Oxus Gold plc – Amantaytau Update

Oxus Gold plc – Amantaytau Update

Oxus Gold plc (OXS), the owner of a 50% interest in Amantaytau Goldfields AO, an Uzbekistan gold and silver producer, today announces the results of a Stage 1 Amendment to the June 2008 Bankable Feasibility Study, as updated in November 2008, compiled by Wardell Armstrong International Ltd on AGF's Underground Sulphide Project in Uzbekistan.

This Amendment was initiated as a consequence of the economic climate which has resulted in a delay in raising the capital required to develop the underground sulphide mine at AGF. It is a revision of the original BFS which requires an initial lower capital cost start-up and also includes retreatment of some of AGF's sulphide tailings arising from the previous trial processing of transitional and sulphide ore through the carbon in pulp ("CIP") plant during AGF's open pit oxide ore mining operation. This study envisages an initial 450,000 tonnes per annum ("tpa") operation at an initial capital cost of approximately $74 million.

Highlights

  • Development of a 450,000 tpa underground gold mine and process plant based on mining a portion of the current reserves at the Severny and Centralny ore deposits (initially supplemented by some sulphide tailings) is technically and commercially feasible
  • The Project will exploit a reserve of 911,000 ounces of gold within a Measured and Indicated Mineral Resource of 1,872,000 ounces of gold over a life of 12 years and, at full production, will produce 100,000 ounces of gold per annum (the Measured and Indicated Mineral Resource in the November 2008 BFS was 2,992,000 ounces of gold)
  • Significant upside potential exists for increased production, extended life and increased reserves. The Project mines 44.8% of the known reserves: the balance of the remaining reserves can be exploited via the currently planned access development at a relatively low capital cost. Also the deposit is open-ended at depth with indications of occurrence of high-grade mineralisation
  • Total costs are estimated at an average $377 per ounce of gold produced over the scheduled 12 years life, including operating taxes and royalties. The Project is in the mid-range on the cost curve of gold producers and is regarded as very robust with potential for further cost reductions
  • Ungeared NPV for the Project is $103.7 million at a 7% discount rate per annum, the IRR is 34.8% and the payback is 30 months from the start of production, anticipated by the end of Q1 2011, assuming an award of a mining development contract by November 2009 and the securing of project finance
  • The Project establishes a new underground mining profit centre in addition to the existing and on-going open pit oxide production of approximately 55,000 ounces of gold equivalent per annum and therefore benefits from the existing infrastructure, existing skilled labour force and management's experience of operating in the area
  • Oxus has been holding discussions with a number of potential sources of financing, including a major Chinese contracting and financing group in respect of both the June 2008 BFS (as amended) and this Amendment.

Speaking today, Chairman Mr Richard Shead said:
"In the light of the current economic climate and the resultant delay in the development of the underground project, Oxus took a decision to revise the original Bankable Feasibility Study to enable the Company to construct the first phase of the mine at a substantially reduced capital cost of approximately $74 million. It is currently the Company's intention to enter into a mining contract with Shaft Sinkers (Pty) Limited by November 2009. Commissioning of the plant is expected in Q1 2011 with an initial production level of 450,000 tpa producing approximately 100,000 ounces of gold per annum. Significant potential exists to expand the Project, given that this Amendment to the original Study only addresses 45% of the known reserves. We remain confident that we will be successful in securing finance for the first phase of this project."

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