Final Results

Pan Andean Resources PLC
23 September 2005

                       PAN ANDEAN RESOURCES PLC

ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005



CHAIRMAN'S STATEMENT



This is an interesting time to be an oil and gas producer. The financial
results, reported below, show Pan Andean profitable with a good cash flow. In
the US, we produce gas from 7 locations onshore and offshore Texas. Our oil
producing offshore block High Island 30 is due on stream within weeks. A
hurricane, not Katrina, but Ivan in 2004, seriously delayed the re-start. At the
time of writing, the refurbishment and reconnections are almost completed with
start up expected in October. Once operational, production of 300 barrels a day
(62% to Pan Andean) is anticipated.



Exploration companies are comfortable with risk. We take geological political
and technical risks as a matter of course. Weather risks are another matter. As
I write, hurricane Rita is powering across the Gulf of Mexico toward Texas. Our
platforms which totally escaped all damage in recent storms, are in the general
area.  Production is closed in offshore. Disruption to energy supplies is
driving US oil and gas prices to unprecedented levels. We are focused on
increasing output from our US assets to capitalise on this opportunity.



High US gas prices are good for all of our Texan assets onshore and offshore.
Our production and royalty on block High Island 52 is highly profitable at
present while the payback on the onshore wells, Zachry and Vrazel, is in months
not years. Exploration plays both onshore and offshore are more attractive at
better prices. There is a significant revival of interest in the shallow waters
of the Gulf but the targets are deeper. We are examining seismic on both High
Island 52 and High Island 30 seeking deeper plays.



We had high hopes for our first deep well on our Danbury Dome acreage. The
indications were good and a number of potential pay zones were encountered but
eventually the well was plugged. We are working through the logs and seismic and
we believe that there remains potential.



There is a frenzy of activity in the US oil and gas industry. It is virtually
impossible to obtain a drilling rig, onshore or offshore or to rent service /
crew boats in the Gulf of Mexico. Rig rates have risen from $12,000 a day to
over $30,000 a day if you can get them.  We have been waiting for rigs since
April to drill two new shallow wells on the Zachry acreage in Danbury Dome.



Our acreage and assets in the US are growing in value. This is easily understood
when you see gas costing 30 cents for 1000 cubic feet selling at $10. In the
coming year we will participate in a number of onshore wells and we will also
seek partners for deeper offshore exploration.



Our Bolivian operation at Monteagudo continues to produce oil and gas but it is
seriously hampered by growing political uncertainty and tough taxation policies.
We have good assets in Bolivia but they have limited value for the foreseeable
future as political instability tears the country apart. Our large gas discovery
at El Dorado is years away from start up while new taxes makes it difficult to
breakeven in Monteagudo. Bolivia is a country with vast potential and equally
vast needs. At present it is not suitable for investment.



After years of searching in South America we have finally found a project which
can use our local expertise. It is an early stage exploration project in Peru.
The Block 114 exploration project shares many geological similarities with our
former projects in the Ixiamas and Chapare areas of Bolivia. It also has
similarities with the giant Camisea gas project being developed in Peru. During
the next two years, we will conduct a grass roots exploration programme,
including seismic and, if indicated, drill. Our Bolivian team of employees and
consultants will be used as much as possible.



Some time ago we made a strategic decision to seek new projects outside of the
Americas. For the past year we have been actively seeking a way into the Iranian
oil industry. Iran is the third biggest oil producer in the world with huge
undeveloped reserves and vast unexplored acreage. The National Iranian Oil
Company (NIOC) has many joint ventures but so far only with large
multinationals. We have made persistent approaches which may bear fruit. Your
directors are associated with a mineral exploration venture in Iran and an oil
venture in neighbouring Iraq and Jordan. These connections are proving useful in
providing credibility. Let me caution you, that this project is at a very early
stage and there is no certainty that we will succeed in getting anything in Iran
but the prize is worth the effort.



FUTURE



Pan Andean shareholders have so far failed to participate in the general uplift
in resource company share prices. We are profitable, with positive cash flow,
money in the bank and a suite of US assets which is growing in worth.  It is
difficult to find acquisitions in the oil/gas industry at present. While we are
an oil and gas producer and explorer, we are not blind to the fact that high oil
and gas prices impact on the economics of substitutes which may provide
excellent investment opportunities. We will keep a weather eye on possible
opportunities outside of our current business.



We have been cautious in committing ourselves to new projects. We seek to trade
political risk against geological risk. Many of the projects we evaluate simply
do not have the necessary risk / reward ratio required. We have found it
virtually impossible to find good value projects in South America. Peru is an
exception. A stable government has introduced good terms to attract explorers
into the difficult territory in the East of the country.



I see a good future. The high gas prices are likely to continue thus providing a
stream of cash to Pan Andean. The delays in the commissioning of High Island 30
have a silver lining in that the $40 oil of last year is now selling at $60.
Re-interpretation and reworking of seismic is offering tantalising prospects of
deep oil and gas plays on our shallow water gulf blocks. The weather is an
unknown variable but hopefully disruptions will only be temporary. We have new
exploration projects in Peru and the possibility of getting a toe into the
Iranian oil industry.



John Teeling
Chairman
23 September 2005




CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2005

                                                                                            2005                   2004
                                                                                               £                      £

TURNOVER                                                                               2,133,186              3,547,568
Cost of sales                                                                          (613,832)            (1,630,469)

GROSS PROFIT                                                                           1,519,354              1,917,099
Administrative expenses                                                                (837,975)              (628,321)

OPERATING PROFIT                                                                         681,379              1,288,778
Interest receivable and similar income                                                    64,618                  4,963
Interest payable and similar charges                                                    (72,328)               (90,324)

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                                            673,669              1,203,417
Tax on profit on ordinary activities                                                   (202,101)              (361,025)

PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE FINANCIAL YEAR
                                                                                         471,568                842,392

Earnings per share                                                                         0.41p                  0.86p
Earnings per share - diluted                                                               0.39p                  0.83p



All income arises from continuing operations.








CONSOLIDATED BALANCE SHEET
As at 31 March 2005


                                                                                            2005                   2004
                                                                                               £                      £
FIXED ASSETS
Tangible assets                                                                       12,393,150             11,143,948
Investments                                                                                2,789                  2,810

                                                                                      12,395,939             11,146,758

CURRENT ASSETS
Debtors                                                                                1,896,831              1,962,484
Cash at bank                                                                           3,790,367              1,450,758

                                                                                       5,687,198              3,413,242

CREDITORS :(Amounts falling due within one year)                                     (1,516,285)            (1,117,092)

NET CURRENT ASSETS                                                                     4,170,913              2,296,150

TOTAL ASSETS LESS CURRENT LIABILITIES                                                 16,566,852             13,442,908

PROVISION FOR LIABILITIES AND CHARGES                                                (1,668,356)            (1,508,105)

NET ASSETS                                                                            14,898,496             11,934,803

CAPITAL AND RESERVES
Called-up share capital                                                                1,192,178                973,220
Share premium account                                                                 20,229,168             17,715,926
Profit and loss account - (deficit)                                                  (6,522,850)            (6,754,343)

EQUITY SHAREHOLDERS' FUNDS - ALL EQUITY                                               14,898,496             11,934,803








CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2005

                                                                                              2005                 2004
                                                                                                 £                    £

NET CASH INFLOW FROM OPERATING ACTIVITIES                                                1,220,246            1,406,326

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received                                                                           64,618                4,963
Interest paid                                                                             (72,328)             (90,324)

NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
                                                                                           (7,710)             (85,361)

TAXATION                                                                                  (55,409)                    -

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets                                              (1,549,718)          (1,333,812)

NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
                                                                                       (1,549,718)          (1,333,812)

NET CASH OUTFLOW BEFORE FINANCING                                                        (392,591)             (12,847)

FINANCING

Issue of ordinary share capital                                                          2,840,442                    -
Costs associated with shares issued during year                                          (108,242)                    -

NET CASH INFLOW FROM FINANCING                                                           2,732,200                    -

(DECREASE)/INCREASE IN CASH                                                              2,339,609             (12,847)








STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 March 2005


                                                                                      2005              2004
                                                                                         £                 £
Profit for the financial year                                                      471,568           842,392
Currency translation adjustments                                                 (240,075)       (1,253,447)
Total recognised gains/(losses) recognised since last annual report                231,493         (411,055)
and financial statements





RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
                                                                                      2005              2004
                                                                                         £                 £
Profit in the financial year                                                       471,568           842,392
Currency translation adjustments                                                 (240,075)       (1,253,447)
New share capital subscribed                                                     2,732,200                 -
Net change in equity shareholders' funds                                         2,963,693         (411,055)
Opening equity shareholders' funds                                              11,934,803        12,345,858
Closing equity shareholders' funds                                              14,898,496        11,934,803






Notes:



The financial information set out above does not constitute the Company's
financial statements for the years ended 31 March 2005 and 2004.  The financial
information for 2004 is derived from the financial statements for 2004 which
have been delivered to the Registrar of Companies.  The auditors have reported
on the 2004 statements; their report was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.  The financial
statements for 2005 have been audited and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.  The auditors have
reported on the 2005 statements; their report was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.



A copy of the Company's annual report and accounts for 2005 will be mailed to
shareholders shortly and will also be available for collection from the
Company's registered office, 20-22 Bedford Row, London  WC1R 4JS.





For further information:

Jim Finn, Finance Director, Pan Andean Resources plc - 00 353 1833 2833
John Teeling, Chairman, Pan Andean Resources plc - 00 353 1833 2833
Barrie Newton, Rowan Dartington & Co. Limited - 0117 933 0011




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