Identification of errors

RNS Number : 7600I

KazakhGold Group Ltd

17 March 2010

 



17 March 2010

KazakhGold Group Limited (LSE: KZG): Identification of material errors in financial statements for the year ended 31 December 2008

As previously announced on 16 November 2009, following the acquisition in August 2009 of a 50.1% stake in KazakhGold Group Limited ("KazakhGold") by Jenington International, an indirect wholly owned subsidiary of OJSC Polyus Gold (the "Partial Offer"), the new management of KazakhGold has been carrying out an extensive series of measures to improve the operations and internal systems and controls of KazakhGold, including trying to recover and restore primary accounting and production documentation, in order to confirm the historical accounting records.

As a result of these measures, and in the course of preparing the consolidated financial statements for the year ended 31 December 2009, certain material errors have been identified in respect of the previously published consolidated financial statements of KazakhGold for the year ended 31 December 2008.  These financial statements relate to a financial period prior to the completion of the Partial Offer.

On the basis of information currently available, these errors comprise the following:

·          Errors identified in the inappropriate recognition of fixed assets and exploration and evaluation expenditures, in an estimated amount of $157 million;

·          Errors in revenue recognition, and related debtor balances, giving rise to an estimated overstatement in the amount of $36 million;

·          Errors in capitalisation of borrowing costs on qualifying assets, in an estimated amount of $7 million; and

·          Errors in recognition of negotiation rights in relation to the Jerooy project in the Kyrgyz Republic.

All estimates above are given without regard to the tax effect of the adjustments. 

KazakhGold expects to publish its audited consolidated financial statements for the year ended 31 December 2009 by the end of April 2010.

The new management of KazakhGold is continuing to review and analyse the information it has received and the circumstances giving rise to these errors.  A further announcement will be made in due course.

For further information please contact:

Alexey V. Chernushkin, Director, capital markets and IR
Evguenia V.Buydina, IR manager
[phone]
[phone]
[e-mail]

Anton A. Arens, PR Director
[phone]
[phone]
[e-mail]

 

END

 

 

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