Half Yearly Report

OXUS GOLD plc

("Oxus" or the "Company" or the "Group")

Interim Results for the six months ended 30 June 2013

The Group reports a loss for the period of $1.0 million including costs of the arbitration process (see below) of $0.2 million and interest charges of $0.3 million.

The major portion of management's time during the past six months has continued to be that of progressing the arbitration proceedings and seeking compensation for the Group in respect of the loss of the Amantaytau Goldfields (AGF) and Khandiza mining assets. There are no other operating activities currently being undertaken by the Company and its subsidiaries.

Update on Arbitration

The arbitration is proceeding on its merits and on 23 August 2013 the Group filed its Reply Memorial to the Republic of Uzbekistan's Statement of Defence. The Reply was accompanied by further supporting evidence, witness statements and expert reports. The Arbitral Hearing will take place in 2014.

In February 2013 the Navoi Regional Economic Court of Uzbekistan declared AGF bankrupt, following insolvency proceedings that were commenced in September 2012. The Group was not granted the required undertakings to participate in these proceedings and in any event is raising its claims under international law before the UNCITRAL Arbitral Tribunal under the UK-Uzbekistan Bilateral Investment Treaty, as opposed to any Uzbek forum based on Uzbek law. The declaration of bankruptcy is not expected to have any negative impact on the arbitration proceedings.

Whereas the Group is preparing for the final stages of the arbitration and the Arbitral Hearing, it continues to remain open to any fair settlement offer it may receive from the Republic of Uzbekistan.

Litigation funding agreement

The existing arrangement with a litigation funder to support the Company's arbitration through non-recourse funding of legal and related fees arising from the arbitration process remains in place. At 30 June 2013 the Company had received $3.3 million of funding, which is only repayable upon the successful completion of the arbitration.

Equity financing facility

In August 2012 the Company entered into a £3 million Equity Financing Facility ("Facility") with Darwin Strategic Limited ("Darwin"). In March 2013 the terms of the Facility were amended to allow Darwin to provide the Company with a minimum amount of £100,000 per month, up to a maximum amount of £3.6 million over an 18 month period commencing on 13 March 2013. As at 12 September 2013 proceeds totalling £332,647 had been drawn down under the amended terms of the Facility.

Outstanding share capital

During the period the Company issued a further 9,692,620 ordinary shares, representing 457,474 shares in respect of capitalised fees of directors and advisers, and 9,235,146 shares issued in respect of the Equity Finance Facility. At 30 June 2013 the total number of shares in issue was 451,581,615. Since the period end a further 7,313,195 shares have been issued in respect of the Equity Finance Facility, and a further 133,334 shares in respect of capitalised fees of advisers. At 12 September 2013 the total number of shares in issue was 459,028,144.

Outlook

As the arbitral proceedings progress towards their conclusion, the directors continue to remain extremely confident that the Company will be awarded the appropriate compensation by the Arbitration Tribunal for both the AGF and Khandiza investments in Uzbekistan. In this respect the board will continue to take whatever steps it deems necessary to maximise the return of value to the Company's long-suffering shareholders.

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Condensed consolidated financial statements for the six month period ended 30 June 2013

Condensed consolidated statement of comprehensive income

All amounts relate to continuing operations.

Selected notes to the interim condensed consolidated financial statements for the six month period ended 30 June 2013

1. Corporate information

Oxus Gold plc ("the Company") is a company incorporated in England.

2. Basis of preparation

These condensed interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 30 June 2013 (the Period) have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited financial statements for the year ended 31 December 2012. These condensed interim financial statements have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 December 2012. The auditors' opinion on these Statutory Accounts was modified and contained an emphasis of matter in respect of the Group's ability to continue as a going concern. While the financial figures included within this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as set out in International Accounting Standard 34 Interim Financial Reporting.

Due to the restrictions which impaired the Group's ability to manage the Amantaytau Goldfields ("AGF") joint venture's operations, the Group, with effect from March 2011, no longer has had joint control over AGF. The Group therefore discontinued the use of the equity accounting method from the date that it ceased to have joint control, or significant influence, over the operations of AGF. The investment which the Group retains in the AGF and Khandiza mining properties is measured in accordance with IAS 39 and since March 2011 has been classified as Available for Sale Investments.

3. Total Comprehensive income

There are no additional items of income and expense which are not included within the profit and loss for the period.

4. Arbitration expenses

Legal costs associated with the international arbitration against the Uzbek Government in order to seek appropriate compensation for the Group's investments in the AGF and Khandiza mining properties constituted $0.21 million (six months to 30 June 2012; $1.45 million and the year to 31 December 2012; $3.11 million). These costs, totalling $3.32 million, have been funded by the litigation funder under the terms of the Litigation Funding Agreement entered into on 29 February 2012.

5. Loss per share

The calculation of the basic loss per share for the six month period ended 30 June 2013 is based on the following data:

Diluted earnings /(loss) per ordinary share (US cents)

The calculation of diluted earnings per share for 30 June 2013 relates to the convertible loan notes. The earnings figure used therefore adds back the related interest charge of $274,618 and the weighted average number of ordinary shares includes an additional figure of 133,793,798. The effect of share options was anti-dilutive in the six month period ended 30 June 2013, the six month period ended 30 June 2011 and the year ended 31 December 2012 as the Group was loss making in those periods. 

6. Mining property

7. Available-for-sale financial assets

Other amounts received in the period arise from the sale of a silver refinery intended for use in Uzbekistan. Other amounts payable arise from storage costs of the silver refinery for the period before the sale.

The amount stated represents the net investment of the Group in AGF up to the time that joint control was lost in March 2011 following the declaration of force majeure, adjusted for amounts subsequently received and paid. In the view of the directors, due to the uncertainties surrounding the arbitration with the Uzbek government, there is no reliable measure available to determine the fair-value of AGF and they have accordingly valued the interest in AGF at the carrying value when control was lost as adjusted for subsequent receipts and payments.

8. Loans and borrowings

Convertible loan notes

In May 2008 the Company issued convertible loan notes in the principal amount of $18.5 million. The notes were restructured in January 2010 and again in July 2012. $3.0 million of the notes were converted in November 2010. Repayment of the notes, if not converted at 12p per share, is the earlier of 14 December 2015, or the date on which the proceeds of an award, settlement or other realisation for value in the arbitral proceedings are received by the Company, or 60 calendar days from the date on which the proceedings conclude or terminate in the case where no payment is receivable by the Company. Interest payable at UK LIBOR + 3% per annum and falling due on or after 6 July 2012 is accruing but remains unpaid, and is convertible at the option of the note holder at the average closing middle market price of the Company's ordinary shares for each separate 6 month interest period to which that portion of interest relates.

If all the remaining notes are converted the maximum number of new ordinary shares that would be issued is 80,729,166. If all the interest accrued to date is converted, a further 53,064,632 new ordinary shares would be issued. The convertible loan notes are disclosed as a non-current liability.

Obligations under finance lease

In April 2010 the Group entered into a credit agreement with Atlas Copco Customer Finance AB in respect of certain exploration equipment. The Group's obligations under the finance lease are secured by the lessor's title to the leased assets. Interest was fixed at 8.7% per annum. In April 2013 the interest rate was reduced to 7.5% per annum. The lease terms are to be reviewed again on 31 January 2014. In the meantime the Company continues to seek recovery of the exploration equipment from AGF in Uzbekistan.

9. Trade and other payables

Trade and other payables includes an amount of $3.3 million due to the litigation funder which will only become payable upon receipt of a settlement in respect of the arbitration proceedings (see also note 4).

10. Approval of interim group financial statements

The interim group condensed financial statements for the six months to 30 June 2013 were approved by the directors on 12 September 2013.