TSG.L Regulatory News (TSG)

17 Oct 2005 07:01

Trans-Siberian Gold PLC17 October 2005 For release at 07.00, 17 October 2005 Trans-Siberian Gold plc TSG to review production strategy at Veduga LONDON: 17 October 2005 - Trans-Siberian Gold plc ("TSG") can now report on thepreliminary results of the pre-feasibility study on TSG's 100% owned Vedugaproject that is being carried out by Aker Kvaerner in conjunction with theRussian institute Giprotsvetmet. Although these findings have yet to befinalised in all respects, and the final report not completed until the end ofOctober, it is evident that constructing a complex metallurgical plant toproduce gold metal at the site is not economically viable for TSG on thereserves currently established at current gold prices and given the lack ofavailable grid power. Although the capital cost has yet to be definitively established the preliminarynumbers show that unless the capital cost of an 850,000 tonnes per annum mineand process plant can be contained to below $220 million and estimated operatingcosts reduced significantly the scale of operation envisaged is insufficient togive TSG an acceptable return. These preliminary calculations are based on mining and treating some 58% of the2.8 million oz of JORC resources established (i.e 10.7 million tonnes at anaverage grade of 5.37 g/t) at a rate of 850,000 tpa initially from open pitsfollowed by 350,000 tpa from underground. The process route (selected afterextensive testwork) envisages pressure oxidation of flotation concentrates withan average recovery rate of 88.2%. In the circumstances TSG is actively looking into a number of alternativeexploitation and other options. These include the production of flotationconcentrates to be transported to plants in the Urals, Kazakhstan and/or Chinathat have the technical capability of treating such material. The capital costof such a straightforward operation would be substantially lower. Testwork hasproven that the ore can be concentrated very efficiently by flotation and that ahigh value product containing up to 50 g/t gold can be produced. On the exploration front express assays are now to hand for one section of thedrill hole (no 541) drilled in the Powerline prospect 2 kilometres north of themain Veduga zone that was briefly alluded to in the half year results issued on20 September. In the hole there are two metasomatic zones with mineralisation(pyrite, arsenopyrite and pyrrhotite) with the lower one (between 164.2 and182.6 metres), the only one assayed so far, having an average grade of 1.9 g/tover 18.4 metres, with individual intervals of 6 g/t and 6.7 g/t. As themineralisation is similar to that in the main Veduga orebody, OB1, this newdiscovery is of potential significance. 4 further holes are now being drilled inthe zone by the Company's own diamond drilling rig. At TSG's other major project in Russia, at Asacha in Kamchatka, work iscontinuing on engineering studies, site preparation and completing constructionof the access road, while discussions with banks and lending agencies on projectfinance are ongoing. TSG also reports that Richard (Dick) Watts, TSG's Operations Director since June2005, has accepted another appointment within the mining industry and hasresigned from the Company and the Board with effect from the end of October. TSG is also looking at strategic options in relation to Veduga and moregenerally. To this end discussions with third parties are taking place, althoughthese are at a very preliminary stage. Ends Contacts: Jocelyn Waller, managing director +44 (0) 7778 164 376 +7 095 775 3929 Simon Olsen, finance director + 44 (0)1223 265 760 Keith Irons, Bankside +44 (0) 20 7367 8873 +44 (0)7885 356 639 Simon Rothschild, Bankside +44 (0) 20 7367 8871 +44 (0) 7703 167 065 This information is provided by RNS The company news service from the London Stock Exchange