Proposed Acquisition

Aurum Mining PLC
13 January 2005


For immediate release                                            13 January 2005

                                Aurum Mining plc
                           ('Aurum' or 'the Company')

                  Proposed Acquisition of Kaldora Company Ltd
         Placing of 714,286 Ordinary Shares of 1p each at 84p per share
               by WH Ireland Ltd as Nominated Adviser and Broker
                    Notice of Extraordinary General Meeting

Aurum Mining plc (AIM: AUR), a company formed last year to acquire gold and
other mineral extraction projects in the Former Soviet Union (FSU), is pleased
to announce that it has conditionally agreed to acquire, for up to £2.9 million,
Kaldora Company Ltd ('Kaldora'), a company whose wholly owned subsidiary, Andash
Mining Company ('Andash'), holds an exploration licence over the Andash gold and
copper exploration project in the Kyrgyz Republic.

At the close of business on 12 January 2005, the closing mid market price of an
Ordinary Share in Aurum was 87.5p, valuing Kaldora at between £0.7 million and
£2.9 million. Aurum proposes to acquire Kaldora for an initial consideration of
$1.5 million in shares and cash and for a deferred consideration of up to $5
million in shares. To provide the additional working capital needed following
the acquisition, WH Ireland has conditionally placed 714,286 Ordinary Shares at
84p per share in a Placing to raise £340,000 net of expenses.

The Andash project has been evaluated to have 634,197 oz of 'inferred' gold
resources and significant exploration potential in respect of a further 412,192
oz of gold although further drilling and assaying will be required to determine
the full potential of the project.

It is intended that John Webster, who holds 20 per cent of the equity in Kaldora
and has more than 20 years' experience in mining engineering, will join Aurum's
Board as Managing Director.

The acquisition of Kaldora represents an important first step in the development
of Aurum's strategy of acquiring gold and other mineral exploration projects in
the FSU. In line with Company strategy, Aurum's Directors intend to continue to
seek and evaluate further acquisitions.

Commenting on the acquisition, Sean Finlay, Aurum's Chairman, said: 'Kaldora is
an ideal first acquisition for Aurum as it offers considerable potential
underlined by the fact that it sits in the Tien Shan gold belt, one of the
world's largest proven gold provinces. In addition the acquisition will bring
John Webster, who has more than 24 years' experience in the FSU mining sector,
to Aurum's Board as Managing Director. John will be of major assistance in
developing Andash and in executing the Company's strategy of identifying
further acquisitions to create a significant natural resources group.'

Details of the Acquisition and Placing

  • Aurum has conditionally agreed to acquire the entire issued and to be
    issued share capital of Kaldora for an initial consideration of $1.5 million
    comprising the issue of 600,000 Ordinary Shares, the payment of $300,000
    cash and, conditional upon the subsequently evaluated levels of gold
    reserves, a deferred consideration of up to $5 million comprising the
    further issue of up to 2,500,000 Deferred Consideration Shares.

  • The Consideration Shares and Deferred Consideration Shares will represent
    between 6.3 per cent and 25.8 per cent of the then issued share capital of
    the Company and in view of the size of Kaldora relative to the Company, the
    acquisition will constitute a reverse takeover of Aurum under the AIM Rules
    and therefore requires the prior approval of shareholders at an
    Extraordinary General Meeting to be held on 31 January 2005.

  • In order to provide the additional working capital that will be required
    following the acquisition, WH Ireland has conditionally placed 714,286
    Ordinary Shares at 84p per share. The Placing is expected to raise £340,000
    net of expenses.

  • The Vendors of Kaldora include parties associated with David Bryans who
    acts as a consultant to the Company and who is interested in 27.5 per cent
    of the Company's current issued share capital. Because the Vendors and their
    associates will, following completion of the Acquisition and the Placing, be
    beneficially interested in over 30 per cent of the Enlarged Share Capital,
    the Company is seeking a waiver under Rule 9 of the City Code (which will
    deem them to be acting in concert and would otherwise require them as
    members of the Concert Party to offer to acquire those Ordinary Shares that
    they do not own). A proposal seeking shareholder approval for a waiver is,
    therefore, included in the notice of the Extraordinary General Meeting

  • The sole asset of Kaldora is its shareholding in Andash, whose principal
    asset is an exploration licence over the Andash gold and copper exploration
    project in the Talas valley located in the north west of the Kyrgyz Republic
    on the border with Kazakhstan. Currently the Andash Project is not
    sufficiently advanced to establish formal 'reserve' levels. However it has
    been evaluated to have 634,197 oz. of 'inferred' gold resources and
    significant exploration potential in respect of a further 412,192 oz. of
    gold. However further drilling and assaying will be required to establish
    the full potential of the Project and to prepare a feasibility study for
    future production.

Summary of the Kyrgyz Republic and the Andash site

The Kyrgyz Republic, which has population of just 5.1 million, is one of the
smallest and most mountainous nations of the FSU. It is located in the Tien Shan
mountain range, on the north flank of the Pamir Mountains, and borders China in
the east, Kazakhstan to the north, Uzbekistan to the south and west and
Tajikistan to the south. Today, the economy is mainly agriculture-based with
some light industry around the major cities but under the Soviets mining for a
variety of strategic minerals and precious metals was also important. The
government has generally embraced western style commercial law, banking reform,
mining code and currency regulations.

The Kyrgyz Republic's gold mining industry is under-developed but the country
sits within a broad band of gold mineralisation that stretches through Central
Asia. This zone is commonly known as the Tien Shan gold belt and is one of the
largest proven gold provinces in the world. The Andash Project is located in the
Talas valley, close to the north western border of the Kyrgyz Republic. It is
approximately 475 km by road from the capital city of Bishkek. The town of Talas
is 45 km from the project site and the closest village, Kupre-Bazar, is less
than 2.5 km away by road. Water is available at the site and a major power line
passes within 15 km of the licence area.

Notice of Extraordinary General Meeting

An Extraordinary General Meeting will be held on 31 January 2005 at 10.00 am at
the offices of Lawrence Graham LLP, 190 Strand, London WC2R 1JN, at which
resolutions will be proposed to approve the acquisition and the waiver under
Rule 9 of the City Code.


Expected Timetable of Principal Events

Extraordinary General Meeting                                                           10.00am, 31 January

Completion date of the Acquisition                                                               1 February

Admission effective and dealing in Ordinary Shares (including New Ordinary                       1 February
Shares) expected to commence on AIM

Expected date for CREST accounts to be credited (in respect of Placing Shares)                   1 February

Expected date for posting of the share certificates for the Placing Shares
(where applicable)                                                                               1 February


For further information:

Aurum Mining plc                                                                           Tel: [phone]
Haresh Kanabar

W H Ireland                                                                               Tel: [phone]
Tim  Cofman

Buchanan Communications                                                                   Tel: [phone]
Mark Court/Charlie Howard

Copies of the document relating to the acquisition are available from WH Ireland
Ltd, 24 Bennetts Hill, Birmingham B2 5QP. Parts I and II of the document are
reproduced below.


                                     PART I

                          INFORMATION ON AURUM MINING


INTRODUCTION

The Board of Aurum Mining announced today that the Company has conditionally
agreed to acquire the entire issued and to be issued share capital of Kaldora
for an initial consideration of $1.5 million comprising the issue of 600,000
Ordinary Shares, the payment of $300,000 cash and, conditional upon the
subsequently evaluated levels of gold reserves, deferred consideration of up to
$5 million comprising the further issue of up to 2,500,000 Deferred
Consideration Shares. At the close of business on 12 January 2005 the last
practicable date before the publication of this document, the closing mid market
price of an Ordinary Share was 87.5p, valuing the Kaldora Group at between £0.7
million and £2.9 million and Aurum Mining at £7.2 million.

In order to provide the additional working capital that will be required
following the Acquisition, W.H. Ireland has conditionally placed 714,286
Ordinary Shares at 84p. The Placing, which is discussed further below is
expected to raise £340,000 net of expenses.

The Consideration Shares will represent between 6.3 per cent. and 25.8 per cent.
of the then issued share capital of the Company and in view of the size of the
Kaldora Group relative to the Company, the Acquisition will constitute a reverse
takeover of Aurum Mining under the AIM Rules and therefore requires the prior
approval of Shareholders at an Extraordinary General Meeting, notice of which is
set out at the end of this document.

The Vendors include parties associated with Mr David Bryans who acts as a
consultant to the Company and who is interested in 27.5 per cent. of the
Company's current issued share capital. Because the Vendors and their associates
will, following completion of the Acquisition and the Placing, be beneficially
interested in over 30 per cent. of the Enlarged Share Capital, the Company is
seeking a waiver under Rule 9 of the City Code (which will deem them to be
acting in concert and would otherwise require them as members of the Concert
Party to offer to acquire those Ordinary Shares that they do not own). A
proposal seeking Shareholder approval for a Waiver will be proposed at the
Extraordinary General Meeting to be held on the 31 January 2005.

BUSINESS & STRATEGY

The Acquisition represents an important first step in the development of the
Company's strategy of acquiring gold and other mineral exploration and
extraction projects in the FSU. This opportunity has been introduced to the
Company by Mr David Bryans under the consulting agreement that he entered into
with the Company at the time of the original admission of its share capital to
trading on AIM in May 2004.

Information on Kaldora and Andash Mining is set out in Part II. The sole asset
of Kaldora is  its shareholding in Andash Mining. The principal asset of Andash
Mining is an exploration licence over the Andash gold and copper exploration
project in the Talas valley located in the north west of the Kyrgyz Republic on
the border with Kazakhstan. Currently the Andash Project is not sufficiently
advanced to establish formal 'reserve' levels. However it has been evaluated to
have 634,197 oz. of 'inferred' gold resources and significant exploration
potential in respect of a further 412,192 oz. of gold. However further drilling
and assaying will be required to establish the full potential of the Project and
to prepare a feasibility study for future production. The Directors and the
Proposed Director expect this work to consume much of the Company's existing
cash resources and while the Enlarged Group may, in the opinion of the Directors
and the Proposed Director, have the resources available to assess additional
opportunities, completion of any additional acquisition will require a further
fund raising.

The exploration licence held by Andash Mining was extended on 22 November 2004,
and is valid until 31 January 2006, subject to a number of conditions including
a requirement to undertake a minimum amount of exploration work. Under Kyrgyz
mining law, once a production feasibility study has been completed, the licensee
will have exclusive rights to obtain a licence. Such mining licences are valid
in the first instance for 20 years from the date of grant.

In the opinion of the Directors and the Proposed Director, the funds being
raised will be sufficient to take the Andash project to the point of
establishing the level of reserves and carrying out a pre-feasibility study and
if these are positive, further funds would be required to produce a bankable
feasibility study.

Further potential projects have been identified by Mr Bryans and are in the
course of evaluation by him.

CURRENT TRADING

The Ordinary Shares of Aurum Mining were admitted to trading on AIM on 7 May
2004. At that time the Company had cash of £1,413,000 and no other significant
assets or liabilities. Since then, Aurum Mining has entered into a lease in
respect of London offices at a cost of approximately £49,000 per annum. The
Board intends to appoint PPI, a company of which John Webster, the Proposed
Director, is a director and in which he has an interest, to undertake the
additional drilling programme required before a feasibility study can be
completed on the Andash prospect. In order to enable PPI to refurbish the rig
that will be used on this project, Aurum Mining has agreed to loan £150,000 to
PPI. In its last published accounts for the year ended 30 June 2003, PPI
disclosed a loss of £127,500 on sales of £53,045 for the year and at the balance
sheet date, net assets of £25,308. In the opinion of the Directors, the terms of
this loan agreement are such that the Company will be able to achieve a
significant cost saving on its drilling program at Andash by employing PPI at a
discount to its normal rates.

In order to gain access to certain potential acquisition opportunities in
Russia, the Company has entered into a facility agreement to lend up to $150,000
to Open Joint Stock Company Geocentr. At 31 December 2004, $115,000 of this
facility had been drawn down.

The net effect of the above is that after allowing for draw-down of the loan
facilities the Company had available cash of approximately £1,103,000 on 4
January 2005.

DIRECTORS, PROPOSED DIRECTOR AND EMPLOYEES

The Board comprises two directors as follows:

Sean Finlay (aged 55) Non-Executive Chairman

Sean is a professional geologist and a chartered engineer. He has over 30 years
experience in mining and quarrying at senior management and board level, having
worked on projects in Ireland, Canada, Ghana, Pakistan and the FSU. He was chief
geologist with Tara Mines Ltd until 1987 when he became managing director of
Celtic Gold plc from 1987 to 1994. In 1995 he was appointed managing director of
Celtic Resources Holdings plc until 1999. In addition, Sean has been a
non-executive director of Glencar Mining plc since 1994 and has been a managing
director of Tobin Environmental Services Ltd since May 2000. Sean is a Fellow of
the Institution of Mining and Metallurgy and a Fellow of the Institution of
Engineers of Ireland.

Haresh Kanabar (aged 46) Executive Business Development Director

Haresh qualified as a certified accountant in 1986. Following a number of
finance positions with Fisons plc, Reed International plc and Texas Homecare Ltd
he became finance director of F E Barber Limited, a subsidiary of Hillsdown
Holdings plc, in 1994. In 1997 he was appointed group finance director of
Whitchurch Group Plc which he left in May 1998 to become finance director of TMV
Finance Limited. In December 1999 he left to join Corvus Capital Inc. as chief
executive and in November 2002 he left to become finance director of Gaming
Insight plc. Haresh is also currently chief executive of Blue Star Capital plc,
non-executive chairman of Greenfield Construction Group, India Outsourcing
Services plc and Silentpoint plc and executive director of Bombay Restaurants
plc, Knighteagle plc and Silvermines Media plc. Haresh was also a director of
Spiritel plc until July 2004.

In addition, upon Admission, John Webster (aged 46), will join the Board as
Managing Director. John has over 20 years of experience in mining engineering
specialising in mine evaluation and development in the countries of the FSU.
John is currently managing director of, and a substantial shareholder in PPI, an
engineering and equipment supply company (in which John holds a 31 per cent.
rising to a possible 47 per cent. on the exercise of options in PPI held by
him). Prior to PPI, John held senior positions with Far East Gold, Nelson Gold,
JD Welsh & Associates and is a Member of the Australasian Institute of Mining
and Metallurgy, The Society of Mining Engineers of A.I.M.E. and the Society of
Explosive Engineers. John's services will be provided under a consultancy
agreement between Aurum Mining and Laverock Ventures Limited. Under this
agreement his services to the Company will be provided on a full time basis and,
accordingly, he will become a non-executive director of PPI.

Upon Admission, Mr Webster will also be granted options over 1,000,000 Ordinary
Shares at an exercise price of 84p. The first 500,000 of the options will be
exercisable at any time from Admission for a period of 5 years. 166,667 options
will become exercisable upon the first two anniversaries of Admission and
166,666 on the third anniversary.

John also has an interest in 20 per cent. of the equity capital of Kaldora.

Aurum Mining does not have any employees other than the executive Director.

Consultancy Agreement

In addition to the above arrangements with the Directors and the Proposed
Director, the Company has the benefit of a consultancy agreement with Tyry
Services Limited ('Tyry') which has agreed to provide the exclusive services of
Mr David Bryans to bring suitable mineral exploration projects to Aurum Mining.

Under the terms of this agreement, Tyry receives a retainer fee of £5,000 per
month (or such amount as may be agreed) together with agreed expenses. In
addition, Tyry is entitled to receive an introductory fee to be agreed between
the parties on a project by project basis. Generally it is expected that such
fees will be equivalent to a two per cent. equity interest, without capital
contribution, in projects introduced by Tyry and subsequently acquired or
materially developed by the Company. However, in the case of the current
acquisition, Mr Bryans provided finance for Andash Mining to enable it to
continue to assess the Andash Project and acquired an interest in 20 per cent.
of the equity of Kaldora. This interest will now be acquired by Aurum Mining as
part of the Acquisition. In the context of the consultancy agreement, therefore,
the Directors believe that this arrangement is exceptional and is unlikely to be
representative of future transactions.

CITY CODE ON TAKEOVERS AND MERGERS

The terms of the Acquisition give rise to certain considerations under the City
Code. Brief details of the Panel, the City Code and the protections they afford
are described below.

The City Code has not, and does not seek to have, the force of law. It has,
however, been acknowledged by government and other regulatory authorities that
those who seek to take advantage of the facilities of the securities market in
the United Kingdom should conduct themselves in matters relating to takeovers in
accordance with best business standards and so according to the City Code.
The City Code is issued and administered by the Panel. The City Code applies to
all takeover and merger transactions, however effected, where the offeree
company is, inter alia, a listed or unlisted public company resident in the
United Kingdom. The Company is such a company and its shareholders are entitled
to the protection afforded by the City Code.

Rule 9 of the City Code is designed to prevent the acquisition of control of a
company to which the City Code applies without a general cash offer being made
to all shareholders of that company. Under Rule 9, a person who acquires,
whether by a series of transactions over a period of time or not, shares which
(taken together with shares held or acquired or acquired by persons acting in
concert with him) carry 30 per cent. or more of the Voting Rights of a company
is normally required by the Panel to make a general cash offer to all the
shareholders of that company to acquire the balance of the shares not held by
such person, or group of persons acting in concert, at the highest price paid by
him or them or any person acting in concert with him or them within the
preceding 12 months.

Rule 9 also provides, inter alia, that where any person, together with persons
acting in concert with him, holds shares carrying not less than 30 per cent. but
not more than 50 per cent. of a company's Voting Rights and such person, or any
person acting in concert with him, acquires additional shares which increase his
percentage of the Voting Rights in that company, such person is normally
required to make a general cash offer to all shareholders of that company at not
less than the highest price paid by him or them or any persons acting in concert
with him or them for any such shares within the preceding 12 months.

For the purposes of the City Code, a concert party arises where persons acting
in concert pursuant to an agreement or understanding (whether formal or
informal) actively co-operate, through the acquisition by them of shares in a
company, to obtain or consolidate control of a company, irrespective of whether
the holding or holdings give de facto control.

The Panel has determined that the Vendors, together with David Bryans, John
Webster, Oleg Kim and Talyn International Limited, are acting in concert for the
purposes of Rule 9 of the City Code.

Under Rule 9, unless a specific Waiver is obtained from the Panel and the terms
of the Acquisition Agreement for the issue of the Consideration Shares and the
proposed grant of options to John Webster are approved by Shareholders on a
poll, the members of the Concert Party would be obliged to make a mandatory cash
offer for the entire issued ordinary share capital of Aurum Mining once the
Concert Party held 30 per cent. or more of the Voting Rights in the Company.
Your Board believes that this consequence is not in the best interests of Aurum
Mining or its Shareholders.
The Panel has agreed, subject to the passing of Resolution 2 in the notice of
EGM by the Independent Shareholders on a poll, that it will not require the
members of the Concert Party to make a general offer under Rule 9 as a result of
the Acquisition and the grant of options to Mr Webster. The members of the
Concert Party, who are currently interested in 2,275,000 Ordinary Shares
representing 27.5 per cent. of the existing share capital of the Company, will
not be entitled to vote on this resolution.

Immediately following Admission, the members of the Concert Party will own
approximately 30 per cent. of the Enlarged Share Capital. On issue of the
Deferred Consideration Shares, this interest could increase up to 45 per cent.
and on exercise of the 1 million options over Ordinary Shares to be granted to
Mr Webster, this interest could increase further to 49 per cent.

The relevant holdings of the members of the Concert Party, now and following
completion of the Acquisition, are set out below and for so long as they
continue to be treated as acting in concert any further increase in their
aggregate shareholding will be subject to the provisions of Rule 9.

SIGNIFICANT SHAREHOLDER

Talyn International Limited and Jake Consultants Limited (both being companies
controlled by David Bryans) will together control Voting Rights in respect of
24.9 per cent. of Aurum Mining's enlarged equity upon Admission which could fall
to 23.9 per cent. following the issue of the conditional element of the
Consideration.

Talyn International Limited, Jake Consultants Limited and David Bryans have
therefore entered into a controlling shareholder agreement with the Company and
W.H. Ireland pursuant to the terms of which they have given certain undertakings
concerning the use of the shares controlled (directly or indirectly) by them and
their related parties to the Company.

LOCK-IN AGREEMENTS

Each of the Directors, the Proposed Director, the Vendors, Brookspey Limited (a
company controlled by Nigel Robertson) and Talyn International Limited have
entered into agreements not to dispose of any interests in the securities of the
Company within the twelve month period following Admission, save in certain
circumstances permitted by the AIM Rules, including in connection with a general
or partial takeover offer. Collectively upon Admission, these Shareholders will
control or be interested in 58.4 per cent. of the Enlarged Share Capital.

PRINCIPAL TERMS OF THE ACQUISITION

Under the terms of the Acquisition Agreement, the Company has conditionally
agreed to acquire Kaldora for an initial consideration of $1.5 million
comprising the issue upon Admission of 600,000 Ordinary Shares and the payment
of $300,000 cash to the Vendors and, conditional upon the subsequently evaluated
levels of gold reserves, deferred consideration of up to $5 million satisfied by
the issue of up to a further 2,500,000 Ordinary Shares to the Vendors. The
conditional element of the Consideration will be payable as to 5 shares per
ounce of gold or gold equivalent included in the pre-feasibility study, to be
prepared by an internationally recognized independent expert. In addition, the
Company has agreed to procure repayment upon Admission of all outstanding monies
due from Andash to Tyry Services Limited pursuant to the loan agreement dated 19
August 2004.

The Acquisition Agreement is conditional, inter alia, on (i) the passing of the
Resolutions; (ii) the Placing Agreement becoming unconditional in all respects
(other than any condition relating to completion of the Acquisition Agreement
and Admission); and (iii) Admission.

The Initial Consideration Shares will, on Admission rank in full for all
dividends or other distributions hereafter declared, made or paid on the
ordinary share capital of the Company after their date of issue and will rank
pari passu in all other respects with all other Ordinary Shares which will be in
issue on Admission.

DIVIDEND POLICY

The Company has not yet commenced trading and it is, therefore, inappropriate to
make a forecast of the likely level of any future dividends.

DETAILS OF THE PLACING

The Company is issuing 714,286 New Ordinary Shares pursuant to the Placing at
the Placing Price to raise approximately £340,000 (net of expenses). The Placing
Shares will represent approximately 7.5 per cent. of the Enlarged Share Capital
of the Company and will be fully paid upon issue and will rank pari passu in all
respects with the existing Ordinary Shares and the Initial Consideration Shares.

The Company, the Directors and the Proposed Director have entered into the
Placing Agreement with W.H. Ireland. The Placing is not being underwritten. The
Placing Shares have been conditionally placed with institutions and other
investors. The Placing is conditional upon the Placing Agreement becoming
unconditional and not having been terminated in accordance with its terms, and
Admission becoming effective on 1 February 2005 (or other such later time and
date as the Company and W.H. Ireland may agree).

USE OF PROCEEDS

The Placing will raise approximately £340,000, net of expenses, for the Company.
The funds raised by the Placing are intended to provide further working capital.

EXTRAORDINARY GENERAL MEETING

An Extraordinary General Meeting will be held at 10.00 a.m. on 31 January 2005
at the offices of Lawrence Graham LLP, 190 Strand, London WC2R 1JN. At the
Extraordinary General Meeting, the Resolutions will be proposed to approve the
Acquisition and the Waiver:

As the Acquisition constitutes a reverse takeover, Shareholder approval, as set
out in Resolution 1, is required under the AIM Rules. In accordance with the
requirements of the Panel for granting a Waiver of the requirement for the
members of the Concert Party to make a general offer under Rule 9 of the City
Code, Resolution 2 will be taken on a poll and the members of the Concert Party
will not be entitled to vote on such resolution. Resolution 1 is conditional
upon the passing of Resolution 2.

The Acquisition Agreement is conditional, inter alia, upon the passing of the
Resolutions and therefore if either is not approved by the Shareholders, the
Acquisition will not be completed.

IRREVOCABLE UNDERTAKINGS FROM CERTAIN SHAREHOLDERS IN AURUM MINING

An undertaking to vote in favour of the Resolutions has been given by Brookspey
Limited (a company controlled by Nigel Robertson) in respect of all the Ordinary
Shares held by it amounting to 2,250,000 Ordinary Shares (being 27.5 per cent of
the existing Ordinary Shares). David Bryans is interested in 2,250,000 Ordinary
Shares (being 27.5 per cent. of the existing Ordinary Shares) which he holds
through Talyn International Limited. In light of Mr Bryans' interests in
Kaldora, Talyn International Limited has undertaken to abstain from voting on
Resolution 1 and is disenfranchised from voting on Resolution 2 in accordance
with the requirements of the City Code.

John Webster is interested in 25,000 Ordinary Shares (being 0.3 per cent. of the
existing Ordinary Shares). In the light of his interest in Kaldora, he has
undertaken to abstain from voting on Resolution 1 and is disenfranchised from
voting on Resolution 2 in accordance with the City Code.

RECOMMENDATION OF THE DIRECTORS

The Directors, who have been so advised by W.H. Ireland, consider that the terms
of the Acquisition and the Waiver are fair and reasonable and in the best
interests of the Company and Shareholders as a whole. In providing advice to the
Board, W.H. Ireland has taken into account the Directors' commercial
assessments. Accordingly, the Directors unanimously recommend Shareholders to
vote in favour of the Resolutions as they themselves intend to do in respect of
their own beneficial holdings which amount, in aggregate, 425,000 Ordinary
Shares, representing approximately 5.2 per cent. of the existing Ordinary
Shares.


                                    PART II

                    INFORMATION ON KALDORA AND ANDASH MINING

INTRODUCTION

Andash Mining was registered as a Kyrgyz limited liability company on 14 June
2004 and on 22 June 2004 the Andash exploration licence was re-issued to Andash
Mining. On 22 July 2004 Kaldora acquired the entire issued share capital of
Andash Mining from Marsa Gold LLC, a local Kyrgyz company which had previously
held the Licence. Since that date it has incurrred additional exploration
expenditure of $100,000, principally in respect of drilling and a chemical
analysis of rock samples taken from the site.

THE ANDASH SITE

The Kyrgyz Republic sits within a broad band of gold mineralisation that
stretches through Central Asia. This zone is commonly known as the Tien Shan
gold belt and is one of the largest proven gold provinces in the world. The gold
mining industry in the Kyrgyz Republic is under developed.

The Andash Project is located in the Talas valley, close to the north western
border of the Kyrgyz Republic with the Republic of Kazakhstan. It is
approximately 475km by road from the capital city of Bishkek. A shorter 260km
route is open in the summer months but is inaccessible at other times because of
snow and the risk of avalanche.

The town of Talas is 45 km from the site and the closest village, Kupre-Bazar is
less than 2.5 km away by road. Water is available at the site and a major power
line passes within 15km of the licence area.

The Licence covers an area of 53km2 and rises between 2,100 and 2,400m above sea
level. In 1962, a survey carried out for the Soviet geological authorities by
the Aktash geological team identified a copper/gold deposit at the Andash
Project. Further survey work including trenching, drilling and tunneling was
carried out between 1977 and 1997. This established that the site comprised a
main tube shaped copper gold porphyry deposit and two smaller deposits. Further
exploration was carried out by the Ala-Too Gold Company ('Ala-Too') a subsidiary
of Commonwealth and British Minerals plc, during the period 1996 to 1997, but at
the time the decision was taken not to proceed with further exploration and no
significant further work was undertaken until 2003 when Marsa Gold carried out a
further geophysical exploration

THE LICENCE

The Licence which covers gold and copper resources was granted by the Licencing
Organ to Marsa Gold in January 2003 was re-issued to Andash Mining on 22 June
2004 and was extended on 22 November 2004 with an expiry date of 31 January
2006. The Licence Agreement specifies the minimum levels of investment to be
conducted as follows;

  •  in 2005: $277,000
  •  in 2006; $60,000

The Company's legal advisers in the Kyrgyz Republic have advised the Directors
that under Kyrgyz law, that subject to the conditions of its Licence Agreement,
Andash Mining may apply for continuations of the exploration licence for up to
10 years. Furthermore, Kyrgyz mining law states that 'should a deposit be
discovered, the licensee shall have exclusive rights to obtain a licence'. Such
mining licences are valid in the first instance for 20 years from the date of
grant. The Directors and Proposed Directors do not believe that there is any
reason why the Licence should not be renewed at the end of January 2006.


RESERVES & RESOURCES

Currently three gold-copper mineralized zones have been identified within the
Licence area:

Zone 1 is hosted in a cylindrical breccia. This zone has been the most
thoroughly investigated, initially by the North Kyrgyz Geological Expedition
(NKGE) and later by Ala-Too. Both of these parties prepared resource/reserve
estimates. The Ala -Too estimate considered that the resource contained within
Zone 1 could be classified as inferred in line with JORC (western) guidelines.
The contained gold in Zone 1 according to this estimate is 634,197 ozs. at a
grade of 1.03 g/t, using a cut-off grade of 0.5 g/t.

This estimate does not include any copper values. NKGE estimated copper
resources of 11,076 tonnes grading 0.49% Cu in Zone 1.

Zones 2 and 3 are less well delineated than Zone 1 and under western resource
estimation criteria would be considered as having significant exploration
potential. NKGE estimated the gold resources in Zones 2 and 3 at 287,329 ozs.
and 124,863 ozs. respectively.

Several areas with additional exploration potential have been identified
elsewhere within the licence area by NKGE and by the current licencee, Andash
Mining.

To date the work undertaken has not been sufficient to establish formal 'reserve
' levels, however the Directors and the Proposed Director believe that this will
be done through the programme of work on which the Company is now set to engage.

Overall, the Experts Report set out in Part IV indicates a value range for the
resources in Zone 1 of $4 million to $5.2 million

The Enlarged Group could incur a tax liability of up to £0.6 million if Kaldora
were to be sold at the upper end of this valuation, although, it is not the
intention of the Directors to pursue such a sale.

THE PROPOSED PROGRAM

In the opinion of the Directors and the Proposed Director; upon Admission, the
Company should have sufficient cash available to progress the exploration of the
Andash licence to the point of completing a reserves estimate to Western
standards and a pre-feasibility study. Additional funds, of the order of $0.5
million, would then need to be raised if the outcome of these was sufficiently
positive to justify taking the project to the stage of preparing a bankable
feasibility study. A detailed work programme is summarised in the Competent
Person's Report in Part IV of this document.

The Board intends to retain PPI to undertake additional drilling on the Andash
Project to confirm and upgrade the estimates of mineral resources on the site.
In order to facilitate and expedite this work, Aurum Mining has agreed to lend
PPI £150,000 to refurbish a drilling rig to be used at Andash and on any other
properties in which Aurum Mining may acquire an interest. Aurum Mining will have
first call on the use of this drilling rig at a discounted rate. In the opinion
of the Directors, this arrangement will provide Aurum Mining with a competitive
advantage in securing cost effective and preferential drilling services.

FINANCIAL

In the period from incorporation to 30 September 2004 the Kaldora Group has
incurred expenditure of approximately $13,500, which has been funded by a loan
of up to $100,000 from Tyry Services Limited of which an initial $30,000 was
drawn down. At 30 September 2004, the Kaldora Group had net liabilities of
$13,465. Since then a further $70,000 has been drawn down under the loan from
Tyry Services Limited. It is intended that the loan will be repaid upon
Admission.

SHAREHOLDERS OF KALDORA AND MEMBERS OF THE CONCERT PARTY

The shareholders of Kaldora are Jake Consultants Limited (as to 20 per cent.),
Clayhill Investments Corp. (as to 20 per cent.) and Kantanna Company Limited (as
to 60 per cent.). These are trust companies with no other assets or liabilities
and hold their shares for the beneift of David Bryans, John Webster and Oleg Kim
respectively, the interests and potential interests of whom in the equity of
Aurum Mining are shown in the table below.


Number of        Total         Concert party     David Bryans and    John Webster and  Oleg Kim and
Ordinary Shares                                  associated          associated        associated
                                                 companies           companies         companies

Currently in     8,191,489     2,275,000   28%   2,250,000  27.5%    25,000     0.3%   -          -
issue

To be issued as
(i) initial      600,000       600,000           120,000             120,000           360,000
consideration

(ii) under the   714,286       -                 -                   -                 -
Placing
                 9,505,775     2,875,000   30%   2,370,000  24.9%    145,000    1.5%   360,000    3.8%

(iii) maximum    2,500,000     2,500,000         500,000             500,000           1,500,000
deferred
consideration
                 12,005,775    5,375,000   45%   2,870,000  23.9%    645,000    5.4%   1,860,000  15.5%

(iv) on exercise 1,000,000     1,000,000                             1,000,000
of options
                 13,005,775    6,375,000   49%   2,870,000  22.1%    1,645,000  12.6%  1,860,000  14.3%



Of the above options, 500,000 are exercisable on Admission, with a further
166,667 becoming exercisable upon the first two anniversaries of Admission and
166,666 exercisable on the third anniversary.

Mr Bryans' interests are held through two companies which he controls and
include 2,250,000 Ordinary Shares already held by Talyn International Limited.

David Bryans, (aged 61) has spent the past 10 years in assessing mining projects
in the FSU, particularly in Russia. David was instrumental in the formation of
Celtic Resources Holdings plc and in the negotiations on the formation of South
Verkhoyansk Mining Company ('SVMC'), a Russian company in which Celtic Resources
Holdings Plc held a 50 per cent. interest. David was a director of SVMC from its
formation in 1996 until November 2002 and its general director from March 1998
to May 2002. Prior to that his early professional career was in investment
management in the UK and Ireland and subsequently as an investor internationally
in a range of companies, latterly in the extractive industries.

Details of John Webster's background and career to date are given above.

Oleg Kim, (aged 44), is a Kyrgyz national with graduate and post graduate
qualifications in geology from Russia and Uzbekistan and further qualifications
in economics from Canada. Having worked for the state geology bodies and
subsequently Kyrgyzaltyn, the Kyrgyz state gold mining holding company, Oleg was
involved from 1993 with the development of the Kumtor gold deposit joint venture
with Cameco and became chief exploration geologist in charge of the major
continuing exploration programme for this gold mine and also generally
responsible for Cameco's Central Asian exploration programme. Since 1992 he has
developed his own business interests in gold exploration and production. In
addition to his directorships of Andash and Marsa Gold he is a director of
Bulakashu Mining Company in the Republic. Oleg developed a professional
relationship with PPI during his service with Cameco and PPI has provided
professional mine industry consulting services to Marsa Gold.


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