Closure of gold hedge

9 Nov 2005 15:10

Oxus Gold PLC09 November 2005 news release For immediate release: 9 November 2005 OXUS GOLD PLC Oxus Gold now an unhedged gold producer LONDON: 9 November 2005 - Oxus Gold plc ("Oxus") (OXS.L) is pleased to reportthat production at Amantaytau Goldfields ("AGF") in Uzbekistan has enabled AGFto eliminate its hedge commitment some three months ahead of schedule. As aresult, Oxus is now an unhedged gold producer. AGF was originally required to hedge 263,096 ounces as a condition precedent todrawdown on the $35 million project finance facility. This facility was repaidto the lending banks in August this year. Since starting gold production in 2004 AGF has not been able to benefit from therise in the world gold price as the majority of its production has beendedicated to reducing the hedge position. This was particularly noticeableduring the 2004/5 year when the average price received of $338 per ounce wassignificantly below the average market price for the year of $419 per ounce. "It is a notable achievement for AGF in being able to repay all of its debtswithin such a short period, and still report a profit, while operating withinthe unfavourable price environment of the gold hedge position," said Bill Trew,chief executive of Oxus. "Now that the AGF hedge has been eliminated Oxus can look forward to 2006 whenas an un-hedged producer we will receive the average market price. If goldprices stay where they are, or rise further, this should have a significantimpact on our profitability." Oxus is the joint owner (50/50) with the government of Uzbekistan of AGF whichis developing several mining operations in the Tien Shan gold belt nearZarafshan. The Amantaytau Oxides project produced a total of 287,532 ounces ofgold by 31 October 2005 and is now producing at the planned rate of 151,000ounces a year. Cash costs in 2004/5 were $177 per ounce and total costs were$225 per ounce. AGF contributed $6.44 million (2004: $3.74m) towards theconsolidated group revenue of $10.11 million for the year ending 30 June 2005,being the Group's 50% attributable share of profits for the 12-month period. Oxus is also developing the Jerooy gold mine in Kyrgyzstan which is expected tocommence production in the second quarter of 2006 at an annual rate of 180,000ounces. Oxus owns two-thirds of Jerooy and has no plans to hedge its goldproduction. Ends. Contacts: Johnny Kipps, Finance Director +44 (0)20 7907 2000 Richard Wilkins, Director and Secretary +44 (0)20 7907 2000 Keith Irons, Bankside Consultants +44 (0)20 7367 8873 / 07885 356 639 This information is provided by RNS The company news service from the London Stock Exchange