Oxus Mining plc (“Oxus” or “the Company”), the AIM traded gold mining exploration company, today announces details of a Placing and Open Offer which will help to fund construction of Phase I of its exciting gold mining project at Amantaytau in Uzbekistan.

-The Placing and Open Offer, which is fully underwritten, will raise £5.0 million, before expenses, comprising an offer to existing Shareholders and an element already placed with investors

 

-Qualifying Shareholders are entitled to apply for New Ordinary Shares in the Open Offer on the basis of 1 New Ordinary Share for every 5 Ordinary Shares held

 

-Proceeds from the Placing and Open Offer will be used for working capital and to help Oxus to raise the additional sum of $16.5 million required by Société Générale in relation to its offer for a $31 million project finance facility, as announced on 3 April 2002

 

-The Company is working towards satisfying the other conditions required by Société Générale in respect of the $31 million project finance facility and towards agreeing terms for a Proposed Subordinated Insured Debt Facility which will net $15 million, thereby providing the balance of the $16.5 million above

 

-Assuming these financing arrangements are completed and the conditions are satisfied, Oxus will have successfully raised the funds required to construct its 1 million ounce heap leach gold mining project at Amantaytau in Uzbekistan. The Directors of Oxus believe the economics of this project are extremely attractive and expect to be producing gold in mid 2003

 

-A Prospectus in connection with the Placing and Open Offer is being posted to Shareholders today

Roger Turner, Chief Executive of Oxus, said today: “We are naturally delighted to have made this advance towards our funding package, especially as we have managed to keep shareholder dilution to a minimum. We now intend to move rapidly to satisfying the conditions outstanding in respect of the project finance and commence the construction stage of Phase I at Amantaytau and look forward with confidence to achieving significant returns when we commence gold production. In addition, the prevailing gold price now substantially exceeds the price on which the original projections were based, which is all the more reason for us to be encouraged.”

 

END

Contacts:

Oxus Mining
Tel: +44 (0) 1483 714 411
Roger Tuner, CEO
Sacha Borthwick, VP Corporate Development

Brown Shipley & Co Limited
Tel: +44 (0) 20 7282 3270
Bill Staple, Director
Martin Eales

Brown Shipley Securities
Tel: +44 (0) 20 7282 3378
Craig Cowan
Gavin Haywood

College Hill
Tel: +44 (0) 20 7457 2020
Archie Berens

 

 

Website: www.oxusminingplc.com

Email: oxus@oxus.demon.co.uk

 Placing and Open Offer of 50,000,000 new ordinary shares of 1p each at 10p per share

Introduction
The Directors are pleased to announce details of the Placing and Open Offer. The total amount raised under the Placing and Open Offer, which is fully underwritten, will be £5.0 million, before expenses. Qualifying Shareholders are being given the opportunity to apply for 26,209,863 New Ordinary Shares (representing 52.4 per cent. of the New Ordinary Shares) on the basis of 1 Offer Share for every 5 Ordinary Shares held as at 22 May 2002. The 23,790,137 New Ordinary Shares which are not Offer Shares, together with 13,511,662 Offer Shares which certain Qualifying Shareholders have undertaken not to subscribe for, have been placed by Brown Shipley under the Placing.

The Placing and Open Offer is underwritten by Brown Shipley and dealings in the new shares are expected to commence on 25 June 2002.

Reasons for and background to the Placing and Open Offer
Oxus' immediate priority is to complete the development, construction and commissioning of the mine and processing facilities for the oxide deposits at Amantaytau ("Amantaytau Phase I" or "Phase I") in Uzbekistan. The Company has estimated the cost to complete the construction and commissioning of Amantaytau Phase I to be approximately US$41.5 million, which includes additional financing costs and pre-production interest.

Société Générale has offered to provide the Amantaytau Goldfields project ("AGF") in which Oxus has a 50% interest, with a project finance facility of US$31 million subject to entering into a legally binding loan agreement on or before 30 June 2002 ("the Proposed Senior Bank Facility"). The loan agreement will be subject to material conditions precedent including a requirement for Oxus to make a contribution of US$16.5 million to the project. Oxus intends that US$15 million of this requirement will be met by the Proposed Subordinated Insured Debt Facility and US$1.5 million from the proceeds of the Placing and Open Offer.

It should be noted that although Oxus has been working to ensure that the Proposed Senior Bank Facility and the Proposed Subordinated Insured Debt Facility are available, it may not prove possible for the relevant parties to enter into agreements for the provision of this finance or to satisfy the conditions as to their availability.

The Placing and Open Offer is not conditional upon agreements being entered into to provide the Proposed Senior Bank Facility or the Proposed Subordinated Insured Debt Facility or for the conditions to their availability being satisfied.

The Placing and Open Offer will raise £5.0 million before expenses. Of this amount, approximately £1.0 million will be used as part of the Proposed Phase I Financing and £4.0 million will be used for working capital and for further exploration to increase Oxus' resource base. In the event that the other components of the Proposed Phase I Financing are not completed, the proceeds of the Placing and Open Offer will be used for working capital and for further exploration while the Company seeks alternative sources of funding for the financing of Phase I.

Amantaytau Phase I
Amantaytau Phase I is now ready for construction, subject to completing the necessary financing which is explained in a Prospectus to be posted to Shareholders today. The planned construction time is ten months, with full production planned to be two months later. The bankable feasibility study completed on Phase I proposes the development of the oxide deposits of Amantaytau Centralny, Uzunbulak and Vysokovoltnoye by open pit mine and heap leach processing. In Phase I, AGF plans to extract a total of 8.6 million tonnes of ore at an average gold grade of 3.16 grammes per tonne and an average silver grade of 37.71 grammes per tonne. Over the first three years of operation the average gold grade is estimated to be 5.75 grammes per tonne. The total mine life of the current reserves for Phase I is estimated to be approximately 10 years (including one year pre-production). The total gold and silver recoverable over the mine life is estimated by CSMA to be 637,497 ounces of gold and 6.624 million ounces of silver.

During the first four years of production, Phase I is projected to recover 508,380 ounces of gold which would represent 80 per cent. of the total oxide gold expected to be produced. The remaining 129,117 ounces of gold and 6.624 million ounces of silver are expected to be recovered in the remaining five years. Silver production, which is planned to start in year six and run through to the end of the oxide mine life, will be produced from the Uzunbulak and Vysokovoltnoye deposits.

The Company has estimated the cost to complete the construction and commissioning of Amantaytau Phase I to be approximately US$41.5 million which includes additional financing costs and preproduction interest. At a US$285 per ounce gold price, and based on the production rates set out in the Bankable Feasibility Study the project would have an ungeared IRR to Oxus of 33.9%. The estimated cash cost of production is US$118 per ounce of gold and on a taxed and ungeared cost basis the estimated production cost is US$185 per ounce of gold.

The Directors therefore believe that the economics of AGF are highly attractive and are of the opinion that the funding proposals announced today are in the best interests of Shareholders.

Details of the Placing and Open Offer
Included within the Prospectus being despatched to Shareholders today, Brown Shipley invites Qualifying Shareholders to apply for up to 26,209,863 New Ordinary Shares at the Offer Price on the basis of:

 

1 New Ordinary Share for every 5 Ordinary Shares

held as at close of business on 22 May 2002. Fractions of New Ordinary Shares will not be allocated to Qualifying Shareholders. The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the existing Ordinary Shares.

Brown Shipley, as agent for Oxus, has agreed conditionally to use all reasonable endeavours to procure subscribers for the New Ordinary Shares with certain institutional and other investors at the Offer Price, subject to the rights of Qualifying Shareholders to apply to subscribe for the Offer Shares under the Open Offer. Brown Shipley has placed the 23,790,137 New Ordinary Shares which are not Offer Shares and a further 13,511,662 Offer Shares which certain Qualifying Shareholders have irrevocably undertaken not to subscribe for under the Open Offer. Brown Shipley has conditionally agreed to subscribe as principal for the New Ordinary Shares to the extent that the same are not subscribed for under the Placing or Open Offer.

Certain Directors and other Qualifying Shareholders have given irrevocable undertakings to the Company and Brown Shipley that they will not apply to subscribe for Offer Shares under the Open Offer. The Offer Shares to which they would be entitled will not be offered to Qualifying Shareholders but have been placed by Brown Shipley pursuant to the Placing.

The Placing and Open Offer is conditional, inter alia, on the Placing Agreement having become unconditional in all respects and not having been terminated in accordance with its terms. The Placing Agreement is conditional, inter alia, on the passing of the Resolution at the EGM and the admission of the New Ordinary Shares to trading on AIM. It is expected that admission will become effective and dealings in the New Ordinary Shares will commence on 25 June 2002.

Timetable

 

General
This announcement has been issued by Oxus and has been approved solely for the purposes of section 21 of the Financial Services and Markets Act 2000 by Brown Shipley.

Brown Shipley, which is regulated by The Financial Services Authority, is acting as nominated adviser and nominated broker to Oxus. Brown Shipley is not acting for any other persons and will not be responsible to anyone other than Oxus for providing the protections afforded to customers of Brown Shipley or for providing advice in relation to the Placing and Open Offer.

The formal documentation relating to the Placing and Open Offer will be despatched to Shareholders today and will be subject to the conditions contained therein. All definitions contained in the Prospectus shall apply to this announcement. The availability of the Placing and Open Offer to persons not resident in the UK may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the UK should inform themselves of, and observe, any applicable requirements. The Offer will not be made, directly or indirectly, in or into the US, Canada, Australia or Japan by use of the mails of, or by any means or instrumentality of inter-state or foreign commerce of, or any facilities of a national securities exchange of, the US. This includes, but is not limited to, facsimile transmission, telex and telephone. Accordingly, copies of this press announcement, the Prospectus and any related documentation will not be, and must not be, mailed or otherwise distributed or sent in or into the US, Canada, Australia or Japan.