- Central Asia Gold reviews its strategic options in view of the crisis on the financial markets - The group gold production during the period January - September 2008 amounted to some 715 kg (823 kg for the corresponding period in 2007) - A cost cutting program has been initiated in the subsidiaries - The two alluvial subsidiaries are facing structural difficulties - Central Asia Gold plans to apply for listing at a new suitable market place within 6 months The Board of Directors of Central Asia Gold AB is currently reviewing the prerequisites for the Company's operations considering the ongoing turmoil on the global financial markets, but also in view of the situation in Russia in general and within the group subsidiaries in particular. The Board of Directors as previously reported estimates full year 2008 group gold production to end in the range 800 - 900 kg. This is less than during 2007, when in total 1,073 kg of gold were produced. The reasons were commented on in the half year report. During January - September 2008 some 715 kg of gold were produced (823 kg during the corresponding period 2007). The two alluvial subsidiaries are now approaching the end of their production season. The inflationary pressures have had negative consequences for the whole Russian alluvial gold sector, and this also applies to Central Asia Gold's subsidiaries. This will result in a write-down of the group book values of these two subsidiaries in the coming nine-month report. Remaining group book values are approximately 40 MSEK. At the same time the compulsory reserve calculation in respect of the Tardan deposit will be finished shortly. Provided the report is as expected, a heap leaching plant must be constructed. This will demand more external financing as this year's lower than planned gold production in combination with cost increases have had negative impact on group cash flow. It is also unlikely that the outstanding warrants in Central Asia Gold will be exercised to any larger extent as the market price of the CAG share is now lower than the strike price of the warrants. The Board of Directors of Central Asia Gold in this context sees the following alternatives for covering the expected financing need: i) A rights issue or a directed issue ii) The attraction of a partner iii) Disposal of existing of assets iv) A combination of the above options The Board of Directors believes measures should be taken as soon as possible. This on the ground that group liquidity is otherwise only estimated to be sufficient for enabling a normal business activity until the end of this year. In this context, the Board of Directors has taken certain initiatives to evaluate structural changes for the Company. The Board believes that the initiatives may possibly lead to concrete changes sometime during October - November this year. There are no guarantees that the initiatives will in fact lead to positive results. In order to save costs, cost cutting measures have been taken on subsidiary level. Staff cuts have taken place in inter alia OOO Tardan Gold and Kopylovskoye AB. In the latter company the order for an RC-drilling rig planned for delivery at year end 2008 has been cancelled. Lastly, the recent decision in Sweden to close down the NGM stock exchange in 6 months time implies that Central Asia Gold just as all other companies today quoted on NGM will evaluate other alternatives for its listing. Central Asia Gold will inform the market when a decision has been taken in this respect. For more information, please contact: MD Torbjorn Ranta, tel: +46 (0)8 624 26 80, fax: +46 (0)8 624 37 20, mobile phone: +46 (0)70 8 85 55 04, e-mail: torbjorn.ranta@centralasiagold.se, Website: www.centralasiagold.se, Post- and visiting address: Brovägen 9, SE-182 76 Stocksund. Central Asia Gold AB is a Swedish mining company focused on gold production and exploration in Russia and Mongolia in the central parts of Asia. The gold production was initiated in late January 2005 and the assets as at early 2008 encompassed some 645,000 troy ounces (1 troy ounce = 31.1 g) of C1/ C2 Russian gold reserves. Cautionary Statement: Statements and assumptions made in this report with respect to Central Asia Gold AB's ("CAG") current plans, estimates, strategies and beliefs, and other statements that are not historical facts, are forward-looking statements about the future performance of CAG. Forward-looking statements include, but are not limited to, those using words such as "may", "might", "seeks", "expects", "anticipates", "estimates", "believes", "projects", "plans", strategy", "forecast" and similar expressions. These statements reflect management's expectations and assumptions in light of currently available information. They are subject to a number of risks and uncertainties, including, but not limited to, (i) changes in the economic, regulatory and political environments in the countries where CAG operates; (ii) changes relating to the geological information available in respect of the various projects undertaken; (iii) CAG's continued ability to secure enough financing to carry on its operations as a going concern; (iv) the success of its potential joint ventures and alliances, if any; (v) exchange rates, particularly between the Russian rouble and the U.S. dollar. In the light of the many risks and uncertainties surrounding any gold production and exploration company at an early stage of its development, the actual results could differ materially from those presented and forecast in this report. CAG assumes no unconditional obligation to immediately update any such statements and/or forecasts.