2007 is proving to be a year of tremendous progress at Aurum Mining. As foundations are being firmly laid for the delivery, in 2008, of the Company's strategic objective of transforming itself from a junior gold explorer to a cash-generating gold producer. It is also a year in which Aurum continued its rapid development. By way of background, Aurum joined the AIM market in May 2004 as a specially formed vehicle to target the acquisition of gold assets in the Former Soviet Union (FSU). It successfully completed its first acquisition in January 2005, gaining an exploration licence to the Andash gold and copper project in the Kyrgyz Republic.

Our work continues to reinforce the fact that the Andash asset is highly attractive in terms of the gold resources in Zone 1 of the licence area, the economics of gold recovery and the exploration potential of other regions within the licence area. The resources in Zone 1 have been endorsed by Wardell Armstrong International, a leading UK independent mining consultant, which confirmed a JORC reserve of 1.1 million ounces of gold and gold equivalent in copper.

Our strategy is to begin production at the earliest opportunity at Zone 1, thereby providing the cash flow to finance further exploration work in the licence area. We have completed some exploration drilling in Zones 2 and 3, which has confirmed extensive mineralisation, and are continuing to test the extent of the resource in these two zones. We have continued to work closely with the Kyrgyz authorities to advance the Andash project.

Wardell Armstrong International completed a full feasibility study for Zone 1 in November last year, which formed the basis of discussions that led to the successful raising of £30m for the project financing of the Andash mine. The mine will be of an open pit design with the potential for production rates of approximately 120,000 ozs of gold and gold equivalent per annum.

Significant progress has been made in the preparatory work for the construction of the open-cast mine. The detailed design work, to meet the requirements of the Company's Mining Licence and to enable the start of the physical construction of the mine, is progressing well. Preparation for the construction of the access road to the mine is moving ahead, with roadbuilding equipment and contractors having already been sourced. In addition, the Company is finalising the sourcing of the ball mills for grinding ore when Zone 1 enters production, which remains on track to begin in the second half of next year.

The Company's balance sheet remains strong, with £28.3 million of net cash at the year end. As the current year progresses, the Company is incurring some expenditure based on requirements and taking into account the lead times involved in sourcing heavy equipment and plant. As recently announced, the Company has successfully identified significant savings in the forecast capital expenditure at the mine, with capital expenditure expected to be in the region of $48.5 million, compared with the Bankable Feasibility Study estimate of $55.5 million.