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Oxus Gold PLC (OXS)

  Print      Mail a friend       Annual reports

Friday 18 March, 2005

Oxus Gold PLC

Interim Results

Oxus Gold PLC
18 March 2005

news release

For immediate release: 18 March 2005

           Interim Results for the six months ended 31 December 2004.

LONDON:  Friday 18th March 2005 - Oxus Gold plc ('Oxus) or the 'Company') is
pleased to report on its interim results for the 6 months ended 31 December


  • Net profit on ordinary activities  of  $3.615 million
  • Net Assets rise to $133.9 million
  • AGF produced 88,822 ounces  of gold in period
  • AGF reports $15.8m profit for the year to 31 December 2004, after tax and
    debt service
  • Construction underway at AGF's Vysokovoltnoye silver / gold heap leach
  • The Kyrgyz licensing authorities recommend that the Jerooy mining licence
    be reinstated
  • 16.49% strategic shareholding in Eurogold Limited acquired
  • £30.6m raised for the development of the Jerooy mine, by placement of
    £13.6m of equity and £17m in convertible redeemable loan notes, of which
    99.9% converted by due date

Report on Activities

Financial Results

The Group reported an unaudited profit on ordinary activities of $3.615 million
for the six month period ended 31 December 2004, and $2.981 million after tax
and minority interests. Net assets increased to $133.9 million during the period
and cash balances to $26.97 million, excluding $32.96 million of convertible
redeemable loan notes held in escrow at 31 December 2004, 99.9% of which have
subsequently been converted into the Company's ordinary shares, significantly
further increasing the cash resources of the Group.  As a result of the
conversion Oxus issued 33,970,000 new ordinary shares to holders of the loan
notes and the total number of shares in issue increased to 286,928,836.

Amantaytau Goldfields (AGF) in Uzbekistan, contributed $4.168 million towards
the consolidated  turnover, being the Group's 50% attributable share of profits
for the six month period. AGF itself reported a profit of $15.8m for the year to
31 December 2004 after tax and debt service, having commenced commercial gold
production in February 2004.


Amantaytau Goldfields

AGF commenced production in February 2004 and the following table summarises the
results for the first period of operations to 31 December 2004:

                                              6 months to 31 December 2004         12 Months to 31 December 2004
Ore mined                                                          586,300                             1,062,100
Ore processed                                                      555,600                               968,700
Average Grade (g/t)                                                    6.2                                   5.8
Gold produced - ounces                                              88,822                               148,511
Average Gold price received $                                         $340                                  $334
Net Profit after tax and debt service                       $8.336 million                       $15.812 million

During the period February to December 2004, AGF achieved an average cash
operating cost, calculated in accordance with the Gold Institute's Production
Cost Standard, of $159 per ounce and an average total production cost of $201
per ounce.  Gold recovery averaged 82.6%.

As at 28 February 2005 the AGF hedge book has been reduced to 120,229 ounces
representing 46% of the original commitment. In addition, $16m (46%) of the
original $35m project finance loan has been repaid to the lending syndicate. It
is expected that both the gold hedge and the project loan will be repaid in
accordance with the original schedule, by the end of January 2006.

Work continued on the AGF sulphide feasibility study, a first draft of which has
now been completed. The final study is expected to be completed during April.
Construction commenced at the Vysokovoltnoye silver/gold heap leach project and
first production is expected early in the second half of this year at an annual
rate of 50,000 ounces gold equivalent at a cash operating cost of approximately
$150 per ounce. The detailed designs for the proposed AGF oxide mill expansion
have also been completed and submitted to the relevant permitting authorities
for approval.

In September 2004 AGF issued UZS 5 billion (US$5m) in corporate bonds on the
securities market in Uzbekistan to assist with the funding of Vysokovoltnoye and
the sulphide feasibility study. This represented the largest issue yet placed on
the Tashkent based exchange.


The six months under review culminated with Oxus raising £30.6 million primarily
to construct the Jerooy gold mine in the Kyrgyz Republic. The government of the
Kyrgyz Republic purportedly cancelled the licence to operate this mine in August
2004.  Oxus immediately repudiated this action, whilst simultaneously announcing
that it would continue to build the mine. In November, the government advised
Talas Gold Mining Company, the project operating subsidiary that provided it was
able to show that it had raised adequate funds to construct the mine, and had
met certain additional technical requirements, the licence would be re-instated.
Having raised the appropriate funds, the detailed technical work has also now
been completed to the satisfaction of the relevant licensing authorities who
have recommended to the government that the licence be reinstated. A new licence
agreement is therefore expected to be signed soon. Construction at the mine
continued throughout the period and first gold production is still targeted for
the end of the year.

Other Activity

In February 2005 the Group acquired a 16.49% strategic shareholding in Eurogold
Limited, an Australian Company with gold exploration and mining operations in
Romania and the Ukraine. Discussions continue with the management of Eurogold
with a view to developing this alliance to the benefit of the shareholders of
both companies.

In March 2005 the Group signed a co-operation agreement with the Navoi Mining
and Metallurgical Combinat to work together with a view to developing the
Kosmanachi silver / gold deposit situated near the AGF mine.  The project has
been extensively explored and is estimated to contain Soviet classified
resources in the C1 and C2 categories of at least 40 million ounces of silver at
an average grade of 105 grammes per tonne and 270,000 ounces of gold at an
average grade of 0.5 grammes per tonne.  Oxus intends to carry out a detailed
review of all the existing data and to undertake a drilling programme to confirm
the earlier exploration results in order to complete the pre-feasibility study.
Kosmanachi also has additional resources in the Soviet P category.


A total of 11,367 metres of reverse circulation (RC) drilling and 637 metres of
diamond core drilling was completed within the AGF exploration area, which
focused on deposit mining preparation and increasing resource confidence.  In
summary the work completed was:

  • 3,413m of RC drilling at the Asaukak deposit.  High grade mineralisation
    has been encountered within existing mineralised zones, e.g. BH SRA44
    intersecting 6m at 9.97g/t gold.
  • 7,569m of RC drilling at the Vysokovoltnoye deposit defined mineralised
    zones in more detail.  Higher than average gold veins have been identified
    within mineralised zones, e.g. BH SRV27 intersecting 9m at 4.97g/t gold.
  • 385m was drilled in the Northern Uzunbulak/Zapadny Amantaytau area with
    the aim of extending known mineralised zones.  The results show that
    mineralisation is present and further work on these extensions is planned.
  • 344m of diamond drilling was focussed on recovering sulphide ore from
    Amantaytau Centralny for metallurgical testwork.
  • As part of the aim to develop 500,000 ounces of additional reserves on the
    AGF balance sheet, all Soviet data for four deposits within the AGF
    exploration area was input into digital form. These deposits are being
    remodelled using Datamine(R) resource evaluation software and will be
    drilled in 2005.


Following the board restructuring, Douglas Sutherland and Oliver Prior joined
the board as non-executive directors and after the departure of certain
directors there remain vacancies which the Company expect to fill in the near 


The significant increase in shareholders' funds, the Group's strong cashflow and
the strength of the balance sheet will provide the springboard for the next
phase of the Company's development.

The Company looks forward to operating as an unhedged producer at both AGF and
Jerooy from 2006 onwards. The Company also remains committed to achieving an
annual attributable gold production of at least 500,000 ounces by 2008, and with
this objective firmly in mind the Group will continue to pursue an aggressive
exploration programme and to identify and develop strategic and other alliances.

Consolidated Profit and Loss Account

                                                                         Six months to               Twelve
                                                                                                  months to
                                                                      31 December 2004         30 June 2004
                                                                           (Unaudited)            (Audited)
                                                                                 $'000                $'000
Consolidated turnover                                                            1,328                1,932
Interest in joint venture
           Income attributable                                                   3,668                3,738
           Dividend receivable                                                     500                    0
                                                                                 4,168                3,738
Administration expenses                                                        (1,102)              (5,287)
Deferred revenue expenditure
 - incurred by Marakand Minerals                                               (1,187)              (1,198)

Consolidated operating profit (loss)                                             3,207                (815)
Net interest receivable
           Group                                                                   155                  212
           Joint venture                                                           363                  575
                                                                                   518                  787

Profit (loss) on ordinary activities before
exceptional items and taxation                                                   3,725                 (28)
Exceptional items
           re abortive 2002 project financing                                    (110)                (634)
           re application to court to convert
           the share premium to distributable reserves                               0                (156)
                                                                                 (110)                (790)
Profit (loss) on ordinary activities                                             3,615                (818)
Net gain on disposal of minority interest
           in Marakand Minerals Limited                                              0               12,252
Profit (loss) on ordinary activities before taxation                             3,615               11,434
Tax on profit (loss) on ordinary activities                                        (5)                  (5)
Profit on ordinary activities after taxation                                     3,610               11,429
Minority interests - Group                                                       (629)                (539)
Retained profit for the financial period/year                                    2,981               10,890

Earnings per share
- basic profit (per share cents)                                                  1.61                 5.32
- diluted profit (per share cents)                                                1.58                 5.20

Turnover is wholly derived from continuing activities.


1                     The financial statements have been prepared in accordance
with applicable UK accounting standards and under the historical cost
convention.  The principle accounting policies of the group are set out in the
group's annual report and financial statements.

2                     The interim financial information does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985.
Statutory accounts for the year ended 30 June 2004 have been filed with the
registrar of Companies.

3                     Basic earnings per share is based on the weighted average
number of shares in issue for the period of 224,048,919.  Diluted earnings per
share is based on the weighted average number of shares in issue for the period
plus potential dilutive ordinary shares arising  from share options and warrants
for the period of 228,514,269.

4                     The directors are not declaring a dividend for the period.

5                     On 3 March 2005 99.9% of the convertible redeemable loan
notes were converted to equity and 33,970,000 new ordinary shares out of a
possible 34,000,000 shares were issued.

6                     The consolidated profit and loss account includes Oxus
Gold plc and its attributable shares of subsidiaries and joint ventures.

7                     Copies of this report are being sent to all shareholders.
Additional copies will be available to the public at the registered office, 105
Piccadilly, London, W1J 7NJ and will be posted on the company's website at

Consolidated Balance Sheet

                                                                       At 31 December          At 30 June
                                                                                 2004                2004
                                                                          (Unaudited)           (Audited)
                                                                                $'000               $'000
Fixed assets
Tangible assets                                                                   214                 193
Exploration and mining rights                                                  28,456              28,456
Exploration and evaluation properties                                          18,549              12,354
                                                                               47,219              41,003
Interest in joint venture
               Share of gross assets                                           27,338              25,844
               Share of gross liabilities                                    (15,812)            (17,987)
                                                                               11,526               7,857
Loan to joint venture                                                          15,294              14,438
                                                                               26,820              22,295
Total fixed assets                                                             74,039              63,298
Current assets
Debtors                                                                         5,415               7,107
Monies receivable for convertible redeemable loan notes held in escrow         32,963                   0
Cash at bank and in hand                                                       26,974               5,541
                                                                               65,352              12,648
Creditors - amounts falling due within one year                                 (695)               (741)
Net current assets                                                             64,657              11,907
Total assets less current liabilities                                         138,696              75,205
Creditors - amounts falling due after one year
AGF Phase 2 Project development Fund                                          (4,789)             (1,761)
Total assets less liabilities                                                 133,907              73,444

Capital and reserves
Called up share capital                                                         3,825               3,289
Share premium account                                                          29,842               5,861
Merger reserve                                                                 34,929              34,929
Capital reserve                                                                19,658              19,656
Profit and loss account                                                         (806)             (4,416)
Equity shareholders' funds                                                     87,448              59,319
Convertible redeemable loan notes                                              32,963                   0
Minority interests                                                             13,496              14,125
Capital employed                                                              133,907              73,444

Consolidated Cash Flow Statement

                                                                 Six months to       Twelve months to
                                                              31 December 2004           30 June 2004
                                                                   (Unaudited)              (Audited)
                                                                         $'000                  $'000

Net cash inflow (outflow) from operating activities                      3,513               (11,787)
Returns on investments - Interest received                                 518                    787
Taxation                                                                   (1)                      0
Capital expenditure and financial investment
Purchase of tangible fixed assets                                         (49)                  (241)
Exploration and evaluation expenditure                                 (6,195)                (3,167)
Funding of joint venture's capital expenditure                           (856)                (1,632)
Net cash outflow for capital expenditure and financial                 (7,100)                (5,040)
Sale of minority shares in subsidiary on flotation                           0                  5,846
Sale of minority shares in subsidiary                                        0                    689
Net cash inflow from disposals                                               0                  6,535
Net cash outflow before use of liquid resources and                    (3,070)                (9,505)
Issue of ordinary share capital                                         26,485                 11,413
Expenses of share issues                                               (1,982)                  (222)
Net cash inflow from financing                                          24,503                 11,191
Increase in cash                                                        21,433                  1,686

Reconciliation to net cash
Net cash at 1 July                                                       5,541                  3,855
Increase in net funds from cash flows                                   21,433                  1,686
Net cash                                                                26,974                  5,541

           Reconciliation of operating profit (loss) to net cash flow from operating activities

                                                                                      Six months to   Twelve months
                                                                                   31 December 2004    30 June 2004
                                                                                        (Unaudited)       (Audited)
                                                                                              $'000           $'000
           Operating profit (loss) including exceptional items and minority
           Operating profit
           (loss)                                                                             3,207           (815)
           Exceptional items
                                                                                              (110)           (790)
           interests                                                                          (629)           (539)
                                                                                              2,468         (2,144)
           Depreciation                                                                          28              48
           Decrease (increase) in debtors and prepayments                                     1,692         (6,842)
           Increase in creditors and                                                          2,982             344
           Salaries and bonuses converted to shares                                              15             529
           Income attributable to joint                                                     (3,668)         (3,738)
           (Profit) loss on foreign                                                             (4)              16
           Net cash inflow (outflow) from operating activities                                3,513        (11,787)

           Reconciliation of Movements in Group Shareholders Funds

           Profit for the year/period                                                         3,610          11,429
           Net proceeds of ordinary shares issued                                            24,517          11,720
           Distribution of Marakand Minerals Limited shares                                       0        (17,490)
           Capital reserve arising on revaluation of exploration                                  0          16,296
           and mining rights
           Capital reserve arising on issue of shares in Marakand Minerals                        2           3,360
           Minority interest adjustment                                                           0              14
           Net change in shareholders'                                                       28,129          25,329
           Shareholders' funds at beginning of period/year                                   59,319          33,990
           Shareholders'                                                                     87,448          59,319

           Statement of Total Consolidated Recognised Gains and Losses

           Group profit for the financial period/                                             3,610          11,429
           Unrealised surplus arising from the revaluation of
           -    and mining rights on flotation of Marakand Minerals Limited                       0          16,296
           Total recognised profit for the period -                                           3,610          27,725


Company:                       Oxus Gold plc

                               105 Piccadilly, London, W1J 7NJ, United Kingdom

                               Phone:  +44 (0)207 907 2000 Fax:   +44 (0)207 907 2001

                               Email:  Web:

Board of Directors:            William Trew - Chief Executive Officer

                               Jonathan Kipps - Finance Director

                               Richard Wilkins - Executive Director

                               Oliver Prior - Non-executive Director

                               Douglas Sutherland - Non-executive

Company Secretary:             Richard Wilkins

Nominated Adviser              Canaccord Capital (Europe) Limited
and Broker:                    1st Floor Brooke House, 27 Upper Brook Street,
                               London W1K 7QF, United Kingdom

                               Phone:  +44 (0)207 518 2777

Auditors:                       BDO (Isle of Man)

                                9 Myrtle Street, Douglas, Isle of Man, IM1 1ED, British Isles

Registrars:                     Capita Registrars

                                The Registry, 34 Beckenham Road, 

                                Beckenham, Kent 
                                BR3 4TU, United Kingdom

For further information please visit or contact:

Oxus Gold plc

Jonathan Kipps - Finance Director         Tel:  +44 (0)207 907 2000

Joanna Solino - Investor Relations        Tel:  +44 (0)207 907 2005

Bankside Consultants

Keith Irons - Chairman                    Tel:  +44 (0)207 444 4155

Simon Rothschild                          Tel: + 44 (0)207 444 4153

                      This information is provided by RNS
            The company news service from the London Stock Exchange