 million including accrued interest.

UFG loans

TSG reported on 1 November 2010 that, in order to prevent any delays in the completion of construction at the Asacha project, while the outstanding conditions of an U$18 million bank facility were satisfied, UFG had agreed to provide the Company with loan finance of up to US$2 million on commercial terms, with scheduled repayment in two equal tranches, on the fourth and fifth anniversaries of the commencement of gold production at Asacha.

It was also reported that UFG had an option, subject to the requisite approval of TSG's shareholders, to convert any part of the outstanding loan into ordinary shares in the Company 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.

TSG further reported on 19 April 2011 that, following the US$4 million increase in the pre start up capital cost of the Asacha project which had been announced on 2 March 2011, UFG had agreed to provide the Company with additional loan finance of US$2 million on commercial terms, with scheduled repayment in two equal tranches on the same dates, and with the same conversion option, as the November 2010 loan.

Conversion of the UFG loans

Subject to shareholder approval at a General Meeting of the Company, to be held as soon as practicable (the "GM"), the UFG loans, including further interest accrued to the date of the GM, will be converted into new TSG ordinary shares by applying the closing US dollar:pound sterling exchange rate on the business day immediately preceding the date of the GM and a conversion price of approximately 93.6p, based on the volume weighted average closing price of TSG's shares for the 60 trading days up to and including 28 September 2011. At an exchange rate of US$1.56:£1 and the above conversion price, and assuming that the GM is held on 1 November 2011, the conversion would result in the issue of approximately 3,000,463 new ordinary shares in the Company to UFG in consideration of the release of the Company's indebtedness to UFG described above.

Based on the above assumptions, the new shares, when issued, would represent approximately 2.92% of TSG's enlarged issued share capital and the interest of UFG and its affiliates would increase from 54.42% to approximately 55.74% of the Company's shares.

As reported on 1 February 2008, the Company is not subject to The City Code on Takeovers and Mergers. The Company's principal place of business is not in the UK and a majority of its Directors are based outside the UK. Therefore the Company continues to be deemed to be outside the jurisdiction of the Code and will not be subject to the Code while its management and control remain outside the UK.

General Meeting

An additional announcement containing further details of the proposed conversion, the resolutions to be put to the GM and arrangements for the GM will be made in due course.

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