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Kyrgyzstan to mine Jerooy gold field with Global Gold
[April 26, 2006]

Kyrgyzstan to mine Jerooy gold field with Global Gold

(Interfax News Agency Via Thomson Dialog NewsEdge)BISHKEK. April 25 (Interfax) - Kyrgyzstan intends to mine the Jerooy gold field in partnership with the international company Global Gold, Almazbek Zhakypov, head of state gold producer Kyrgyzaltyn, told Interfax.

Zhakypov said the parties were working on a general agreement and that the terms offered by the new investor were far better than those offered by the previous project partner Oxus Gold.

Global Gold has agreed to let Kyrgyzaltyn have 40% of the equity in a joint venture, but that the state company only had 33% of the previous joint venture with Oxus, Zhakypov said.

He also said that Global Gold estimated Kyrgyzstan's share of the project financing at $20 million, while Oxus estimated those costs at $15.5 million.

Global Gold intends to pay $30 million into the joint
charter capital. The money will be used for construction
andcommissioning the mine.

All of the gold mined at Jerooy will be refined at Kyrgyzstan's Kara Balta Mining Plant.

Overall project costs, which were previously estimated at $60 million, have not yet been finalized, Zhakypov said.

At least 90% of the mine's employees will be local. The new investor will set aside $2.5 annually for local development, no matter what its net profit is. Global Gold is also prepared to compensate $3 million of Kyrgyzstan's expenditures related to the project.

Commercial gold production will start eight months after the project has been launched and a fine will be paid for every month that the project is delayed if applicable.

Compensation for Oxus Gold's costs has yet to be
Zhakypov said. "So far we've agreed to conduct an audit and
that BDOwill perform this," he said, adding that only then will it be possible to say exactly what Oxus spent on the project.

Risks are attached to the Jerooy project, because Oxus will be defending its rights to the project in court, Zhakypov said. "We would like to resolve this issue amicably," he said.

Zhakypov said he hopped Oxus would "demonstrate good will and allow Global Gold to acquire all existing project documentation, including the feasibility study."

He said the new investor was not selected by tender because the law on subsurface resources allows mineral rights to be transferred either by tender or direct negotiations. In this case, the government opted for negotiations.

Fred Houston, a representative of Talas Gold Mining, the joint venture formed with Oxus Gold, told Interfax that the company had not received formal notification that a new investor had emerged. "We would like to continue talks [with the Kyrgyz side] to find new methods to continue the work that Oxus started," he said. Representatives of the British company will fly to Kyrgyzstan on April 27-28, he said. Oxus estimates that overall investment in the project should be $70 million.

Kyrgyzaltyn said in February that it would pull out of the
venture with Oxus Gold to develop the Jerooy deposit. The
Kyrgyzgovernment had decided that the license for joint venture Talas Gold Mining Company (Oxus owns 67%) will not be reinstated. Kyrgyzstan said it would look for a new investor and was ready to pay all the costs borne by Oxus, but on the basis of an international audit.

Total reserves at the Jerooy field are estimated at 3.45
Troy ounces of gold and the field will have a life of 11
years.Production at the field should have begun in mid-2005, but this did not happen.

Planned ore extraction is 1 million tonnes per year, with gold production of 180,000 Troy ounces per year. The field will be developed by open and underground mining.

Oxus Gold Plc. was set up in 1996 for mining projects in Central Asia, including Jerooy and the Amantaytau gold project in Uzbekistan.

Global Gold Corp. operates and explores mineral deposits in Armenia and Chile. pr

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