Issue of Equity

    RNS Number : 9492Z
  Trans-Siberian Gold PLC
  28 July 2008
   

    

    Trans-Siberian Gold plc

    Proposed placing to raise US$13.6 million

    Proposed equity conversion of US$8.2 million existing debt 

    Asacha Project update

    Extraordinary General Meeting

    LONDON: 28 July 2008 - Trans-Siberian Gold plc ("TSG" or "the Company") (TSG.L) reported on 24 June 2008 that the Group's total
requirement for additional funds before the Asacha mine is cash flow positive was US$44 million and that this requirement was US$6 million
lower than previously reported as a result of AngloGold Ashanti's ("AGA") agreement to convert the US$6 million outstanding balance of its
loan (the "AGA Loan") into TSG shares, at the same time and on the same terms as the planned equity raising which the Company had announced
on 22 May 2008.

    The Company also reported that it planned to satisfy that forecast additional funding requirement of US$44 million, and to avoid a delay
to the project because of funding constraints, through raising additional equity by means of a placing of up to US$19 million and debt
finance of US$25-30 million. It further reported that UFG Asset Management ("UFG"), which currently holds 34.92% of the Company's shares,
had confirmed its commitment to subscribe for a minimum of US$10 million in the placing and, if necessary, to provide part of this amount as
bridging finance prior to the completion of the placing. On 17 July 2008, UFG advanced US$2 million to the Company as bridging finance (the
"UFG Loan"), which is being utilised to fund capital expenditure at Asacha.

    TSG is now pleased to announce proposals to strengthen its capital base and provide additional financial resources by raising US$13.4
million, net of expenses, through a conditional placing of new ordinary shares at 25.5p per share (the "Placing") and by converting the AGA
Loan and the UFG Loan, in aggregate US$8.2 million, into new ordinary shares in the Company (the "Conversion"), also at 25.5p per share.

    Proposed Placing

    The proposed Placing involves a conditional placing by Seymour Pierce of 26,657,899 new ordinary shares with UFG, two Directors
(Alexander Doumnov and Peter Burnell) and other shareholders. The Placing is conditional on the approval by TSG's shareholders at an
Extraordinary General Meeting of the Company, to be held on 18 August 2008 (the "EGM"). 

The majority of these funds will be utilised in the completion of the Asacha mine and its associated plant and infrastructure in Kamchatka,
Far East Russia, the balance to be used for further exploration at TSG's properties in Kamchatka and for general corporate purposes. 

    The Placing price of 25.5 pence per share is based on the volume weighted average closing price of TSG's shares for the 20 trading days
up to and including 23 July 2008. 

    The Placing shares, when issued and fully paid, will represent approximately 31.8% of TSG's enlarged issued share capital.

    Conversion of the AGA and UFG Loans

    Subject to shareholder approval at the EGM, the loans will be converted into new TSG ordinary shares by applying the closing US
dollar:pound sterling exchange rate on 15 August 2008 and a Conversion price of 25.5p. At an exchange rate of US$2.00:�1, the Conversion
will result in the issue of approximately 16,062,748 new ordinary shares in the Company, of which 3,962,825 shares will be issued to UFG and
12,099,923 shares to AGA respectively, in consideration of the release of the Company's indebtedness to UFG and AGA under their respective
loans.

    The Conversion shares, when issued, will represent approximately 19.1% of TSG's enlarged issued share capital. The Conversion shares to
be issued to UFG are in addition to the Placing shares to be issued to UFG. 

    Effect of the Placing and the Conversion

    The new ordinary shares to be issued pursuant to the Placing and the Conversion will represent approximately 50.93% of the Company's
enlarged issued share capital. As a result of the Placing and the Conversion, UFG's interest will increase to approximately 52.25% and AGA's
interest will reduce to approximately 29.04% of the Company's shares.

    Asacha

    Further progress has continued to be made at the Asacha Project. By the end of June, more than 300 metres of mine development had been
completed. In addition, the manufacture of the main process plant equipment has been completed and the equipment is currently being shipped
from China. Excavation of the plant's foundation area has also been completed, as well as its gravel backfilling. The construction of
concrete bedding for the plant has started and the road between the plant site and the tailings storage site has been completed. The first
tailings storage compartment has been cleared of trees and approximately 50% of vegetation cover. Finally, contracts for the design of the
external 35kV power supply system, in line with the decision to rely on grid power instead of diesel power generation (to avoid the latter's
increasingly high costs and supply risks), and for Asacha's on-site power networks have been signed.

    The total capital cost of the Asacha project to the start of production is now estimated at US$105.7 million, net of US$9.2 million VAT
recoveries, compared to the May 2008 estimate of US$105.6 million. The total project cost includes pre-commissioning mining costs of US$5.2
million, other pre-operating expenditure of US$23.9 million, "first fill" equipment spares and consumables of US$1.0 million and contingency
of US$1.8 million. Although certain costs have increased due to the assumption of a stronger Russian rouble against the US dollar, this has
been offset by a US$3.0 million increase in forecast VAT refunds prior to the start of production, with US$2.6 million now expected to be
recovered in the second half of 2008, and a reduction of US$2.2 million in the contingency provision. US$63.1 million, net of US$1.4 million
VAT recovered, has been spent up to the end of June 2008. A further US$42.6 million, net of US$7.8 million VAT recoveries, is forecast to be
spent prior to the start of production. US$10.4 million of capital expenditure will be incurred after the commencement of production.

    Project finance, the terms of which are being negotiated with 2 Russian banks, is expected to contribute around US$27 million of the
remaining cost of US$42.6 million. Production of gold is expected to commence in the third quarter of 2009. 

    Rodnikova

    The drilling programme in the first half of 2008 encompassed more than 5,500 metres. Analysis of three holes drilled on the southern
flank of the vein zone traced the zone to a depth of 150 metres, with intercepts of 19 metres @ 7.8 grammes/tonne (g/t) Au, 85.4 g/t Ag,
21.8 metres @ 6.05 g/t Au, 40.5 g/t Ag and 10 metres @ 4.76 g/t Au, 39.0 g/t Ag. Further results from the drilling programme on the southern
flank of Zone 44 between Vilyucha River and Spokolny Creek are expected during the second half of 2008, following which a decision on a
further exploration programme will be taken.

    Extraordinary General Meeting

    Shareholders' approval is being sought at the EGM for an increase in the Company's authorised share capital and for an increase in the
Directors' authorities to allot shares and to disapply statutory pre-emption rights in relation to the Placing and the Conversion.
Shareholders' approval is also being sought for a new Employee Share Option Scheme, to replace the current scheme whose 5 year term expires
in September 2008. The proposed new scheme retains the commencement of the production of gold by any Group Company as a pre-condition to any
exercise of options.

    Related Party Transactions 

    The Placing and the Conversion are defined as related party transactions under the AIM Rules. The Directors, other than Dr Fedorov and
Messrs Fenner and Khilov (who are connected to UFG) and Messrs Doumnov and Burnell who are also participating in the Placing, having been so
advised by Seymour Pierce, the Company's nominated adviser, consider the terms of the Placing to be fair and reasonable insofar as the
Company's shareholders are concerned.

    The Directors, other than the three directors who are connected to UFG, having been so advised by Seymour Pierce, consider the terms of
the Conversion to be fair and reasonable insofar as the Company's shareholders are concerned.

    Ends
    Contacts:

    TSG
    Simon Olsen                                                        +44 (0) 1223 265760
       
    Seymour Pierce
    Stuart Lane                                                         +44 (0) 20 7107 8000


    Geological information in this report is based on data reviewed by Mr V Zhouravlev, Chief Geologist of OOO Trans-Siberian Gold
Management who is an expert of the GKZ (State Reserves Commission of the Russian Federation) with 45 years relevant experience in mineral
exploration and a Qualified Person under AIM rules. Mr Zhouravlev consents to the inclusion of the information in the form and context in
which it appears.


    Copies of the the Circular sent to TSG shareholders are available at the offices of Seymour Pierce Limited (20 Old Bailey, London, EC4M
7EN) upon request. Copies of the Circular are also available from TSG's website in accordance with Rule 26 of the AIM Rules for Companies,
http://www.trans-siberiangold.com


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