For immediate release 15 May 2009 Chaarat Gold Holdings Ltd ("Chaarat" or "the Company") PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 Road Town, Tortola, British Virgin Islands (15 May 2009). Chairman's Report 2008 has been another year of sound progress for your Company's operations. Advances have been made across all facets of our gold project: in field-based exploration, in the size and confidence in our resource base, in regional exploration within our licence area and in the completion last summer of a scoping study that highlighted potential healthy financial returns. In addition, progress has been made in planning for the establishment of a mine, preparation of an environmental baseline study and metallurgical test work. We are aiming to complete a prefeasibility study incorporating all of these elements in the second half of this year. The delineated mineral resource at Chaarat has increased to 3.34 million ounces of gold. This is a JORC compliant resource estimate, with about half of this being in the 'indicated' category - an important step towards determining mineable gold reserves. Overall, our 2008 drilling season came through with pleasing results. Our understanding of the structural controls and distribution of mineralisation in the three principal zones has improved, which will increase the effectiveness of drilling extensions to the mineralisation and in prospecting new targets. The 'blue sky' element at Chaarat remains significant, since drilling has tested a small percentage of known mineralised strike and gold occurrences. The mineralisation remains open at depth and along strike in most project areas where advanced stage prospecting has been conducted. Of more general note, interest in gold related companies in the current monetary environment appears to be on the increase. Admittedly, it is gold producers that have been at the forefront of attention but interest is now broadening to exploration opportunities. In the Kyrgyz Republic, it is noteworthy that Gold Fields Limited has recently 'farmed in' to the Taldibulak project and that the protracted dispute between the Government and major Centerra is now resolved. Considerable interest is also being shown in gold and other mineral projects within the Kyrgyz Republic by her neighbour, China. As a Board, we are committed to seeking an improvement in the value placed upon your Company. In this regard, we would not rule out bringing a partner into our project if the right terms could be achieved. In the meantime, and whilst such avenues are investigated, we have raised GBP 2.2million by way of a limited private placing at a price of 12 pence per share to fund completion of the prefeasibility study and our exploration programme in the year ahead. Finally, I would like to draw your attention to the fact that our hard working staff, both in the Kyrgyz Republic and in London have achieved a great deal this year. They have our sincere thanks. Christopher Palmer-Tomkinson Chairman Chief Executive's Operations Report During 2008, the Chaarat project was transformed from being an exploration project to one making meaningful progress on a prefeasibility study - a significant step towards production. Much time, effort and expense has been directed towards exploration, upgrading confidence in the mineral resource and generating and collecting the data required for planning, designing and constructing a mine. In particular, we have continued with our intensive exploration programme, the underground development and drilling and metallurgical test work. Furthermore, the Company has commissioned contractors to undertake the accurate surveying of the access road route and conducted geotechnical drilling and studies, as well as hydrological and environmental studies. June 2008 saw the completion of the Scoping Study compiled by Behre Dolbear, with an amended and improved version published in December. As is always the case, 'work in progress' changes to the development strategy occur as more information becomes available. Exploration progress benefited from our continuous operations throughout the 2007/08 winter, being the first time exploration at Chaarat did not cease during the winter months. The work allowed the Company to complete the adit we started to develop during 2007, reaching and intersecting the mineralised zone. Drifting was started in both directions along the zone of mineralisation and the construction of the second underground drilling chamber was successfully completed. That work allowed the Company to commence underground drilling during early spring 2008. The drilling results contributed towards refining our models on the distribution and controls of mineralisation and led to a reinterpretation, which showed increased continuity in the zones of mineralisation between previously separate project areas. As I write this report, the 2009 drilling programme is getting underway, with the primary aim of testing these mineralisation models and increasing the mineral resources in the intervening spaces between the various project areas. The global financial meltdown has had a significant impact on our markets. Whilst the gold price reacted positively to the crisis, the equity markets have not been easy for junior explorers. The falling share price and reduced appetite for raising additional funds led the Company to reduce its level of activities, albeit in a measured way. You will see administration costs have increased during the year; this has been the result of a full year's worth of the additional costs the Company incurs as a result of our public listing on the Alternative Investment Market. There has also been an increase in the notional cost attributed to the share options issued to date. Exploration During the year we developed a total of 1,150 metres of adit and drifts, as well as three drilling chambers, to support underground exploration. A total of 14,753 metres in 67 drill holes were drilled, of which 29 holes (5,986 metres) were drilled from the underground drilling chambers and the balance, 38 holes (8,767 metres), were drilled from surface. These drill results significantly improved our understanding of the more prospective areas of the Chaarat licence area, which will be of benefit to the 2009 drilling programme. Selected drilling results from each of the project areas drilled are set out below: +----------------------------------------------------------------------------------------------------------------+ | Project Area | Drill Hole No. | Section Line | Intersected width | True width | Gold grade | | | | | (metres) | (metres) | Au (g/t) | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | C5300 (surface) | CCH08C535 | 5240 | 43.50 | 37.21 | 4.02 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | C5300 (UG) | UGADH185 | 5160 | 33.00 | 29.54 | 4.25 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | C4600 | CCH08C464 | 4520 | 32.00 | 27.39 | 6.04 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | C4000 | CCH08C402 | 4000 | 9.00 | 4.05 | 3.94 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M2400 | CCH08M24-1 | 2040 | 35.00 | 23.98 | 4.47 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M3000 | CCH08M3018 | 3160 | 46.50 | 30.98 | 4.12 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M3400 | CCH08M3015 | 3320 | 17.55 | 12.95 | 3.06 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M3900 | CCH08M399 | 4000 | 28.90 | 23.27 | 3.90 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M5000 | CCH08M501bis | 4880 | 10.50 | 7.67 | 2.96 | |-----------------+----------------+--------------+----------------------------+--------------------+------------| | M6000 | CCH08M601 | 6040 | 5.00 | 5.00 | 3.52 | +----------------------------------------------------------------------------------------------------------------+ Contact Zone The three project areas on the Contact Zone, C4000, C4600 and C5300, occur over a ten kilometre strike length, on the contact of the Tulkubash Formation siltstones and the Chaarat Formation quartzites. The wide mineralised zones, developed in multiple subzones within siltstones, on the Contact Zone have been the focus of most of the exploration during 2008. C5300-C4600 Project Areas These two adjacent project areas represent the flagship project at Chaarat, where a mineral resource of some 1.41 million ounces of gold has been delineated. On the C5300 Project Area, 1,150 metres of underground exploration development, in adits and drifts, were completed, from which 29 underground drill holes (5,986m) were drilled during the year. In addition, a further 5 drill holes (1,128 metres) were drilled from surface. The mineralisation here is developed in multiple zones (up to eight, with a cumulative width of 12.26 metres), of which the principal zone has a grade of 4.26 g/t gold over a true width of 5.89 metres and extends for some 550 metres along strike and is still open along strike and down dip. Of significance during the year, underground drill hole UG ADH185 intersected 4.25g/t gold over a width of 29.54 metres. On the C4600 Project Area, drilling during the year comprised 3 drill holes (821 metres) and included the noteworthy intersection in drill hole No CCH08C464 of 6.04g/t gold over a width of 27.39 metres, which is one of the more impressive intersections since prospecting commenced at Chaarat. The mineralisation in this zone is similar to that in the C5300 project area. It occurs in up to four parallel zones, with a cumulative width of 15.14 metres and an average grade of 4.32 g/t. The mineralisation extends over 400 metres of strike and remains open at depth and along strike. An interpretation of the drilling results indicates that the mineralisation in the C4600 Project Area is a strike extension of the mineralisation in the C5300 Project Area and therefore the intervening 150 metres between these two areas represents a prime exploration target. Should the mineralisation prove to be continuous between these two areas, this combined target would have a cumulative mineralised strike length of 1,100 metres. A second prime exploration target area is on the north east of the C4600 Project Area, below the current limit of drilling, at some 200 metres depth, where a high grade, wide area of mineralisation appears to plunge towards a similar area in the C5300 Project Area. C4000 Project Area An initial mineral resource of 97,000 ounces of gold has been delineated at a grade of 3.58 g/t gold over a width of 3.40 metres. However, only 13 drill holes have been drilled here (2008: 3 drill holes and 791 metres) and the latest interpretation indicates that although this zone may represent the thinner lower grade termination of the C53000 - C4600 mineralisation system, the higher grade zones here appear to plunge towards the north east into the undrilled open area, with a 300 metre strike length between the C4000 and C4600 Project Areas. This is a target that will be tested in the forthcoming drilling programme. Main Zone Gold mineralisation in the Main Zone is widespread and seven project areas, extending over 4.5 kilometres of strike, have been delineated and drilled to date. The wide mineralised zones, consisting of multiple sub zones within a shear zone, are hosted by siltstones of the Chaarat Formation. Only four of the seven project areas (M400, M3000, M3400 and M3900) have been drilled sufficiently to allow for significant mineral resources to be delineated. Although all the upper parts of the Main Zone project areas are potential open pit targets, drilling to date has been restricted in parts by overlying surface conditions. This should be resolved in the coming year with the arrival of the RC rig for the 2009 field season. M2400-M3000 Project Areas These two Project Areas, extending over a currently delineated strike distance of 1,100 metres (of which 900 metres is mineralised), have a combined estimated mineral resource of 1.04 million ounces of gold. As drilling has only extended to depths in the range of 200 and 300 metres below surface, the mineralisation remains open on strike and down dip. Although a total of 42 holes have been drilled in these areas to date, only 10 holes (2,642 metres) were drilled during 2008. Drilling has defined at least six parallel mineralised zones in these project areas, with a cumulative width of over 9 metres and in which the principal zones have grades of over 4.1 g/t gold over widths of some 4 metres. As the mineralisation is open on strike, there is scope for increasing the resource as further drilling is undertaken. The upper sections of the mineralisation in the Contact and Main Zones are likely open cut targets. Other Main Zone Project Areas The Main Zone contains five additional project areas, including the M3400 Project Area (133,000 ounces at 4.19 g/t) and M3900 Project Area (256,000 ounces at 3.74 g/t). Only 24 holes have been drilled on these two project areas to date, including 10 holes (2,345 metres) during 2008. These areas have a currently delineated cumulative mineralised strike of 550 metres and the mineralisation is open in all directions. As the configuration of the mineralisation in the upper parts would appear to be amenable to open pit mining, further surface drilling with the RC rig is planned on these areas in an effort to increase the resource base significantly. The remaining three project areas in the Main Zone (M4400, M5000, M6000 Project Areas) have a currently defined cumulative mineralised strike length of 830 metres but have limited drilling completed on them - a total of only 21 holes (2008: seven holes and 588 metres). As the mineralisation in all three of these areas remains open in all directions, these represent very significant medium term exploration targets. Other Project Areas At the Tulkubash zone there has been limited progress during the year. On the principal target, the T0700 Project Area, which was drilled in previous years to establish a mineral resource in 2007 of 319,000 ounces of gold at a grade of 6.69g/t, drilling was suspended pending the arrival of the RC rig, which is more appropriate for the conditions in this area. Drilling will recommence in the coming year, in an effort to increase the resources here. At the Ishakuldy Project Area, a new node of mineralisation, surface exploration continued and exposed mineralisation in trenches with grades of up to 4.08 g/t gold over 38.40 metres. Much progress was made on an access road to this area that will be completed early in the new field season, thereby allowing further surface sampling with bulldozer cuts and thereafter drilling, as the new target is defined on surface. Mineral Resources Following the completion of the drilling programme at the end of the 2008 field season, SRK Consulting of Johannesburg ("SRK") were commissioned to update the mineral resource estimate, as part of the prefeasibility study, by incorporating all the latest drilling results. Of significance, the Company followed SRK's advice and increased the cut-off grade from 2.0 g/t to 3.0 g/t gold applied to the resource estimate. Although this had the effect of apparently limiting the increase in resources estimated attributable to the additional drilling in 2008, it significantly increased the confidence in the mineralisation controls within the resource blocks and indicated the robust nature of the mineralisation within the range of the cut off grades applied. The 2008 mineral resource estimate is as follows: +----------------------------------------------------------------------------------------------------------------+ | At 3.0g/t Cut-off | Indicated Resources | Inferred Resources | Total Resources | |----------------------+-----------------------------+-----------------------------+-----------------------------| | | | Tonnage | Grade | Contained | Tonnage | Grade | Contained | Tonnage | Grade | Contained | | Zone | Sub-Zone | (kt) | (g/t | Gold | (kt) | (g/t | Gold | (kt) | (g/t | Gold | | | | | Au) | (koz) | | Au) | (koz) | | Au) | (koz) | |----------------------+---------+-------+-----------+---------+-------+-----------+---------+-------+-----------| | Main Zone Totals | 6,531 | 4.30 | 904 | 4,992 | 4.33 | 693 | 11,523 | 4.31 | 1,597 | | /Averages | | | | | | | | | | |----------------------+---------+-------+-----------+---------+-------+-----------+---------+-------+-----------| | Contact Zone Totals | 3,673 | 4.18 | 492 | 6,829 | 4.23 | 930 | 10,502 | 4.21 | 1,422 | | /Averages | | | | | | | | | | |----------------------+---------+-------+-----------+---------+-------+-----------+---------+-------+-----------| | Tulkubash | T0700 | 1,642 | 4.70 | 248 | 473 | 4.67 | 71 | 2,115 | 4.69 | 319 | |----------------------+---------+-------+-----------+---------+-------+-----------+---------+-------+-----------| | Grand | 11,846 | 4.32 | 1,644 | 12,294 | 4.29 | 1,694 | 24,140 | 4.30 | 3,338 | | Totals/Averages | | | | | | | | | | +----------------------------------------------------------------------------------------------------------------+ The quantum of resources that are indicated within the Chaarat licence area, at a stage when all the principal targets are only partially drilled and many of the outlying targets have yet to be drilled, provides encouragement that this area could be a significant gold district with substantial gold resources, in common with many of the large gold producers in the Tien Shan Belt of Central Asia. Scoping study During 2008, Behre Dolbear completed a scoping study based on the mineral resources delineated in the principal advanced project areas. The study indicated that a future notional mining operation at Chaarat may produce at a cash cost of some $458 per ounce of gold over the life of the mine and that such a project would have a Net Present Value of $152 million, assuming a 10% discount rate and a gold price of $750/oz, and have an Internal Rate of Return of 21.6%. Prefeasibility Study Following the positive indicative results of the scoping study, the Company immediately commissioned SRK to conduct a prefeasibility study. This study is designed to indicate, with increased confidence, the economic viability of Chaarat as a potential producing mine. The study is also aimed at identifying those components which will have the most significant impact on mine profitability and operation and at testing the various metallurgical, engineering, mining and infrastructure alternatives, prior to commissioning a feasibility study. The prefeasibility study is scheduled to be completed during the second half of 2009. Geotechnology As an integral part of the prefeasibility study, various rock mechanics and geotechnical tests have been conducted, principally in the adit in the C5300 Project Area. The preliminary results indicated limited competence of the rock in the geochemically altered material immediately associated with the mineralisation, a common feature elsewhere in similarly altered rocks. This will be addressed as the tests continue and as the layout of any future mining operations are designed and planned. Metallurgy In last year's report, we stated that Resource Development Inc ("RDI") had successfully tested a process route in the laboratory to obtain a 94% to 96% recovery of gold, based on a pressure oxidation process followed by a carbon in leach ("CIL") process. Given the importance of ensuring that the optimal process is selected, prior to committing to a feasibility study, we have continued with the metallurgical test work during this year. Clearly the optimal process would address all of: the metallurgical properties of the mineralisation, infrastructure, and appropriate technologies for the area and environmental aspects, as well as the optimal capital and operating cost implications. To this end, larger representative samples from the exposure of mineralisation in the adit on the C5300 Project Area have been subjected to further testing at RDI as well as at Mintek, in Johannesburg, South Africa. This work will include tests on the applicability of all the established oxidation technologies including pressure oxidation, bioxidation and roasting and subsequent gold recovery performance. Infrastructure There has been significant progress during the year on a number of aspects of infrastructure. We have continued with studies on power supply alternatives for any future mining operations, advancing the hydrological studies that would impact on a decision to utilise hydroelectricity. In addition the impact of generators, which could be utilised in the initial years of production, is also being studied. The entire licence area has been resurveyed with the aid of satellite imagery and the necessary ground controls, in order to provide an accurate survey framework for a mining operation. In addition, an option for an upgraded access route has been surveyed by contractors, Maccaferri, who are undertaking the design process. The Year Ahead During 2009, the Company will focus on completing the prefeasibility study, continuing with operations related to increasing the resource and providing required input to the prefeasibility study. Further geotechnical and hydrological work will be undertaken. In addition, the metallurgical test work will continue and studies on the optimal mining methods and mining costs will benefit from the exposure of the mineralised zone in the adit. On 11 May 2009, the Company completed a limited fund raising of GBP 2.2million. We were delighted that many of our existing shareholders demonstrated their support of Chaarat by subscribing for additional shares. This successful fund raising will ensure that the Company can achieve the above objectives. Dekel Golan Chief Executive Officer Consolidated income statement For the years ended 31 December 2008 2007 Note USD USD Exploration expenses (8,244,068) (5,298,560) Administrative expenses 3 (2,461,734) (1,460,486) Share options expense (752,345) (163,306) Other operating expense (34,998) (2,852) Operating loss (11,493,145) (6,925,204) Foreign exchange loss (645,972) - Financial income 226,753 384,858 Loss for the year, attributable to equity shareholders of the Parent (11,912,364 ) (6,540,346) Loss per share (basic and diluted) - USD cents 2 (16.57)c (11.21)c All amounts relate to continuing activities. Consolidated balance sheet At 31 December 2008 2007 USD USD Assets Non-current assets Intangible assets 99,473 4,797 Property, plant and equipment 2,022,414 1,215,273 Other receivables - 37,740 2,121,887 1,257,810 Current assets Inventories 59,587 475,846 Trade and other receivables 434,610 742,433 Cash and cash equivalents 1,375,445 13,128,822 1,869,642 14,347,101 Assets held for sale 39,562 - 1,909,204 14,347,101 Total assets 4,031,091 15,604,911 Liabilities and equity Equity attributable to shareholders Share Capital 718,834 718,834 Share premium 15,665,928 15,665,928 Other reserves 11,782,189 11,048,357 Foreign currency reserve (595,888) (408,059) Retained losses (23,889,711) (11,995,860) 3,681,352 15,029,200 Current liabilities Trade payables 69,525 401,253 Accrued liabilities 280,214 174,458 349,739 575,711 Total liabilities and equity 4,031,091 15,604,911 Consolidated statement of changes in equity For the years ended 31 December Share Share premium Retained losses Other reserves Translation capital USD USD USD reserve USD Total USD Note USD Balance at 31 December 2006 3,431 6,454,707 (5,455,514) - 11,801 1,014,425 Currency translation - - - - (419,860) (419,860) Net loss recognised - - - - (419,860) (419,860) directly in equity Loss for the year ended 31 December 2007 - - (6,540,346) - - (6,540,346) Total recognised income and expense for the year attributable to equity shareholders of the Company - - (6,540,346) - (419,860) (6,960,206) Issuance of shares and options for cash, pre reverse acquisition 308 4,750,232 - 248,509 - 4,999,049 Transfer to reserves - reverse acquisition * (3,739) (11,204,939) - 11,208,678 - - Share for share exchange - reverse acquisition * 572,136 - - (572,136) - - Share options expense - - - 163,306 - 163,306 Issuance of shares for cash 146,698 18,119,004 - - - 18,265,702 Share issue costs - (2,453,076) - - - (2,453,076) Balance at 31 December 2007 718,834 15,665,928 (11,995,860) 11,048,357 (408,059) 15,029,200 Currency translation - - - - (187,829) (187,829) Net income recognised - - - - (187,829) (187,829) directly in equity Loss for the year ended (11,912,364) 31 December 2008 - - (11,912,364) - - Total recognised income and expense for the year - - (11,912,364) (187,829) (12,100,193) Share options lapsed - - 18,513 (18,513) - - Share options expense - - - 752,345 - 752,345 Balance at 31 December 2008 718,834 15,665,928 (23,889,711) 11,782,189 (595,888) 3,681,352 * The transfers to reserves during 2007 represent the issued share capital and share premium of subsidiary Chaarat Gold Limited prior to its reverse acquisition of Chaarat Gold Holdings Ltd Consolidated cash flow statement For the years ended 31 December 2008 2007 USD USD Operating activities Loss for the year before and after tax (11,912,364) (6,540,346) Adjustments: Amortisation expense - intangible assets 21,791 430 Depreciation expense - property, plant and equipment 613,029 200,415 Loss on disposal of property, plant and 19,701 3,541 equipment Finance income (226,753) (263,558) Share based payments 752,345 163,306 Foreign exchange 618,990 87,875 Decrease/(Increase) in inventories 416,259 (475,846) Decrease/(Increase)in accounts receivable 393,189 (633,208) (Decrease)/Increase in accounts payable (225,972) 490,859 Net cash flow used in operations (9,529,785) (6,966,532) Investing activities Purchase of computer software (116,467) (5,227) Purchase of property plant and equipment (1,642,604) (1,297,372) Proceeds from sale of equipment 41,885 13,750 Purchase of assets held for sale (39,562) - Loans issued (93,316) - Loans repaid 53,360 40,000 Interest received 219,084 203,079 Net cash used in investing activities (1,577,620) (1,045,770) Financing activities Proceeds from issue of share capital - 23,264,751 Issue costs - (2,453,076) Net cash from financing activities - 20,811,675 Net change in cash and cash equivalents (11,107,405) 12,799,373 Cash and cash equivalents at beginning of the year 13,128,822 846,573 Effect of changes in foreign exchange rates (645,972) (517,124) Cash and cash equivalents at end of the year 1,375,445 13,128,822 Notes: 1 Preparation of accounts The financial information set out in this preliminary announcement does not constitute the Group's complete financial statements under the definition of IAS 1, for the years ended 31 December 2008 or 2007. The consolidated balance sheet at 31 December 2008, the consolidated income statement, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2008 annual financial statements upon which the auditors' opinion is unqualified. 2 Loss per share The loss per share is calculated by reference to the loss for the year of USD11,912,364 (2007: USD6,540,346) and the weighted average number of shares in issue during the year of 71,883,433 (2007: 58,366,390). There is no dilutive effect of share options or warrants. 3 Administrative expenses The increase in Administrative expenses from 2007 to 2008 results from the effect of a full year of staff costs incurred in the second half of 2007 and as a result of a full year of the additional costs the Company incurs as a result of its public listing on the Alternative Investment Market. 4 Dividend No dividend is proposed in respect of the year. 5 Selected accounting policies Basis of preparation of financial statements The financial information has been prepared on the historical cost basis and in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) as adopted by the European Union. The acquisition of the Company in 2007 was treated as a reverse acquisition by its operating subsidiary, without the presence of goodwill. At 31 December 2008, the Company had cash and cash equivalents of USD 1.4million and no borrowings. However the Company successfully completed a Private Placement on 11 May 2009 raising funds of GBP 2.2million. The cash position of the Group after the fund raising was approximately GBP 2.3million. Based on a review of the Company's budgets and cash flow plans and the flexibility to alter these to suit prevailing circumstances, the Board considers this is sufficient to maintain the Company as a going concern for a period of over twelve months from the date of signing the annual report and accounts. As is typical in the industry, to complete a feasibility study and bring the project to production will require further funding. Basis of consolidation Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, that entity or business is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. On 7 September 2007, the Company became the legal parent company of Chaarat Gold Limited in a share for share exchange transaction. The substance of the transaction was effectively that Chaarat Gold Limited acquired Chaarat Gold Holdings Ltd by way of reverse acquisition. Chaarat Gold Limited was the acquirer in the transaction in that Chaarat Gold Holdings Ltd at the time of acquisition was a shell with no net assets, compared with the more substantial value of its acquiror subsidiary, Chaarat Gold Limited. Furthermore, the subsidiary's management determined the selection of the management team of the combined entity. The consolidated income statement for the year ended 31 December 2007 consolidates the results of Chaarat Gold Limited for the whole year and those of Chaarat Gold Holdings Ltd from 7 September 2007, the date of the reverse acquisition. The consolidated income statement for the year ended 31 December 2008 consolidated the results of both companies for the whole year. Mining exploration and development costs During the exploration phase of operations, all costs are expensed in the Income Statement as incurred. A subsequent decision to develop a mine property within an area of interest is based on the exploration results, an assessment of the commercial viability of the property, the availability of financing and the existence of markets for the product. Once the decision to proceed to development is made, exploration, development and other expenditures relating to the project are capitalised and carried at cost with the intention that these will be depreciated by charges against earnings from future mining operations over the relevant life of mine on a units of production basis. 6 Publication of Annual Report Copies of the Annual Report and Accounts for the year ended 31 December 2008 will be posted to shareholders during May 2009 and will be available, free of charge, from Central Asia Services Limited, 6 Conduit Street, London, W1S 2XD, for a period of 14 days from the date of their posting and will be made available on the Company's website - About the Chaarat Gold Project The Chaarat project is situated within the Middle Tien Shan Mountains of Kyrgyzstan which form part of the Tien Shan gold belt. At the completion of the 2008 exploration season a mineral resource of 3.34Moz at a grade of 4.30 g/t gold (JORC compliant in the Indicated and Inferred categories) had been delineated. The Company's exploration programme is aimed at increasing the confidence levels in the resource through infill drilling through down-dip and along-strike extension drilling whilst developing a pre-feasibility study to demonstrate the economic viability of the deposit. About Chaarat Gold Holdings or the Company Chaarat Gold Holding is an exploration company founded for the purpose of developing the Chaarat License Area. Chaarat was admitted to AIM on 8 November 2007. Disclaimer This press release includes forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Chaarat's control that would cause the actual results, performance or achievements of Chaarat to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Chaarat's present and future business strategies and the environment in which Chaarat will operate in the future. Any forward-looking statements speak only as at the date of this document. Chaarat expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in Chaarat's expectations with regard to these or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements in this press release may not occur either partially or at all. Enquiries: Chaarat Gold Holdings Ltd c/o Central Asia Services Ltd Tel: +44 (0) 20 7499 2612 Dekel Golan Harry Lopes Canaccord Adams Limited Tel: +44 (0) 20 7050 6500 Mike Jones Smith's Corporate Advisory Tel: +44 (0) 20 7239 0140 Dominic Palmer-Tomkinson ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.