Final Results year ended 31 M

RNS Number : 2617Z

Aurum Mining PLC

18 September 2009

 



18 September 2009

AURUM MINING PLC

('Aurum' or 'the Company')  

Final results for the year ended 31 March 2009

Aurum Mining plc (AIM: AUR), the gold mining company focused on the Former Soviet Union (FSU) and whose principal asset is the Andash project in the Kyrgyz Republic, is pleased to announce its final results for the year ended 31 March 2009. 

Key points

• The Company has granted an option to ASX listed Kentor Gold which, if exercised, will result in the Company disposing of a majority stake in the Andash project and the ancillary mining fleet for net proceeds of $13.8m. Under the terms of the proposed deal Aurum will retain a 10% stake in the Andash asset.

• The Bishkek litigation has been closed with a ruling in favour of the Group and the validity of Group's Andash licenses has been reconfirmed by the State Agency for Geology and Mineral Resources of the Kyrgyz Republic.

• Following pressure from the major Shareholders to do so, the Company returned £15.9m to Shareholders in April 2009

• The Board is now examining a number of exceptional acquisition opportunities which will be put in front of our Shareholders at the appropriate time

Sean Finlay, Aurum's Chairman, said: 'It has been a turbulent, but ultimately successful period for the Company and we feel that we are extremely well positioned to take advantage of some of the excellent opportunities that currently exist in the market. We look forward to the completion of the deal with Kentor and the funds that Aurum receives will enable the Company to get the leverage it requires to acquire assets on terms beneficial for all of our stakeholders'

It is anticipated that the Company's Annual Report will be dispatched to Shareholders later today.  The Accounts include notice of the Company's Annual General Meeting to be held at 12.00 noon on 23 October 2009 at 4 More London Riverside, London SE1 2AU. A copy of the Annual Report and the notice of AGM are also be available on the Company's website, www.aurummining.net

For further information:

Aurum Mining Plc	Tel: [phone]
Mark Jones, Chief Executive Officer
Chris Eadie, Chief Financial Officer
Arbuthnot Securities	Tel: [phone]
John Prior

Notes to editors 

Aurum Mining, which joined the AIM market of the London Stock Exchange in May 2004, is a mining company focused on gold opportunities in the Former Soviet Union. Its principal asset is an exploration licence over the Andash gold and copper project in the Kyrgyz Republic. A mining licence for Andash Zone 1 was awarded by the Kyrgyz authorities in 2006. The feasibility study compiled by Wardell Armstrong International, also in 2006, confirmed a measured and indicated resource base of 19.2 million tonnes at 1.1 grams per tonne of gold and 0.4% copper, which equates to 1.1 million ozs of gold and gold equivalent. The Andash project also includes Zone 2 and Zone 3 along with Tokhtonysay, Nakhodka and three other additional exploration areas.

Chairman's Statement

The period since I wrote my previous Chairman's Statement has been one of considerable progress for Aurum and we now, once again, feel very confident and excited about the Company's future.

During this time not only did we successfully resolve the Bishkek court case but we also moved the Company through the recovery phase of its development and we have now progressed into the transformation phase that I believe will result in Aurum becoming a consolidated mining company. 

Twelve months ago we were in the full grip of the Bishkek court case. While the case was entirely without merit there is no question that it did cause significant delays and disruption to the Andash project. The whole process took about a year from start to finish to get resolved and during that time it became clear that, due to a number of different factors, Aurum no longer had the financial resources to get the Andash mine into production without significant further fundraising. 

In view of this, it was obviously disappointing, but of no real surprise, that there were calls from our major Shareholders to return some of the cash that had been raised by the Company for the purpose of getting the Andash mine into production. The Board acted appropriately and responsibly in responding to Shareholder sentiment and as a result £15.9m was returned to Shareholders in April 2009.

The return of cash to Shareholders left the Company in a perilous position where it was valued by the market at only the level of cash that was left in the balance sheet. Therefore the Board was then left with the task of obtaining value from the Andash asset and to secure funds that could then be used for the transformation of the Company.

Since April, management have been entirely focused on the task of unlocking value from the Andash asset and the Company was delighted to announce in late June that it had signed an option agreement with ASX listed gold mining company Kentor Gold Limited ('Kentor') to sell the bulk of its shareholding in the Andash asset and the associated mining fleet for net proceeds of $13.8m. The process with Kentor is on track and we expect to receive the proceeds from the transaction in early 2010.

The Board is also very pleased that under the terms of the proposed deal, Aurum will retain a 10% interest in the Andash asset. The Board continues to believe very strongly in the potential of Andash and believes that the retention of a stake in Andash is in the best interests of all of the Company's stakeholders.

With the unlocking of value from the Andash asset well underway, the Board is now focusing on taking the Company to the next stage. The Board is currently examining in detail a number exciting assets and opportunities and we will update the market as and when we find the right next opportunity for the Company. 

Financials

For the year to 31 March 2009, the Group reported a loss of $10.1m compared to a loss of $1.6m in 2008. The loss has primarily increased due to impairment and depreciation charges that have arisen on the Group's fixed assets.

Cash in the bank at the end of August 2009 was £2m compared to £17.9m at the end of March 2009. The reduction in cash balances in primarily the result of the return of £15.9m to Shareholders in April 2009.

During this year of transition, cash management and conservation and cost control have remained key priorities for the Company.  

People

I would like to thank our staff in both the UK and the Kyrgyz Republic and also the Company's consultants and other advisers for all their dedication throughout this difficult period.

Outlook

There is no question that it has been a turbulent, but ultimately successful, twelve months for the Company, and we now feel that we are extremely well positioned to take advantage of some of the exceptional acquisition opportunities that we are currently considering. 

We look forward to the completion of the deal to dispose of the Andash asset to Kentor. The cash that Aurum will receive from this deal will give the Company the leverage to obtain appropriate assets on terms beneficial to all of our stakeholders.

Sean Finlay 

Chairman

17 September 2009

Chief Executive's Review

Over the years, Aurum has met many significant challenges, but none of these have had a greater impact on our operations than the Bishkek court case that prevented us bringing the Andash mine into production in the 2008 calendar year. Aurum lost almost exactly twelve months as a result of the court case, and once it was finally resolved we were in a position of requiring additional funds to complete the Andash mine construction at a time when the global credit crisis had effectively ensured the closure of the capital markets to junior mining companies like ourselves. 

As you are fully aware the Aurum Board had always maintained that the attack against our Andash asset was entirely without merit; and while this was finally proven by the closure of the case by the Bishkek courts in February of this year, the damage to our business had already been done. 

It was a direct result of these factors that led the Board, in August 2008, to approve the commencement of a strategic review with the intention of diversifying the Company out of Kyrgyzstan and finding a partner that could bolster our regional strengths whilst providing the additional capital needed to bring the Andash project into production. 

By November 2008, whilst there had been some interest in the Andash asset, the Board strongly believed that the deals being discussed did not value Andash appropriately and it was not in the interests of our Shareholders to continue the process. As a result of the failure to find an appropriate business partner, the company faced pressure from major Shareholders to return some of the cash that had been raised by the Company for the purpose of getting the Andash mine into production.

With a need to secure our future with Andash, Aurum's management embarked on a strategy to work with representatives of the Kyrgyz Government to find a solution. 

On the basis that the legal claim was not in the interests of the Kyrgyz Republic, in particular its national and local economy, negotiations commenced in November last year with representatives of the Kyrgyz Government to establish a new ownership structure for the project which would give local inhabitants access to the economic benefits of a successful mining venture. In a ground-breaking agreement, a Memorandum of Understanding ('MOU') was signed in February 2009 and under the terms of this agreement 20% of the Andash asset will be taken up by a local company formed with the express goal of benefiting the local population in return for Aurum getting a fair and transparent hearing in the Bishkek courts. With this in place, the claimant did not even provide representation at the court hearing and the case was dismissed in March 2009.

Whilst the court case reconfirmed the security of tenure of both exploration and mining licenses, we still faced the inability to raise the necessary finance to meet the full financial commitment to build the mine and the calls from our major Shareholders to return some of the cash continued. As a result of these demands, £15.9m was returned to Shareholders in April 2009.

Since the return of cash to Shareholders, the Company has continued to focus on ways of unlocking the value from the Andash asset for its Shareholders. Aurum's management have always understood the value of Andash; as a low technical risk project it stood out both in terms of its economic valuation and its resource upside, so it was therefore no surprise when we started to get enquiries from potential business partners now that the validity of the Andash mining licence had been reconfirmed.

The Company therefore was delighted to announce in late June that it has signed an agreement to dispose of a majority share in the Andash asset and the associated mining fleet to Kentor for net proceeds of $13.8m. Under the terms of the proposed deal, Aurum will retain a 10% interest in the Andash asset and believes that considering the potential upside, the retention of a stake in Andash is in the best interests of all of the Company's stakeholders.

At the time of writing, the due diligence process with Kentor is seemingly progressing well and we are very confident that the Company will receive the $13.8m net proceeds early in the 2010 calendar year.

Our Future

Since the formation of Aurum in 2004 and the subsequent acquisition of the Andash asset in early 2005, Aurum has amassed the skill sets to take a project from exploration, through pre-feasibility, full feasibility, project finance, detailed design, permitting and development. It has seen its market capitalisation grow from £3m to £65m and grow its human capital base from thirty to over one hundred whilst maintaining tight fiscal, statutory and technical control, and has managed to do this in emerging markets where the challenges are larger and tougher. Whilst we are currently close to our lowest point in terms of market capitalisation and manpower numbers, we still retain these core skills.

If we look now at the global mining world, whilst the declarations of the industry in 2007 of being in the early stages of a 'Super Cycle' have been shown to be more of a myth than a reality, opportunities in emerging markets still exist. In fact in some areas they have been enhanced, as the medium and larger mining companies withdraw back into their core territories where they can control costs and outputs, and overstretched and overleveraged local players are forced to divest of assets to survive. As a result, there are a small number of highly desirable assets that are becoming available and many of these can be acquired on excellent partnership terms if the management has the track record to show that they can manage the technical, regulatory and money raising challenges needed to bring the projects to life.

Aurum's Board feel confident that the Company fits into the required category, and can establish opportunities for growing stakeholder value through partnering on such projects. 

Currently Aurum's executive management are working in a number of different areas, looking at exciting acquisition opportunities that should they meet our exacting criteria will be considered for appropriate study, due diligence and in due course recommendation to our Shareholders for approval.

Our historical geography has been the FSU which has been hit very hard by the global credit crisis; so much of our energy is still focused here as we see strong acquisition opportunity. However Aurum's management has very diverse geographical experience and whilst our focus remains in the FSU, the Board will look at all acquisition opportunities based on whether the Company can capitalise on its strong skill sets and where capital fundraising is less challenging.

We are conscious that our Shareholders want to see Aurum emerge from this difficult time as a stronger company, and we are aware that this is best expressed by a strong share price; we are also cognisant of the fact that there is not an unlimited time period in which this needs to happen. It is the Board's intention to finalise our work on the proposals that we are currently assessing and complete the appropriate work required for us to make a recommendation by the end of the Company's financial year. Key to this timetable will be the realisation of cash proceeds from our partnership proposal with Kentor.

Summary

It has been a year of significant progress for Aurum - we started the year in the midst of a court case that threatened our very existence and we now find ourselves feeling very confident of delivering strong returns to all our stakeholders in 2010.

Mark Jones
Chief Executive Officer

17 September 2009

Consolidated income statement

Year ended 31 March 2009

		2009	2008
	Notes	$'000	$'000
Impairment of assets	16	(5,468)	(165)
Depreciation		(1,648)	(210)
Other administrative expenses		(4,711)	(4,128)
Administrative expenses		(11,827)	(4,503)
Operating loss	3	(11,827)	(4,503)
Finance income	6	1,706	2,957
Finance expenses	6	-	(79)
Loss for the year before taxation		(10,121)	(1,625)
Tax on loss for the year	7	-	-
Loss for the year after taxation		(10,121)	(1,625)
Loss attributable to the equity shareholders of the parent company		(10,121)	(1,625)
Loss per share
Basic and Diluted	8	(21.00)c	(3.57)c

All amounts above relate to continuing operations.

Consolidated and Company Balance Sheets

As at 31 March 2009

		Group			Company
		2009		2008	2009	2008
	Notes	$'000		$'000	$'000	$'000
Assets
Non-current assets
Intangible assets	10	-		515	-	-
Property, plant and equipment	9	13,974		22,516	15	35
Investment in subsidiaries	11	-		-	4,603	6,384
Amounts owed by subsidiaries	12	-		-	9,419	20,295
Total non-current assets		13,974		23,031	14,037	26,714
Current assets
Inventories	13	40		462	-	-
Receivables	14	962		1,671	727	159
Cash and cash equivalents	20	25,680		41,730	25,620	41,720
Total current assets		26,682		43,863	26,347	41,879
Total assets		40,656		66,894	40,384	68,593
Liabilities
Non-current liabilities
Trade and other payables	15	-		423	-	-
Total non-current liabilities		-		423	-	-
Current liabilities
Trade and other payables	15	406		1,208	212	689
Total current liabilities		406		1,208	212	689
Total liabilities		406		1,631	212	689
Net assets		40,250		65,263	40,172	67,904
Capital and reserves attributable to the equity holders of the company
Share capital	17	921		921	921	921
Share premium account	19	64,295		64,295	64,295	64,295
Merger reserve	19	5,816		5,816	5,816	5,816
Presentational currency translation reserve	19	(13,467)		1,061	(15,545)	1,284
Warrant reserve	19	350		350	350	350
Retained earnings	19	(17,665)		(7,180)	(15,665)	(4,762)
Total Equity		40,250		65,263	40,172	67,904

The financial statements were approved by the Board of Directors and authorised for issue on 17 September 2009. They were signed on its behalf by:

Chris Eadie
Chief Financial Officer

Consolidated and Company Cash Flow Statements

Year ended 31 March 2009

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
Cash flows from operating activities
Loss for the year before tax	(10,121)	(1,625)	(10,539)	(180)
Depreciation of property, plant and equipment	1,648	210	12	14
Finance income	(1,706)	(2,957)	(1,720)	(2,990)
Finance expense	-	79	-	3
Loss on disposal of property, plant and equipment	323	17	-	-
Impairment losses	5,468	-	10,158	-
Share based payments	(364)	244	(364)	244
Foreign exchange differences	371	96	385	202
Cash flow from operating activities before changes in working capital	(4,381)	(3,936)	(2,068)	(2,707)
Decrease/(increase) in inventories	422	(101)	-	-
(Increase)/decrease in trade and other receivables	(129)	(1,488)	(568)	(42)
(Decrease)/increase in trade and other payables	(1,225)	942	(477)	57
Cash used by operations from operating activities	(5,313)	(4,583)	(3,113)	(2,692)
Income taxes paid	-	-	-	-
Net cash used in operating activities	(5,313)	(4,583)	(3,113)	(2,692)
Investing activities
Purchase of property, plant and equipment	(1,265)	(12,617)	-	(36)
Proceeds from the sale of property, plant and equipment	344	9	-	-
Purchases of intangible assets	-	(515)	-	-
Interest income	1,335	2,788	1,335	2,788
Net cash used in investing activities	414	(10,335)	1,335	2,752

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
Financing activities
Issue of ordinary shares	-	197	-	197
Interest paid	-	(6)	-	(3)
(Increase) in loans to subsidiaries	-	-	(2,954)	(14,797)
Cash flows from financing activities	-	191	(2,954)	(14,603)
Net (decrease)/increase in cash and cash equivalent	(4,899)	(14,727)	(4,732)	(14,543)
Cash and cash equivalents at the beginning of the year	41,730	55,649	41,720	55,498
Effect of exchange rate changes on cash and cash equivalents	(11,151)	808	(11,368)	765
Cash and cash equivalents at the end of the year	25,680	41,730	25,620	41,720

Consolidated and Company Statement Of Recognised Income and Expense

Year ended 31 March 2009

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
Exchange translation differences on consolidation of Group entities	(14,528)	890	(16,829)	845
Net income recognised directly in equity	(14,528)	890	(16,829)	845
Loss for the financial year	(10,121)	(1,625)	(10,539)	(180)
Total recognised income and expense for the financial year	(24,649)	(735)	(27,368)	665
Attributable to the equity shareholders of the parent company	(24,649)	(735)	(27,368)	665

Notes to the Financial Statements

For the year to 31 March 2009

1.  ACCOUNTING POLICIES

The following accounting policies have been applied in the preparation of the financial statements of Aurum Mining Plc.

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS').  

The Group financial statements are presented in United States Dollars, and all values are rounded to the nearest thousand Dollars ($'000) except when otherwise indicated. The functional currencies of the individual Group companies are;

Company	Functional Currency
Aurum Mining Plc	Great Britain Pound Sterling (GBP)
Kaldora Company Limited	US $ (USD)
Andash Mining Company	Kyrgyz Som
Aureus Mining Company	Kyrgyz Som
Aurum Mining Kazakhstan LLP	Kazakh Tenge (KZT)

New & revised Standards effective for 31 March 2009 year ends and adopted by the Group
			Effective for annual periods commencing on or after
Amendments
IAS 39 & IFRS 7	Amendment - Reclassification of Financial Instruments.		1 July 2008**
IAS 39 & IFRS 7*	Amendment - Reclassification of Financial Instruments - Effective date and transition.		1 July 2008**
Interpretations
IFRIC 12	Service Concession Arrangements.	1 January 2008
IFRIC 14	IAS 19 - The Limit on a Defined Benefit Asset Minimum Funding Requirements and their Interaction.	1 January 2008

New & revised Standards issued but not effective for 31 March 2009 year-ends
		Effective for annual periods commencing on or after
New Standard
IFRS 8	Operating Segments.	1 January 2009
Amendments
IAS 1	Presentation of financial statements: A revised presentation.	1 January 2009
IAS 23	Borrowing costs.	1 January 2009
IFRS 2	Amendment - Share based payment: vesting conditions and cancellations.	1 January 2009
IAS 27	Amendment - Consolidated and separate financial statements.	1 July 2009
IFRS 3	Revised - Business combinations.	1 July 2009
IFRS 1*	Revised - First time adoption of IFRS.	1 January 2009
IAS 32 & IAS 1	Amendment - Puttable financial instrument and obligations arising on liquidation.	1 January 2009
IFRS1 & IAS27*	Amendment - Cost of an investment in a subsidiary, jointly-controlled entity or associate.	1 January 2009
IAS 39*	Amendment - Financial Instruments: recognition and measurement: eligible hedged Items.	1 July 2009
IFRS 7*	Amendment - improving disclosures about financial instruments.	1 January 2009
Improvements to IFRSs (2009)	Amendment - The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies between Standards.	1 January 2009
IFRIC 9 & IAS 39*	Amendment - Embedded derivatives.	30 June 2009
Improvements to IFRSs (2010) *	Amendment - The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies between Standards.	1 January 2010
IFRS 2*	Amendment - Group cash-settled share-based payment transactions.	1 January 2010

Interpretations
IFRIC 13	Customer Loyalty Programmes.	1 July 2008
IFRIC 15*	Agreements for the construction of real estate.	1 January 2009
IFRIC 16*	Hedges of a net investment in a foreign operation.	1 October 2008
IFRIC 17*	Distributions of non-cash assets to owners.	1 July 2009
IFRIC 18*	Transfers of assets from customers.	1 July 2009
	* These have not been endorsed by the EU. The Group is evaluating the impact of the above pronouncements but they are not expected to be material for the Group's operations.
	** Effective from 1 July 2008, not just for periods beginning on or after this date.

Accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may deviate from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Mine rehabilitation obligations

Costs associated with rehabilitating land disturbed during the exploration and mining process and addressing environmental, health and community issues are estimated and provided for based on the most current information available. Estimates may, however, be insufficient and/or further issues may be identified. Any underestimate or unidentified rehabilitation costs will reduce earnings and could materially and adversely affect the Group's asset values, earnings and cash flows.

Capitalised mining costs and mining resources

The Group's reserves of precious metals ('mining properties') are estimates based upon geological studies. Over the longer term the actual mineable resources achieved may vary significantly from the current estimates. The Group periodically updates estimates of reserves and assesses those for indicators of impairment relating to its capitalised mining costs.

Base of mining operations

The Group's primary base of operations is in the Kyrgyz Republic. The laws relating to commercial operations, taxation and future dividend payments are still under development and there may be unforeseen changes to the operating and fiscal environment. The financial statements have been prepared on the assumption that no significant adverse changes to the economic, regulatory and fiscal environment will arise.

Carrying values of inventory 

The Group monitors internal and external indicators of impairment relating to its inventory. Management has considered whether any indicators of impairment have arisen over certain spares, materials, tools and equipment held in inventory. After assessing these, management has concluded that no impairment has arisen in respect of these assets during the year. Refer to note 13.

Carrying values of PP&E

The Group monitors internal and external indicators of impairment relating to its property, plant and equipment. Management has considered whether any indicators of impairment have arisen over certain assets relating to the Group's mining operations. After assessing these, management has concluded that an impairment has arisen in respect of these assets during the year. Refer to note 16 for further details.

Useful lives of intangible assets and property, plant and equipment

Intangible assets and PP&E are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Due to the long lives of certain assets, changes to the estimates used could result in significant variations in the carrying value.

Fair value of financial instruments

The Group determines the fair value of financial instruments that are not quoted, based on estimates using present values or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Where market prices are not readily available, fair value is either based on estimates obtained from independent experts or quoted market prices of comparable instruments. In that regard, the derived fair value estimates cannot be substantiated by comparison with independent markets and, in many cases, could not be realised immediately. 

Income Taxes

The Group is subject to income taxes in several jurisdictions and in other jurisdictions has significant carried forward tax losses. Significant judgement is required in determining provisions for income taxes and in determining deferred tax assets based on assessment of probability that taxable profits will be available against which carried forward losses can be utilised.

Legal proceedings

In accordance with IFRS the Group only recognises a provision where there is a present obligation from a past event, a transfer of economic benefits is probable and the amount of costs of the transfer can be estimated reliably. In instances where the criteria are not met, a contingent liability may be disclosed in the notes to the financial statements. Realisation of any contingent liabilities not currently recognised or disclosed in the financial statements could have a material effect on the Group's financial position.

Application of these accounting principles to legal cases requires the Group's management to make determinations about various factual and legal matters beyond its control. The Group reviews outstanding legal cases following developments in the legal proceedings and at each balance sheet date, in order to assess the need for provisions in its financial statements. Among the factors considered in making decisions on provisions are the nature of litigation, claim or assessment, the legal process and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of legal advisers, experience on similar cases and any decision of the Group's management as to how it will respond to the litigation, claim or assessment.

Share-based payments

In order to calculate the charge for share-based payments as required by IFRS2, the Group makes estimates principally relating to assumptions used in its option-pricing model as set out in note 18.

Basis of consolidation

The consolidated financial statements incorporate the results of Aurum Mining Plc and its subsidiaries as at 31 March 2009.

The subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.

The Company has taken advantage of Section 230 of the Companies Act 1985 in not presenting its own income statement. The Company's loss for the year was $10,539,000 (2008: loss of $180,000).

Foreign currency transactions

Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement, except for differences on monetary assets and liabilities that form part of the Group's net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at the fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined.

The income statements of individual Group companies with functional currencies other than US Dollars are translated into US Dollars at the rate approximating the rate ruling at the date of the transaction and the balance sheet translated at the rate of exchange ruling on the balance sheet date. Exchange differences which arise from retranslation of the opening net assets and results of such subsidiary undertakings are taken to reserves. On disposal of such entities, the deferred cumulative amount recognised in equity relating to that particular operation is recognised in the income statement.

Business combinations

Business combinations are accounted for under IFRS 3 using the purchase method. Any excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is regularly reviewed for impairment. To the extent that the net fair value of the acquired entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised immediately in the income statement.

Mining properties

Once a decision is made to proceed with the development of a mining project, exploration and evaluation expenditure other than that on buildings, machinery and equipment is capitalised under property, plant and equipment as mining properties, together with any amount transferred from exploration and evaluation assets. Mining properties are amortised over the estimated life of the reserves on a 'unit of production' basis.

Exploration and evaluation assets

All costs associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. When a decision is made to proceed to development, the related expenditures are transferred to mining properties. Where a licence is relinquished, a project is abandoned, or is considered to be of no further commercial value to the company, the related costs are written off.

The recoverability of deferred mining costs and mining interests is dependent upon the discovery of economically recoverable reserves, the ability of the company to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition of recoverable reserves.

Costs on productive areas are amortised over the life of the area of interest to which such costs relate on a unit of production output basis.

Property, plant and equipment

Property, plant and equipment, is stated at cost less depreciation and impairment losses. Cost includes the purchase price plus any directly attributable costs to bring the asset into working condition and location for its intended use.

Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost of each asset over its useful life:

Office and computer equipment	20% to 33% per annum
Plant and Equipment:	20% to 33% per annum
Vehicles	33% per annum

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Investments in subsidiaries

Investments in subsidiary undertakings are shown at cost less provisions for impairment. The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition.

Amounts owed by subsidiaries

Amounts owed by subsidiaries are treated as receivables. Refer to the receivables accounting policy for further details.

Operating leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged to the income statement on a straight line basis over the term of the lease.

Finance leases

Leases of plant and equipment where the Group assumes a significant portion of risks and rewards of ownership are classified as a finance lease. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is classified between the liability and the finance charges to achieve a constant rate on the finance balance outstanding. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's policy on borrowing costs. The plant and equipment acquired under the finance leases are depreciated over the useful lives of the assets, or over the lease term if shorter.

Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. 

A previously recognised impairment loss is reversed only if permitted by International Financial Reporting Standards and if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss. After such a reversal the depreciation or amortisation charge is adjusted in future periods to  

allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Inventories

Inventory is valued at lower of cost and net realisable value. Cost is based on the cost of purchase on a first in, first out basis. Net realisable value is based on estimated selling price less additional costs to disposal.

Finance costs and debt

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Financial Instruments

Financial assets and financial liabilities are recognised in the group's balance sheet when the group becomes a party to the contractual provisions of the instrument.

Financial assets

The Group's financial assets fall into one category, loans and receivables, which is discussed below. The Group does not have any held to maturity, fair value through profit or loss, or available for sale financial assets.

Loans and receivables

Receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. The Group's financial liabilities fall into one category, financial liabilities held at amortised cost, which is discussed below.

Financial liabilities held at amortised cost

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Finance income and expense

Finance income comprises interest income on funds invested and foreign exchange gains. Interest income is recognised as it accrues, calculated in accordance with the effective interest rate method.

Finance costs comprise interest expense on borrowings, the accumulation of interest on provisions and foreign exchange losses. All interest and other costs incurred in connection with borrowings are expensed as incurred as part of finance costs.

Income taxes

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

• where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affect neither accounting nor taxable profit or loss;
• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or losses can be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Income tax is charged or credited directly to equity if it relates to items that are credited or charge to equity. Otherwise income tax is recognised in the income statement.

Rehabilitation obligations

Rehabilitation obligations include future estimated costs of closure and restoration in returning disturbed areas to their original state. Estimated rehabilitation obligations are provided for in the accounting period when the obligation arising from the related disturbance occurs and is based on the net present value of estimated future costs. The unwinding of the discount is included in finance costs. At the time of establishing the provision, a corresponding asset is capitalised, where it gives rise to a future benefit, and is depreciated over the future production from the mine to which it relates.

The provision is reviewed on an annual basis for changes to obligations and discount rates that effect cost estimates or life of operations. The cost of the related asset is adjusted for such changes in the provision and the adjusted cost of the asset is depreciated prospectively.

National Insurance on share options

To the extent that the share price as at the balance sheet date is greater than the exercise price of outstanding options, provision for any National Insurance contributions has been made based on the prevailing rate. The provision is accrued over the performance period attaching to the award.

Pension contribution

The Group does not enter into any pension scheme arrangements. The Group does make payments in lieu of pensions for certain individuals; these costs are expensed as incurred.

Share-based payments

The cost of equity-settled transactions with suppliers of goods and services is measured by reference to the fair value of the good or service received, unless that fair value cannot be estimated reliably. The fair value of the good or service received is recognised as an expense as the Group receives the good or service. The cost of equity-settled transactions with employees, and transactions with suppliers where fair value cannot be estimated reliably, is measured by reference to the fair value of the equity instrument. The fair value of equity-settled transactions with employees is recognised as an expense over the vesting period. The fair value of the equity instrument is determined at the date of grant, taking into account market based vesting conditions. The fair value is determined using an option pricing model.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions, the number of equity instruments that will ultimately vest, or in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity. 

2.  SEGMENTAL information

For management purposes the Group is organised into two business segments, Mining and Corporate. These business segments are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Corporate - The head office activities of the Group are based in the United Kingdom.

Mining - The mining, production and exploration of gold and other precious metals in the Kyrgyz Republic. 

The Group operates in two geographic segments, the United Kingdom and the Kyrgyz Republic, which correspond to the business segments as described above.

The segment results areas as follows:

Year ended 31 March 2009	Corporate $'000	Mining $'000	Group $'000
Operating expenses	(2,101)	(9,726)	(11,827)
Segment result	(2,101)	(9,726)	(11,827)
Finance income			1,706
Finance expenses			-
Loss before taxation			(10,121)
Taxation			-
Loss for the year			(10,121)

Year ended 31 March 2008	Corporate $'000	Mining $'000	Group $'000
Operating expenses	(3,167)	(1,336)	(4,503)
Segment result	(3,167)	(1,336)	(4,503)
Finance income			2,957
Finance expenses			(79)
Loss before taxation			(1,625)
Taxation			-
Loss for the year			(1,625)

Other segment items included in the income statement are as follows:

Year ended 31 March 2009	Corporate $'000	Mining $'000	Group $'000
Depreciation	12	1,636	1,648
Share based compensation charges	(364)	-	(364)

Year ended 31 March 2008	Corporate $'000	Mining $'000	Group $'000
Depreciation	14	196	210
Share based compensation charges	244	-	244

The segment assets and liabilities and capital expenditure are analysed as follows:

Year ended 31 March 2009	Corporate $'000	Mining $'000	Group $'000
Segment assets	26,362	14,294	40,656
Segment liabilities	(212)	(194)	(406)
Segment net assets	26,150	14,100	40,250
Capital expenditure	-	1,265	1,265

Year ended 31 March 2008	Corporate $'000	Mining $'000	Group $'000
Segment assets	41,914	24,980	66,894
Segment liabilities	(689)	(942)	(1,631)
Segment net assets	41,225	24,038	65,263
Capital expenditure	28	13,104	13,132

3.  OPERATING LOSS

Operating loss is stated after charging:

	2009 $'000	2008 $'000
Depreciation	1,648	210
Operating lease expense	238	238
VAT claim refund	(791)	-
Impairment of intangible assets	513	-
Impairment of property, plant and equipment	4,117	-
Impairment of other receivables	838	73
Impairment of inventories	-	92
External auditors' remuneration
- Audit fee for the annual audit of the company and group financial statements	50	80
- Auditing of accounts of associates of the Company under legislation	15	20
- Other taxation services	33	-
Loss on disposal of assets	323	17
Share-based payments	(364)	244

The Group has a policy in place for the award of non-audit work to the auditors, which requires approval of the audit committee. 

4.  staff costs

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Wages and salaries	1,883	2,075	1,187	1,202
Social security costs	183	228	50	56
Pension costs	14	8	14	8
Share based payments	(364)	244	(364)	244
National Insurance on share options	(201)	(43)	(201)	(43)
	1,515	2,512	686	1,467

Staffs costs include executive Directors' salaries, fees, benefits and share based payments and are shown gross.

In the current year, an amount of $364k previously charged to the income statement for share based payments was reversed to reflect the revised best estimate of options that will ultimately vest. The provision for National Insurance on share options has also been revised, resulting in a credit to the income statement of $201k (2008: $43k).

The weighted average monthly number of employees, including executive Directors, employed by the Group and the Company during the year was:

	Group		Company
	2009	2008	2009	2008
Administration	45	73	6	6
Operations	34	31	-	-
Total	79	104	6	6

5.  DIRECTORS' EMOLUMENTS - GROUP AND COMPANY

	2009	2008
	$'000	$'000
Directors' emoluments	1,104	1,105
Social security costs	41	47
Pension costs	14	8
Total Directors' emoluments	1,159	1,160
Share based payments	(364)	244
National Insurance on share options	(201)	(43)
	594	1,361

The highest paid Director received emoluments totalling $628,876 (2008: $624,924) and share based payments of ($227,957) (2008: $127,090).

M Jones is paid via J Cubed Ventures Ltd, a private service company.

S Finlay is paid via Mostop Ltd, a private service company.

C Knight is paid via Knights Consultants Ltd, a private service company. 

Directors' interests and share options are disclosed in the report of the Directors on pages 7 to 10 of the Annual Report (a copy of which can be found on the Company's website).

In 2009 and 2008 key management personnel are considered to be Directors only.

6.    fINANCE income and EXPENSEs

Recognised in profit or loss

	2009 $'000	2008 $'000
Finance income
Bank interest receivable	1,335	2,788
Total interest income calculated using effective interest method	1,335	2,788
Exchange gains	371	169
	1,706	2,957

Finance expenses
Bank interest payable	-	3
Lease interest payable	-	3
Total interest expense calculated using effective interest method	-	6
Exchange losses	-	73
	-	79
Net finance income/(expense) recognised in profit or loss	1,706	2,878

The above net finance income/(expense) includes the following in respect of assets/(liabilities) not at fair value through profit or loss.

	2009 $'000	2008 $'000
Total finance income on financial assets	1,706	2,788
Total finance expense on financial liabilities	-	(6)
	1,706	2,782

7.  TAXATION

No current or deferred tax charge has arisen in the current year.  

The Company and the Group have incurred tax losses for the year and a corporation tax charge is not anticipated. At 31 March 2009, the Group had tax losses of $14.2m (2008: $7.7m) carried forward which can be used against future profits. The majority of these losses arose in a jurisdiction with a lower tax rate than in the UK. However, these losses are only recoverable against future profits, the timing of which is uncertain and as a result no deferred tax asset is being recognized in relation to these losses.

The total of unprovided deferred tax assets relating to unprovided losses which have not been provided for in the financial statements amount to $2.3m (2008: $1.6m).

The Directors believe that there have been no breaches of foreign tax regulations and that all necessary provisions have been made in these accounts.  

Current taxation

The tax assessed for the year is different from the standard rate of Corporation Tax in the UK. The differences are explained below:

	2009	2008
	$'000	$'000
Loss before taxation	(10,121)	(1,625)
Loss at the standard rate of Corporation tax  in the UK of 28% (2008: 30%)	(2,834)	(488)
Effects of:
Expenses not deductible for tax purposes	1,972	32
Unutilised tax losses carried forward	862	456
Current tax charge	-	-

The Group did not recognise any deferred tax assets or liabilities at 31 March 2009 or 2008.

8.  loss per share

Loss per share is calculated based on a loss of $10,121,000 (2008: $1,625,000) on a weighted average of ordinary shares in issue during the year of 48,188,275 (2008: 45,467,005).

The diluted loss per share is calculated on the loss attributable to equity shareholders and on the weighted average diluted number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. 

In 2009 and 2008 the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated.

The options and other potentially dilutive instruments are disclosed in note 18 to the financial statements.

9.  PROPERTY, PLANT AND EQUIPMENT

Group	Office and Computer equipment	Plant, Equipment and vehicles	Mining Properties	Total
	$'000	$'000	$'000	$'000
Cost
At 1 April 2007	69	704	9,544	10,317
Foreign currency re-translation	-	-	80	80
Additions	100	10,640	1,877	12,617
Disposals	(1)	(35)	-	(36)
At 1 April 2008	168	11,309	11,501	22,978
Foreign currency re-translation	(34)	(1,676)	(2,542)	(4,252)
Additions	12	1,253	-	1,265
Disposals	(20)	(952)	-	(972)
At 31 March 2009	126	9,934	8,959	19,019
Depreciation
At 1 April 2007	33	231	-	264
Foreign currency re-translation	(1)	(1)	-	(2)
Charge for the year	36	174	-	210
Disposals	-	(10)	-	(10)
At 1 April 2008	68	394	-	462
Foreign currency re-translation	(25)	(852)	-	(877)
Charge for the year	30	1,618	-	1,648
Impairment charges	48	4,069	-	4,117
Disposals	(14)	(291)	-	(305)
At 31 March 2009	107	4,938	-	5,045
Net book value
At 31 March 2009	19	4,996	8,959	13,974
At 31 March 2008	100	10,915	11,501	22,516

Property, plant and equipment was written down by $4,117k (2008: $nil) during the year. Refer to note 16 for further details.

Included within plant, equipment and vehicles is an amount of $nil (2008: $91,366), which represents capitalised interest. 

The net book value of non-current assets held under finance leases was:

	2009	2008
	$,000	$,000
Cost	-	1,243
Depreciation	-	-
Net book value	-	1,243

Company	Office and computer equipment $'000
Cost
At 1 April 2007	28
Additions	36
At 1 April 2008	64
Foreign currency re-translation	(18)
Additions	-
At 31 March 2009	46
Depreciation
At 1 April 2007	15
Charge for the year	14
At 1 April 2008	29
Foreign currency re-translation	(10)
Charge for the year	12
At 31 March 2009	31
Net book value At 31 March 2009	15
At 31 March 2008	35

10.  intangible assets

Group		Unevaluated mining properties
		$'000
Cost
As at 1 April 2007		-
Additions during the year		515
At 1 April 2008		515
Foreign currency re-translations		(2)
Additions during the year		-
Impairment charges		(513)
At 31 March 2009		-
Net book value At 31 March 2009		-
At 31 March 2008		515

The exploration and evaluation assets are considered to be intangible assets.

Intangible assets were written down by $513k (2008: $nil) during the year. Refer to note 16 for further details.

The Company had no intangible assets at 31 March 2009 or at 31 March 2008.

11.  INVESTMENT IN SUBSIDIARIES

Company	Investments in subsidiaries
	$'000
Cost
At 1 April 2007	6,304
Foreign currency re-translation	80
Additions	-
At 1 April 2008	6,384
Foreign currency re-translation	(1,781)
Additions	-
Impairment charges	-
At 31 March 2009	4,603

The Company had the following subsidiary undertakings at 31 March 2009 and 31 March 2008 which have been included in the consolidated financial statements:

		Percentage interest			Country of incorporation	Activity
		2009	2008
		%	%
Kaldora Company Limited		100	100		British Virgin Islands	Holding company
Andash Mining Company		100	100		Kyrgyz Republic	Mining and exploration
Aurum Mining Kazakhstan LLP		100	100		Republic of Kazakhstan	Mining and exploration
Aureus Mining Company		100	-		Kyrgyz Republic	Mining and exploration

Aureus Mining Company was incorporated on 20th May 2008. 

12.  amounts owed by subsidiaries 

	Company
	2009 $'000	2008 $'000
Amounts owed by subsidiaries	17,588	20,295
Impairment of amounts owed by subsidiaries	(10,158)	-
Foreign currency re-translations	1,989	-
Amounts owed by subsidiaries	9,419	20,295

The Directors have carried out an impairment review in respect of assets in the Kyrgyz Republic and as a result the carrying value of the loans to the subsidiaries have been written down by $10,158k (2008: $nil) as they are unlikely to be recovered in the short term.

13.  INVENTORIES

	Group		Company
	2009  $'000	2008  $'000	2009  $'000	2008  $'000
Raw materials and consumables	40	462	-	-

Inventory consists of spare parts, fuel and various materials used in exploration and mining operations. 

In the prior year, a provision of $92,000 was made in respect of steel held by a third party on behalf of Andash Mining Company. The ownership of this material remains disputed. There were no provisions made in the current year.

14.  receivables

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Other receivables	138	1,204	-	-
VAT recoverable	756	257	659	-
Prepayments	68	146	68	95
Accrued income	-	64	-	64
	962	1,671	727	159

The fair value of receivables is not materially different from the carrying value.

Other receivables

In the prior year, the Group's subsidiary in the Kyrgyz Republic made advance payments to various suppliers for the supply of goods and services. 

 A provision/impairment charge of $838,000 (2008: $73,000) was made against an advance payment to a supplier in respect of the process plant.

VAT Recoverable

The Company registered for VAT in February 2009 and submitted its first VAT claim for the 41 month period ended 30 June 2009, resulting in an amount for VAT recoverable of $659k (2008: $nil) at year end. 

The Group's subsidiary is a registered value added tax payer in the Kyrgyz Republic and therefore has a right to be reimbursed for value added tax paid on purchased goods and services. The Group's management believes that the subsidiary would be able to recover the value added tax in the course of future assets disposals.

15.  trade and other PAYABLES

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Current Trade creditors	102	191	27	146
Obligations under finance leases	-	241	-	-
Other taxation and social security	31	62	13	22
Accruals and deferred income	273	714	172	521
	406	1,208	212	689

Non-current

Obligations under finance leases	-	423	-	-
	-	423	-	-

The fair value of trade and other payables is not materially different from the carrying value.

16.  mpairment charges

The Directors have carried out an impairment review of the Group's assets in the Kyrgyz Republic and as a result the Group incurred an impairment charge of $5.5m in relation to the carrying value of the Andash assets to their recoverable amount. The recoverable amount of the assets is based on the expected realisable value and has been determined by reference to the disposal value of the Andash assets under the option agreements with Kentor as outlined in note 23. The Directors are confident the disposal to Kentor will complete as per the option agreements. However, Kentor do not currently have he funds to settle the consideration. In the evnt that Kentor were unable to raise the require funds, the Directors are confident an alternative solution could be found to realise the current carrying value of the assets.

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Impairment of intangible assets	513	-	-	-
Impairment of property, plant and equipment	4,117	-	-	-
Impairment of other receivables	838	73	-	-
Impairment of inventories	-	92	-	-
Impairment of amounts owed by subsidiaries	-	-	10,158	-
Impairment of investment in subsidiaries	-	-	-	-
Total	5,468	165	10,158	-

17.  share capital

	Number £0.01 ordinary shares '000	$'000
Authorised ordinary shares
At beginning of year	200,000	3,474
At end of year	200,000	3,474

	2009		2008
	£0.01 ordinary shares	$'000	£0.01 ordinary shares	$'000
Allotted, issued and fully paid ordinary shares
At beginning of year	48,188,275	921	45,467,005	868
Conversion of accrued interest on Loan Notes	-	-	26,270	1
Conversion of Warrants	-	-	195,000	3
Shares issued	-	-	2,500,000	49
At end of year	48,188,275	921	48,188,275	921

18.  SHARE OPTIONS AND WARRANTS

Share Options

The following options over ordinary shares have been granted and remained outstanding at 31 March 2009:

	Exercise  Price	Outstanding at 1 April 2008	Granted During year	Exercised During year	Outstanding at 31 March  2009	Final exercise date
47p		500,000	-	-	500,000	06/05/2009
55.5p		2,000,000	-	-	2,000,000	23/02/2011
84p		500,000	-	-	500,000	01/05/2010
99.5p		500,000	-	-	500,000	08/12/2011
		3,500,000	-	-	3,500,000

The following options over ordinary shares have been granted and remained outstanding at 31 March 2008:

Exercise  Price	Outstanding at 1 April 2007	Granted During Year	Exercised During year	Outstanding at 31 March  2008	Final  exercise  date
47p	500,000	-	-	500,000	06/05/2009
55.5p	2,000,000	-	-	2,000,000	23/02/2011
84p	500,000	-	-	500,000	01/05/2010
99.5p	500,000	-	-	500,000	08/12/2011
	3,500,000	-	-	3,500,000

Warrants

The following warrants over ordinary shares have been granted and remained outstanding at 31 March 2009:

Exercise  Price	Outstanding at 1 April 2008	Granted During Year	Exercised During year	Outstanding  at 31 March  2009	Final  exercise  date
45p	805,000	-	-	805,000	15/02/2016

The following warrants over ordinary shares have been granted and remained outstanding at 31 March 2008:

Exercise  Price	Outstanding at 1 April 2007	Granted During Year	Exercised During year	Outstanding  at 31 March  2008	Final  exercise  date
45p	1,000,000	-	195,000	805,000	15/02/2016

Options and warrants held by Directors are disclosed in the report of the Directors on pages 7 to 10 of the Company's Annual Report.

The market price of shares as at 31 March 2009 was £0.37 (2008: £0.94). The range during the financial year was £0.05 to £0.50.

The expense recognised for share-based payments in respect of Directors and consultant services received during the year ended 31 March 2009 was ($364,192) (2008: $243,605).

In the current year, an amount of $364k previously charged to the income statement for share based payments was reversed to reflect the revised best estimate of options that will ultimately vest.

The following illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year.

	2009 Number	2009 WAEP	2008 Number	2008 WAEP
		Pence		Pence
Outstanding at beginning of year	3,500,000	64.64	3,500,000	64.64
Granted during the year	-	-	-	-
Exercised	-	-	-	-
Outstanding at 31 March	3,500,000	64.64	3,500,000	64.64
Exercisable at 31 March	2,800,000	63.79	2,800,000	63.79

There were no new options or warrants granted in the year ended 31 March 2009 or 2008.

19.  RESERVES

Group

	Share premium	Merger reserve	Shares to be issued	Present-ational currency translation reserve	Warrant reserve	Retained earnings	Total
		$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2008		64,295	5,816	-	1,061	350	(7,180)	64,342
Share based payments		-	-	-	-	-	(364)	(364)
Loss for the year		-	-	-	-	-	(10,121)	(10,121)
Exchange differences on retranslation		-	-	-	(14,528)	-	-	(14,528)
At 31 March 2009		64,295	5,816	-	(13,467)	350	(17,665)	39,329

Group

	Share premium	Merger reserve	Shares to be issued	Present-ational currency translation reserve	Warrant reserve	Retained earnings	Total
		$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2007		64,017	865	5,000	171	435	(5,799)	64,689
Share based payments		-	-	-	-	-	244	244
Issue of 2,500,000 shares		-	4,951	(5,000)	-	-	-	(49)
Issue of 26,270 shares following conversion of Loan Notes accrued interest		18	-	-	-	-	-	18
Issue of 195,000 shares following conversion of warrants		175	-	-	-	-	-	175
Exercise of warrants		85	-	-	-	(85)	-	-
Loss for the year		-	-	-	-	-	(1,625)	(1,625)
Exchange differences on retranslation		-	-	-	890	-	-	890
At 31 March 2008		64,295	5,816	-	1,061	350	(7,180)	64,342

Company

	Share premium	Merger reserve	Shares to be issued	Present-ational currency translation reserve	Warrant reserve	Retained earnings	Total
		$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2008		64,295	5,816	-	1,284	350	(4,762)	66,983
Share based payments		-	-	-	-	-	(364)	(364)
Loss for the year		-	-	-	-	-	(10,539)	(10,539)
Exchange differences on retranslation		-	-	-	(16,829)	-	-	(16,829)
At 31 March 2009		64,295	5,816	-	(15,545)	350	(15,665)	39,251

Company

	Share premium	Merger reserve	Shares to be issued	Present-ational currency translation reserve	Warrant reserve	Retained earnings	Total
		$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2007		64,017	865	5,000	439	435	(4,826)	65,930
Share based payments		-	-	-	-	-	244	244
Issue of 2,500,000 shares		-	4,951	(5,000)	-	-	-	(49)
Issue of 26,270 shares following conversion of Loan Notes accrued interest		18	-	-	-	-	-	18
Issue of 195,000 shares following conversion of warrants		175	-	-	-	-	-	175
Exercise of warrants		85	-	-	-	(85)	-	-
Loss for the year		-	-	-	-	-	(180)	(180)
Exchange differences on retranslation		-	-	-	845	-	-	845
At 31 March 2008		64,295	5,816	-	1,284	350	(4,762)	66,983

The following describes the nature and purpose of each reserve within owners' equity.

Reserve	Description and purpose
Share premium	Amounts subscribed for share capital in excess of nominal value.
Merger reserve	Merger relief reserve for amount in excess of nominal value on issue of shares in relation to business combinations.
Shares to be issued	Amount for shares that the Company is obligated to issue at year end.
Warrant reserve	Fair value of the warrants issued as part of compound financial instruments.
Presentational currency translation reserve	Gains/losses arising on retranslating the net assets of Group operations into US Dollars.
Retained earnings	Cumulative net gains and losses recognised in the income statement less distributions made.

20.  financial instruments

The Group and the Company uses financial instruments, other than derivatives, comprising cash at bank and various items such as sundry receivables and payables that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group's operations. 

Categories of financial assets and financial liabilities:

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
Loans and receivables
Cash and cash equivalents	25,680	41,730	25,620	41,720
Receivables	962	1,671	727	159
Amounts owed by subsidiaries	-	-	9,419	20,295
	----------	----------	----------	---------
Total financial assets	26,642	43,401	35,766	62,174
	----------	---------	----------	---------
Financial liabilities held at amortised cost
Current trade and other payables	406	1,208	212	689
Non-current trade and other payables	-	423	-	-
	---------	--------	--------	-------
Total financial liabilities	406	1,631	212	689
	---------	--------	--------	-------

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's Finance function. The Board receives monthly reports from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.

The main risks arising from the Group and the Company's financial instruments are liquidity risk, credit risk, currency risk, and interest rate risk. Further details regarding these policies are set out below:  

Liquidity risk

The Group finances its operations through the issue of equity share capital and debt. The Group seeks to manage financial risk, to ensure sufficient liquidity to meet foreseeable requirements and to invest cash profitably at low risk. 

The Group holds investments in bank deposits as a liquid resource to fund the projects of the Group. The Group's strategy for managing cash is to maximise interest income whilst ensuring its availability to match the profile of the Group's expenditure. Liquidity risk is further managed by tight controls over expenditure.

Maturity analysis of financial liabilities:

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Less than 3 months	256	795	112	457
3-6 months	150	61	100	-
6-12 months	-	352	-	232
1-5 years	-	423	-	-
	406	1,631	212	689

Credit risk

The Group and the Company's credit risk is primarily attributable to the cash held on deposit at financial institutions. It is the Group and the Company's policy to only use recognised financial institutions for these deposits. The Group and Company do not have any trade receivables.

Currency risk

The Group and the Company does not hedge its exposure of foreign investments held in foreign currencies. The Group and the Company are exposed to translation and transaction foreign exchange risk and takes profits or losses on these as they arise. The Group and the Company are continually reviewing its strategy towards currency risk. 

Currency of net monetary asset/ (liability)

The net monetary assets / (liabilities) of the Group and Company are denominated as follows:

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
UK Pounds	26,035	41,330	35,363	43,964
US Dollars	158	408	191	17,521
Kyrgyz Som	43	32	-	-
	26,236	41,770	35,554	61,485

The Group is mainly exposed to Kyrgyz Som (functional currency of Andash Mining Company) -a 5% increase in the value of the Kyrgyz Som against the US$ will increase expenses and pre-tax loss by $338,000 (2008: $75,000). 

Interest rate risk 

The Group and the Company's exposure to changes in interest rates relates primarily to cash at bank. Cash is held either on current or on short term deposits at floating rates of interest determined by the relevant bank's prevailing base rate. The Group and the Company seeks to obtain a favourable interest rate on its cash balances through the use of bank treasury deposits. 

Borrowing facilities and interest rate risk

The Group and the Company have financed their operations through the issue of equity share capital.  

The Group and the Company earned interest on its cash assets at rates between 0% and 6.10% (2008: 0% and 6.65%). 

An increase of 0.5% in interest rates will increase finance income by $168,000 (2008: $250,000).

Cash and cash equivalents

	Group		Company
	2009	2008	2009	2008
	$'000	$'000	$'000	$'000
Floating interest rate	25,680	41,730	25,620	41,720

Fair values

The fair values of the Group's financial instruments are considered not materially different from the book value.

Capital disclosures

As described in notes 17 and 19, the Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings as its capital reserves. In managing its capital, the Group's primary objective is to ensure its continued ability to provide a consistent return for its equity Shareholders through capital growth. In order to achieve this objective, the Group seeks to maintain a

gearing ratio that balances risk and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues or the reduction of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives.

There have been no significant changes to the Group's capital management objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital.

21. financial commitments 

The total of future minimum lease payments under non-cancellable operating leases are as follows:

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Land and buildings
-Not later than one year	-	279	-	138
-Later than one year and not later than five years	-	656	-	656
Total	-	935	-	794

During the year the Group and Company settled all existing commitments under non-cancellable operating leases.

Total minimum lease payments under finance leases are as follows:

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Plant and equipment
-Not later than one year	-	241	-	-
-Later than one year and not later than five years	-	423	-	-
Total	-	664	-	-

During the year all finance lease commitments were settled and closed as part of the process prior to the return of capital to shareholders.

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: 

	Group		Company
	2009 $'000	2008 $'000	2009 $'000	2008 $'000
Plant and equipment	-	4,628	-	-

During the year the Group settled all commitments that were outstanding at the end of the 2008 financial year.

22.  RELATED PARTY TRANSACTIONS

For details of Directors' emoluments and key management personnel, see note 5.

Other than above, there were no related party transactions in the Group or Company during the year.

23. post balance sheet events

Details of significant post balance sheet events are included within the Chairman's statement and Chief Executive's review.

In summary, the key post balance sheet events are as follows:

On 14 April 2009 the Company returned £15.9m to Shareholders. The exact payment made was 33p for every ordinary share held on the register of members as at close of business on 31 March 2009. In accordance with the terms and conditions of the instruments, the exercise prices of the Company's warrants and options in issue have been adjusted to take account of the capital repayment to Shareholders.

On 15 June 2009 the Kyrgyz State Agency for Geology and Mineral resources extended the Company's deadlines for the completion of key commitments outlined in its Andash Zone 1 mining licence. While the Company's mining licence for the Andash Zone 1 mine in Kyrgyzstan is valid until 2017, there are various requirements contained within the licence that need to be met. The key requirement was that the Company had to have the Zone 1 mine constructed by March 2010- this deadline has now been pushed back to June 2011. 

On 30 June 2009 the Board announced that it had granted options to facilitate the disposal of both its 80% interest in the Andash gold-copper mining project ('Andash') and its ancillary assets, consisting mainly of a mining and construction fleet. The options have been granted to ASX listed gold mining company, Kentor Gold Limited ('Kentor'). If the options are exercised, Aurum will realise $10m from its 80% stake in the Andash project and a further $5m for its share of the ancillary assets. As a further component of the proposed deal and once the initial options have been exercised, Aurum will acquire 10% stake in the Andash project from its local partner for consideration of $1.2m. The shareholders in the Andash project post the transaction would be Kentor with 80%, Aurum with 10% and Aurum's local partner with 10%.

 

END

 

 

FR ILFVEAEIDLIA