· Total CAG group gold production during the nine-month period January - September 2007 amounted to 823 kg (26,400 oz), 577 kg of which (some 18,500 oz) were produced during the quarter July - September. Approximately 815 kg of gold were sold during the nine-month period, of which 710 kg during the last quarter. During October - November approximately 200 kg of additional gold (6,400 oz) were produced. · The new Tardan processing plant has been in operation since beginning of April this year. Gold production from the plant amounted to 95 kg during the second and third quarters of 2007, of which 38 kg was during the third quarter. The plant produced another 57 kg during October - November, of which nearly 40 kg was during November. · The Kopylovskoye project appraisal campaign is in full progress. The sale of 25% of the ownership of this project to external investors resulted in a TSEK 25,968 capital gain, which has been included in the 9-month result and in the result for the quarter July - Sept 2007. · In early 2008 Central Asia Gold will submit a new reserve calculation for approval as regards the Tardan license. The figure that will be presented is some 10 tons (some 320,000 oz) of C1/C2 gold reserves in respect of the first four ore bodies 24, 26, 28 and 29 including new low grade ores. The corresponding historic figure for this area was some 5 tons of C1/C2 reserves (160,000 oz). · Consolidated revenues for the nine month period amounted to TSEK 150,037 (TSEK 38,404). For the quarter July - September 2007 revenues were TSEK 118,466 (TSEK 28,421). · The net result after tax for the period January - September 2007 was TSEK 6,922 (TSEK -12,411). For the quarter July - September 2007 the same net result amounted to TSEK 32,959 (TSEK 261). · EPS was SEK 0.014 for the reporting period (SEK -0.050). For the last quarter EPS was SEK 0.077 (SEK 0.001). (For table see attached file) Background Central Asia Gold AB (CAG AB) is a Swedish junior mining company with operations in Eastern Siberia, Russia. The group structure consists of the Swedish joint stock parent company, which currently controls three wholly-owned subsidiaries, of which two are in Russia. The Russian subsidiaries are of the limited liability type. The subsidiary OOO Tardan Gold also owns several sub-subsidiaries in Russia. The operations involve exploration and production of gold, primarily in the Tyva and Irkutsk regions in Russia. The group's main assets comprise a large number of mineral licences held by the various subsidiaries. The licences, as at early January 2007, encompass 747,000 troy ounces (oz) (1 oz = 31.1 g) of gold reserves according to the Russian C1+C2 categories, as well as 1,055,000 oz of P1 gold resources and 5,765,000 oz of P2 gold resources. CAG AB was publicly listed on the Swedish NGM Nordic Growth Market stock exchange on March 29, 2005. The number of shareholders is currently approximately 4,800. Results - the Group For the nine-month period ending September 30, 2007 the group reported a net result after tax of TSEK 6,922 (TSEK -12,411) which corresponds to SEK 0.014 per share (SEK -0.050). A capital gain of MSEK 25,968 is included in this result and applies to the third quarter of the period. The capital gain arose as a result of the sale of 25% of the Kopylovskoye project to a group of external investors. For the third quarter of the reporting period the net result after tax was TSEK 32,959 (TSEK 261). This corresponds to EPS of SEK 0.077 (SEK 0.001). Consolidated gold sales revenues were TSEK 102,099 (TSEK 19,750) during the financial period. For the quarter July - September 2007 gold sales amounted to TSEK 89,822 (TSEK 18,544). In addition, a revenue component of TSEK 12,044 (TSEK 3,967) is included in the consolidated P/L account relating mainly to services performed by the transportation subsidiaries of the group, which provide transportation services, partly to external clients. The transport revenues were TSEK 4,827 during the last quarter of the reporting period (TSEK 2,174). The change in stock of finished and semi-finished goods amounted to TSEK 18,788 (0). During the last quarter the same change was TSEK 9,682 (0). According to previous statements the Tardan mine is considered to be operational as from 1 January, 2007 and, therefore, only limited costs have been capitalized at the Tardan production license area. However, a lot of exploration work is being conducted on the other appraisal projects in the group, and these costs are predominantly capitalised during this stage. During the reporting period total costs of TSEK 16,296 were capitalized at subsidiary level. In the corresponding nine month period of 2006 TSEK 14,687 was capitalized as mining permits. For the quarter July - September 2007 the capitalization component amounted to TSEK 13,325 (TSEK 7,703). Finally, a revenue component of TSEK 810 (0) has been recognized in the third quarter of the reporting period in respect of dissolution of negative goodwill. The negative goodwill resulted from the provisional acquisition analysis of Artelj Lena, which is consolidated in the group PL-account as from the third quarter this year. Total operating costs in the group during the reporting period amounted to TSEK 166,020 (TSEK 44,573). It should be emphasized that installation and start up costs relating to the Tardan processing plant amounting to TSEK 13,392 have been charged directly to the P&L account in this period. They do not relate to the gold production for this year. For the quarter July - September 2007 the operating costs were TSEK 108,082 (TSEK 28,429). Included in the operating costs for the full nine-month period and for the last quarter is a write-down charge in respect of the Tomano-project amounting to TSEK 2,579 (please see section on Tomano below). Net financial items were TSEK 26,902 for the reporting period (TSEK -5,828). For the last quarter of the reporting period the net financial items were TSEK 25,925 (TSEK 673). The above mentioned capital gain of TSEK 25,968 is included in the net financial items for the full reporting period and also for the third quarter. The tax cost for the reporting period was TSEK -3,997 (TSEK -414). The tax cost consists of actual current tax of TSEK -117. The rest of the tax cost is a change in deferred tax. The tax cost for the last quarter of the reporting period was TSEK -3,350 (TSEK -404). The minority share of the net result for the nine month period was TSEK 1,392 (TSEK -23). For the quarter July - September 2007 the minority share amounted to TSEK 1,255 (TSEK -64). Mining operations Tardan project in the Tyva region General overview Tardan is a medium sized gold deposit, which was privatized in a public auction in the summer of 2003. The officially established Russian reserves (C1/C2) and P1 resources, most recently updated in the early 1990s, amount to 413,000 oz of gold, of which 229,000 oz were C1/C2 reserves. In addition, Tardan is estimated to contain 4,354,000 oz of P2 gold resources (Russian classification standards). The appraisal work has so far only been conducted to a depth of about 100 m. The average gold grade of these reserves is estimated at 10.7 grams/ton (g/t). A considerable exploration programme involving core drilling, trenching and construction of underground drifts and shafts was carried out in the Soviet time and has been supplemented by new data gathering in 2004 - 2007. The first license applies to a 3.3 square kilometre area, which lies 80 km to the east of the region's capital Kyzyl. The existing gold reserves are attributable to this license. Some 30 ore bodies exist, out of which the four main ore bodies constitute the bulk of the gold reserves assigned thus far. Another exploration and production license with a term of 25 years was won in a public auction in summer 2007. This license area comprises some 520 km2 and surrounds the first license area. This new license is called the "Tardan mining district". A large number of gold occurrences were identified on this license block during the Soviet era, and Central Asia Gold has already commenced with appraising them. The occurrence of initial interest is called "Tardan 2"and is located only some 2 km to the East of the new processing plant commissioned this year. Reserve status and heap leaching plans As stated above the initial Tardan license comprised some 229,000 oz of gold reserves assigned in the Soviet era. The cut-off grade applied then was 2 g/ton and the appraisal work did not go below a depth of 100 m. Of the total gold reserves assigned during the Soviet era, the 5 major ore bodies contained some 160,000 oz of the assigned C1/C2 reserves. Central Asia Gold has conducted a significant appraisal programme an these ore bodies over the last two years, and gold production has commenced. The appraisal work continues, and thus more information is added all the time. Central Asia Gold plans to go through a new reserve examination by the Russian State Mineral Reserve Committee (GKZ) during the first quarter of 2008. The internal reserve report is now being finalized and the main new parameters are the following: Firstly, as regards the high-grade ore bodies the new drilling conducted has not yet reached the bottom of the ore bodies. Attempts will be made to drill to a depth of 300 - 400 m to establish where they end. In addition, these ore bodies are wider than had previously been assumed. The new data shows that the main ore body number 26, which according to the older data contained some 170,000 tons of ores with a grade of more than 10 g/ton, is larger and is now estimated to contain more than 500,000 tons of ores. The average grade is therefore expected to be reduced from more than 10 g/t to some 6 g/t. The established low-grade ore bodies will also undergo the reserve examination process. The Tardan geologists estimate that they have thus far proven there are over 2.5 million tons of low-grade ore reserves with an average estimated grade of more than 2 g/ton. More and more data arrive from the continuing appraisal work, and the low-grade ore volumes are particularly expected to increase over the years to come. In total, given the currently existing data, the internal calculations show gold reserves of some 10 tons (320,000 oz) in respect of the new low-grade zones and in respect of the 4 main ore bodies. This is the figure that will be submitted to the GKZ-committee, and Central Asia Gold believes it will be approved in early 2008. It is important to stress that the new reserve estimate in principle only applies to the recalculation of the ore reserves on four out of more than 30 ore bodies in the first license block. This reserve review will also enable Central Asia Gold to design a development plan for the heap leaching unit that will process the low-grade ore reserves as well as the tailings from the high-grade ore bodies. The test enrichment trials of the low-grade ores have, as previously stated, given satisfactory results with recovery rates of up to 70% given cyanide as agent. It is currently believed that the first gold via heap leaching may be produced in 2009. Gold production - the processing plant The gravimetric processing plant began operation in April 2007. After certain initial start up problems the factory has been working satisfactorily since the middle of August. The processing capacity of the plant is 100,000 tons of ore per year or approximately 8,000 tons of ore per month. During the quarter April - June 2007 11,000 tons of ore were processed, which resulted in approximately 57 kg of gold in the gravimetric stage with an extraction coefficient of more than 50%. The gold grades were high during this period. During the quarter July - September more than 20,000 tons of ore were processed with some 38 kg of gold produced. During this quarter, ores from another ore body were produced with lower grade and finer gold grains resulting in a lower recovery ratio. After the end of the third quarter, the incoming gold grade has again increased as from November. During October some 17 kg of gold was produced; in November the best monthly result thus far was achieved with nearly 40 kg of gold produced. Total Tardan gold production for 2007 is thus estimated to end in the interval 180 - 200 kg. The staff at the Tardan plant is now beginning to mix ores from the various ore bodies in order to have a more stable gold grade in the incoming ores. During the first six months of the reporting period OOO Tardan Gold sold 70 kg of gold including gold in stock at the beginning of the year. During the third quarter a further approximately 30 kg of gold were sold. Tardan 2 gold occurrence The Tardan 2 occurrence is one of several occurrences within the so-called Tardan Mining district license. This license was acquired in an open auction in summer 2007. The license area comprises some 520 km2. The Tardan 2 occurrence is immediately adjacent to the first Tardan license block, where gold is now produced. The Tardan 2 occurrence was approached as a quartz vein object in the Soviet era, but was deemed less interesting due to the limited size of the quartz veins. Central Asia Gold's geologists have approached this object from another angle and believe that the side rock also contains gold (please compare with the results from the Kavkaz project described below). The conducted geophysical work has identified significant anomalies at this object. The size of the anomalies indicates that this object may be significantly larger than the neighbouring Tardan project. Limited surface samples have been analysed and reveal high gold grades. In summer 2007 a number of surface trenches have been constructed, from which a large number of samples have been collected. The analysis results of these samples are due by end of this year. Kopto Continuous operation at the Kopto plant stopped at the end of the year 2006. In the future the plant will be used to perform test enrichment of ore samples. The fact that the Kopto plant is not used for commercial gold production has not led to any consequences for the external group accounts since much of the equipment has been transported to the nearby Tardan plant, where it continuous to function. Kopylovskoye deposit in Irkutsk Kopylovskoye is a gold deposit that holds 7 tons of gold reserves as per Russian geological standards (some 240,000 oz). The project's potential reserve base, however, is significantly larger as the so far registered gold reserves are only attributable to a depth of some 30 m. An Extraordinary General Meeting of Central Asia Gold in spring 2007 approved the sale of a 25% ownership interest in the licence company for a consideration of 70 MSEK (at that time the equivalent of MUSD 10). As a part of this transaction the Russian licence company (OOO Kopylovsky) has been legally transferred from the Russian subsidiary OOO Tardan Gold to a newly established Swedish subsidiary named Kopylovskoye AB. The first 35 MSEK of external financing was received towards the end of September, and the second half is expected during the fourth quarter. The transaction has resulted in a capital gain of 25,968 TSEK in the external group accounts, which has been recorded in this interim report. A 25% minority therefore arises in the accounts of the Kopylovskoye AB group. Central Asia Gold currently views the acquisition of the Kopylovskoye project as an acquisition of assets and therefore no acquisition analysis is done. Geological work has commenced on the ground in Irkutsk. Project documentation has been submitted, the camp for the workers has been prepared and certain equipment has been ordered, including a powerful, new RC drilling rig. A significant appraisal programme will now take place during this year and 2008. Core drilling has already started through a local subcontractor. During autumn 2007 some 1,000 m of core drilling has been carried out. The current plan is to complete some 6,000 m of core drilling and more than 30,000 m of RC-drilling over the next 12 - 18 months. A new laboratory, will be able to fast and reliably process test samples on line, is currently being constructed close to the site. It is estimated that some 50,000 samples will be analysed over the next year. It is important to stress that the existing ore body is still fully open in all directions. The established strike of the ore body is some 300 m and the width is some 50 m. However, the license block itself has a length of 6 km and the gold mineralized zone penetrates right through the license block. The Kavkaz project in Irkutsk The historic geologic perception was that the Kavkaz project contained certain high-grade gold reserves in limited volumes, which were concentrated in quartz vein zones with a thickness of slightly over one meter. Central Asia Gold's geologists have always stated that they believed the old data gathering methods underestimated the true gold grade as they did not capture the larger gold grains. During 2007 new data has been gathered on the surface of the Kavkaz deposit, primarily via surface trenches. These samples have been analysed, and they reveal that the gold is present not only in the quartz veins but also in the side rock. The ore zone has a thickness of up to 45 meters instead of one or a few meters in the surface trenches studied. This changes the whole perception of the Kavkaz project and makes it resemble the Kopylovskoye deposit owned by Central Asia Gold. The potential of the project has therefore increased considerably as a result of this year's working programme. Alluvial gold production: The placer deposit Sivo Pravy Uval This placer deposit held by the subsidiary OOO GRK Tomano (Tomano) is located in the Buryatiya region of Russia, which borders on the Tyva region. It holds 19,000 oz of Russian C1 gold reserves. In March 2005 Central Asia Gold concluded a joint venture agreement in respect of the future development of the deposit. According to the agreement, the joint venture partner, the Russian company OOO GRK Oreol (Oreol), was supposed to be the operator of the project and was supposed to secure the financing. Oreol has however not performed, and Central Asia Gold itself does not find it economically interesting to start a development campaign in respect of this project. Consequently, the license has been handed back to the Russian authorities. This has led to a net write-down charge of TSEK 2,579 in the external accounts, which is recognized in the last quarter of the nine month period. The subsidiary gold placer producers OOO Artelj Tyva (Tyva region) and OOO Artelj Lena (Irkutsk region) The acquisition of OOO Artelj Lena was completed in late June 2007. A provisional acquisition analysis was performed upon consolidation. This analysis has resulted in a limited negative goodwill dissolution (one-off income component) amounting to TSEK 810. This income component is recorded in the last quarter of this nine month report. The provisional acquisition analysis is described in the notes section of this report. Artelj Lena is thus included in the CAG consolidated profit and loss account as from the third quarter of this year. The acquisition of the other placer producer in the group, OOO Artelj Tyva, was completed at the end of 2005. During the nine month period (actually during May - September due to the seasonal character of placer gold production) both alluvial subsidiaries produced in total 728 kg of gold (23,400 oz) divided into 560 kg for Artelj Lena and 168 kg for Artelj Tyva. The production during the last quarter of the reporting period was 539 kg (17,300 oz). Thereafter the two companies produced another approximately 145 kg (4,600 oz) in the fourth quarter before the production season ended. This was divided into some 64 kg (Artelj Tyva) and 81 kg (Artelj Lena). In total both alluvial subsidiaries sold 716 kg of gold during the nine-month period. 680 kg of this were sold during the quarter July - September 2007. Investments and Liquidity Net investments in material and immaterial fixed assets during the first nine months of 2007 amounted to TSEK 123,358 (TSEK 56,900). The corresponding figure for the last quarter of the reporting period was TSEK 45,874 (TSEK 25,742). Cash in group accounts was TSEK 54,524 at the end of the period (TSEK 167,563). The parent company The Swedish parent company is a holding company without significant operations. It supports the subsidiary companies with financing, investor relations services, strategy reviews etc. It thus has no income other than interest on loans extended to the subsidiaries from time to time or in respect of bank deposits. The number of employees was 3 at the end of the reporting period (1). The net result for the nine month period 2007 was TSEK -5,937 (TSEK -9,115). For the quarter July - September 2007 the corresponding result was TSEK -1,574 (TSEK +42). Currency exchange rate losses during the first half of 2006 impacted the net result of the parent company during that period, and the currency movements reversed somewhat during the third quarter of 2006 resulting in a positive net result for that quarter. Cash in the parent company was TSEK 7,529 as at September 30, 2007 (TSEK 167,563). Employees The group had 1,129 employees at the end of September 2007 (468). Issued shares As at the end of September 2007 as well as at the date of this report, the number of shares outstanding in Central Asia Gold AB (publ) is 412,210,070. In addition to this an options programme directed at leading personnel in the group was approved by the Annual General Meeting of shareholders on June 12, 2007 in Stockholm. In total 14,500,000 options were issued in accordance with this programme. The term of the options is to the end of July 2009 and the strike price is SEK 2.25 per option corresponding to one underlying share. The options can only be exercised towards the end of the period. The allocation of options took place during the third quarter of the financial period. The market price of the CAG share is lower than the strike price of the options as at the end of the reporting period. Major events after the end of the reporting period Gold production As stated above, during October - November 2007 the group companies have produced an additional approximate 200 kg of gold (6,400 oz). Next report due The next financial report due is the 12-month Interim report for the full financial year 2007 (January - December). It will be released on Thursday, February 28, 2008. Reporting dates in 2008 Interim 12-month report for financial year 2007 February 28 Interim report for Jan - March 2008 (Q1-2008) May 28 Annual General Meeting (exact date not yet determined) June 2008 Interim report for Jan - June 2008 (Q2-2008) August 28 Interim report for Jan - Sept 2008 (Q3-2008) November 28 Company information The parent company's full name is Central Asia Gold AB (publ). It is a public limited liability company with head offices in Stockholm and the corporate identification number is 556659-4833. The address of the parent company is Brovägen 9, 182 76 Stocksund. (For complete interim report see attached file)