Preliminary Results

Eurasia Mining PLC 28 June 2000 * REPORT AND RESULTS FOR THE YEAR TO 31 DECEMBER 1999 * CONSIDERABLE PROGRESS ON PLATINUM AND PALLADIUM ASSETS * BALANCE SHEET SIGNIFICANTLY STRENGTHENED IN APRIL 2000 * TARGETING FIRST PRODUCTION OF PALLADIUM BY END OF YEAR * INCREASING WORLD DEMAND FOR PGM's AND NEW POLITICAL STABILITY IN RUSSIA PROMISES ENCOURAGING FUTURE FOR EURASIA SHAREHOLDERS Mr J A Mitchell, Chairman, Eurasia Mining PLC, in his statement to shareholders in the Annual report for the year to 31 December 1999 says: 'During 1999 Eurasia achieved considerable progress on its platinum and palladium assets and was actively involved in an important funding and debt restructuring exercise to enable it to take those assets towards production'. Mr Mitchell reported that the company raised £2 million in April 2000, and converted 60% of the Framlington Russian Investment Fund debt into equity. He also stated that the company is targeting the first production of Palladium by the end of the year at the Baronskoye Palladium project, and that this is expected to be the first stage of developing production to in excess of 100,000 oz. of PGM's per annum. Mr Mitchell welcomed both Invesco and Gartmore as two new leading institutional shareholders and made note of the joint venture agreement with Anglo American Platinum Corporation (Amplats), for a programme to define and assess large-scale alluvials and tailings resources in the Urals. In his statement Mr Mitchell also drew attention to the sustained growth in demand for PGM's, particularly for fuel cell technology, and to the new political stability in Russia. He said: '...I believe your company is particularly well positioned to take full advantage of these developments'. Mr Andrew Counsell, Managing Director, reviews the progress at the main operational sites at Baronskoye, and at Soloviev Hill/Vissim, and announces excellent sampling results, encouraging geochemical surveys, and high assay grades. He reports on the acquisition of a fully portable hydraulic diamond drill which will permit the completion of the summer drilling programme at a cost well under the budget, whilst also being available for future additional drilling programmes. Andrew Counsell also reports that the company is actively evaluating other PGM opportunities throughout the Urals, both in association with present joint venture partners and also independently, particularly through strong collaboration with various academic and research institutions throughout the region. He concludes 'with a considerably improved position in terms of cash, debt, assets and potential production/cashflow, the company and its employees have the opportunity to create a highly profitable long-term business with commensurate high investment returns to Shareholders'. The company reported for the year to 31 December 1999 a significantly reduced net loss, in comparison to 1998, of £582,670 ( 1998 £1,346,954), together with an increase in shareholders' funds of £249,913 to £2,734,865, after the raising of additional share capital during the year of £907,758. A complete copy of the Preliminary Announcement of the company's 1999 results is attached hereto. Listing: Alternative Investment Market, London Stock Exchange Code: EUA Web Site: www.eurasia-mining.plc.uk Email: info@eurasia-mining.plc.uk For further information please contact: Andrew Counsell, Managing Director Tel: +44 20 7976 1222 Paddy Manning, The Paddy Manning Company Tel: +44 20 7930 0777 28 June 2000 14-16 REGENT STREET, LONDON SW1Y 4PH TEL: 44 171 976 1222 FAX: 44 171 976 1422 HEAD OFFICE AND REGISTERED OFFICE COMPANY NO: 3010091 CHAIRMAN'S STATEMENT During 1999 Eurasia achieved considerable progress on its platinum and palladium assets and was actively involved in an important funding and debt restructuring exercise to enable it to take those assets towards production. The Company's funding exercise, completed in April 2000, raised £2 million and was coupled with the conversion of 60% of the debt to Framlington Russian Investment Fund into equity, thus substantially strengthening the Company's balance sheet. The funds raised will be used over the next twelve months to advance the Company's projects, to pay down debt and to provide working capital. In particular the Company is targeting the first production of palladium by the end of the year at the Baronskoye Palladium project. This is expected to be the first stage of developing production to in excess of 100,000 oz Platinum Group Metals ('PGM') per annum, for which additional debt and/or equity funding will be required. Further, much progress is expected at the Soloviev Hill and Vissim platinum licence areas. The funding also bought in two new leading institutional shareholders, Invesco and Gartmore, to join Framlington and we welcome them and other new shareholders. It is indeed encouraging to see confidence in the company's prospects supported by significant investment names. In addition, the Company succeeded in concluding a joint venture agreement in 1999 with Anglo American Platinum Corporation Limited ('Amplats'), the world's leading producer of platinum. Amplats is funding a joint works programme with the Company, with the objective of assessing the potential for commercial application of alternative technologies to define and exploit large-scale alluvials and tailings resources in the Urals. Our close working relationship with Amplats bodes well for a bright future. The rising world demand for both platinum and palladium has led me to conclude that our company is well poised to benefit from the increases in the world prices of these two important metals, which we expect to be maintained for the foreseeable future. One particular area of potential significant and sustained growth in demand for Platinum Group Metals is fuel cell technology. Strict legislation on emissions policy has focused attention on this alternative automotive power source. With companies such as Johnson Matthey and Ballard Power teaming up with the likes of Ford, Daimler Chrysler, General Motors, Toyota and Exxon to develop this technology, it becomes clear that fuel cells are indeed the frontrunners of the leading alternatives. It is estimated that by the year 2010 around 10% of all US cars will be powered by fuel cells. In Russia the recently elected President Putin appears determined to boost the economy (already assisted by low inflation, high oil prices and internal demand), to cut bureaucracy and to push through the changes in tax law and investment conditions called for by Western investors. The new political stability is already restoring confidence to inward investment and provides us with added opportunities to enlarge our exploration programmes. Thus I believe your company is particularly well-positioned to take full advantage of these developments. In conclusion I would personally like to thank management and staff for all their hard work and believe that their efforts will help provide shareholders a confident and prosperous future. J A Mitchell Chairman 28 June 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 1999 1999 1998 £ £ Administrative expenses (741,254) (764,408) Other operating income - 35,088 Loss from continuing activities (741,254) (729,320) before interest Profit on partial disposal of a subsidiary 70,835 - Interest receivable & similar items 90,113 5,719 Interest payable & similar charges (2,364) (622,993) Loss from continuing activities (582,670) (1,346,594) before taxation Taxation - - Loss on continuing activities (582,670) (1,346,594) after tax Minority interest (20,451) - Retained loss for the financial year (603,121) (1,346,594) Loss per share (6.01)p (36.14)p CONSOLIDATED BALANCE SHEET At 31 December 1999 1999 1998 £ £ Fixed assets Intangible - Exploration, development 1,649,706 1,649,706 and production interests Tangible - Exploration, development 3,694,368 3,440,535 and production interests Tangible - Other 275,870 296,468 Investments 61,762 59,878 Total fixed assets 5,681,706 5,446,587 Current assets Debtors 61,959 183,576 Cash at bank 21,710 50,036 Total current assets 83,669 233,612 Creditors - amounts falling due within one year (3,009,715)(3,194,984) Net current liabilities (2,926,046)(2,961,372) Total assets less current liabilities (2,755,660) 2,485,215 Net assets 2,755,660 2,485,215 Capital and reserves Called-up share capital 4,167,556 3,726,217 Share premium 3,246,336 2,779,917 Reserves (4,679,027)(4,021,182) Equity shareholders' funds 2,734,865 2,484,952 Minority interests 20,795 263 2,755,660 2,485,215 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 1999 1999 1998 £ £ Cash flow from operating activities (495,722) (524,249) Returns on investments and servicing of (419) 3,355 finance Capital expenditure and (244,732) (619,573) financial investment Acquisitions and disposals 36,847 - disposals Cash outflow before use of liquid (704,026)(1,140,467) resources and financing Financing Issue of convertible loans - 1,006,027 Issue of ordinary shares 675,700 - Decrease in cash in period (28,326) (134,440) Reconciliation of net cash flow to movement in net debt Decrease in cash in the period (28,326) (134,440) Cash inflow from increase in debt - (1,006,027) Change in net debt resulting from cash flows (28,326)(1,140,467) Translation difference (49,829) 30,935 Non cash movement 144,161 - Movement in net debt in period 66,006 (1,109,532) Net debt at 1 January 1999 (2,521,751)(1,412,219) Net debt at 31 December 1999 (2,455,745)(2,521,751) ACCOUNTING POLICIES 1 Basis of preparation The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The Group has implemented the new accounting standards FRS 13 (Financial Instruments and Derivatives) and FRS 15 (Fixed Assets). Neither Financial Reporting Standard has resulted in adjustment to previously published figures. The Group is in an early stage of development and it does not at present generate sufficient revenues from operations in order to meet operating expenditures, capital requirements and commitments. In order for the Group to finance planned extraction and achieve expanded production the Group is dependent upon securing additional debt and or equity financing. On 25 April 2000 the Group completed a private placement of £2.0 million (£1.8 million, after deducing costs of £0.2 million) which the Directors estimate will provide sufficient finance to enable the Group to commence small scale commercial production. Further debt and or equity financing must then be secured to finance the next stage of development. Concurrent with the fund raising £482,065 and US$1,442,063 (£1,394,994 million in total) of secured convertible loan stock held by Framlington Russian Investment Fund ('FRIF') was converted into Shares of the Company to take FRIF's shareholding to 29.9% of the Company. The terms of the agreement provided that FRIF would undertake not to exercise any of its conversion rights if this would increase its shareholding in excess of 29.9% of the issued share capital of the Company and that the remaining balance of US$1,420,937 be converted or repaid by 24 April 2001. In the circumstances that either FRIF is unable to convert the remaining balance into Shares of the Company by 24 April 2001, the remaining loan stock of US$1,420,937 would be repayable by the Company. Unless agreement was reached with the loan stockholder or additional funding negotiated, the Company will not be able to meet its obligations as they fall due. In the event that the Company is unable to secure such further funding, the Company may be unable to continue as a going concern. The financial statements do not include any adjustments, particulary in respect of tangible fixed assets, stocks, investments, loans and provisions for the costs of winding up, that would result from the Company and the Group, or any of its subsidiary undertakings, ceasing to operate as a going concern. 2 Basis of consolidation Details of principal subsidiaries and associated undertakings are given in note 12. The consolidated financial statements have been prepared from the financial statements of the Company and all subsidiary undertakings and also include the Group's share of the results of associated undertakings. Each company in the Group and each associated undertaking has prepared financial statements for the period ended 31 December 1999 which have been adjusted where necessary to conform with the Group's accounting policies. 3 Exploration and development interests The Group adopts the 'successful efforts' accounting policy for mineral expenditure. This requires the immediate write-off of exploration and development expenditure which the Directors do not consider to be supported by the existence of commercial reserves; expenditure to bring successful prospects to production is capitalised and depleted on a unit of production method over mineral reserves on a mine by mine basis. Provision is made for any anticipated site restoration or abandonment costs over the life of the mines on a unit of production basis. 4 Other tangible fixed assets Depreciation is calculated to write off office furniture, equipment and vehicles on a straight line basis over their estimated useful lives, which range from three to five years. 5 Intangible assets Intangible assets represent the cost of acquisition by the Group of rights, licences and know how. Such expenditure requires the immediate write-off of exploration and development expenditure that the Directors do not consider to be supported by the existence of commercial reserves. Otherwise expenditure is capitalised and depleted on a unit of production method over mineral reserves on a mine by mine basis. 6 Deferred taxation Provision is made for deferred taxation on timing differences only where these are expected to give rise to a tax liability in the foreseeable future. 7 Foreign currencies The financial statements of overseas subsidiaries are generally translated at the rate of exchange ruling at the balance sheet date with the exception of the year's profit and loss account, which is translated at the average exchange rates for the period of activity. The exchange differences arising on the retranslation of opening net assets and on the retranslation of the profit and loss account to closing rates of exchange are taken directly to reserves. All other translation differences are taken to the profit and loss account. Notes 1. The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 1999 or 1998 but is derived from these accounts. Statutory accounts for 1998 have been delivered to the registrar of companies, and those for 1999 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2. Reconciliation of operating loss to operating cash flows 1999 1998 £000 £000 Operating Loss (741) (729) Depreciation and impairment 93 40 charges Decrease in debtors 122 (17) Increase in creditors 31 182 Net Cash outflow from operating (496) (524) activities 3. Copies of this announcement and the Annual Report and Accounts for the year ended 31 December 1999 will be mailed to the shareholders on 28 June 1999 and will be available, free of charge from the Company's registered office at 14-16 Regent Street, London SW1Y 4PH for a period of 14 days from the date thereof.

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