- 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.
