Nezhdaninskoye ownership

Celtic Resources Holdings PLC
06 October 2005


                         Celtic Resources Holdings Plc
                          ("Celtic" or "the Company")

           Third party claims concerning ownership of Nezhdaninskoye

The board of Celtic has noted the recent press comment concerning the Company's
50 per cent. ownership of South Verkhoyansk Mining Company ("SVMC"), the company
which owns the Nezhdaninskoye gold mine in Yakutia, north-eastern Russia
("Nezhdaninskoye"). Further to the disclosure on the subject in the Company's
preliminary and interim results announcements this year, the board believes it
is important to clarify the matter for shareholders.

In early 2000, Celtic engaged in a financing arrangement with a Russian Bank for
the purposes of funding SVMC in the development of Nezhdaninskoye. As part of
the financing, Celtic entered into a security arrangement which included a
Russian Law trust management agreement, under which the Company pledged a 30 per
cent. interest in SVMC (60 per cent. of Celtic's holding in SVMC) to the Russian
bank. Under the trust management agreement, no ownership or title to the shares
was transferred to the Russian bank and all actions carried out under the trust
management agreement were, by law, always to be made in the interests of Celtic.

In October 2001 Celtic entered into further negotiations with the bank for
additional lending and at the same time initiated plans to seek admission of
Celtic shares to the AIM Market of the London Stock Exchange plc ("AIM").

In December 2001, Celtic received from Standard Bank Limited an offer to provide
a loan to SVMC of US$10 million with a further US$3.5 million extension. The
Russian bank, which was well known to Standard Bank Limited, was notified of the
offer and agreed to roll over the existing lending and provide additional funds.

Following this extension the Russian bank required that the trust management
agreement, under which the shares in SVMC were pledged, be renegotiated and the
shares be allowed to move to companies in the Cayman Islands. The Russian bank
represented to Celtic that moving the shares to offshore companies was no more
than a reorganisation of the security, with a benefit to the bank of providing
an easier means to enforce its rights in the event of a default by SVMC. Celtic
also saw some strategic benefits in such an arrangement at the time and agreed
to the proposal. In early 2002 the Russian bank indicated that it no longer
wanted to pursue the offshore structure and Celtic believed the issue to be
closed.

The loan from Standard Bank and the proposed admission to AIM took longer than
anticipated to complete and Celtic therefore obtained agreement from the Russian
bank to extend the date for repayment of the financing being provided to SVMC.
The security documentation was amended twice to reflect this and a new repayment
date of 18 October 2002 was agreed.

In early October 2002 Celtic had informed the Russian bank of its intention to
repay the loan and funds were received by the Russian bank on 17 October 2002.
As soon as Celtic notified the bank that funds had been remitted, the Russian
bank announced that it had previously assigned SVMC's debt to a third party
Russian lender along with the other transferable elements to the security, but
not the trust management agreement. To avoid any suggestion of a default, Celtic
repaid the third party lender as well and subsequently recovered the previous
payment from the primary Russian bank. The third party lender acknowledged
receipt of the funds and fully discharged Celtic from any further obligations.

Following on from this repayment, under Russian Law, all pledged assets are
automatically released. Nevertheless, Celtic requested that the Russian bank
confirm that the trust management agreement, under which the SVMC shares were
held, was now at an end and sign the relevant documentation confirming this
legal position. Celtic was subsequently notified in November 2002 that the
Russian bank had transferred the shares in SVMC to two companies in the Cayman
Islands on 11 October 2002 and now considered the matter closed.

The Russian bank has claimed since that time that it is unable to return the 30
per cent. shareholding in SVMC to Celtic and that it has no control over the
Cayman Island companies or any class of shares in them. Celtic does not accept
these claims.

Celtic initiated proceedings against the Cayman Island companies and in June
2003, the Company obtained judgment in default against the Cayman Island
companies only to then be informed that the shares had been transferred by those
companies in November 2002 to companies registered in the British Virgin
Islands.

At that time Celtic had also entered into negotiations with Investment Group
Alrosa ("IGA") to acquire the remaining 50 per cent. shareholding in SVMC which
the Company did not own. As part of these negotiations, Celtic agreed to stay
its pending legal actions in Russia and to engage in discussions with the aim of
achieving recognition of its lawful claim to the ownership of the disputed SVMC
shares. This was done with a view to achieving an amicable settlement.

As recently announced the negotiations with IGA have not proved successful and
consequently Celtic has now re-initiated legal proceedings in Russia.

As part of its ongoing legal strategy Celtic has on 12 September 2005 obtained
an injunction in the British Virgin Islands against the companies to whom the
SVMC shares were transferred. This injunction prevents any dealings with those
shares or representations by the British Virgin Island companies as to
ownership. The British Virgin Island companies have indicated that they intend
to defend the injunctive proceedings.

Celtic has always and will continue to maintain that its ownership in SVMC
stands at 50 per cent. as evidenced by the original and true share register for
SVMC.

Commenting, Celtic's Chairman, Peter Hannen, said, "We are the rightful and
legal owners of 50 per cent. of Nezhdaninskoye and we will defend ourselves
vigorously against pretenders to any of these shares. Nezhdaninskoye cannot be
developed without Celtic's participation."


On a related issue as indicated in its announcement of 19 September 2005, the
Company can confirm that preliminary discussions with ZAO Polyus, the other 50
per cent. holder in SVMC, with regard to the future development of
Nezhdaninskoye have commenced and the Company will keep shareholders informed of
progress.



For further information please contact:

Kevin Foo / Kate Dexter Smith             Leesa Peters / Laurence Read
Celtic Resources Holdings Plc             Conduit PR
Tel: + 44 (0)20 7921 8800                 Tel: [phone]
[e-mail]             Tel: [phone]
                                          [e-mail]

                             
www.celticresources.com




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