INTERIM REPORT DATED AUGUST 27, 2010
Central Asia Gold AB (publ)
Interim report for the six-month period January - June 2010
- The amount of gold produced was 201 kg (106 kg) in the first six months of
2010 and 133 kg (106 kg) for the quarter April-June 2010.
- Consolidated revenues for January -June 2010 amounted to MSEK 74.4 (MSEK
224.3) comparative figures for January-June 2009 excl. goodwill dissolution
were MSEK 23.0, i.e. an improvement in 2010 with MSEK 51.4.
- For the six months January - June 2010, EBITDA was MSEK 7.5 (MSEK 184.0).
Comparative figures January - June 2009 excl. goodwill dissolution were MSEK
-17.3 i.e. an improvement in 2010 with MSEK 24.8.
- The net result after tax and minority interest for January - June 2010 was
MSEK -11.4 (MSEK 167.0). Comparative figures 2009 excl. goodwill dissolution
were MSEK -34.2 i.e. an improvement in 2010 of MSEK 22.8.
- EPS was SEK -0.65 (SEK 9.98) for January-June 2010. For the quarter
April-June 2010 EPS amounted to SEK -0.34 (SEK -0.85).
- Approved gold reserves C1/C2 on current licenses are expected to reach
approximately 34 tons in the end of 2010. As per the report date they amount to
approximately 24 tons.
Major events after the end of the report period
- Fully subscribed rights issue with preferential rights to the existing
shareholders was completed in August 2010. CAG will receive proceeds amounting
to approximately 226 MSEK before transaction costs. Number of shares increases
by 141 225 000, the share capital increases by 158 MSEK. After the rights issue
the total number of shares will amount to 158 878 125, each with a quota value
of 1.125 SEK, and the share capital will amount to 179 MSEK.
- Since 19 July 2010 CAG is listed at the Swedish stock exchange NASDAQ OMX
First North Premier instead of NGM Nordic Growth Market.
Comments by the CEO
It is with satisfaction I summarize the first half of 2010 and the recent
activities and developments. The important pieces needed to implement the
strategy previously outlined are now in place. The planned activities for Q2,
both operational and financial were successfully implemented in accordance to
plan.
First of all we have completed the rights issue and CAG will receive proceeds
amounting to approximately 226 MSEK before transaction costs. Now we have the
financial resources to carry out the planned activities.
Our plans for the future look good and are already confirmed by the positive
trend in CAG gold production which has developed very positively during the
current year.
Prior year CAG produced 106 kg gold in the first six months. In the first six
months 2010 we doubled the production rate to 201 kg. Until now, we have
produced another 200 kg, thus about 400 kg produced until 27 August 2010. The
goal of increasing the production by 50 percent on an annualized basis in 2010
to about 1,000 kg is still valid. Our target to continue increasing production
by a further doubling to 2,000 kg in 2011 is also still valid.
The increased gold production in 2010 will enable the Company to achieve a
positive operating cash flow already this year.
Total revenues for the six months 2010 increased from 23 million to 74 million
compared to last year, operating expenses increased from 45 million to 79
million, which is in line with the increase of production.
Development plans described in the previous report are now implemented
successfully:
The construction of the new heap leaching plant in Tardan has begun. The
positive response to our ongoing activities, not least the rights issue, made
the Russian banks respond positively to co-finance the expansion of Tardan.
Tardan has already signed a loan agreement with Russian bank amounting to 500
million ruble as a part of the financing of the construction of the heap
leaching plant. The plant will have an annual production capacity of 1,200 kg
gold. The investment is expected to generate a cash flow of approximately 50-70
million per year and has a payback period of less than two years. The activity
at the construction of the heap leaching plant is now very high to ensure that
it is completed before the winter season.
Solcocon Heap Leaching plant has been restarted. Drilling works and re-sampling
has shown a very promising content of 2.5 gram per ton at the newly explored
site Podgornoe. Mining there was started in mid-August.
Regarding alluvial mining, Gold Borzya managed to exceed 15% of its budgeted
production level. The Board has decided to sell Artelj Lena. Taking into
consideration the sub production and the high cost level, the shares owned in
Artelj Lena will be sold in four phases until November 2012 for cash
consideration of 4 MUSD (29 MSEK) including interest of 15% on deferred payment
which will be paid at the end of 2012.
Exploration activity being one of the most important areas continued during the
second quarter 2010 as planned. Newly explored areas within the Staroverinskaya
license area allow for restart of Solcocon Heap Leaching Plant. Three
prospective anomalies were identified within Tardan field. A total of 40,000
samples are being collected at Staroverinskaya field, Tardan field and
Uzhunzhul currently.
Gold reserve statement preparation C1/C2 for Kozlovskoe deposit will start in
the fall 2010. The approval is expected end of 2010.
The cooperation with the Canadian mining company Centerra Gold concerning
exploration of Kara-Beldyr has developed according to plan. Centerra invested
2.5 MUSD in Kara-Beldyr and has a right to receive 50% of shares in Kara-Beldyr
according to the agreement. Legal procedures in order to transfer the 50% share
of Kara-Beldyr to Centerra have started.
CAG is, since July 19, 2010, listed on the Swedish stock exchange NASDAQ OMX
First North Premier instead of NGM Nordic Growth Market, this should be seen as
a step towards a listing on the NASDAQ OMX main market. This gives us the
opportunity to become part of a larger international capital market and will be
an important step in the goal to grow and become a profitable and successful
gold producer in Russia.
CAG has during the first six months delivered as expected and has created the
platform required to thrive in the future, we are convinced that our future
goals will be achieved.
Preston Haskell, CEO
