2005 Preliminary Results-Amd

KazakhGold Group Ltd
05 June 2006




The following replaces the 'Preliminary Results' announcement released on 
5 June at 07:00 under RNS No 0323E.

This version contains minor textual changes.

The full amended text is shown below.



                    Preliminary results for 14 weeks from September 26
                                to December 31, 2005

Highlights

•        Gold production during the period was 52,691oz from newly commissioned
processing facilities at the company's three operating mines: Aksu, Bestobe and
Zholymbet; bringing total production for 2005 to 88,784oz (H1: 6,800oz; H2:
81,984oz)

•        Production of 33,624oz in first quarter of 2006 in line with budget

•        Successful IPO in November 2005 raised net proceeds of US$97.4 million
for debt repayment and reinvestment in business

•        Substantial capital expenditure in 2005 to expand processing capacity
and US$68.8 million budgeted for further capacity expansion in 2006

•        Exploration portfolio of three properties acquired in July 2005 by
Kazakhaltyn, expanded through award of licences for five additional properties
in gold-bearing regions of Kazakhstan

•        Actively looking at opportunities to accelerate growth strategy


KazakhGold (KZG) is one of the first companies from Kazakhstan to list on the
London Stock Exchange.  It has three operating gold mines and a portfolio of
highly-prospective exploration properties. The company has embarked on a
development strategy to realise the full potential of its mines which are
believed to have the largest known gold reserves and resources in Kazakhstan.
It has already commissioned modern processing facilities with annual treatment
capacity of 3m tonnes.

KazakhGold is led by Chief Executive, Dr Kanat Assaubayev, a leading authority
on automation of process technology in the mining, iron and steel and oil and
gas industries.

Commenting on KazakhGold's first set of results, Dr Assaubayev said: 'We are
pleased with the progress we are making at our three operating mines where we
have commissioned new processing facilities and substantially increased gold
production.  We have a strong management team that is committed to developing
KazakhGold to its full potential as a leading low-cost Central Asian gold
producer.  We are actively looking at opportunities to accelerate our growth.'

                                                                              /2

                                      -2-

KazakhGold will be hosting presentations for analysts at the offices of ING, 60
London Wall, London EC2M 5TQ on Monday, June 5, 2006: in Russian at 9.00am and
in English at 10.15am.

Those unable to attend in person are invited to participate by conference call.
Details as follows:

Analysts: Russian Speaking: 09.00 BST:  please call [phone].  Pass
Code 706819.

Analysts: English Speaking: 10.15 BST:  please call [phone].  Pass
Code 706821.

A conference call facility will be available for investors at 09.00 BST on
Tuesday, June 6.  Those who would like to participate should call: +44 (0) 20
7162 9962.  Pass Code 706816


Further Information:

Aidar Assaubayev
Deputy Chief Executive
KazakhGold Group Limited
Tel: [phone]

John Greenhalgh/ Ron Marshman
City of London PR Limited
Tel:  [phone]
Mobile: [phone]

Website: www.kazakhgold.com




                                                                              /3


                                      -3-

Chairman's Statement

2005 was a successful year as well as an important milestone in the development
of KazakhGold Group, and its principal operating subsidiary Kazakhaltyn. Our
production targets were met and the financial and operational foundations were
laid to realize the full potential of our assets. These assets, we believe,
comprise the largest known gold reserves and resources in Kazakhstan.

KazakhGold's London IPO in November 2005 led to the issue of 13.1 million Global
Depositary Receipts (GDRs) at US$15 per GDR. This included a primary issue of
7.1 million new shares, with net proceeds after costs of approximately US$97.4
million. Our GDRs were admitted to the Main Market of the London Stock Exchange
on 1 December 2005.

Our strategy is to realize the full potential of the Group's existing assets;
significantly expanding production in the medium term and pursuing growth
opportunities, both in Kazakhstan and elsewhere in the region, that create value
for shareholders. Where appropriate, KazakhGold will partner with other leading
mining companies to realise the full potential of our existing resources and to
pursue acquisition opportunities.

Results and dividend

From 26 September to 31 December 2005, the Group had total revenue of US$20.4
million, and a loss after tax of US$2.2 million. During this period, the Group
mined and processed 757,048 tonnes of ore with an average grade of 3.25 g/t gold
and recovered 52,691oz of gold at an average cash cost of US$210/oz. Production
of 33,624oz during the first quarter of 2006 was on budget and we are on track
to meet our half-year production target.

As already stated, at the time of last year's IPO, the Board does not propose
the payment of shareholder dividends until the current plant modernisation
programme is completed and our processing facilities reach their maximum
designed output capacity. After this, and subject to KazakhGold's performance,
we intend to commence paying dividends progressively up to 25 per cent of the
Group's consolidated annual net income.

From July to December 2005, there was a phased increase in production at
Kazakhaltyn's three principal mines. This followed their partial closure from
August 2004 to July 2005, during which time the mine facilities were
reconfigured and upgraded. The Group's operating and financial results for the
reporting period are therefore not typical.

Strategic developments

Since our IPO, KazakhGold has continued to seek new exploration and production
opportunities in Kazakhstan. Following a successful tender, the Kazakh
Government awarded the Group five new licences that include mineral rights to
Southern Karaultube and Kyzylsorskoe in Northern Kazakhstan, Pridorojnoe and
Kaskabulakskoe in the Eastern Kazakhstan and Zones 1 & 2 of the Akshatau MMC
deposit in Central Kazakhstan. Further details on these properties are included
below.

Outlook

KazakhGold expects to increase gold output significantly over the medium term.
We will achieve this by a dramatic expansion of our processing capacity, using
simple but effective production and processing methods. In 2006 we will conduct
further exploration of Aksu's significant Vera zone. We are also evaluating the
possibility of accelerating the Group's investment programme, to achieve even
higher production levels over a shorter time period.

                                                                              /4

                                      -4-


KazakhGold's costs are primarily denominated in Kazakh tenge. While this was of
benefit to us last year, as the tenge depreciated against the US dollar, this
favourable trend began to reverse following the Presidential elections. The
tenge is also a petro-currency, reflecting the importance of the oil sector to
the Kazakh economy. Inevitably, this will see some inflationary pressure in
Kazakhstan during 2006. While the Group cannot influence these external
macro-economic factors, we will continue to focus on managing our costs.

Top line growth will be supported by increasing our reserves, through
realization of the full potential of our existing and recently acquired assets.
We are embarking on a joint venture with Barrick Gold which will provide us with
access to valuable expertise, accelerating the joint exploration of several
properties acquired through successful tender last year.  Overall, the Board is
confident that KazakhGold has the strategy, management expertise and growth
opportunities to make further significant progress in 2006.

                                                                              /5



Operating Review

AKSU (Including Quartzite Hills)

Overview

The Aksu and adjacent Quartzite Hill mines are located in the Akmola region of
Northern Kazakhstan, 18 kilometres north of the city of Stepnogorsk.

Exploration at Aksu began in 1929, when gold deposits of a quartz-vein
mineralization type were discovered. There are currently four operating shafts;
one dedicated ventilation shaft and one open pit facility in operation at the
two mines. In addition, low-grade ore is processed from tailings in on-site
tailings dams and waste dumps.  Until 2005, only underground mining and
flotation processing were performed at Aksu. Ore from Aksu is now processed
using flotation, CIP or heap leach technology.

Aksu is the location of a geological exploration unit that handles all of the
Group's internal exploration work.

Reserves and resources

Kazakhaltyn estimated that as of June 2005 the Aksu mine, which includes the
Aksu and nearby Quartzite Hills deposits, had B and C1 gold reserves and C2 and
P1 gold resources of approximately 5.4 million ounces and 15.0 million ounces
respectively. Approximately one third of the reserves identified are
concentrated in the Vera zone. The orebody at Vera continues to the surface,
which will allow the Group to develop large scale open pit operations at Vera in
the future.

Production highlights & capital expenditure

For the period 26 September to 31 December 2005, 369,259 tonnes of ore were
mined, with an average grade of 2.54 g/t gold. The gold recovery rate was 63 per
cent, enabling 18,981oz of gold to be produced. Capital expenditure at Aksu
during the period was US$3.0 million.

Processing

Until July 2005, all ore at Aksu was processed using the flotation method. Then,
after extensive testing, two new processing technologies were introduced. First
into operation, on 13 July 2005, was a new heap leach plant with an annual
throughput capacity of approximately 0.5 million tonnes. This facility is
producing cathodic gold.

On 28 August operations commenced at Aksu's new CIP facility, following the
reconstruction of the original flotation technology plant to rely primarily on
CIP technology. This CIP facility has an annual throughput capacity of 1.0
million tonnes per annum and produces cathodic gold. Finally, in August, a
small-scale flotation line with a capacity of 0.2 million tonnes per annum was
re-started at the Aksu processing plant. This treats refractory ores and
produces flotation concentrates.

Outlook

In 2006 the focus at Aksu will be on development of open pit operations, to
support the Group's production expansion plans.

Longer term, the Group expects to start underground mining of the high-grade
sulphide ore in the Vera zone from 2008. This zone has significant potential,
despite being only partly drilled and proven. Vera has approximately 2.0 million
ounces of reserves, with the ore having a high gold content of 10.7 grammes per
tonne.

BESTOBE

Overview

Located 80km northeast of Stepnogorsk, most of the exploration work at Bestobe
was undertaken in the 1950s. Over 380 quartz veins have been identified at the
mine of which some 285 are considered suitable for mining.

There are four underground mining locations, a dedicated ventilation shaft and
one open pit mine. Low-grade ore is contained in on-site tailings dams and waste
dumps. Until 2005, only underground mining and flotation processing were
undertaken at Bestobe.

Reserves and resources

In June 2005, according to Kazakhaltyn's estimates, Bestobe had B and C1 gold
reserves and C2 and P1 gold resources under the FSU Classification of
approximately 3.1 million ounces and 10.2 million ounces respectively.

Production highlights & capital expenditure

For the period 26 September to 31 December 2005, 257,807 tonnes of ore were
mined, with an average grade of 3.87g/t gold. The gold recovery rate was 62.0
per cent enabling 19,904oz of gold to be produced. Over the period, US$0.2
million was invested in Bestobe's ore crushing facility.

Processing

The original processing plant at Bestobe was constructed in 1932. Unlike the
Aksu and Zholymbet deposits, a significant proportion of the gold can be
recovered using gravity concentration. The plant currently treats both
underground ore and some oxidised material using gravity and flotation
technologies. Gold recovered from the gravity circuit is amalgamated to produce
gravity concentrate, whilst gold bearing flotation concentrate is also produced.

A new heap leach plant at Bestobe commenced operations on 15 August 2005. It
treats a combination of tailings and oxide ore and has an annual throughput
capacity of approximately one million tonnes of ore. A new CIP plant, with an
annual ore processing capacity of 0.5 million tonnes was also inaugurated. The
existing flotation processing facility has an annual throughput capacity of
approximately 0.25 million tonnes. This plant will continue in operation and
will be used to treat ore from the Dalnaya zone, which is better suited to
processing using flotation technology.

Outlook

Expansion of open pit mining is a priority in 2006, in order to support the
Group's rising production plans across its principal mines. On the processing
side, heap leaching capacity will be expanded in 2006. Construction of a new CIP
plant, with annual capacity of 2.5 million tonnes, is also planned and due to
become operational by the end of 2007. This will replace the old flotation
facility of 0.25 million tonnes annual throughput capacity.

ZHOLYMBET

Overview

Zholymbet is located 100km south of Stepnogorsk and saw most of the exploration
work carried out in the 1930s. There are four underground mine operations as
well as a dedicated ventilation shaft. Low-grade ore is contained in on-site
tailings dams and waste dumps.

Reserves and resources

In June 2005, Kazakhaltyn estimated that the Zholymbet mine had B and C1 gold
reserves and C2 and P1 gold resources of approximately 4.3 million ounces and
8.2 million ounces respectively. The deposit includes a silicified zone
extending 2.5 kilometres and up to 80 metres wide. The underground ore is the
Group's highest-grade reserve, with a gold content of 21.15 grammes/tonne.

Production highlights & capital expenditure

For the period 26 September to 31 December 2005, 129,982 tonnes of ore were
mined, with an average grade of 4.03g/t gold. The gold recovery rate was 82.1
per cent, enabling 13,806 oz of gold to be produced. Capital expenditure at
Zholymbet during this period was US$1.5 million.

Processing

Until 2005 only underground mining and flotation processing were performed at
Zholymbet. The original processing plant was designed to treat sulphide ores
using gravity and flotation technologies. As part of the Group's modernisation
programme, the flotation sections were removed and the plant was modified to
treat tailings. A newly constructed CIP plant began operations on 2 August 2005,
with an annual throughput capacity of approximately 0.5 million tonnes.

A new heap leach plant is expected to become operational later in 2006. It will
have an annual throughput capacity of approximately 1.0 million tonnes.

Outlook

Open pit production is due to commence in the second half of 2006. To
accommodate the additional ore, it is planned to increase the processing
capacity at the CIP plant to 2.5 million tonnes by 2008, beginning from the
second half of 2006. These changes will allow production levels at Zholymbet to
rise considerably.

ACQUISITIONS

In July 2005, Kazakhaltyn acquired four mines for a total consideration of
US$3.2 million, which now form part of the Group's assets. These mines are the
Akzhal and Vasilevskyi mines, and the assets and mineral rights to the Boldykol
and Zhanan mines. The properties are largely unexplored and are in Eastern
Kazakhstan. The Group is currently in the process of securing subsurface use
contracts for Boldykol and Zhanan with the Kazakh Government (Ministry of Energy
and Mineral Resources).

The Akzhal, Boldykol, Vasilevskyi and Zhanan mines are within 210 kilometres of
the city of Semipalatinsk, where the Group has established its headquarters for
managing its operations in Eastern Kazakhstan.

NEW LICENCES

Kazakhaltyn was awarded five new exploration licences in December 2005.

Southern Karaultube (9.3 km2) and Kyzylsorskoe (60km2) are both located in the
Akmola region of Northern Kazakhstan, near our existing mining operations. They
can both be explored and developed efficiently by KazakhGold and were
historically part of Kazakhaltyn, with the results of earlier exploration work
from the 1980s still available.

Pridorojnoe (390 km2) and Kaskabulakskoe (491 km2) are in Eastern Kazakhstan,
close to the four deposits acquired by Kazakhaltyn in July 2005. Zones 1 & 2 of
the Akshatau MMC deposit (56.6 km2) are located in the Karaganda region of
central Kazakhstan. These deposits are likely to be explored and developed by a
joint venture with Barrick Gold. Registration of the necessary legal documents
will be completed in 2006, although the joint venture has already started to
prepare a detailed programme for the geological investigation of the deposits.
Prospecting work will begin later this year.

INTERNATIONAL PARTNERS

The Group's management team has significant experience of the geology,
metallurgy, mining and processing technologies currently used in Kazakhstan.
This knowledge means that KazakhGold is well placed to cooperate with leading
international gold mining companies to develop a range of opportunities.

Barrick Gold Corporation

A framework agreement was signed with Barrick Gold on 23 September 2005, to
cooperate with exploration projects in Kazakhstan and central Asia. Barrick Gold
will benefit from access to new properties in the region, while KazakhGold will
have access to explore and develop certain of Barrick Gold's resources. It is
anticipated that the tenders won in December 2005, for exploration properties in
Eastern and Central Kazakhstan, will be acquired, explored and developed under
this agreement through a joint venture company, in which Kazakhaltyn and Barrick
Gold will each have a 50 per cent interest. Final details of this are expected
to be concluded in 2006.

KazakhGold's joint venture agreement with Barrick Gold Corporation also covers
the exploration of territories in Kazakhstan, Kyrgyzstan and Uzbekistan. The
partners will take part in tenders to acquire the rights to explore sites in
these areas. The investment in exploration works will be carried out in
conjunction with Barrick Gold Corporation.

China National Gold Corporation

Discussions with the China National Gold Corporation (CNGC) regarding the
expansion of underground mining operations at Bestobe are under way, with a view
to CNGC acting as a subcontractor at Bestobe. CNGC is likely to provide
equipment and operational management, enabling the Group to benefit from CNGC's
underground mining expertise. The total planned expenditure for the
reconstruction of the Bestobe underground mine, and the construction of a new
enrichment plant, is approximately US$20 million.

HEALTH & SAFETY

In the period 26 September to 31 December 2005, there were no fatalities at the
Group's operations. The Group, through its subsidiary Kazakhaltyn, is engaged in
a process of continuous improvement in the work practices at all its mines, not
only to comply with Kazakh law but also to move towards best international
practice.

ENVIRONMENT

This legal obligation is matched by the Group's pro-active approach towards the
environment. In addition to compliance with Kazakh law, KazakhGold aims to
improve the environmental impact of its operations by bringing standards into
line with international accepted practice for mining companies. To facilitate
this, a dedicated environmental department has been established in Kazakhaltyn
to monitor compliance with Kazakh environmental regulations, and to address any
issues arising.

The Group continues to invest in its operations to ensure their compliance with
local environmental standards. In 2005, for example, new equipment was installed
at the Zholymbet mine boiler facility that enables harmful or hazardous
emissions to be reduced by up to 85 per cent. At the Aksu mine, similar gas
scrubber equipment was installed in 2005.

CORPORATE SOCIAL RESPONSIBILITY

Kazakhaltyn has a track record of providing charitable support for the
communities bordering its mines. In the period of 26 September to 31 December
2005, for example, some US$21,300 was donated to support schools and orphanages,
for the maintenance and repair of water supply lines and other projects.

PEOPLE

As at 31 December 2005, Kazakhaltyn had 3209 employees. The number of employees
has increased by 146, over the period from 26 September to 31 December 2005.
Following the Kazakhaltyn's acquisitions in July 2005, in which it acquired
rights to the Akzhal, Boldykol, Vasilevskyi and Zhanan mines, a further 268
employees were taken on.

FINANCIAL REVIEW

The fourteen weeks from 26 September to 31 December 2005 is the first period for
which the Group is reporting financial results, following its incorporation in
Jersey on 26 September 2005. On 12 October 2005 the Group acquired the entire
issued units of Romanshorn LC AG, from Kanat Assaubayev and Marussya Assaubayeva
for nil consideration. Romanshorn is the holding company of the Group's main
operating subsidiary Kazakhaltyn.  The financial statements have been prepared
in accordance with International Financial Reporting Standards (IFRS).

Revenue for the period was US$20.4 million, with slightly over half of sales
made to Kyrgyzstan and the remainder to Switzerland, Russia and Kazakhstan. The
cost of sales was US$14.9 million, leaving a gross profit of US$5.5 million.
The operating loss for the period was US$713,000.

Interest charged to the consolidated income statement in the period on the
Group's fixed rate bank debt and its floating rate bonds was US$647,000. The
loss before tax was US1.1 million, and the loss after the deduction of US$1.1
million in tax was US$2.2 million.  Basic earnings per share were US$(0.05).

The cash cost of gold production for the period was US$210/oz compared with
US$268/oz for the whole of 2005. This cost reduction for the final period of the
year was due to increasing economies of scale, as production was stepped up over
the period. The average gold price achieved on sales of gold in the period was
US$448/oz, compared with US$433/oz for 2005.

The most significant impact on the Group's cash flow last year was its IPO in
November. The primary issue of 7.1 million GDRs, at US$15/GDR, raised some
US$97.4 million net of costs for reinvestment in the Group. A significant
proportion of the proceeds have been allocated for investment in 2006, for the
expansion and upgrading of the Group's ore processing facilities, for mine
development and exploration. Of the balance, US$6.3 million was used to repay
borrowings during the period and the remainder was used for working capital
purposes.

Operating cash flow from 26 September 2005 to the year end was US$5.1 million.
Capital expenditure at the mines during the period was US$11.5 million. Taking
into account operating cash flow and the proceeds from the IPO and other
financing activity, the Group had cash and cash equivalents at the end of the
period of US$87.9 million.

At 31 December 2005, the Group had debt of US$ 46.6 million made up of floating
rate tenge bonds, US Dollar and tenge denominated fixed rate debt and finance
leases. The bonds have a variable coupon, capped at 13%, which in 2005 amounted
to an effective rate of 10.6 per cent over the period. The fixed rate US dollar
and tenge debt, meanwhile, has a coupon of approximately 13.5 per cent.  Within
2006, the Group intends to pay down all this relatively high cost debt using
proceeds from the IPO. The Group will continue actively to manage its borrowings
to ensure their cost remains competitive and reflect the Group's size and
potential.

Looking ahead, the Group is examining financing and technical options for an
accelerated development plan for its mines. It is confident that any such plans,
if implemented, can be financed through additional debt, without compromising
its long-term financial stability and operational flexibility.

Annual Report and Accounts

The annual report and accounts for the period ended December 31, 2005 will be
published and distributed at the end of June.


                         KazakhGold Group Limited

    Consolidated financial statements for the period 26 September 2005 to 31
                                 December 2005


Consolidated Income Statement
                                                                      2005
                                                                     US$000

Revenue                                                                 20,357

Cost of sales                                                          -14,863

Gross profit                                                             5,494

Other operating income                                                   1,473
Distribution expenses                                                      -86
Administrative expenses                                                 -6,954
Other operating expenses                                                  -640

Operating loss                                                            -713

Financial income                                                           277
Financial expenses                                                        -647
Net financing costs                                                       -370

Loss before tax                                                         -1,083

Taxation                                                                -1,090

Loss for the period attributable to equity shareholders                 -2,173


Basic and diluted loss per share                                       $(0.05)

All amounts relate to continuing operations.





Consolidated Balance Sheet


                                                                      2005
                                                                     US$000
Non-current assets
Property, plant and equipment                                           49,797
Mining properties                                                      493,573
Exploration and development costs                                        9,013
Intangible assets                                                        1,092
Other financial assets                                                   1,713
                                                                       555,188

Current assets

Inventories                                                              7,629
Trade and other receivables                                             20,112
Cash and cash equivalents                                               87,887
                                                                       115,628

Total assets                                                           670,816

Equity and liabilities

Equity attributable to shareholders
Share capital                                                                8
Share premium                                                           97,429
Capital contributions                                                  510,000
Translation reserve                                                        -41
Retained earnings                                                          714
Total equity                                                           608,110

Non-current liabilities
Interest-bearing loans and borrowings                                   24,543
Other financial liabilities                                              1,197
Provisions                                                                 241
Deferred tax liabilities                                                 2,732
                                                                        28,713
Current liabilities
Interest-bearing loans and borrowings                                   20,464
Trade and other payables                                                10,959
Current tax payable                                                      2,156
Other financial liabilities                                                414
                                                                        33,993

Total equity and liabilities                                           670,816



Consolidated Cash Flow Statement


                                                                      2005
                                                                     US$000
Cash flows from operating activities
Loss before tax for the period                                          -1,083
Adjustments for:
Depreciation, amortisation and impairment                                1,411
Foreign exchange gain                                                        8
Interest paid                                                              647
Loss on disposal of non-current assets                                     640
Equity settled share-based payment expenses                              2,887

Cash flows from operating activities before changes in                   4,510
working capital and provisions

Increase in trade and other receivables                                 -6,095
Decrease in inventories                                                  5,511
Increase in trade and other payables                                       888
Increase in provisions                                                     241

Cash generated from operating activities                                 5,055

Cash flows from investing activities
Acquisition of property, plant and equipment                            -6,930
Proceeds from the disposal of non-current assets                           385
Capitalised exploration and development costs                           -4,491
Capitalised mining properties costs                                       -114
Cash held in subsidiary companies at the date of                           565
acquisition.

Net cash from investing activities                                     -10,585

Cash flows from financing activities
Proceeds from the issue of share capital                               106,507
Share issue costs                                                       -9,070
Proceeds from the issue of bonds                                            24
Issue of promissory notes                                                3,007
Repayment of borrowings                                                 -6,284
Interest paid                                                             -647
Payment of finance lease liabilities                                      -120

Net cash from financing activities                                      93,417

Net increase in cash and cash equivalents                               87,887
Cash and cash equivalents at 26 September 2005                               -
Cash and cash equivalents at 31 December 2005                           87,887



Notes To Editors

KazakhGold (KZG.L)  listed on the Main Board of the London Stock Exchange on
December 1, 2005.  It is the largest pure-gold play in Kazakhstan with reserves
and resources (Soviet classification) of 13.3 million oz and 33.4 million oz
respectively at three operating mines near Stepnogorsk, a traditional gold
mining area in the north of the country. Approximately 5.8 million oz (44%) of
the reserves are categorised as underground and 5.4 million oz (41%.) are
amenable to open pit mining.  A further 1.3 million oz are contained in surface
dumps and 0.8 million oz in tailings.

The Group is implementing a modernisation and expansion programme in order to
fully exploit the potential of its very considerable resource base.  The
programme is being financed from cash flow and part of the proceeds from a
global offer of GDRs (1 GDR = 1 ordinary share) at the end of November, 2005
which was five times oversubscribed and raised net proceeds of approximately
US$97.4m

One of KazakhGold's main objectives is to exploit the lower grade, near-surface
mineralisation present at all three of its operating mines.  This is amenable to
low-cost open pit mining and represents around 40% of the Group's ore reserves/
resources.   Low -grade surface dump material and tailings will also be
exploited.  Large-scale open pit operations are being developed and
modernisation of ore processing facilities is underway, with construction of
large new heap-leach and CIP treatment facilities.  In future, underground
mining will be restricted to high-grade, low-refractory sulphide ore that will
still be treated by flotation.

These changes will improve efficiency, lower operating costs and increase gold
production, significant milestones towards meeting KazakhGold's objective of
becoming one of Central Asia's leading gold mining companies.

'Blue Sky' is represented by potential for further discoveries in vicinity of
its existing mines, together with four other deposits near Semipalatinsk in
eastern Kazakhstan and a number of exploration properties, acquired late 2005,
in the north and east of country.

The Assaubayev family, who purchased the company in an open tender in 1999,
retains just over 71% of KazakhGold, ensuring continuity of the entrepreneurial
skills, vision and technical expertise that are behind the success of the
company to date.  Four members of the family are executive directors, including
Dr Kanat Assaubayev, the chief executive.  The non-executives are Lord Daresbury
(chairman), David Netherway, Stephen Oke and Toktarkhan Kozhagapanov, who
together bring extensive emerging market mining expertise to the company.

Key Cost Advantages: quality and size of reserves; low labour costs; low cost
electricity; good transport links; low royalty payments; stable exchange rate.

Shares (GDRs) in issue:              47.1 million
Issue price (1.12.05):               US$15 per GDR
Latest price (2.6.06)                US$25
Market Cap  (2.6.06)                 US$1,177 million



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