The Company is moving towards feasibility at its Gedabek gold, copper and silver project in north-west Azerbaijan and a resource estimate is being prepared, following an in-fill drilling programme on 40m x 40m spacing. It is expected that this resource estimate will be announced in November 2006 and follows the two releases by the Company detailing encouraging results from drilling at Gedabek made on 2 June 2006 and 24 August 2006.

Early indications show that a high proportion of the resource is amenable to heap leaching and further metallurgical leaching tests are underway at SGS Lakefield laboratories in Canada and at Gekko Systems in Australia. Under a heap leaching scenario the Directors estimate that an initial annual production rate of 50,000 to 70,000 oz of gold with silver and copper credits can be achieved. Heap leaching is a less capital intensive option than the CIL/flotation alternatives, resulting in both a lower capital cost and shorter construction period. It is therefore expected that under this option the construction could be completed before the end of 2007 allowing production to commence shortly thereafter.

The Company is in the process of commissioning a geophysical survey on the site in order to establish potential extensions to the ore body.

In light of the positive drilling results and the encouraging metallurgical test work at Gedabek, the Company has decided to direct all financial and human resources towards this project with minimal focus on other contract areas. The Company is working towards early production at Gedabek as its first priority.

The Company has put in place a cost reduction programme throughout the organisation with the aim of ensuring that the current cash resource is sufficient to provide funding for the Company through to the end of 2007. It is anticipated that additional funding will be required to cover the capital and working capital costs for the Gedabek project. Should the heap leach option continue to be the process of choice, the sale of the CIL plant now located in Singapore will provide a significant proportion of the required funding and will also allow construction to start in early 2007, pending the necessary government approvals.

A decision on the plant will be taken when the results of the resource estimate and current metallurgical test-work are completed in November 2006.

Exploration work continues in the adits at the Gosha property, some 50km from Gedabek.? The results of the adit sampling carried out to date are consistent with the Soviet data incorporated in the Company's AIM Admission Document dated 26 July 2005 (the 'Admission Document'), which identified an inferred resource of 424,000 oz gold. Further limited evaluation and sampling of this prospect is planned over the coming winter months.

In light of the progress made at Gedabek and the prioritisation of early production at this project, the exploration work in Ordubad will be put on hold and the camp currently located in Ordubad will be relocated to Gedabek.

Previous releases on 17 January 2006 and 24 August 2006 detailed the outcome of the work carried out to date, which is summarised as follows:

The drilling programme at Piyazbashi was completed in March 2006. The results of the drilling and adit sampling provided confirmation of gold grade in the veins broadly in line with the Soviet data.? An assessment of the resource is still to be completed.

Adit sampling at Shakardara, as announced in January 2006, was disappointing and a brief drilling campaign did not provide any further encouragement. In addition, as reported in the same release, the retesting and resampling of grab samples from the dump outside adit 12 gave two results around 1 gram per tonne ('g/t'), in contrast to the significantly higher grades of two grab samples taken by Behre Dolbear, which were included in table 3.1 of the Admission Document of 14.88 and 33.6 g/t gold. These discrepancies have been the subject of discussion between the Company and Behre Dolbear, however, the Directors note that the results of the said grab samples were excluded from Behre Dolbear's resource estimates and project valuations stated in the Admission Document. The Directors and their advisers therefore believe that the information released to date on Shakardara provides an accurate summary of the situation.

Further methodical exploration work is planned in due course for the other contract areas of Ordubad, namely Misdag, Diakahchy, Agyurt and Shalala and the Company will also complete its assessment of Shakardara. The remainder of the programme in Ordubad will be carried out when it is considered appropriate and the utilisation of cash and human resources will not affect the chances of success on the Gedabek project. The Company has a minimum of two and a half years under the Production Sharing Agreement to complete the exploration work in this area.

To strengthen the Company's technical management, Mr Kevin Shugg has been appointed as Chief Geologist.? Mr Shugg, an Australian, has extensive experience in both exploration and mine geology and has previously worked in Central Asia.

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