kazakhgold group limited
report  accounts
26 september to 31 december 2005 aktöbe
oral
atyrau
kostanay
arkalyk
petropavl
pavlodar
karaghandy
shymkent
kyzylorda
zhambyl
almaty
öskemen

aktau
turkmenistan
uzbekistan
kyrgyzstan
kuaraghandy
east kazakhstan
akmola
astana
kostanay
aktobe
atyrau
almaty
zhambyl
pavlodar
china
russian federation
caspian
sea
aral
sea
north kazakhstan
west kazakhstan
mangghystau
kyzylorda
boldykol  zhanan
zholymbet
southern
karaultube
zones 1  2
of akshatu
stepnogorsk
aksu
kyzylsorskoe
bestobe
mines in production
properties acquired  july 2005
new licences awarded  december 2005
akzhal
vasilevskyi
pridorojnoe
kaskabulakskoe
kazakhgold group limited is the largest
specialised gold mining company in kazakhstan
we estimate our gold reserves and resources to
be the largest known in the country we are
developing rapidly and aiming to become a
leading lowcost central asian gold producer
in 2005 we acquired eight new properties 
in kazakhstan adding to our three existing
operational mines
kazakhgold group limited  kazakhgold
overview
contents
• gold reserves and resources believed to be the largest in
kazakhstan with an estimated 27 per cent of the country’s
known gold reserves
• three main operating mines with total gold reserves bc
1

of 132 million oz and combined reserves and resources
bc
1
c
2
p
1
 of 466 million oz
• eight new properties acquired in 2005 not yet included in
kazakhgold’s resource calculations 
• developing as a lowcost producer with increasing economies 
of scale
• an improving sales mix from lower margin concentrates 
to higher valueadded products
• a mine strategy to realize the full potential of existing
operations with options under consideration to accelerate
production growth even further
• an experienced and proven management team with 
extensive knowledge of the local geology business and
regulatory environment
01 overview
02 highlights  priorities
03 mission  strategy
04 chairman’s statement
06 president  ceo’s review
09 group proﬁle 
10 kazakhstan
11 operational review
15 aksu overview
17 bestobe overview
19 zholymbet overview
23 financial review
24 board of directors
26 directors’ report
28 statement of directors’ responsibilities
29 independent auditors’ report
30 consolidated income statement
31 company income statement
32 consolidated balance sheet
33 company balance sheet
34 consolidated cash flow statement
35 company cash flow statement
36 statement of changes in equity for the group
37 statement of changes in equity for the company
38 notes forming part of the financial statements
50 directors company secretary and advisers
51 glossary
kazakhgold group limited 1 highlights
 priorities
2005 highlights
• kazakhgold group limited incorporated in jersey on 
26 september
• production targets met at aksu bestobe zholymbet –
gold production for the ﬁnal quarter of 52691oz
• exploration licences awarded in december for ﬁve new 
kazakh properties 
• successful november ipo and introduction to the london
stock exchange main market raising some us974 million
net of costs for reinvestment in the business
• further negotiations with barrick gold following an earlier
framework agreement reached with kazakhaltyn on 
23 september
now the principal operating subsidiary of kazakhgold
2006 priorities
• increase overall processing capacity and gold production 
  expand open pit activity at aksu and bestobe – initiate open 
pit work at zholymbet
  expansion of aksu and bestobe heap leaching capacity and
possible expansion of the aksu cip plant
  construction of a cip plant and expansion of the heap leach
plant at bestobe
  development of a heap leach processing plant and possible
expansion of the cip plant at zholymbet
• further exploration of the vera zone at aksu
• developmentexploration of the properties acquired in 2005
• continued negotiation of a joint venture with barrick gold
• evaluation of an accelerated investment programme to
achieve further increases in production levels
kazakhgold group limited 2 mission
to become one of central asia’s leading gold
mining companies
strategic objectives
• increase gold output substantially
 increase ore production signiﬁcantly at 
the three main operational mines
 open new mines to increase ore 
production
 expand processing capacity dramatically
to achieve scale economies
• introduce appropriate ore processing
technologies
 process existing lowgrade ores
 focus production on highermargin
products
 reduce unit mining and processing
costs further to become a lowcost
producer across all operations
• capture growth opportunities
 utilize the group’s expertise to convert
the maximum resources to reserves
 seek selective valueadding
acquisitions in kazakhstan and
elsewhere in central asia
• partner with global sector leaders to
maximise returns from business
opportunities 
 joint venture with barrick gold to
exploit the potential of several recently
acquired properties and pursue other
opportunities in the region
 work with china national gold
corporation to develop underground
mining at bestobe
in implementation of the strategy the group
is committed to ensuring the health and
safety of its employees and to protecting the
environment in which it operates
key strengths
• substantial gold resources with the
management skills to ensure maximum
conversion to reserves
• a commitment to reducing overall
production costs further with low
extraction and processing costs already
for open pit waste dump and tailings
operations
• a developed infrastructure close to 
major assets
• well placed to acquire further
exploration properties in kazakhstan and
elsewhere in central asia
• a stable political and strong economic
environment in kazakhstan
 president nazarbayev reelected in
december 2005 for a further seven
year term
 2005 gdp growth of 90 per cent 
and inﬂation of 77 per cent making
kazakhstan the bestperforming
economy amongst the cis countries
mission 
strategy
kazakhgold group limited 3
ore transfer and crushing at aksu chairman’s
statement
i am delighted to present
kazakhgold group limited’s 
ﬁrst report and accounts for 
the period from 26 september to
31 december 2005 kazakhgold
was incorporated in jersey on 
26 september 2005 with the
intention of unlocking what we
believe to be the largestknown
gold reserves and resources in
kazakhstan from this base
kazakhgold aims to become 
one of central asia’s leading 
gold mining companies
our strategy is to realize the full potential 
of the group’s existing assets signiﬁcantly
expanding production in the medium term
and pursuing growth opportunities both 
in kazakhstan and elsewhere in the region
that create value for shareholders where
appropriate kazakhgold will partner with
other leading mining companies to realize
the full potential of our existing resources
and to pursue acquisition opportunities 
on 12 october 2005 the group acquired
the entire issued units of romanshorn lc 
ag from kanat assaubayev and marussya
assaubayeva for nil consideration
romanshorn is the holding company of 
the group’s main operating subsidiary
kazakhaltyn 
in november kazakhgold successfully
completed an initial public offering ipo
joining the london stock exchange main
market on 1 december 2005 the ipo was
ﬁve times oversubscribed and the issue of
71 million new shares raised some us974
million for the group net of costs
results and dividend
from 26 september to 31 december 2005
the group had total revenue of us204
million and a loss after tax of us22 million
during this period the group mined and
processed 757048 tonnes of ore with an
average grade of 325 grammes per tonne
of gold enabling 52691oz of gold 
to be recovered
as stated at the time of last year’s ipo the
board does not propose the payment of
shareholder dividends until the current plant
modernisation programme is completed and
our processing facilities reach their maximum
designed output capacity after this and
subject to kazakhgold’s performance we
intend to commence paying dividends
progressively of up to 25 per cent of the
group’s consolidated annual net income
strategic developments
since our ipo kazakhgold has continued 
to seek new exploration and production
opportunities in kazakhstan following a
successful tender the kazakh government
awarded the group ﬁve new licences that
include mineral rights to southern karaultube
and kyzylsorskoe in northern kazakhstan
pridorojnoe and kaskabulakskoe in eastern
kazakhstan and zones 1  2 of the akshatau
mmc deposit in central kazakhstan further
details about these properties are included 
in the operational review
in september 2005 kazakhaltyn reached 
an agreement with barrick gold to cooperate
with the exploration of new properties in
kazakhstan and elsewhere in central asia
detailed negotiations remain ongoing and
are expected to be concluded later in 2006
early in 2005 kazakhaltyn began
negotiations with the china national gold
corporation regarding the future
development of underground mining at
bestobe an agreement is expected shortly
whereby china gold will act as a
subcontractor providing equipment and
operational management 
board and management 
in overseeing the development and
implementation of our strategy the group 
is fortunate to be able to draw upon the
board’s signiﬁcant industry technical and
international expertise as well as indepth
local operational knowledge the directors
are supported by an experienced senior
management team and dedicated workforce
their hard work has enabled our three main
operating assets to be reconﬁgured and to
meet the production targets set for 2005
without the continuing support and loyalty
of our employees to whom the board
extends its gratitude the group’s
achievements of 2005 would not have 
been possible 
kazakhgold group limited 4 kazakhgold group limited 5
corporate governance
the board supports the principles of good
corporate governance although there are
no corporate governance recommendations
applicable to companies incorporated in
jersey the group intends so far as it is 
able having regard to its size and stage 
of development to comply with the
recommendations of the combined code 
on corporate governance for uk registered
and listed companies to this end the board
has established three committees with
delegated duties and responsibilities for
audit health safety  environment and
remuneration matters 
although the board has responsibility for
maximising shareholder returns it is also
determined that kazakhgold’s operations
adopt sound environmental management
practices employ sustainable development
policies and that the group is a valued
member of all the communities in which it
operates given the nature of the group’s
activities the board places a high priority 
on ensuring that kazakhgold and its
subsidiaries provide a healthy safe and
fulﬁlling workplace for employees 
outlook
in december 2005 kazakhstan’s president
nursultan nazarbayev was reelected for 
a further sevenyear term under president
nazarbayev kazakhstan is moving towards 
a freemarket economy that is supportive of
business and foreign direct investment for
gold mining companies such as kazakhgold
further investment is encouraged by keeping
royalty payments at a realistic level in 2005
for example the group paid royalties of 
23 per cent of its production value which
compares favourably with rates of over six
per cent in countries such as russia 
the group’s results are inﬂuenced by 
macroeconomic factors such as the gold
price and the tengeus dollar exchange 
rate at the end of 2005 gold prices rose
above us500oz a level not seen since 
the early 1980s 
kazakhgold’s costs are primarily
denominated in kazakh tenge while 
this was of beneﬁt to us last year as the
tenge depreciated against the us dollar 
this favourable trend began to reverse
following the presidential elections the
tenge is also a petrocurrency reﬂecting the
importance of the oil sector to the kazakh
economy inevitably this will see some
inﬂationary pressure in kazakhstan during
2006 while the group cannot inﬂuence
these external macroeconomic factors we
will continue to focus on managing our costs
kazakhgold expects to increase gold output
signiﬁcantly over the medium term we 
will achieve this by a dramatic expansion 
of our processing capacity using simple 
but effective production and processing
methods in 2006 we are conducting 
further exploration of aksu’s signiﬁcant vera
zone we are also evaluating the possibility
of accelerating the group’s investment
programme to achieve even higher
production levels over a shorter time period
topline growth will be supported by
increasing our reserves through realization
of the full potential of our existing and
recently acquired assets our joint venture
with barrick gold will provide us with access
to valuable expertise accelerating the joint
exploration of several properties acquired
through successful tender last year overall
the board is conﬁdent that kazakhgold has
the strategy management expertise and
growth opportunities to make further
signiﬁcant progress in 2006 
lord daresbury
chairman president 
ceo’s review
laying the foundations for
sustainable growth
2005 was a successful year as well as an
important milestone in the development 
of kazakhgold group and its principal
operating subsidiary kazakhaltyn our
production targets were met and the
ﬁnancial and operational foundations were
laid to realize the full potential of our assets
these assets we believe comprise the
largestknown gold reserves and resources 
in kazakhstan
kazakhgold’s london ipo in november 
2005 led to the issue of 131 million global
depositary receipts gdrs at us15 per
gdr this included a primary issue of 71
million new shares with net proceeds of
some us974 million after costs our gdrs
were admitted to the main market of the
london stock exchange on 1 december 2005
kazakhgold employed 3209 people at the
end of 2005 the success of our business
reﬂects their skill professionalism and sheer
hard work i should like to acknowledge
their enormous contribution and ongoing
role in shaping the future of our business
2005 operating results 
26 september – 31 december 2005
the group is reporting results for the period
26 september 2005 the date of incorporation
to 31 december 2005 on 12 october 2005
kazakgold group limited acquired
kazakhaltyn and accordingly the results of
kazakhaltyn are included in those of the
group’s ﬁnancial statements from this date
from july to december 2005 there
was a phased increase in production at
kazakhaltyn’s three principal mines this
followed their partial closure from august
2004 to july 2005 during which time the
mine facilities were reconﬁgured and
upgraded the group’s operating and
ﬁnancial results for the reporting period are
therefore not typical in future the group
will provide annual and interim results
in the last quarter of 2005 the group mined
and processed 757048 tonnes of ore with
an average grade of 325 grammes per
tonne and an average recovery rate of 667
per cent during the period 52691oz of
gold was produced at an average cash 
cost of us210oz
kazakhgold group limited 
6
2005 results summary 26 september – 31 december 2005
total ore processed 757048 tonnes
recovered grade 325 grammestonne
recovery rate 667 per cent
gold production 52691oz
average production cost us210oz kazakhgold group limited 7
strategy in action
kazakhgold aims to become one of 
central asia’s leading gold mining
companies to achieve this our strategy 
has four key components 
• introduce more appropriate and modern
processing technologies
• signiﬁcantly raise gold production
• capture growth opportunities 
organic and acquired
• partner with global sector leaders
i am pleased to report that in 2005
including the period 26 september to 31
december 2005 we have made progress
against all these strategic priorities
effective processing technologies
as part of our modernisation programme
we are now seeing the beneﬁts from
reducing our dependence on gravitation 
and ﬂotation technologies this follows 
the introduction of more appropriate ore
processing methods such as carboninpulp
we are now able to recover gold not only
from underground ore but also from open
pit oxide ore old tailings and lowgrade ore
in waste dumps the transition helps us
produce and sell greater volumes of higher
margin gold products rather than ﬂotation
and gravitation concentrates
production expansion
in the third quarter of 2005 kazakhaltyn
began operations at aksu and bestobe’s 
new heap leaching facilities and started
processing ore at modernised concentration
and extraction plants at aksu and
zholymbet almost all of kazakhgold’s 
new or reconstructed processing facilities 
are expected to continue increasing their
processing capacity from 2006 until our
current modernisation programme is fully
implemented this additional capacity will
enable a substantial increase in gold
production in 2006 and beyond
capturing growth opportunities
our growth strategy is to increase
kazakhgold’s reserve base through
conversion of our existing gold resources
and to expand our current portfolio of gold
mining operations by actively pursuing
appropriate acquisitions 
the group intends to participate in
government tenders and to negotiate 
with potential sellers in the private sector 
in december 2005 for example we were
awarded licences to ﬁve new exploration
properties in kazakhstan where beneﬁcial
we will consider selective acquisitions of
underperforming operational gold mining
companies or their assets and mineral rights
to exploration properties in kazakhstan and
elsewhere in central asia 
international partners 
kazakhgold will use its local knowledge 
and expertise to partner with international
mining companies in september 2005 a
memorandum of understanding was signed
between kazakhaltyn and barrick gold
corporation one of the world’s leading gold
mining companies to cooperate with the
joint development of new licences such as
those acquired in kazakhstan during
december 2005 with barrick gold the
group will also seek other development
opportunities in both kazakhstan and
elsewhere in central asia
additionally in 2005 kazakhaltyn began
negotiations with the china national gold
corporation china’s leading gold mining
company with a view to cngc becoming 
a subcontractor for underground mining 
at bestobe 2006 priorities and outlook
in 2006 we are continuing to develop open
pit mining at our three principal mines work
will be initiated at zholymbet in the second
half of 2006 whilst at aksu and bestobe
production is being increased steadily
throughout the year in the ﬁrst quarter 
of 2006 we produced 33624 oz of gold
which was in line with our expectations 
we intend to signiﬁcantly expand the
group’s use of carboninpulp processing
methods this technology beneﬁts from no
seasonal effects and enables the recovery 
of up to 95 per cent of the gold present in
ore it is compatible with ore mined at our
underground and open pit operations 
in the second half of 2006 processing is
scheduled to begin at a new heap leach
facility in zholymbet the priority there will
be to process some 125 million tonnes of
dumps with a gold content of 12 grammes
per tonne at aksu and bestobe we
anticipate further expansion of our heap
leaching capacity to support planned
increases in our gold production
at a strategic level the group will continue
to seek opportunities to acquire additional
properties in kazakhstan and elsewhere 
in the region partnering with other
organisations where appropriate to 
develop such assets
kanat assaubayev
president  chief executive ofﬁcer
president 
ceo’s review
continued
kazakhgold group limited 8
performance monitoring at the group’s recently
installed cip processing facilities history
kazakhgold group limited was incorporated
under the laws of jersey on 26 september
2005 it was formed as a holding company for
the group’s assets and to facilitate its global
offer of gdrs and subsequent admission to
the main market of the london stock
exchange on 1 december 2005
the group’s principal operating subsidiary
kazakhaltyn is the ultimate successor
company to the kazakh stateowned
enterprise open joint stock company 
ojsc kazakhaltyn and owns and 
operates gold mining assets in northern 
and eastern kazakhstan
kazakhaltyn’s business dates back to 1929
when gold ore reserves were discovered in
northern kazakhstan during the soviet era 
it was a part of the ussr’s nonferrous
metallurgy ministry between 1953 and 
1992 the business traded under the name 
of kazzoloto ore mining and processing
enterprise kazzoloto after the collapse of
the soviet union in 1991 kazzoloto was
transformed into an independent economic
unit ojsc kazakhaltyn in 1996 the kazakh
government transferred management of 
ojsc kazakhaltyn to gold pool llp  these
management rights were cancelled in 1997 
in part due to gold pool’s failure to perform
under the management agreement
in august 1998 the kazakh government put
the assets of osjc kazakhaltyn up for open
tender askamsnab llp  a kazakhregistered
company controlled by the assaubayev family
won the tender and acquired the bankrupt
company’s assets and certain of its liabilities 
in june 1999 these liabilities included
accrued but unpaid salaries and certain other
ﬁnancial obligations as required under the
terms of the tender the family created a new
legal entity to own the assets and continue
the employment of the former employees 
of ojsc kazakhaltyn
the business was initially registered with the
akmola regional justice department as a
limited liability partnership on 10 september
1999 under the name kazakhaltyn mining
and processing company limited liability
partnership kazakhaltyn llp
to enable the listing of bonds on the
kazakhstan stock exchange in july 2001 the
limited liability partnership was transformed
into an open joint stock company under the
name ojsc kazakhaltyn mining metallurgical
concern following the adoption of a new
joint stock company law in kazakhstan in
may 2003 which amongst other things
removed the distinction between open 
and closed joint stock companies ojsc
kazakhaltyn mining metallurgical concern
adopted a new charter and was renamed jsc
kazakhaltyn mining metallurgical concern
on 12 october 2005 in preparation for
kazakhgold’s global offer of gdrs and
listing on the london stock exchange kanat
assaubayev and marussya assaubayeva
transferred via nominees their entire
interest in romanshorn lc ag the holding
company of kazakhaltyn being the entire
issued units in romanshorn lc ag to the
group for nil consideration
group proﬁle
1929 discovery of gold in 
kazakhstan production begins 
at aksu mine
1921
fall of ussr  kazakhstan formed
government puts kazakhaltyn up for tender
soviet 
control
uncertain 
direction
privatisation
2006
1991
1992
1998
1999
1931 production begins at 
bestobe and zholymbet mines
the business became part of the 
ussr nonferrous metallurgy 
ministry
1950s assets consolidated into 
stateowned kazzoloto
largest gold mines in kazakhstan during the 1980s production reaches up to 244000 oz per year
1954 production begins at 
quartzite hills mine
1992 kazzoloto transformed 
into stateowned ojsc 
kazakhstan
1998 mismanagement leads to 
bankruptcy of kazakhaltyn
june 1999 assaubayev family 
acquires assets and liabilities 
kazakhaltyn llp formed
2004 start of major 
modernisation programme
november 2005 
ipo – london 
stock exchange
2005 acquired eight additional 
properties in kazakhstan start of 
cooperation with barrick gold
kazakhgold group limited 9 kazakhstan
overview
kazakhstan is the ninthlargest country in
the world covering an area of approximately
27 million square kilometres it is similar 
in size to western europe and spans two
time zones
with a population of over 15 million in 2005
and an average of fewer than six persons per
square kilometre kazakhstan has one of the
lowest population densities in the world the
country is ethnically diverse with over half
the population being ethnic kazakhs while
more than a quarter are russians
politically the country is stable president
nazarbayev was reelected in december
2005 for a further sevenyear term with 
the backing of 91 per cent of the vote
economic strength
the government of kazakhstan began
implementation of marketbased economic
reforms in 1991 this includes a signiﬁcant
privatisation programme the promotion of
foreign direct investment and the introduction
of an extensive legal framework in september
2002 kazakhstan became one of the ﬁrst
countries in the former soviet union to
receive an investment grade rating from 
a major international credit rating agency
between 1993 and 2005 the country
attracted more than us34 billion in foreign
direct investment making it the highest per
capita rate of all the cis countries
in each of the past ﬁve years kazakhstan’s
gross domestic product gdp has grown 
by over nine per cent this is also the highest
rate achieved amongst the countries of the
confederation of independent states cis
in absolute terms gdp per capita has grown
threefold since 2000 reaching us3763
this growing prosperity has been supported
by world demand for oil and rising oil prices
oil receipts have boosted kazakhstan’s
current account and balance of payments
with the country’s trade surplus now over
us10 billion despite this inﬂation was 77
per cent in 2005 the lowest level in any cis
country in the foreign exchange markets
the kazakh tenge remained stable within 
a ktzus1304 range throughout 2005
although it has since appreciated against 
the us dollar
natural resources and gold mining
metallurgy mining and mineral processing
have traditionally been the main industrial
activities in kazakhstan more recently
however oil and gasrelated industries have
become the most important sector of the
economy overall kazakhstan is the world’s
ﬁfthlargest exporter of natural gas and has
the world’s eighthlargest proven oil reserves
kazakhstan beneﬁts from a good transport
network low energy costs and royalty
payments set at a comparatively low level
which support ongoing investment in the
mining industry kazakhstan’s proximity to
china also beneﬁts mining companies by
providing ready access to lowcost chinese
technology and mining equipment
geology
kazakhgold group limited 10
’00
98 135 98 93 94 90
132
84
59
64
69
77
’01 ’02 ’03 ’04 ’05
’00 ’01 ’02 ’03 ’04 ’05
13 29 22 22 54 25
145
150
155
144
130
134
real gdp  y o y
cpi average y o y
gdp growth and inﬂation
net foreign direct investment and tenge exchange rate
real gdp  y o y
cpi average y o y
net fdi us bn
exchange rate ktzus  reserves and resources
geology
kazakhstan has some 20 identiﬁed gold
bearing regions with the most signiﬁcant
grouped in the north east and centre of 
the country where the group’s properties
are located the deposits in the north fall
broadly into two groups quartzvein and
metasomatic alteration types gold
mineralisation originates from the pre
cambrian rocks the group’s three main
mines have abundant low grade and easily
treatable surface oxide ores with an average
grade of 203 gtonne these mines also have
highgrade underground sulphide reserves
with an average grade of 984 gtonne
mining activity is at present split equally
between underground and open pit activity
the latter is set to increase in importance from
2006 as kazakhgold begins to process more
of these plentiful ore resources
resource classiﬁcation
the group uses the fsu classiﬁcation
system which is deﬁned in law with strict
criteria for compliance this system was
developed in 1960 and revised in 1981 it
remains widely used in the commonwealth
of independent states including in
kazakhstan mineral concentrations are
divided into seven categories of three major
groups based on the level of exploration
performed explored reserves are designated
as either a b or c
1
 evaluated reserves are
designated as c
2
and prognostic resources
are designated either as p
1
 p
2
or p
3

while the group’s properties beneﬁt from a
large quantity of resource data compiled
during soviet times the material requires
reviewing and validation by independent
mining consultants the intention is to put
this work out to tender in 2006 with a view
to reclassiﬁcation of the group’s three
principal operating mines to jorc standards
by the end of 2007 
a signiﬁcant asset base
the group believes it has the largestknown
gold reserves and resources in kazakhstan
with an estimated 27 per cent of the
country’s total reserves based on the fsu
system see the glossary on page 51 for
deﬁnitions the three principal operating
mines of aksu including quartzite hills
bestobe and zholymbet have estimated total
gold reserves bc
1
 and reserves 
resources bc
1
c
2
p
1
 of 132 million
ounces and 466 million ounces respectively
as of june 2005 these mines which share a
similar geological formation have operating
licences valid until 2016
the group currently undertakes annual
revisions of its estimates of reserves and
resources based upon actual exploration
and production results depletion new
information and ﬂuctuations in production
and economic parameters the most recent
review was completed in june 2005 and
forms the basis of the group’s current stated
b and c
1
reserves and c
2
and p
1
resources
this annual revision was conducted prior 
to the completion of the acquisitions of the
akzhal boldykol  zhanan and vasilevskyi
deposits in july 2005 as a result these
properties have not yet been included in 
the group’s calculations
the group’s three principal mines are all
located within 100 kilometres of the city 
of stepnogorsk in the akmola region of
northern kazakhstan the main operating
subsidiary kazakhaltyn has its headquarters
in stepnogorsk which acts as an operations
hub for the group’s mines in the north of
the country the mines enjoy access to
inexpensive electrical power and are served
by a welldeveloped road and rail network
as production is increased in 2006 the close
proximity of these mines will help generate
further economies of scale
exploration – converting resources 
to reserves
the group’s exploration strategy is focused
on the extension of its existing ore bodies
both at its current operational mines and 
at undeveloped properties a signiﬁcant 
part of the licenced mining area at the aksu
bestobe zholymbet mines as well as at 
the recently acquired akzhal boldykol 
zhanan and vasilevskyi mines remains
substantially unexplored
operational
review
kazakhgold group limited 11 operational
review
continued
the group is working to convert its
resources into reserves during the second
half of 2005 exploratory investigations were
undertaken in the tsentralnaya zone of the
bestobe mine and kariernaya zone of the
aksu mine in addition drilling work was
performed in the southeastern part of the
vera plot to conﬁrm that the ore body
continues to the surface the outcome of
this exploration is expected to enable an
increase of reserves of highgrade ore to 
be mined 
processing 
technologies
the group is moving towards the use 
of more appropriate technologies such 
as carboninpulp cip which are well
established internationally although
relatively new to the cis countries in the
former soviet union by contrast ﬂotation
and gravitation technology was widely 
used for gold production
the group’s processing strategy is to
•  use wellestablished appropriate and
proven ore processing technologies
•  employ lowcost techniques to ensure the
commercial viability of processing open pit
oxide and tailingsdumps
•  source only businesscritical equipment
from international suppliers using chinese
suppliers where possible to keep costs
low without compromising quality
the main processing technologies employed at
the group’s operations are summarized below
flotation and gravitation
this technology enables the processing of
highergrade sulphide ores it is however
unsuitable for oxide ores due to their high
clay content both free gold and ﬂotation
concentrate with a gold content of 6090
grammestonne are produced using this
method combined recovery rates average
around 90 per cent 50 per cent for 
ﬂotation and 40 per cent for gravitation
processing methods
carboninpulp cip
this was ﬁrst used in gold production 
20 years ago and in 2005 kazakhgold
became the second company to implement
cip technology in kazakhstan it is the most
efﬁcient method to process both oxide and
sulphide ores with recovery rates of over 
90 per cent
heap leaching
this technology was ﬁrst used in gold
production 30 years ago and is used to
process lowgrade oxide ores in 2005
bestobe became the second mine in
kazakhstan to implement this technology
while it is the lowestcost method of
processing recovery rates are only
approximately 60 per cent
both cip and heap leaching produce
cathodic gold with a gold content of
between 60 and 90 per cent
appropriate processing – optimised
production 
prior to the bankruptcy of stateowned ojsc
kazakhaltyn production at aksu bestobe
and zholymbet was focused on mining and
processing highgrade ore lowergrade ore
if extracted was generally sent to onsite
waste dumps the new management of
kazakhaltyn recognised the potential to
increase gold production whilst reducing
the unit production cost through extracting
and processing lowergrade ore consequently
from 1999 to 2004 kazakhaltyn engaged 
in extensive research on the mineralogy of
the group’s main deposits using data
collected during the soviet era and by
undertaking further exploration work the
existence of large reserves of lowgrade ore
that could be extracted by open pit mining
was conﬁrmed
kazakhgold group limited 12
reserves and resources of the three principal mines
ore grade gold gold
m tonnes gtonnes tonnes m oz
reserves b  c
1
 1616 255 4113 132
resources  c
2
 548 692 3791 122
resources p
1
 1394 473 6600 212
total reserves and resources
b  c
1
 c
2
 p
1
 3558 408 14504 466 b  5
c
1
 23
c
2
 26
p
1
 46
resources
1
by fsu
classiﬁcation
in 2004 implementation of a modernisation
programme began that moves the group
from a dependence on ﬂotation and
gravitation technology to the use of 
more appropriate processing methods 
such as heap leaching and carboninpulp
cyanidation treatment techniques the
modernisation programme began with 
the construction of new heap leach plants 
at aksu bestobe and zholymbet the
programme also identiﬁed the need for new
or reconstructed cip plants that rely primarily
upon cyanidation processing technology
the newly constructed aksu heap leach 
and cip processing plants the bestobe 
heap leach plant and the zholymbet cip
plant all commenced operations in the 
third quarter of 2005 the group is currently
expecting to begin operations at zholymbet’s
new heap leach plant in the ﬁrst quarter of
2007 and at bestobe’s cip plant in the third
quarter of 2008
the processing technology used at the group
enables a range of products to be fabricated
including cathodic sludge cathodic gold free
gold ﬂotation concentrate quartzite ore and
doré bars further explanation of these products
is provided in the glossary on page 51
cost competitiveness – a critical
success factor
kazakhgold’s operations beneﬁt from 
a number of distinct cost advantages 
these include
• conveniently located assets
• quality reserves amenable to lowcost
mining techniques
• onsite processing facilities
• competitive labour and electricity costs
• modest royalty payments
• local currency stability – which is
important as operating costs are
primarily denominated in tenge
in the period 26 september to 31 december
2005 gold was produced at the group’s
three principal mines for a cost of
approximately us210oz this is already
below the average cost for asia and
signiﬁcantly below the average costs in other
gold mining countries such as south africa
and australia the group’s production costs
per ounce are set to fall further due to
economies of scale as production increases
kazakhgold group limited 13
b
257 gtonne
c
1
254 gtonne
c
2
692 gtonne
p
1
473 gtonne
total
408 gtonne
110
122
212
466
22
average 
grade
reserves and resources by fsu classiﬁcation m oz
dumps  107 gt  9
underground  984 gt  44
open pit  203 gt  41
tailings  099 gt  6
reserves by source
1 2

zholymbet  33
aksu  44
bestobe  23
reserves by mine
1 2

1
based on gold content excludes new acquisitions
2
includes only reserves bc
1

as at june 2005 the aksu and adjacent quartzite hills
mines are located in the akmola region
of northern kazakhstan 18 kilometres
north of the city of stepnogorsk 
kazakhgold group limited 14 overview
exploration at aksu began in 1929 when
gold deposits of a quartzvein mineralization
type were discovered there are currently
four operating shafts one dedicated
ventilation shaft and one open pit facility 
in operation at the two mines in addition
lowgrade ore is processed from tailings in
onsite tailings dams and waste dumps 
until 2005 only underground mining and
ﬂotation processing were performed at
aksu ore from aksu is now processed using
ﬂotation cip or heap leach technology
aksu is the location of a geological
exploration unit that handles all of the
group’s internal exploration work
reserves and resources
kazakhaltyn estimated that as of june 2005
the aksu mine which includes the aksu and
nearby quartzite hills deposits had b and c
1
gold reserves and c
2
and p
1
gold resources of
approximately 58 million ounces and 150
million ounces respectively approximately
one third of the reserves identiﬁed are
concentrated in the vera zone the ore body
at vera continues to the surface which will
allow the group to develop largescale open
pit operations at vera in the future
production highlights and capital
expenditure
in the period 26 september to 31 december
2005 369259 tonnes of ore were mined
with an average grade of 254 grammes of
gold per tonne the gold recovery rate was
63 per cent enabling 18981oz of gold to 
be produced capital expenditure at aksu
during the period was us30 million
processing
until july 2005 all ore at aksu was
processed using the ﬂotation method then
after extensive testing two new processing
technologies were introduced first into
operation on 13 july 2005 was a new heap
leach plant with an annual throughput
capacity of approximately 05 million tonnes
this facility is producing cathodic gold
on 28 august 2005 operations commenced
at aksu’s new cip facility following the
reconstruction of the original ﬂotation
technology plant to rely primarily on cip
technology this cip facility has an annual
throughput capacity of 10 million tonnes
per annum and produces cathodic gold
finally in august a smallscale ﬂotation 
line with a capacity of 02 million tonnes 
per annum was restarted at the aksu
processing plant this treats refractory 
ores and produces ﬂotation concentrates
outlook
in 2006 the focus at aksu will be on
development of open pit operations 
to support the group’s production 
expansion plans
longer term the group expects to start
underground mining of the highgrade
sulphide ore in the vera zone from 2008
this zone has signiﬁcant potential despite
being only partly drilled and proven vera 
has approximately 20 million ounces of
reserves with the ore having a high gold
content of 107 grammes per tonne
100
200
300
400
500
600
700
level metres
tailings dam
processing plant
kapitalnaya shaft
novaya shaft
flangovaya shaft
17’ shaft
4139 shaft
vera zone
shaft 40
shaft 38
karyernaya zone
shaft 38’
heap leach pads
shaft “r”
shaft “b”
waste dump
aksu
overview
kazakhgold group limited 15
schematic section through the aksu ore ﬁeld
reserves b  c
1
 by source
1
ore grade gold gold
m tonnes gtonnes tonnes m oz
b 140 228 320 10
c
1
567 262 1486 48
total reserves b  c
1
 707 255 1806 58
c
2
218 716 1564 50
p
1
620 500 3100 100
total reserves and resources
b  c
1
c
2
p
1
 1545 419 6470 208
reserves and resources
dumps  100 gt 
underground  840 gt
open pit  206 gt
tailings  097 gt
as at june 2005 
1
based on gold content
note based on fsu classiﬁcation located 80km northeast of stepnogorsk
most of the exploration work at bestobe
was undertaken in the 1950s 
kazakhgold group limited 16 overview
over 380 quartz veins have been identiﬁed
at the mine of which some 285 are considered
suitable for mining
there are four underground mining locations
a dedicated ventilation shaft and one open
pit mine lowgrade ore is contained in 
onsite tailings dams and waste dumps 
until 2005 only underground mining 
and ﬂotation processing were undertaken 
at bestobe
reserves and resources
in june 2005 according to kazakhaltyn’s
estimates bestobe had b and c
1
gold reserves
and c
2
and p
1
gold resources under the fsu
classiﬁcation of approximately 30 million
ounces and 102 million ounces respectively
production highlights and capital
expenditure
for the period 26 september to 31
december 2005 257807 tonnes of ore
were mined with an average grade of 387
grammes per tonne the gold recovery rate
was 62 per cent enabling 19904 oz of gold
to be produced over the period us02
million was invested in bestobe’s 
ore crushing facility 
processing
the original processing plant at bestobe was
constructed in 1932 unlike the aksu and
zholymbet deposits a signiﬁcant proportion
of the gold can be recovered using gravity
concentration the plant currently treats
both underground ore and some oxidised
material using gravity and ﬂotation
technologies gold recovered from the
gravity circuit is amalgamated to produce
gravity concentrate whilst gold bearing
ﬂotation concentrate is also produced
a new heap leach plant at bestobe
commenced operations on 15 august 2005
it treats a combination of tailings and oxide
ore and has an annual throughput capacity
of approximately 10 million tonnes of ore
the existing ﬂotation processing facility 
has an annual throughput capacity of
approximately 025 million tonnes this 
plant will continue in operation and will be
used to process ore from the dalnaya zone
which is better suited to processing using
ﬂotation technology
outlook
expansion of open pit mining is a priority in
2006 in order to support the group’s rising
production plans on the processing side
heap leaching capacity will be expanded in
2006 construction of a new cip plant with
annual capacity of 25 million tonnes is 
also planned and due to become operational
by 2008 this will replace the old ﬂotation
facility of 025 million tonnes annual
throughput capacity
bestobe
overview
kazakhgold group limited 17
45
110
160
250
340
430
520
610
700
790
790
970
level metres
waste dump zapadnaya
kapitalnaya shaft
novaya shaft
zapadnaya shaft
waste dump dalnaya
dalnaya zone
waste dump ventilyatsionnaya
waste dump processing plant
shaft 50
old tailings dump
zone 1008
zone 1009
shaft 2
heap leach pads
new tailings dump
ventilyatsionnaya shaft
schematic section through the bestobe ore ﬁeld
reserves b  c
2
 by source
1
ore grade gold gold
m tonnes gtonnes tonnes m oz
b 49 339 167 05
c
1
296 260 769 25
total reserves b  c
1
 345 271 936 30
c
2
92 1290 1182 38
p
1
333 600 2000 64
total reserves and resources
b  c
1
c
2
p
1
 770 535 4118 132
reserves and resources 
dumps  102 gt 
underground  737 gt
open pit  223 gt
tailings  100 gt
as at june 2005 
1
based on gold content
note based on fsu classiﬁcation zholymbet is located 100km south
of stepnogorsk and saw most of
the exploration work carried out
in the 1930s
kazakhgold group limited 18 overview
there are four underground mine operations
as well as a dedicated ventilation shaft low
grade ore is contained in onsite tailings
dams and waste dumps
reserves and resources
in june 2005 kazakhaltyn estimated that
the zholymbet mine had b and c
1
gold
reserves and c
2
and p
1
gold resources of
approximately 44 million ounces and 82
million ounces respectively the deposit
includes a siliciﬁed zone extending 25
kilometres and up to 80 metres wide the
underground ore is the group’s highest
grade reserve with a gold content of 2115
grammestonne
production highlights and capital
expenditure
for the period 26 september to 31
december 2005 129982 tonnes of ore
were mined with an average grade of 403
grammes per tonne the gold recovery rate
was 821 per cent enabling 13806 oz of
gold to be produced capital expenditure 
at zholymbet during this period was 
us15 million
processing
until 2005 only underground mining and
ﬂotation processing were performed at
zholymbet the original processing plant was
designed to treat sulphide ores using gravity
and ﬂotation technologies as part of the
group’s modernisation programme the
ﬂotation sections were removed and the
plant was modiﬁed to treat tailings a newly
constructed cip plant began operations in
august 2005 with an annual throughput
capacity of approximately 05 million tonnes
a new heap leach plant is expected to
become operational later in 2006 it will
have an annual throughput capacity of
approximately 10 million tonnes
outlook
open pit production is due to commence in
the second half of 2006 to accommodate
the additional ore later this year it is planned
to steadily increase the processing capacity
at the cip plant to 25 million tonnes by
2008 the group is also expecting to begin
operations at a new 20 million tonne
capacity heap leach plant in the ﬁrst quarter
of 2007 these changes will allow
production levels at zholymbet to rise
considerably
zholymbet
overview
kazakhgold group limited 19
ore grade gold gold
m tonnes gtonnes tonnes m oz
b 80 255 203 07
c
1
484 241 1168 37
total reserves b  c1 564 243 1371 44
c
2
238 440 1046 34
p
1
441 340 1500 48
total reserves and resources
b  c
1
c
2
p
1
 1243 315 3917 126
waste dump processing plant
waste dump dioritovaya dyke
shaft 8
tsentralnaya shaft
chubokaya shaft
shaft 6
dioritovaya dyke open pit
ventilyatsionnaya shaft
quartzy zone
475
135
205
275
350
430
520
600
680
760
840
920
1000
level metres
schematic section through the zholymbet ore ﬁeld
dumps  120 gt 
underground  2115 gt
open pit  187 gt
tailings  100 gt
reserves b  c
1
 by source
1
reserves and resources 
as at june 2005 
1
based on gold content
note based on fsu classiﬁcation operational
review
continued
acquisitions
in july 2005 kazakhaltyn acquired three
mines for a total consideration of us31
million which now form part of the group’s
assets these mines are the akzhal and
vasilevskyi mines and the assets and mineral
rights to the boldykol  zhanan mine the
properties are largely unexplored and are 
in eastern kazakhstan
the akzhal boldykol  zhanan and
vasilevskyi mines are within 210 kilometres
of the city of semipalatinsk where the
group has established its headquarters for
managing its operations in eastern kazakhstan
akzhal
visart llp  a privatelyowned kazakh
partnership was acquired for us694000
visart llp has the rights to the akzhal mine
which is an exploration property with no
current gold production
vasilevskyi
rudnik vasilevskyi llp  a privatelyowned
kazakh partnership was acquired for
us393000 rudnik vasilevskyi llp has the
rights to the vasilevskyi mine which is an
exploration property with no current gold
production
boldykol  zhanan
the mine and mineral rights to the boldykol
 zhanan deposits together with other
assets in semipalatinsk and ustkamenogorsk
were acquired for us201 million the
assets were previously owned by jsc altyn
tobe and were acquired from jsc
kazkommertsbank through a tender
process following a loan default by altyn
tobe the group is currently in the process 
of securing subsurface use contracts for
these deposits with the kazakh government
ministry of energy and mineral resources
new licences 
kazakhaltyn was awarded ﬁve new
exploration licences in december 2005
southern karaultube 93 km
2
 and
kyzylsorskoe 60 km
2
 are both located in 
the akmola region of northern kazakhstan
near our existing mining operations they
can both be explored and developed
efﬁciently by kazakhgold and were
historically part of kazakhaltyn with the
results of earlier exploration work from the
1980s still available
pridorojnoe 390 km
2
 and kaskabulakskoe
491 km
2
 are in eastern kazakhstan close to
the three mines acquired by kazakhaltyn in
july 2005 while zones 1  2 of the
akshatau mmc deposit 566 km
2
 are
located in the karaganda region of central
kazakhstan these deposits are likely to be
explored and developed by a joint venture
with barrick gold registration of the
necessary legal documents will be completed
in 2006 although the joint venture has
already started to prepare a detailed
programme for the geological investigation
of the deposits prospecting work will begin
later this year
international partners
the group’s management team has
signiﬁcant experience of the geology
metallurgy mining and processing
technologies currently used in kazakhstan
this knowledge means that kazakhgold 
is well placed to cooperate with leading
international gold mining companies to
develop a range of opportunities
barrick gold corporation
a framework agreement was signed by
kazakhaltyn with barrick gold on 23
september 2005 to cooperate with
exploration projects in kazakhstan and
central asia barrick gold will beneﬁt from
access to new properties in the region while
kazakhaltyn will have access to explore and
develop certain of barrick gold’s resources it
is anticipated that the tenders won in
december 2005 for exploration properties
in eastern and central kazakhstan will be
acquired explored and developed under this
agreement through a joint venture company
in which kazakhaltyn and barrick gold will
each have a 50 per cent interest final details
are expected to be concluded in 2006
kazakhaltyn’s proposed joint venture
agreement with barrick gold also covers 
the exploration of territories in kazakhstan
kyrgyzstan and uzbekistan the partners will
take part in tenders to acquire the rights to
explore sites in these areas the investment
in exploration works will be carried out in
conjunction with barrick gold
china national gold corporation
discussions with the china national gold
corporation cngc regarding the
expansion of underground mining
operations at bestobe are under way with 
a view to cngc acting as a subcontractor 
at bestobe cngc is likely to provide
equipment and operational management
enabling the group to beneﬁt from cngc’s
kazakhgold group limited 20 underground mining expertise the total
planned expenditure for the reconstruction
of the bestobe underground mine and 
the construction of a new cip plant is
approximately us20 million
sales
the group’s business strategy envisages
increasing sales of higher margin gold
products at the expense of ﬂotation and
gravity concentrates and quartzite ore 
from 26 september to 31 december 2005
52691 oz of gold was produced most of 
the production was of cathodic sludge 
part of which was sold in kazakhstan and
kyrgyzstan with the balance expected to 
be sold in 2006 the group expects the
proportion of cathodic sludge produced to
decline throughout 2006 in favour of higher
margin cathodic gold this shift is due to 
the optimisation of recently installed
electrolysis equipment 
the remaining production of free gold and
gold doré during the period was sold to
metalor sa in switzerland while ﬂotation
and gravity concentrates were sold to
customers in russia a breakdown of sales
by product and market for the period is
provided in note 2 of the ﬁnancial statements
looking ahead the group is seeking to
broaden its customer base and expects to
export all its gold production in 2006 
health  safety
as a mining group with large numbers of
workers employed at its facilities workplace
safety issues are of paramount importance
kazakhgold encourages all employees to
pursue a healthy balanced lifestyle this is
supported by comprehensive health policies
at the group’s plants preventative medical
care and subsidised health centres
in the period 26 september to 31 december
2005 there were no fatalities at the group’s
operations the group through its
subsidiary kazakhaltyn is engaged in a
process of continuous improvement in the
work practices at its mines not only to
comply with kazakh law but also to move
towards best international practice to
achieve this a department has been
established to ensure compliance with
kazakh health and safety regulations and 
to address all relevant issues arising this
department is developing a management
system compliant with the international
ohsas 18101 standard on occupational
health and safety an occupational health
and safety plan is also being prepared 
and will be implemented progressively
through 2006
at aksu bestobe and zholymbet the group
operates occupational safety training facilities
where mandatory training is provided to all
employees engaged in operations from
2006 this training is being extended to
workers at the recentlyacquired akzhal
boldykol  zhanan and vasilevskyi mines
environment
historically industrial complexes in
kazakhstan have often employed sub
optimal procedures and technologies under
kazakh law the group’s principal operating
subsidiary kazakhaltyn is required to give
priority to environmental considerations 
this includes monitoring the impact of
operations on the environment limiting
desertiﬁcation and soil erosion and
preventing the pollution or exhaustion 
of subsurface water
this legal obligation is matched by the
group’s proactive approach towards the
environment in addition to compliance 
with kazakh law kazakhgold aims to
improve the environmental impact of its
operations by bringing standards into line
with international accepted practice for
mining companies to facilitate this a
dedicated environmental department has
been established in kazakhaltyn to monitor
compliance with kazakh environmental
regulations and to address any issues
arising it is led by kazakhaltyn’s chief
geologist with support from an
environmental engineer there is also 
an ecologist based at each of the three
principal mines
prior to commencing mining operations 
at any property kazakhaltyn is required 
to obtain approval from the kazakh
environmental authorities upon the
conclusion of mining operations it is 
obliged to make good the environment 
of the impacted area to ensure that any
environmental damage is mitigated and 
that the work area is suitable for future use
to ﬁnance this kazakhaltyn is required to
transfer an amount equivalent to one per
cent of its net income into a liquidation fund
for environmental cleanup costs following
cessation of mining operations including the
costs of removing buildings and equipment
in the event that this fund proves to be
kazakhgold group limited 21 operational
review
continued
insufﬁcient to meet the cost of kazakhaltyn’s
cleanup obligations kazakhaltyn is obliged
to fund any such shortfall no additional
payments were necessary in the period 26
september to 31 december 2005
in 2005 kazakhaltyn reached agreement
with the kazakh ministry of environmental
protection on an ecological monitoring
programme for its operations water and 
air quality samples are now taken at three
monthly intervals and soil samples are 
tested annually
the group continues to invest in its
operations to ensure their compliance with
local environmental standards in 2005 for
example new equipment was installed at
the zholymbet mine boiler facility that
enables harmful or hazardous emissions 
to be reduced by up to 85 per cent at the
aksu mine similar gas scrubber equipment
was installed in 2005 
corporate social
responsibilty
the group acknowledges that it has a wider
role in the communities in which it operates
beyond just the employment provided
kazakhaltyn is required by the kazakh
government to provide ﬁnancing of at least
one per cent of the total amount of its mine
investment for development of the social
infrastructure of the area covered by each
mining contract
kazakhaltyn has a track record of providing
charitable support for the communities
bordering its mines in the period 26
september to 31 december 2005
us21300 was donated to projects 
that included the provision of support 
for schools and orphanages and the
maintenance of local water supplies
kazakhaltyn recently met regional and
community representatives to address any
environmental concerns with its operations
and to discuss its plans on a broader level
the group has undertaken to purchase
goods and services from local businesses
wherever possible and where competitive
with alternatives options available outside
kazakhstan in 2006 the group plans 
to formalise its community work through 
the introduction of a community
development plan
people
the group continues to place great
importance on the welfare training 
and development of its employees 
as is common with mining agreements
between mining companies and national
governments kazakhaltyn has also
undertaken certain social obligations for 
the beneﬁt of its employees and their
dependants these include investing at 
least one per cent of kazakhaltyn’s annual
net income in training programmes for 
its employees
the group through kazakhaltyn transfers
10 per cent of kazakh employees’ salaries
into a private deﬁned contribution pension
plan this fulﬁls a requirement established by
the kazakh government
the number of group employees was 3209
at 31 december 2005 an increase of 146
over the period 
kazakhgold group limited 22
kazakhgold employees by principal activity
26 september 2005 31 december 2005
aksu mine 821 857 
bestobe mine 1081 1101 
zholymbet mine 671 701 
geological exploration unit 81 82 
central supply base 43 64 
construction and maintenance unit 126 116 
security services unit 115 174 
management 125 114 
total 3063 3209  financial
review
the fourteen weeks from 26
september to 31 december 2005
is the ﬁrst period for which the
group is reporting ﬁnancial
results following its incorporation
in jersey on 26 september 2005
the ﬁnancial statements have
been prepared in accordance
with international financial
reporting standards ifrs
on 12 october 2005 the group acquired 
the entire issued units of romanshorn lc
ag from kanat assaubayev and marussya
assaubayeva for nil consideration
romanshorn is the holding company of 
the group’s main operating subsidiary
kazakhaltyn at that date kazakhaltyn had
cash and cash equivalents of us05 million
revenue for the period was us204 million
with slightly over half of sales made to
kyrgyzstan and the remainder to switzerland
russia and kazakhstan the cost of sales was
us149 million leaving a gross proﬁt of
us55 million after allowing for other
operating income and expenses an operating
loss of us713000 resulted for the period
interest charged to the consolidated income
statement in the period on the group’s ﬁxed
rate bank debt and its ﬂoating rate bonds
was us647000 the loss before tax was
us11 million after the deduction of
us11 million in tax the loss attributable 
to equity shareholders was us22 million
basic and diluted losses per share were
us005
the group’s revenues are denominated in 
us dollars while its costs are predominantly
in kazakh tenge except for some equipment
and a small number of consumables
purchased internationally hedging is not
used to cover this foreign currency risk as 
it could impact the group’s intention of
being an unhedged gold producer further
information on the management of the
group’s ﬁnancial risks is contained in note
29a of the ﬁnancial statements
the cash cost of gold production for the
period was us210oz while the average
gold price achieved on sales made in the
period was us448oz
the most signiﬁcant impact on the group’s
cash ﬂow last year was its ipo in november
the primary issue of 71 million gdrs at
us15gdr raised some us974 million
net of costs for reinvestment in the group 
a signiﬁcant proportion of the proceeds
have been allocated for investment in 2006
for the expansion and upgrading of the
group’s ore processing facilities for mine
development and exploration of the
balance us63 million was used to 
repay borrowings during the period and 
the remainder was used for working 
capital purposes
operating cash ﬂow from 26 september
2005 to the yearend was us51 million
the group had cash and cash equivalents 
at the end of the period of us879 million
at 31 december 2005 the group had debt
of us466 million made up of ﬂoating rate
tenge bonds and us dollar and tenge
denominated ﬁxed rate debt and ﬁnance
leases the bonds have a variable coupon
capped at 13 per cent which in 2005
amounted to an effective rate of 106 per
cent over the period the ﬁxed rate us dollar
and tenge debt meanwhile had coupons 
of 13 to 15 per cent in 2006 the group
intends to pay down all this relatively high
cost debt using proceeds from the ipo the
group will continue to manage actively its
borrowings to ensure that their cost remains
competitive and that they reﬂect 
the group’s size and potential
looking ahead the group is examining
ﬁnancing and technical options for an
accelerated development plan for its mines
it is conﬁdent that any such plans if
implemented can be ﬁnanced through
additional debt without compromising 
the group’s longterm ﬁnancial stability 
and operational ﬂexibility
kazakhgold group limited 23 board of
directors
kazakhgold group limited 24
13
24
57
6 8 kanat shaikhanovich assaubayev
1
president  chief executive ofﬁcer
kanat assaubayev has been president of kazakhaltyn
since 1999 and was also a member of the board of
directors of kazakhaltyn from 2001 until 2004
subsequently being reelected a director in february
2005 between 1991 and 1999 he established and
participated in the management of a number of
companies in kazakhstan in several different industrial
sectors some of which provided goods and services to
various kazakh government ministries he graduated
from the kazakh polytechnic institute in 1970 and
subsequently received a candidate of science degree from
the institute of systemic analysis in moscow in 1978 in
1985 he was awarded a doctor of science degree from
the institute of steel and alloys in moscow 
member of the health safety and environment
committee
baurzhan kanatovich assaubayev
2
first deputy chief executive ofﬁcer
baurzhan assaubayev is a vice president of kazakhaltyn
where he has been responsible for gold mining and
processing operations since 1999 he graduated from the
kazakh national technical university in 1992 where he
specialised in system software development in 1996 he
received a candidate of science degree from the same
university in the automation of technological processes
and production cycles
aidar kanatovich assaubayev
3
deputy chief executive ofﬁcer  
corporate development  
aidar assaubayev is a vice president of kazakhaltyn
which he joined in 1999 his responsibilities there include
the supervision of the legal department international
activities and the introduction of new mining and
processing technologies in 2000 he graduated with
honours from the kazakh national technical university
where he specialised in engineering and economics in
2006 he will receive a candidate of science degree from
the institute of systemic analysis in moscow
member of the health safety and environment
committee
marussya maralovna assaubayeva
4
deputy chief executive ofﬁcer  
health safety environment and hr 
from 2000 to 2001 mrs assaubayeva was vice president
of kazakhaltyn and was director and deputy
chairperson of the board of directors between 2001 and
2004 in 2005 she was reelected as a director and
deputy chairperson of the board of directors she
graduated from the pharmaceutical department of the
almaty medical institute in 1972
member of the health safety and environment
committee
kazakhgold group limited 25
executive
directors
lord daresbury
5
nonexecutive chairman
peter daresbury joined the board in october 2005 he
served as the chairman of de vere group plc from 2000
until 2006 between 2002 and 2005 he was executive
chairman of highland gold mining limited he has an 
ma in history from magdalene college cambridge
university and also received a sloan fellowship from the
london business school
member of the audit and remuneration committees
toktarkhan kozhagapanov 
6
nonexecutive director 
toktarkhan kozhagapanov has been chairman of the board
of kazakhaltyn since 2001 between 1993 and 1997 he
served as chairman of the supervisory board of jsc turan
bank leaving to become a vice governor of the almaty
region between 1997 and 2001 he graduated from the
kazakh polytechnic institute and the national academy of
economics of the ussr council of ministers he also has a
candidate of science degree in economics in 1989 he
received the title of honoured economist of the republic
of kazakhstan in 2005 he was awarded the kurmet
order a prestigious national award by a decree of the
president of kazakhstan
member of the audit and remuneration committees
david netherway 
7
nonexecutive director
david netherway has nearly 30 years of experience in the
mining industry from 2002 he served as chief executive
ofﬁcer of the torontolisted afcan mining corporation a
chinafocused gold mining company until its takeover by
eldorado gold corporation in 2005 he has been involved
in the construction and development of the iduapriem
siguiri and kiniero gold mines in west africa prior to
joining afcan he held senior management positions in a
number of mining companies including golden shamrock
mines ashanti goldﬁelds and semafo
he received a be in mining engineering from the university
of melbourne in 1975 and a certiﬁed diploma in
accounting and finance from the chartered association
of certiﬁed accountants in the united kingdom in 1985
chairman of the health safety and environment
committee chairman of the remuneration committee
member of the audit committee 
stephen oke 
8
nonexecutive director
stephen oke has some 30 years of mining operational
management and natural resources investment banking
experience he has held senior positions with standard
bank nm rothschild  sons ltd merrill lynch and smith
newcourt he has also worked with the uk national coal
board anglovaal mining johannesburg bp coal pty
ltd and johannesburg consolidated investment ltd he is
a nonexecutive director of international ferro metals
ltd he has an honours degree in geology from the
university of southampton and an mba from the
university of the witwatersrand graduate school of
business in johannesburg
chairman of the audit committee member of the
remuneration committee
nonexecutive
directors the directors of kazakhgold group limited have pleasure in submitting
their report with the audited financial statements for the period 26
september to 31 december 2005
principal activities
kazakhgold group limited the“group” is the ultimate holding company
and the indirect parent company of kazakhaltyn a company incorporated
in kazakhstan and the operating company through which the group holds
its gold mining assets in kazakhstan the principal activities of the group
are exploration mining and gold production kazakhgold group limited
was incorporated in jersey on 26 september 2005 registered number
91264 and was registered as a public company on 18 november 2005 
it acts as a holding company and provides financing and management
services to its subsidiaries from its principal place of business in london
where it is centrally managed and controlled the relationship between it
its operating companies and its mines is explained on the inside back cover
of this report
business review  future developments
a summary of the group’s main business developments for the period 
26 september to 31 december 2005 and potential future developments 
is contained within the chairman’s statement and the president and
ceo’s review
accounting policies
the financial statements have been prepared in accordance with
international financial reporting standards as adopted by the european
union and also in accordance with the companies jersey law 1991
share capital and reserves
details of the group’s authorised and issued share capital as at 31 december
2005 are contained in note 22 of the financial statements
results and dividends
an overview of the group’s results covering the period 26 september to
31 december 2005 is provided in the financial review on page 23 detailed
financial information is included from page 30 to page 49 of the report
the directors do not propose the payment of shareholder dividends until
the group’s plant modernisation and processing capacity programmes are
completed thereafter subject to kazakhgold’s performance the group
intends to commence paying dividends progressively up to 25 per cent of
its consolidated annual net income
postbalance sheet events
there were no significant postbalance sheet events
directors and their interests
details of directors’ emoluments are contained within note 8 of the
accounts
the table below sets out the interests of the directors in kazakhgold
group’s issued share capital as at 31 december 2005
number of  of issued 
director ordinary shares share capital
kanat assaubayev
1
33600000 713
baurzhan assaubayev
1
33600000 713
aidar assaubayev
1
33600000 713
marussya assaubayeva
1
33600000 713
lord daresbury
2
561901 12
toktarkhan kozhagapanov – –
david netherway
2
3325 –
stephen oke
2
3325 –
1 these interests include those of kanat assaubayev baurzhan assaubayev aidar
assaubayev marussya assaubayeva as discretionary beneficiaries under the abm
sk trust whose only named discretionary beneficiaries are members of the
assaubayev family no members of the assaubayev family have a direct interest in
the groupthe shareholding interests of the abm sk trust are held by gold lion
limited
2 of the total shown for lord daresbury 400000 shares are held in the form of
ordinary shares while the remaining interest and those of david netherway and
stephen oke are held in the form of global depositary receipts
the following options to purchase the group’s ordinary shares were
outstanding at 31 december 2005
david netherway stephen oke
number of options granted on 
1 december 2005 26667 26667
exercise price 15 15
substantial shareholdings
the group is aware of the following beneficial shareholdings representing
10 per cent or more of the issued ordinary share capital of the group as at
31 december 2005
number of  of issued 
ordinary shares share capital
gold lion limited 33600000 7134
bny nominees limited
1
13100000 2781
1 bny nominees limited holds these shares as depositary against which
131 million global depositary receipts have been issued each representing one
ordinary share with a nominal value of £00001
corporate governance
there are no corporate governance recommendations applicable to
companies incorporated in jersey but the group intends so far as it is able
having regard to its size and stage of development to comply with the
recommendations of the combined code on corporate governance for uk
registered and listed companies
kazakhgold group limited 26
directors’ report board
the board of directors is composed of eight members four executive
directors and four nonexecutive directors including a nonexecutive
chairman
the board has established audit health safety and environment and
remuneration committees with formally delegated duties responsibilities
and written terms of reference from time to time separate committees
may be set up by the board to consider specific issues as and when the
need arises
audit committee
the audit committee helps the board discharge its responsibilities regarding
financial reporting external and internal audits and controls as well as
reviewing the group’s annual financial statements it also assists by
reviewing and monitoring the extent of non audit work undertaken by
external auditors advising on the appointment of external auditors and
reviewing the effectiveness of the group’s internal audit activities internal
controls and risk management systems the ultimate responsibility for
reviewing and approving the annual report and accounts and the halfyearly
reports remains with the board
the audit committee comprises four independent nonexecutive directors
lord daresbury toktarkhan kozhagapanov david netherway and stephen
oke stephen oke is considered by the board to have recent and relevant
financial experience the chairman of the audit committee is stephen oke
the committee meets formally at least three times a year in london and
otherwise as required
remuneration committee
the remuneration committee assists the board in determining its
responsibilities in relation to remuneration this includes making
recommendations to the board on the group’s policy on executive
remuneration determining the individual remuneration and benefits
package of each of the executive directors and recommending and
monitoring the remuneration of senior management below board level
the remuneration committee comprises four nonexecutive directors
lord daresbury toktarkhan kozhagapanov david netherway and stephen
oke and is chaired by david netherway the committee meets formally at
least twice a year in london and otherwise as required
health safety and environment committee
the health safety and environment committee helps the board in
formulating the group’s health safety and environment policies as they
affect the group’s operations the committee also monitors compliance
with national and international standards and reviews management’s
investigations of any incidents or accidents that may occur in order to
assess whether policy improvements are required
the health safety and environment committee is composed of four
members one of whom is an independent nonexecutive director david
netherway the other members of the committee are executive directors
kanat assaubayev aidar assaubayev and marussya assaubayeva the
chairman of the health safety and environment committee is david
netherway the committee meets formally at least twice a year in london
and otherwise as required
relations with shareholders
the directors attach importance to the provision of clear and timely
information to shareholders gdr holders and the broader investment
community information about the company is available on its website
wwwkazakhgoldcom the group’s annual and interim reports will also be
sent to shareholders and be made available to gdr holders through the
group’s website
following its ipo in november 2005 the group began to implement a
programme of contact with its principal and institutional shareholders in
addition to sellside financial analysts the board is provided with feedback
from these meetings shareholders are encouraged to attend the 2006
annual general meeting at which members of the board will be available to
answer questions
directors and officers liability insurance
the group has in place a directors and officers insurance policy to cover
relevant individuals against claims arising from their work on behalf of the
company the board intends to keep the level of cover provided under
annual or more frequent review as appropriate
going concern
based on the group’s budgets and cash flow projections for 2006 the
directors are satisfied that the group has adequate resources to continue its
operations and meet its commitments for the foreseeable future
annual general meeting
the 2006 annual general meeting will be held at 1100 am on 28 july
2006 at the de vere cavendish hotel 81 jermyn street london sw1y 6jf
england the notice of meeting together with an explanation of the items
of special business is provided separately to shareholders with this report
auditors
bdo stoy hayward llp were appointed as the first auditors of the company
and a resolution for their reappointment will be proposed at the annual
general meeting
on behalf of the board
aidar assaubayev
deputy chief executive – corporate development
5 june 2006
kazakhgold group limited 27 the directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company for safeguarding the assets for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the
preparation of financial statements which comply with the requirements 
of the companies jersey law 1991
the directors have prepared the financial statements in accordance with
international financial reporting standards ifrss
international accounting standard 1 requires that financial statements
present fairly for each financial year the company’s financial position
financial performance and cash flows this requires the faithful
representation of the effects of transactions other events and conditions 
in accordance with the definitions and recognition criteria for assets
liabilities income and expenses set out in the international accounting
standards board’s ‘framework for the preparation and presentation of
financial statements’ in virtually all circumstances a fair presentation will 
be achieved by compliance with all applicable international financial
reporting standards a fair presentation also requires the directors to
• consistently select and apply appropriate accounting policies
• present information including accounting policies in a manner that
provides relevant reliable comparable and understandable
information and
• provide additional disclosures when compliance with the specific
requirements in ifrs is insufficient to enable users to understand 
the impact of particular transactions other events and conditions 
on the entity’s financial position and financial performance
financial statements are published on the group’s website the
maintenance and integrity of the group’s website is the responsibility 
of the directors the directors’ responsibility also extends to the financial
statements contained therein
kazakhgold group limited 28
statement of directors’ responsibilities we have audited the group and parent company financial statements the
‘’financial statements’’ of kazakhgold group limited for the period ended
31 december 2005 which comprise the group and parent company income
statements the group and parent company balance sheets the group and
parent company cash flow statements the group and parent company
statements of changes in shareholders’ equity and the related notes these
financial statements have been prepared under the accounting policies set
out therein
respective responsibilities of directors 
and auditors
the directors’ responsibilities for preparing the report and the financial
statements in accordance with applicable law and international financial
reporting standards ifrss as adopted by the european union are set out
in the statement of directors’ responsibilities
our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and international standards on
auditing uk and ireland
we report to you our opinion as to whether the financial statements give a
true and fair view and whether the financial statements have been properly
prepared in accordance with the companies jersey law 1991 we also
report to you if in our opinion the directors’ report is not consistent with
the financial statements if the company has not kept proper accounting
records if we have not received all the information and explanations we
require for our audit
we read other information contained in the report and consider whether
it is consistent with the audited financial statements the other information
comprises only the directors’ report and the chairman’s statement we
consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial
statements our responsibilities do not extend to any other information
our report has been prepared pursuant to the requirements of the
companies jersey law 1991 and for no other purpose no person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of the companies
jersey law 1991 or has been expressly authorised to do so by our prior
written consent save as above we do not accept responsibility for this
report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability
basis of audit opinion
we conducted our audit in accordance with international standards on
auditing uk and ireland issued by the auditing practices board an audit
includes examination on a test basis of evidence relevant to the amounts
and disclosures in the financial statements it also includes an assessment of
the significant estimates and judgments made by the directors in the
preparation of the financial statements and of whether the accounting
policies are appropriate to the group’s and company’s circumstances
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud
or other irregularity or error in forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial
statements
opinion
in our opinion
• the group financial statements give a true and fair view in accordance
with ifrss as adopted by the european union of the state of the
group’s affairs as at 31 december 2005 and of its loss for the period
then ended
• the group financial statements have been properly prepared in
accordance with the companies jersey law 1991
• the parent company financial statements give a true and fair view in
accordance with ifrss as adopted by the european union of the state
of the parent company’s affairs as at 31 december 2005 for the period
then ended and
• the parent company financial statements have been properly prepared
in accordance with the companies jersey law 1991
bdo stoy hayward llp
chartered accountants and registered auditors
london
5 june 2006
kazakhgold group limited 29
independent auditors’ report to the
shareholders of kazakhgold group limited 2005
note us000
revenue 2 20357
cost of sales 14863
gross profit 5494
other operating income 3 1473
distribution expenses 86
administrative expenses 6954
other operating expenses 4 640
operating loss 5 713
financial income 9 277
financial expenses 10 647
net financing costs 370
loss before tax 1083
taxation 11 1090
loss for the period attributable to equity shareholders 2173
basic and diluted loss per share 12 005
all amounts relate to continuing operations
kazakhgold group limited 30
consolidated income statement 2005
note us000
revenue –
cost of sales –
gross profit –
administrative expenses 5744
operating loss 5 5744
financial income 9 277
loss before tax 5467
taxation 11 –
loss for the period attributable to equity shareholders 5467
all amounts relate to continuing operations
kazakhgold group limited 31
company income statement 2005
note us000
noncurrent assets
property plant and equipment 13 49797
mining properties 14 493573
exploration and development costs 15 9013
intangible assets 16 1092
other financial assets 18 1713
555188
current assets
inventories 19 7629
trade and other receivables 20 20112
cash and cash equivalents 21 87887
115628
total assets 670816
equity and liabilities
equity attributable to shareholders
share capital 22 8
share premium 97429
capital contributions 510000
translation reserve 41
retained earnings 714
total equity 608110
noncurrent liabilities
interestbearing loans and borrowings 24 24543
other financial liabilities 25 1197
provisions 26 241
deferred tax liabilities 28 2732
28713
current liabilities
interestbearing loans and borrowings 24 20464
trade and other payables 27 10959
current tax payable 27 2156
other financial liabilities 27 414
33993
total equity and liabilities 670816
these financial statements were approved and authorised for issue by the board on 5 june 2006
lord daresbury aidar assaubayev
chairman deputy chief executive – corporate development
kazakhgold group limited 32
consolidated balance sheet 2005
note us000
noncurrent assets
investment in subsidiaries 17 510000
510000
current assets
amounts due from group undertaking 20 26685
other receivables 20 636
cash and cash equivalents 21 70203
97524
total assets 607524
equity and liabilities
equity attributable to shareholders
share capital 22 8
share premium 97429
capital contributions 510000
retained earnings 2580
total equity 604857
current liabilities
other payables 27 2667
2667
total equity and liabilities 607524
these financial statements were approved and authorised for issue by the board on 5 june 2006
lord daresbury aidar assaubayev
chairman deputy chief executive – corporate development
kazakhgold group limited 33
company balance sheet 2005
note us000
cash flows from operating activities
loss before tax for the period 1083
adjustments for
depreciation depletion and amortisation 1411
foreign exchange gain 8
interest paid 647
loss on disposal of noncurrent assets 640
equity settled sharebased payment expenses 2887
cash flows from operating activities before changes in working capital and provisions 4510
increase in trade and other receivables 6095
decrease in inventories 5511
increase in trade and other payables 888
increase in provisions 241
cash generated from operating activities 5055
cash flows from investing activities
acquisition of property plant and equipment 6930
proceeds from the disposal of noncurrent assets 385
capitalised exploration and development costs 4491
capitalised mining properties costs 114
cash held in subsidiary companies at the date of acquisition 565
net cash from investing activities 10585
cash flows from financing activities
proceeds from the issue of share capital 106507
share issue costs 9070
proceeds from the issue of bonds 24
issue of promissory notes 3007
repayment of borrowings 6284
interest paid 647
payment of finance lease liabilities 120
net cash from financing activities 93417
net increase in cash and cash equivalents 87887
cash and cash equivalents at 26 september 2005 –
cash and cash equivalents at 31 december 2005 21 87887
significant noncash transactions are as follows
investing activities
equity consideration for the acquisition of romanshorn lc ag see note 30
kazakhgold group limited 34
consolidated cash flow statement 2005
note us000
cash flows from operating activities
loss before tax for the period 5467
adjustments for
equity settled sharebased payment expenses 2887
cash flow from operating activities before changes in working capital and provisions 2580
increase in other debtors 636
increase in amounts due from group undertaking 26685
increase in other payables 2667
cash absorbed from operating activities 27234
cash flows from financing activities
proceeds from the issue of share capital 106507
share issue costs 9070
net cash from financing activities 97437
net increase in cash and cash equivalents 70203
cash and cash equivalents at 26 september 2005 –
cash and cash equivalents at 31 december 2005 21 70203
kazakhgold group limited 35
company cash flow statement for the period ended 31 december 2005
share share capital translation retained
capital premium contributions reserve earnings total
balance at 26 september 2005 ––––––
shares issued in the period 8 106499––– 106507
share issue costs – 9070 – – – 9070
equity settled sharebased payments –––– 2887 2887
contribution of ownership of romanshorn lc ag – – 510000 – – 510000
foreign exchange on translation of foreign operations – – – 41 – 41
losses after tax for the period –––– 2173 2173
balance at 31 december 2005 8 97429 510000 41 714 608110
– share capital is the amount subscribed for shares at nominal value
– share premium represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses share issue expenses
comprise a proportion of the costs incurred in respect of the placing offer and the issue by the group of global depositary receipts as attributable to the issue of new
matching shares under the terms of the placing the costs allocated against the share premium account include all of the underwriting fees relating to the issue of new shares
together with a proportion in the ratio of 71 million to 131 million of all other similar costs being the ratio of new shares issued to the total of all listed shares
– capital contributions represent the value of romanshorn lc ag and its subsidiaries the beneficial ownership of which was acquired by the company as detailed in note 30
– exchange differences arising on translating the net assets and the results of overseas operations to us dollars are recognised directly in the translation reserve
– retained earnings represent the cumulative profitloss of the group attributable to the equity shareholders
kazakhgold group limited 36
statement of changes in 
equity for the group for the period ended 31 december 2005
share share capital retained
capital premium contributions earnings total
us000 us000 us000 us000 us000
balance at 26 september 2005 –––––
shares issued in the period 8 106499 – – 106507
share issue costs – 9070 – – 9070
equity settled sharebased payments – – – 2887 2887
contribution of ownership of romanshorn lc ag – – 510000 – 510000
loss after tax for the period – – – 5467 5467
balance at 31 december 2005 8 97429 510000 2580 604857
– share capital is the amount subscribed for shares at nominal value
– share premium represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses share issue expenses
comprise a proportion of the costs incurred in respect of the placing offer and the issue by the company of global depositary receipts as attributable to the issue of new
matching shares under the terms of the placing the costs allocated against the share premium account include all of the underwriting fees relating to the issue of new shares
together with a proportion in the ratio of 71 million to 131 million of all other similar costs being the ratio of new shares issued to the total of all listed shares
– capital contributions represent the value of romanshorn lc ag and its subsidiaries the beneficial ownership of which was acquired by the company as detailed in note 30 
– retained earnings represent the cumulative profitloss of the company attributable to the equity shareholders
kazakhgold group limited 37
statement of changes in 
equity for the company 1 accounting policies
a basis of presentation
kazakhgold group limited the “company” is a company incorporated in
jersey the company is centrally managed and controlled in the united
kingdom and therefore resident in the united kingdom for the purposes of
united kingdom taxation liabilities
the group financial statements consolidate those of the company and its
subsidiaries together referred to as the “group” the parent company
financial statements present information about the company as a separate
entity and not about its group
these financial statements have been prepared in accordance with
international financial reporting standards ifrss and ifric interpretations
as adopted by the european union and also in accordance with the
companies jersey law 1991
the accounting policies set out below have unless otherwise stated been
applied consistently in these financial statements
judgments made by the directors in the application of these accounting
policies that have significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year 
are discussed in note 31
b measurement convention
the financial statements are prepared on the historical cost basis except
that the following assets and liabilities are stated at their fair value financial
instruments classified as fair value through the profit or loss or as available
forsale
c 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 “the group” as if they formed a single
entity intercompany transactions and balances between group companies
are therefore eliminated in full
d business combinations
during the period the company acquired the entire share capital of
romanshorn lc ag as the controlling party of romanshorn lc ag and
kazakhgold group limited were the same the acquisition has been
accounted for as a capital contribution with the assets and liabilities
acquired initially recognised at fair value and a corresponding increase to
equity credited to the “capital contributions” reserve
no acquisitions in the period are within the scope of ifrs 3
e revenue
revenue arises from the sale of cathodic sludge cathodic gold free gold
flotation and gravitational concentrate quartzite ore and doré bars
revenues are recognised when the risks and rewards of ownership together
with effective control are transferred to the customer and the amount of
the revenue and associated costs incurred in respect of the relevant
transaction can be reliably measured revenue is not recognised unless it is
probable that the economic benefits associated with the sales transaction
will flow to the group
f foreign currency
in accordance with ias21 transactions entered into by group entities in a
currency other than the currency of the primary economic environment in
which it operates the “functional currency” are recorded at the rates
ruling when the transactions occur foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet date
exchange differences arising on the retranslation of unsettled monetary
assets and liabilities are similarly recognised immediately in the income
statement the presentational currency for the group consolidated financial
statements is the us dollar this is also the functional currency of the
company and is considered by the board also to be appropriate for the
purposes of preparing the group financial statements
on consolidation the results of overseas operations are translated into us
dollars the presentational currency at rates approximating to those ruling
when the transactions took place all assets and liabilities of overseas
operations are translated at the rate ruling at the balance sheet date
exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations at the actual rate are
recognised directly in equity the “translation reserve”
g classification of financial instruments issued by the group
in accordance with ias 32 financial instruments issued by the group are
treated as equity ie forming part of shareholders’ funds only to the
extent that they meet the following two conditions
a they include no contractual obligations upon the group to deliver cash
or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the group and
b where the instrument will or may be settled in the company’s own
equity instruments it is either a nonderivative that includes no
obligation to deliver a variable number of the company’s own equity
instruments or is a derivative that will be settled by the company
exchanging a fixed amount of cash or other financial assets for a fixed
number of its own equity instruments
to the extent that this definition is not met the proceeds of issue are
classified as a financial liability where the instrument so classified takes the
legal form of the company’s own shares the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares
finance payments associated with financial liabilities are dealt with as part
of finance expenses finance payments associated with financial instruments
that are classified in equity are dividends and are recorded directly in equity
h trade and other receivables
these assets are nonderivative financial assets with fixed or determinable
payments that are not quoted in an active market they arise principally
through the provision of goods and services to customers trade debtors
but also include other types of contractual monetary assets these assets
are carried at amortised cost less any provision for impairment
i property plant and equipment
property plant and equipment are stated at cost less any subsequent
accumulated depreciation and impairment losses
where parts of an item of property plant and equipment have different
useful lives they are accounted for as separate items of property plant and
equipment
leases in which the group assumes substantially all the risks and rewards of
ownership of the leased asset are classified as finance leases leased assets
acquired by way of finance lease are stated at an amount equal to the
lower of their fair value and the present value of the minimum lease
payments at inception of the lease less accumulated depreciation and
impairment losses
depreciation is charged to the income statement within cost of sales and
administrative expenses on a straightline basis over the estimated useful
lives of each part of an item of property plant and equipment land is not
depreciated the estimated useful lives are as follows
kazakhgold group limited 38
notes forming part of the 
financial statements – freehold buildings 11 – 50 years
– machinery and equipment 2 – 35 years
– vehicles 4 – 10 years
– other 15 – 17 years
expenses incurred in respect of the maintenance and repair of property
plant and equipment are charged against income when incurred
refurbishments and improvements expenditure where the benefit is
expected to be long lasting is capitalised as part of the appropriate asset
assets under construction are carried at cost less any recognised impairment
loss cost includes interest capitalised and associated borrowing costs
j exploration and development
exploration and development costs are capitalised as intangible assets until
the decision is made to proceed to development whereupon the related
expenditures are transferred to noncurrent assets as mining properties or
until the projects are determined not to be commercially viable whereupon
the related costs are written off to the income statement
k mining properties
once a decision is made to proceed with the development of a mining
project exploration and development expenditure other than that on
buildings machinery and equipment is capitalised under noncurrent assets
as mining properties together with any amount transferred from
exploration and development
depreciation depletion and amortisation of mining properties are calculated
using the ‘units of production method’ based upon actual production and
estimated recoverable reserves this amount is charged to cost of sales in
the income statement
l intangible assets
expenditure on research activities is recognised in the income statement as
an expense as incurred
other intangible assets that are acquired by the group are stated at cost
less accumulated amortisation and impairment losses
amortisation of intangible assets is charged to cost of sales over the
following periods
– mining and other licences 3 – 4 years
– computer software 3 years
m inventories
raw materials which consist of tools for development activities spare parts
diesel fuel and various materials used in mining operations are valued at the
lower of cost and net realisable value the basis on which cost is derived is
a weighted average cost formula
finished goods comprising cathodic sludge cathodic gold free gold
flotation and gravitational concentrate quartzite ore and doré bars are
stated at the lower of weighted average cost or net realisable value costs
include direct materials direct labour costs and production overheads
including the depreciationdepletion of relevant property plant and
equipment and mining properties net realisable value represents the
estimated selling price less all expected costs to completion and costs to be
incurred in selling and distribution
n cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits bank
overdrafts that are repayable on demand and form an integral part of the
group’s cash management are included as a component of cash and cash
equivalents for the purpose only of the statement of cash flows
o impairment
an impairment loss is recognised in respect of mining properties where the
assessed estimate of the quantum of mineable resources indicates a
reduction from the previous estimate
impairment losses recognised in respect of cashgenerating units are
allocated first to reduce the carrying amount of any goodwill allocated to
cashgenerating units and then to reduce the carrying amount of the other
assets in the unit on a pro rata basis a cash generating unit is the smallest
identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets
impairment losses and reversals of impairment losses previously included in
the income statement under the same category are included within other
operating expenses in the income statement
an impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been
determined net of depreciation or amortisation if no impairment loss had
been recognised
p other financial liabilities
trade payables and other shortterm monetary items are recognised at
amortised cost
q interestbearing loans and borrowings
bank borrowings are initially recognised at the amount advanced less any
transaction costs directly attributable to the borrowings such interest
bearing liabilities are subsequently measured at amortised cost using the
effective interest rate method which ensures that any interest expense over
the period to repayment is at a constant rate on the balance of the liability
carried in the balance sheet interest expense in this context includes initial
transaction costs and premia payable on redemption as well as any interest
or coupon payable while the liability is outstanding
other interestbearing borrowings are recognised initially at fair value less
attributable transaction costs subsequent to initial recognition interest
bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income
statement over the period of the borrowings on an effective interest basis
r employee benefits
defined contribution plans
the group contributes to certain defined contribution pension and
employee benefit schemes on behalf of its employees these costs are
charged to the income statement on an accruals basis
other employee benefits
other employee benefits are charged to the income statement on an
accruals basis
s sharebased payment transactions
the company awards share options to certain company directors to
acquire shares of the company the fair value of options granted is
recognised as an employee expense with a corresponding increase in equity
the fair value is measured at grant date and spread over the period during
which the employees become unconditionally entitled to the options the
fair value of the options granted is measured using an option valuation
model taking into account the terms and conditions upon which the
options were granted the amount recognised as an expense is adjusted to
reflect the actual number of share options that vest only where vesting is
dependent upon the satisfaction of service and nonmarket vesting
conditions
kazakhgold group limited 39 t provisions
a provision is recognised in the balance sheet when the group has a present legal or constructive obligation as a result of a past event and it is probable that
an outflow of economic benefits will be required to settle the obligation if the effect is material provisions are determined by discounting the expected future
cash flows at a pretax rate that reflects current market assessments of the time value of money and where appropriate the risks specific to the liability
u finance lease payments
minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability the finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability
v financing costs
financing costs comprise interest payable on bank loans bonds and finance leases interest payable is recognised in profit or loss as it accrues using the
effective interest method unless such interest is attributable to ‘assets under construction’ and qualifies for capitalisation under ias 23
w taxation
tax on the profit or loss for the period comprises current and deferred tax tax is recognised in the income statement except to the extent that it relates to items
recognised directly in equity in which case it is recognised in equity
current tax is the expected tax payable on the taxable income for the period using tax rates enacted or substantively enacted at the balance sheet date and
any adjustment to tax payable in respect of previous years
deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes the following temporary differences are not provided for the initial recognition of assets or liabilities that affect neither accounting nor
taxable profit other than in a business combination and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future the amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities using tax rates enacted or substantively enacted at the balance sheet date
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised
2 revenue
the group operates in one segment the mining and production of gold in kazakhstan the revenues from this segment are analysed as follows
2005
us000
by product
cathodic sludge 16998
cathodic gold 682
free gold 1841
flotation and gravitational concentrate 602
quartzite ore 138
doré bars 96
20357
by destination market
kyrgyzstan 10633
kazakhstan 7178
switzerland 1805
russia 741
20357
3 other operating income
group
2005
us000
foreign exchange gains 1274
other income 199
1473
the company has no other operating income
kazakhgold group limited 40
notes forming part of the
financial statements 4 other operating expenses
group
2005
us000
loss arising from the disposal of noncurrent assets 640
the company has no other operating expenses
5 operating loss
this has been stated after charging
group company
2005 2005
us000 us000
depreciation of property plant and equipment 441 –
amortisation of exploration and development costs and mining licences 236 –
depletion of mining properties 734 –
initial public offering and reorganisation costs 2264 2264
equity settled sharebased payment expense 2887 2887
auditors’ remuneration see note 6 588 –
6 auditors’ remuneration
group company
2005 2005
us000 us000
amounts receivable by auditors and their associates in respect of
audit of financial statements of the group 250 250
transaction advisory services relating to the placing and global offer 738 738
988 988
of the amounts paid to the auditors for the transaction advisory services 338000 was charged to the income statement and 400000 was charged to the share premium
account
7 staff numbers and costs
the average number of persons employed by the group including directors during the period analysed by category was as follows
group
2005
number
management 117
supply 64
construction and maintenance 116
research and exploration 82
security 174
mining activities 2659
3212
the company employed four nonexecutive and four executive directors during the period the company did not have any employees other than directors
in the period
group company
the aggregate payroll costs of these persons were as follows 2005 2005
us000 us000
wages and salaries including directors’ emoluments 2317 177
social security and other pension costs 284 11
2601 188
kazakhgold group limited 41 8 directors’ remuneration
group company
2005 2005
us000 us000
directors’ emoluments 377 177
pension contributions 28 –
405 177
the emoluments of the chairman were 35 35
during the period the chairman exercised a share option over 400000 shares note 23 the ifrs2 charge disclosed in note 5 relates entirely to options awarded to directors
9 financial income
group company
2005 2005
us000 us000
interest receivable 277 277
10 financial expenses
group company
2005 2005
us000 us000
interest payable 647 –
11 taxation
group
2005
us000
recognised in the income statement
current tax expense 1421
deferred tax income 331
total tax charge 1090
reconciliation of effective tax rates
us000
the reasons for the difference between the actual tax charge for the period and 
the rate of 30 applied to the loss for the period are as follows
loss before tax 1083
tax using domestic rates of corporation tax of 30 325
effect of
effect of expenses not deductible for tax purposes 1293
losses carried forward 122
total tax charge for the period 1090
there is no tax charge or tax credit arising in the parent company
the group’s principal operations are in kazakhstan the corporate tax system in kazakhstan has been in place a relatively short time as a result the tax legislation in kazakhstan
is evolving and is subject to different and varying interpretations as well as inconsistent enforcement the board of the company believes there have been no material breaches 
of kazakhstan tax regulations and that all necessary provisions have been made
kazakhgold group limited 42
notes forming part of the
financial statements 12 loss per share
the calculation of basic loss per share is based upon the net loss after tax attributable to the ordinary shareholders of us2173000 and a weighted average
number of shares in issue for the period 26 september 2005 to 31 december 2005 of 40212371
2005
loss per share 005
us000
loss attributable to ordinary shareholders 2173
weighted average number of ordinary shares number
issued ordinary shares at 26 september 2005 100000
effect of issue on 30 september 2005 37843299
effect of issue on 30 november 2005 2269072
weighted average number of ordinary shares at 31 december 2005 40212371
diluted loss per share
no diluted loss per share has been calculated as the group has incurred a loss for the period
the numerator for the calculation of the basic loss per share is the loss after tax of us2173000 the denominator for the calculation of the basic loss per
share is 40212371
13 property plant and equipment
freehold freehold assets under machinery and
land buildings construction equipment vehicles other total
group us000 us000 us000 us000 us000 us000 us000
cost
balance at 26 september 2005 –– – ––––
acquisitions through business combinations 92 21689 14876 8447 2798 858 48760
other acquisitions – 1028 689 4851 312 50 6930
disposals – 773 472 240 84 4 1573
effect of movements in foreign exchange– 221 – – 5
balance at 31 december 2005 92 21946 15095 13059 3026 904 54122
depreciation and impairment
balance at 26 september 2005 –– – ––––
acquisitions through business combinations – 1514 – 2114 459 327 4414
depreciation charge for the period – 219 – 121 85 16 441
disposals – 402 – 100 28 – 530
balance at 31 december 2005 – 1331 – 2135 516 343 4325
net book value
at 31 december 2005 92 20615 15095 10924 2510 561 49797
at 26 september 2005 –– – ––––
the net book value at 31 december 2005 of noncurrent assets held under finance leases was
us000
cost 1632
depreciation 164
net book value 1468
included within additions to assets under construction and machinery and equipment is interest capitalised of us291000
kazakhgold group limited 43 14 mining properties
us000
cost
balance at 26 september 2005 –
acquisitions through business combinations 494193
capitalised costs 114
balance at 31 december 2005 494307
depletion and impairment
balance at 26 september 2005 –
depletion charge for the period 734
balance at 31 december 2005 734
net book value
at 31 december 2005 493573
at 26 september 2005 –
15 exploration and development costs
us000
cost
balance at 26 september 2005 –
acquisitions through business combinations 4593
capitalised costs 4491
balance at 31 december 2005 9084
depreciation and impairment
balance at 26 september 2005 –
amortisation for the period 71
balance at 31 december 2005 71
net book value
at 31 december 2005 9013
at 26 september 2005 –
16 intangible assets
mining
licences
us000
cost
balance at 26 september 2005 –
acquisition of romanshorn lc ag 1257
balance at 31 december 2005 1257
amortisation and impairment
balance at 26 september 2005 –
amortisation for the period 165
balance at 31 december 2005 165
net book value
31 december 2005 1092
26 september 2005 –
the amortisation and impairment charge is recognised in cost of sales
kazakhgold group limited 44
notes forming part of the
financial statements 17 investments in subsidiaries
the company has an investment in the following subsidiary
note country of class of ownership
incorporation share 
romanshorn lc ag 30 united states units 100
indirect subsidiaries of the company
jsc kazakhaltyn mmc kazakhstan ordinary 100
visart llp kazakhstan ordinary 100
rudnik vasilevskyi llp kazakhstan ordinary 100
jsc kazakhaltyn mmc visart llp and rudnik vasilevskyi llp are all engaged in mining exploration development and mining operations in kazakhstan romanshorn lc ag is a
dormant holding company of jsc kazakhaltyn mmc visart llp and rudnik vasilevskyi llp are both subsidiaries of jsc kazakhaltyn mmc
18 other financial assets
2005
us000
noncurrent
amounts receivable in respect of deferred consideration from the sale in 2000 of 
‘subsurface’ mining rights related mining assets and land by jsc kazakhaltyn mmc 1713
this deferred consideration represents the non current balance of consideration which is receivable in instalments over the next three years the current
proportion of amounts due is included in other debtors the amounts due are denominated in us dollars
19 inventories
2005
us000
raw materials and consumables 4201
work in progress 519
finished goods 2909
7629
certain spares materials tools and equipment held in inventory amounting to 1305000 became obsolete in the period following the modernisation of elements of the group’s
mining assets and were written down to net realisable value
20 trade and other receivables
group company
2005 2005
us000 us000
trade receivables 11369 –
amounts due from group undertaking – 26685
other debtors 8626 636
prepaid expenses 117 –
20112 27321
– amounts due from group undertaking represent amounts due to the parent company in respect of funding provided to a subsidiary and is classified as a related party loan
under ias24 the loan is repayable within 30 days of demand is unsecured and is interest free all other monetary assets included in trade and other receivables are
denominated in kazakhstan tenge
– included within the group other debtors as at the period end was an amount of us77000 due from baurzhan assaubayev this amount was repaid in march 2006
21 cash and cash equivalents
group company
2005 2005
us000 us000
cash per balance sheet and per the cash flow statement 87887 70203
cash and cash equivalents consist of cash
kazakhgold group limited 45 22 capital and reserves 2005
number
share capital
number of ordinary shares
in issue at 26 september 2005 –
issued for cash 47100000
in issue at 31 december 2005 47100000
2005
in issue at 31 december 2005 – fully paid us000
47100000 ordinary shares of £00001 each 8
2005
number
authorised
ordinary shares of £00001 each 100000000
allotted called up and fully paid
ordinary shares of £00001 each 47100000
holders of 13100000 of the ordinary shares hold their shares through the bank of new york which acts as a depositary for these shares these deposited shares are matched to
global depository receipts “gdrs” on a share for share basis the gdrs are listed on the london stock exchange
the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share payments of cash dividends and other amounts
including cash distributions will in the case of the gdrs issued by the company be made by the depositary of the gdrs to the persons entitled to the receipt of the funds
23 equity settled sharebased payment transactions
the number and weighted average exercise prices of share options granted to directors of the group are as follows number of 
options
outstanding at 26 september 2005 –
granted during the period 453333
exercised during the period 400000
lapsed during the period –
outstanding at 31 december 2005 53333
exercisable at 31 december 2005 –
– 2887388 is charged to the income statement within administrative expenses representing the fair value at the date of grant of the 400000 options exercised of 2870000
together with an element of the fair value at the date of grant of the options outstanding as at 31 december 2005 of 17388 relating to the period ending on that date the
weighted average cost of the options exercised in the period was 718
– the fair value of the 400000 options exercised in the period has been valued by the board based upon the value of the acquired entities as at the date of acquisition
the following additional options to purchase the company’s ordinary shares were granted during the period and were outstanding at 31 december 2005
total
number of options granted on 1 december 2005 53334
number of employees 2
share price on 1 december 2005 15
exercise price 15
the options vest on 1 december 2008 and are exercisable until 1 december 2011
the outstanding options at 31 december 2005 have been valued by the directors based on advice from an independent valuer who assessed the valuation
using a binomial option valuation model under the assumptions listed below under these assumptions the total value of the charge arising from these
options is 588 per share option or 313000 in total the total charge will be spread over the period to 1 december 2008
the principal assumptions used within the stock option valuation model were as follows
fair value of the share price at date of grant issued flotation price 15
interest rate per annum zero coupon gilt yield at option grant date 42 
dividend yield 25 
volatility twoyear average of volatility of close competitor companies 39 
vesting time in years 3
employee exit rate 0
kazakhgold group limited 46
notes forming part of the
financial statements 24 interestbearing loans and borrowings
2005
note us000
noncurrent
bank loans 28 4174
bonds 28 20369
24543
current
bank loans 28 17457
promissory notes 3007
20464
the bank loans are secured on the assets and share capital of jsc kazakhaltyn mmc and its subsidiaries the bonds are unsecured and pay interest at 
a variable rate which is capped at 13
the bank loans which are secured are from the following banks and in the following currencies
bank location currency rate us000
kazkommertsbank kazakhstan kazakhstan tenge 13 5272
kazkommertsbank kazakhstan united states dollars 13 15462
nurbank kazakhstan united states dollars 14 897
total bank loans 21631
25 noncurrent liabilities – other financial liabilities
2005
us000
lease liabilities 1197
26 provisions
2005
us000
within noncurrent liabilities
balance at 26 september 2005 –
charged to profit and loss 241
balance at 31 december 2005 241
the provision represents a statutory reserve for potential future liabilities in respect of site closure and environmental ‘clean up’ costs there are no current plans for the early
closure of any of the group’s mines
27 current liabilities – trade and other payables
group company
2005 2005
us000 us000
trade payables 3632 –
current tax payable 2156 –
other tax and social security payable 1173 –
interest payable 1314 –
lease liabilities 414 –
other creditors and accruals 4840 2667
13529 2667
kazakhgold group limited 47 28 deferred tax assets and liabilities
recognised deferred tax assets and liabilities
2005
us000
deferred tax assets and liabilities are attributable to the following
noncurrent assets 2925
other 193
net deferred tax liabilities 2732
no deferred tax asset has been recognised in respect of the loss arising in the company
29 effective interest rates and repricing analysis
in respect of incomeearning financial assets and interestbearing financial liabilities the following table indicates their effective interest rates at the balance
sheet date and the periods in which they mature or if earlier are repriced
effective
interest
rate 0 – 1 years 2 – 5 years total
 us000 us000 us000
cash and cash equivalents 40 87887 – 87887
bank loans 130 to 140 17457 4174 21631
bonds 106 – 20369 20369
70430 24543 45887
at 31 december 2005 the group had commenced negotiations to repay all outstanding borrowings within the next year utilising funds raised from the initial public offering and
the subsequent listing of the group’s global depositary receipts the strength of the group’s balance sheet following the success of the recent fundraising exercise should enable
the group to benefit from this strength in the form of lower effective interest rates
29a
risk and sensitivity analysis
the group is exposed through its operations to one or more of the following financial risks
foreign currency risk fair value and cash flow interest rate risk liquidity risk market price risk and credit risk the policy for managing these risks is set by the
board and all such risks are managed at a group level within the organisation the policies for these risks are described further below
foreign currency risk
foreign exchange risk arises due to the group’s primary revenues being in us dollars also the presentational currency whilst the group’s principal operating
costs are denominated in kazhak tenge which is the group’s principal functional currency
the group has a general policy of not hedging against foreign currency risk in accordance with a policy of being an unhedged producer of gold in managing
interest rate and currency risks the group aims to reduce the impact of shortterm fluctuations on the group’s earnings over the longerterm however
permanent changes in foreign exchange rates could have an impact on consolidated earnings
fair value and cash flow interest rate risk
the group utilises or intends to utilise fixed and variable rate loans and floating rate bonds the group intends to repay all fixed rate borrowings in the next
period the board sets a policy for each material borrowing dependent upon the prevailing market conditions and the terms available in respect of each
particular financial instrument and the interest rates attaching thereto the group seeks to achieve an appropriate balance of exposure to these risks
as described in note 29 above the group is in discussions with its providers of finance to redeem all outstanding borrowings in 2006 this will eliminate the
interest rate and foreign exchange rate risks in respect of these borrowings
liquidity risk
the liquidity risk of the group is managed centrally new loans are taken out where additional funds are required and surplus funds not allocated to future
investment and working capital requirements are used to repay existing loans and bonds the group intends to maintain a balance of funding designed to
reduce liquidity risks whilst also seeking to minimise the costs of borrowing
market price risk
as an ‘unhedged gold producer’ the group is exposed to market price risk from its current activities
credit risk
the group is exposed to credit risk arising from ‘credit sales’ of its product to customers due to the nature of the market the group’s principal customers are
concentrated on a small number of significant customers it is the board’s policy to assess the credit risk of all new customers before entering into contracts and
also where possible to trade only with established entities
kazakhgold group limited 48
notes forming part of the
financial statements 30 acquisition of subsidiaries
on 12 october 2005 the company was gifted the entire share capital of romanshorn lc ag the nontrading parent company of jsc kazakhaltyn mmc by
kanat assaubayev and marussya assaubayeva the ultimate majority shareholder of the company is the abm sk trust a jerseyregistered discretionary trust
whose only named discretionary beneficiaries are the assaubayev family
the details of the fair value of identifiable assets and liabilities acquired are as follows
book fair value fair
value adjustments value
us000 us000 us000
acquiree’s net assets at the acquisition date
mining properties – 494193
1
494193
mining licences and other intangible assets 1257 – 1257
tangible fixed assets 44346 – 44346
capitalised mine development costs 4593 – 4593
inventories 8679 4459
2
13138
trade and other receivables 15727 – 15727
cash and cash equivalents 565 – 565
interestbearing loans and borrowings 48255 – 48255
other liabilities 14226 1338
2
15564
net identifiable assets and liabilities 12686 497314 510000
510000
1 no identifiable goodwill has arisen in respect of this transaction the surplus of value of the consideration over the other separable net assets and liabilities of the acquired
group has been attributed to the mining properties and represents the estimated recoverable gold reserves within the romanshorn lc ag group as at the date of acquisition
of 12 october 2005 there was no cash element in the consideration
2 the fair value of inventory has been assessed with reference to the market value of finished product less estimated selling costs a deferred tax liability has been recognised
in respect of this increase in value
the income statement includes the following profit after tax from this acquisition for the period from 12 october 2005 to 31 december 2005
revenue profit after tax
us000 us000
jsc kazakhaltyn mmc and subsidiaries 20357 7149
the revenue and profit after tax of jsc kazakhaltyn mmc and subsidiaries for the full year to 31 december 2005 was
revenue profit after tax
us000 us000
jsc kazakhaltyn mmc and subsidiaries 26323 1445
cash flow
us000
the cash flow arising from the acquired entities for the period was 17684
31 accounting estimates and judgments
capitalised mining costs and mining resources
the group’s reserves of precious metals “mining properties” are estimates based upon geological studies over the longer term the actual mineable
resources achieved may vary significantly form the current estimates
base of mining operations
the group’s primary base of operations is in kazakhstan the laws relating to commercial operations taxation and future dividend payments are still under
development and there may be unforeseen changes to the operating and fiscal environment the financial statements have been prepared on the
assumption that no significant adverse changes to the economic regulatory and fiscal environment will arise
32 immediate and ultimate parent
the immediate parent company of the group is gold lion limited a company incorporated in jersey the ultimate parent entity and controlling party is the
abm sk trust a jerseyregistered discretionary trust whose only named discretionary beneficiaries are members of the assaubayev family
kazakhgold group limited 49 directors
kanat assaubayev
president and chief executive officer
baurzhan assaubayev
first deputy chief executive officer
aidar assaubayev
deputy chief executive officer
– corporate development
marussya assaubayeva
deputy chief executive officer
– health safety environment and hr
lord daresbury
nonexecutive chairman
toktarkhan kozhagapanov
nonexecutive director
david netherway
nonexecutive director
stephen oke
nonexecutive director
legal advisers
as to english law
denton wilde sapte
one fleet place
london ec4m 7ws
england
as to kazakh law
denton wilde sapte
273 furmanov street
3rd floor
almaty
kazakhstan
as to jersey law
bedell cristin
26 new street
st helier
jersey je2 3ra
channel islands
registered office
kazakhgold group limited
la motte chambers
st helier
jersey je1 1bj
channel islands
company secretary
abacus secretaries jersey limited
la motte chambers
st helier
jersey je1 1bj
channel islands
principal place of business
kazakhgold group limited
20 richbourne court
harrowby street
london w1h 5pt
england
gdr depositary
the bank of new york
101 barclay street
22nd floor
new york ny 10286
united states of america
broker
ing bank nv
60 london wall
london ec2m 5tq
england
auditors
bdo stoy hayward llp
8 baker street
london w1u 3ll
england
kazakhgold group limited 50
directors company secretary
and advisers ore reserves and resources estimation
under the fsu classification explored reserves are designated as either a b
or c
1
 evaluated reserves are designated as c
2
and prognostic resources are
designated as either p
1
 p
2
or p
3

category a
the reserves in place are known in detail the boundaries of the deposit
have been outlined by trenching drilling or underground workings the
quality and properties of the ore are known in sufficient detail to ensure the
reliability of the projected exploitation
category b
the reserves in place have been explored but are only known in fair detail
the boundaries of the deposit have been outlined by trenching drilling or
underground workings the quality and properties of the ore are known in
sufficient detail to ensure the basic reliability of the projected exploitation
category c
1
the reserves in place have been estimated by a sparse grid of trenches drill
holes or underground workings this category also includes reserves
adjoining the boundaries of a and b reserves as well as reserves of very
complex deposits in which the distribution cannot be determined even by a
very dense grid the quality and properties of the deposit are known
provisionally by analyses and by analogy with known deposits of the same
type the general conditions for exploitation are known tentatively
category c
2
the reserves have been extrapolated from limited data probably from a
single hole this category includes reserves that are adjoining a b and c
1
reserves in the same deposit prognostic resources are estimated for
mineralisation outside the limits of areas that have been explored in detail
and are often based on data from trenches and from geochemical and
geophysical surveys
category p
1
resources under the p
1
category may extend outside the actual limits of 
the ore reserves defined in the c
2
category the outer limits of p
1
type
resources are determined indirectly by extrapolating from similar known
mineral deposits in the area p
1
is the main source from which c
2
reserves
can be increased
category p
2
these resources represent possible mineral structures in known mineral
deposits or orebearing regions they are estimated based on geophysical
and geochemical data morphology mineral composition and the size of
the ore body are estimated by analogy with similar mineralised geologic
structures in the area
category p
3
any potential orebearing deposits are classified as resources in the p
3
category the presence of these resources relies on the theoretical definition
of a “favourable geological environment” resource figures are derived from
figures of similar deposits in the region estimates of prognostic resources
routinely depend on assumptions and projections regarding the probable
dimensions ie length width and depth and grade of the deposit that 
are subject to confirmation by more detailed investigations
au
the chemical symbol for gold
cis
confederation of independent states or former soviet union
cpi
consumer price index
carboninpulp or cip
an established method of gold recovery using cyanide and activated carbon
cathodic gold
the gold product that arises following the processing of mined ore by the
cip and hl methods which ends with the gold bearing solution being
treated by electrolysis the gold is deposited on the cathodes of the cell
which are then washed to remove the deposited gold which can be further
smelted into doré bars
cathodic sludge
the gold residue in the electrolysis cell from that part of the solution that 
is not deposited on the cathodes
company
kazakhgold group limited
doré bars
these are produced when the cathodic gold is smelted with flux and 
the mixture poured as gold doré bars
fdi
foreign direct investment
fsu
former soviet union
fsu classification
the former soviet union system of classification of geological reserves 
and resources
flotation concentrate
the product of a processing method used to separate gold sulphide
particles in slurry by causing them to selectively adhere to froth and float 
to the surface the resultant gold concentrate is then filtered to form
flotation concentrate
free gold
gold uncombined with other substances gold not found in chemical
combination with other minerals found largely in placer gold form
gt or gtonne
grammes per metric tonne
gdp
gross domestic product
gdr
global depositary receipt equivalent to one underlying ordinary share of
the group with a nominal value £00001
gold doré
unrefined gold bullion bars which will be further refined to almost pure
metal 999 per cent au see also doré bars
kazakhgold group limited 51
glossary grade
relative quantity or the percentage of ore mineral or metal content in an
ore body usually expressed in grammes per metric tonne
gravitation
gold particles in slurry are separated based on their specific gravity
group
kazakhgold group limited and its subsidiary companies
heap leaching or hl
an ore processing technology see page 12 for further explanation
ifrs
international financial reporting standards
ipo
initial public offering of equity securities
jorc
joint ore reserves committee – a widely used international ore reporting
classification standard
jsc
joint stock company
kzt
kazakh tenge the official currency of kazakhstan
kazakhaltyn
jsc kazakhaltyn mmc – a company registered in kazakhstan and the
group’s principal operating subsidiary
llp
limited liability partnership
listing
the listing of the group’s global depositary receipts on the london stock
exchange on 1 december 2005 following an ipo the previous month
mmc
mining metallurgical concern
mineralisation
process of formation and concentration of elements and their chemical
compounds within a mass or body of rock
nbk
the national bank of kazakhstan
open pit
a largescale hard rock surface mine
ore
rock that can be mined and processed at a profit
ore body
a solid mass of mineralised rock which can be mined profitably under
current or immediately foreseeable economic conditions
ounce or oz
troy ounce equal to 311035 grammes
pounds sterling
the official currency of the united kingdom and ‘‘£’’
quartzite ore
a mass of mineralised quartzite rock containing gold
recovery
proportion of valuable material obtained in the processing of an ore 
stated as a percentage of the material recovered compared with the total
material present
romanshorn lc ag
a company incorporated in the united states of america and the direct
holding company of kazakhaltyn see inside back cover
rudnik vasilevskyi llp
a kazakh partnership with rights to the vasilevskyi deposit in eastern kazakstan
t or tonne
us dollars per metric tonne
shaft
vertical or inclined excavation into mine workings
silicification
the introduction of silica into a rock either filling pore spaces or replacing
preexisting minerals
tailings
material that remains after all metalsminerals considered economic have
been removed from the ore
tenge
the official currency of kazakhstan
us dollar
the official currency of the united states of america “us“ and ““
vein
a tabular deposit of mineralized rock
visart llp
a kazakh partnership with rights to the akzhal mine in eastern kazakhstan
kazakhgold group limited 52
glossary kazakhgold group limited 
designed by sas
wwwsasdesigncouk
printed by stives westerham press
group structure and subsidiaries
mines acquired in 0705
100
100
100
100
100
100
100
kazakhgold group limited
incorporated in jersey
jsc kazakhaltyn mmc
incorporated in kazakhstan
romanshorn lc ag
incorporated in usa
aksu 
including 
quartzite 
hills
bestobe zholymbet vasilevskyi
akzhal
holding companies operating companies principal mines
visart llp
incorporated in 
kazakhstan
rudnik vasilevskyi llp
incorporated in 
kazakhstan
boldykol
 zhanan kazakhgold group limited
20 richbourne court harrowby street
london w1h 5pt england
registered number 91264
wwwkazakhgoldcom


Summary:
 chairman’s
statement
i am delighted to present
kazakhgold group limited’s 
ﬁrst report and accounts for 
the period from 26 september to
31 december 2005 kazakhgold
was incorporated in jersey on 
26 september 2005 with the
intention of unlocking what we
believe to be the largestknown
gold reserves and resources in
kazakhstan from this base
kazakhgold aims to become 
one of central asia’s leading 
gold mining companies
our strategy is to realize the full potential 
of the group’s existing assets signiﬁcantly
expanding production in the medium term
and pursuing growth opportunities both 
in kazakhstan and elsewhere in the region
that create value for shareholders where
appropriate kazakhgold will partner with
other leading mining companies to realize
the full potential of our existing resources
and to pursue acquisition opportunities 
on 12 october 2005 the group acquired
the entire issued units of romanshorn lc 
ag from kanat assaubayev and marussya
assaubayeva for nil consideration
romanshorn is the holding company of 
the group’s main operating subsidiary
kazakhaltyn 
in november kazakhgold successfully
completed an initial public offering ipo
joining the london stock exchange main
market on 1 december 2005 the ipo was
ﬁve times oversubscribed and the issue of
71 million new shares raised some us974
million for the group net of costs
results and dividend
from 26 september to 31 december 2005
the group had total revenue of us204
million and a loss after tax of us22 million
during this period the group mined and
processed 757048 tonnes of ore with an
average grade of 325 grammes per tonne
of gold enabling 52691oz of gold 
to be recovered
as stated at the time of last year’s ipo the
board does not propose the payment of
shareholder dividends until the current plant
modernisation programme is completed and
our processing facilities reach their maximum
designed output capacity after this and
subject to kazakhgold’s performance we
intend to commence paying dividends
progressively of up to 25 per cent of the
group’s consolidated annual net income
strategic developments
since our ipo kazakhgold has continued 
to seek new exploration and production
opportunities in kazakhstan following a
successful tender the kazakh government
awarded the group ﬁve new licences that
include mineral rights to southern karaultube
and kyzylsorskoe in northern kazakhstan
pridorojnoe and kaskabulakskoe in eastern
kazakhstan and zones 1  2 of the akshatau
mmc deposit in central kazakhstan further
details about these properties are included 
in the operational review
in september 2005 kazakhaltyn reached 
an agreement with barrick gold to cooperate
with the exploration of new properties in
kazakhstan and elsewhere in central asia
detailed negotiations remain ongoing and
are expected to be concluded later in 2006
early in 2005 kazakhaltyn began
negotiations with the china national gold
corporation regarding the future
development of underground mining at
bestobe an agreement is expected shortly
whereby china gold will act as a
subcontractor providing equipment and
operational management 
board and management 
in overseeing the development and
implementation of our strategy the group 
is fortunate to be able to draw upon the
board’s signiﬁcant industry technical and
international expertise as well as indepth
local operational knowledge the directors
are supported by an experienced senior
management team and dedicated workforce
their hard work has enabled our three main
operating assets to be reconﬁgured and to
meet the production targets set for 2005
without the continuing support and loyalty
of our employees to whom the board
extends its gratitude the group’s
achievements of 2005 would not have 
been possible 
kazakhgold group limited 4 kazakhgold group limited 5
corporate governance
the board supports the principles of good
corporate governance although there are
no corporate governance recommendations
applicable to companies incorporated in
jersey the group intends so far as it is 
able having regard to its size and stage 
of development to comply with the
recommendations of the combined code 
on corporate governance for uk registered
and listed companies to this end the board
has established three committees with
delegated duties and responsibilities for
audit health safety  environment and
remuneration matters 
although the board has responsibility for
maximising shareholder returns it is also
determined that kazakhgold’s operations
adopt sound environmental management
practices employ sustainable development
policies and that the group is a valued
member of all the communities in which it
operates given the nature of the group’s
activities the board places a high priority 
on ensuring that kazakhgold and its
subsidiaries provide a healthy safe and
fulﬁlling workplace for employees 
outlook
in december 2005 kazakhstan’s president
nursultan nazarbayev was reelected for 
a further sevenyear term under president
nazarbayev kazakhstan is moving towards 
a freemarket economy that is supportive of
business and foreign direct investment for
gold mining companies such as kazakhgold
further investment is encouraged by keeping
royalty payments at a realistic level in 2005
for example the group paid royalties of 
23 per cent of its production value which
compares favourably with rates of over six
per cent in countries such as russia 
the group’s results are inﬂuenced by 
macroeconomic factors such as the gold
price and the tengeus dollar exchange 
rate at the end of 2005 gold prices rose
above us500oz a level not seen since 
the early 1980s 
kazakhgold’s costs are primarily
denominated in kazakh tenge while 
this was of beneﬁt to us last year as the
tenge depreciated against the us dollar 
this favourable trend began to reverse
following the presidential elections the
tenge is also a petrocurrency reﬂecting the
importance of the oil sector to the kazakh
economy inevitably this will see some
inﬂationary pressure in kazakhstan during
2006 while the group cannot inﬂuence
these external macroeconomic factors we
will continue to focus on managing our costs
kazakhgold expects to increase gold output
signiﬁcantly over the medium term we 
will achieve this by a dramatic expansion 
of our processing capacity using simple 
but effective production and processing
methods in 2006 we are conducting 
further exploration of aksu’s signiﬁcant vera
zone we are also evaluating the possibility
of accelerating the group’s investment
programme to achieve even higher
production levels over a shorter time period
topline growth will be supported by
increasing our reserves through realization
of the full potential of our existing and
recently acquired assets our joint venture
with barrick gold will provide us with access
to valuable expertise accelerating the joint
exploration of several properties acquired
through successful tender last year overall
the board is conﬁdent that kazakhgold has
the strategy management expertise and
growth opportunities to make further
signiﬁcant progress in 2006 
lord daresbury
chairman