First Quarter Results

RNS Number:5837V
KazakhGold Group Ltd
26 April 2007


April 26, 2007

                             First Quarter 2007 Update

       KAZAKHGOLD'S FOCUS ON BECOMING ONE MILLION OUNCE PER YEAR PRODUCER

Highlights
          
*    First quarter gold production increased to 33,910 ounces (Q1 2006:
     33,624 ounces)

*    Average gold price received US$547 per ounce, 31% higher than in first
     quarter 2006

*    Preliminary JORC evaluation confirms world class asset base

*    7m ounces likely to be classified as measured or indicated; 8m ounces
     as inferred

*    Construction started on production expansion projects at Aksu and
     Zholymbet

*    Highly experienced international management team appointed

*    Romaltyn plant refurbishment underway

*    Agreement reached in principle with Oxus Gold to purchase Jerooy plant
     equipment, and balance of Romaltyn in Romania and Turkish gold copper 
     projects

*    Construction underway at Kaskabulakskoe and Akzhal Heap Leach projects

*    21,800 metres of exploration core drilling completed at Aksu, Bestobe and
     Zolymbet representing 26% of a planned 83,500m for the year

Report on Activities

Reconciliation Study of Reserves and Resources

Wardell Armstrong International (WAI) have completed a preliminary JORC
reconciliation study of the Group's Soviet classified reserve statement dated 1
January 2007.  The results confirm a world class asset base with significant
potential for resource classification upgrade and a significant proportion of
the ounces contained within the designated open pit mining zones at each of the
deposits.

The results of the preliminary JORC reconciliation show that the company has an
asset base with in excess of 7Moz of gold likely to be classified as either
Measured or Indicated following WAI's  preliminary study, which is ongoing.  In
addition, WAI estimate that a further 8Moz of gold are at the Inferred status
with a realistic likelihood of upgrading to the Indicated category or better.
Moreover, a significant proportion of this 15Moz lies within designated open pit
zones at each of the deposits.

In addition to this, the Company also holds nearly 22Moz of gold which WAI
designates as unclassified due to the need to do further evaluation work.
However, as with the Inferred category, it is likely that a significant
proportion of this will eventually be classified as indicated or better.  An
additional 10Moz, currently remain as Soviet classified P1 until further
drilling and sampling is carried out to allow the conversion to JORC
classification.

WAI has given the preliminary observations to KazakhGold in the attached letter*
in which they also state:

"The preliminary analysis of the asset base has shown the company to have a
world class asset which through proper management will be continuously upgraded
and should yield long term benefit to the company."

It is KazakhGold's strategy to aggressively continue its exploration and
evaluation programmes to upgrade resources to reserves with the aim of
continuing to provide the gold ounces for mining to meet its focused objective
to become a one million oz per annum gold company.

Operating Results

The Group's three operating mines in northern Kazakhstan Aksu, Bestobe and
Zholymbet produced a total of 33,910 ounces during the first quarter of 2007.
This compares with 33,624  ounces produced in the first quarter of 2006.

The recent announcement on appointment of a new senior management team is
expected to yield substantial production growth in the medium and long term.
The new management team has committed to presenting its operational growth and
development and modernisation plans to shareholders in mid-2007.  It is expected
that this plan will form the basis for delivering substantial production growth.

Corporate activity

In addition to the substantial acquisitions at the end of 2006, namely the
purchase of the Azkhal, Boldykol and Vasilevski gold deposits and the five new
exploration licences, the company recently announced that it had agreed in
principle to acquire certain assets  from Oxus Gold plc including:-
     
1.   100% of Norox Mining Company Limited, which owns 66.67% of Talas Gold
     Mining Company in Kyrgyzstan.  The Oxus Group has spent approximately US$63
     million on the Jerooy gold project to date, including on the construction 
     of a processing plant which is approximately 80% complete, and associated 
     mining equipment.  The Jerooy project contains 3.45 million ounces of gold.  
     Should KazakhGold obtain the rights to develop the project, it is 
     anticipated that production at an annual rate of 180,000 ounces could be 
     achieved in less than one year.
     
2.   The remaining 50% of the issued share capital of Romaltyn Limited, which 
     operates a gold recovery plant in Romania and owns tailings stockpiles and
     a number of gold exploration licences.  The plant was built by Lycopodium 
     of Australia in order to treat 3 million tonnes of tailings per year.  The 
     plant is expected to resume production in 2007.

3.   Significant exploration assets in Turkey.

The period under review has been  busy and challenging necessitating many
changes and intense corporate activity.  Management believes that this effort
will result in KazakhGold becoming a world class gold mining company staffed by
seasoned professionals.

Exploration

Drilling work has focused on the key production deposits of the Company, to
ensure mine expansion. During the first quarter, 21,800m of core drilling were
completed, representing 26% of the planned total of 83,500m for the year.  At
Aksu 10,300m of 48,500m were  drilled, at Bestobe 5,000m of 15,000m and at
Zholymbet 6,500m of 20,000m.

In addition, 1,000m of drilling and trenching have been completed at Kaskabulak
and Akzhal as part of the preliminary exploration programmes that have been
established for the additional nine exploration areas.

Directors and Management

During the period, Kanat Assaubayev was appointed the Executive Chairman of the
Group and Darryl Norton joined the board as an Executive Director and Joint
Managing Director.  In addition, Dr Stephen Westhead and Mr Geoff McLoghlin have
been appointed as Group Chief Geologist and Group Chief Metallurgist
respectively.

*Please click on the following link:

http://www.mining-investor.com/stex/wardell%20armstrong%20letter.pdf


Further Information:

Aidar Assaubayev                                 Ron Marshman/John Greenhalgh
Kazakhgold                                       City of London PR Limited
+73272509264                                     +442076285518

http://www.kazakhgold.com/KazakhGold Share Price



                      This information is provided by RNS
            The company news service from the London Stock Exchange
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