Oxiana has an aggressive exploration program planned this year at its Sepon operations in Laos with more than $10m to be spent on exploring ground around the operating mine. The aim is to identify both extensions to the existing deposits and locating entirely new deposits.

The potential for further gold and copper discoveries in the 400 square kilometre Sepon mineral district continues to be clearly demonstrated with new resources, deposits and prospects discovered each year, both around the existing pits and in new parts of the district.

Last year seven new gold prospects were generated and two potential new gold deposits were discovered. Mineable Reserves of oxide gold have so far been outlined at the Discovery ( Main , East, Colluvial), Discovery West, Nalou , Nam Kok (West and East), Vang Ngang and Luang deposits.

The total oxide resources at Sepon stand at 1.6Moz. These near surface oxide variants of the primary sulphide hosted gold mineralisation at depth have been the main focus of exploration to date, with the potential for primary sulphide hosted gold mineralisation remaining highly under-explored. Total known primary resources are 2Moz.

Last year wide-spaced drilling to test the down-dip continuity between the Discovery Main and Luang deposits confirmed continuity of both oxide and primary mineralisation. Some high grade results were returned including 10m @ 13.7g/t gold (from 90m), 19m @ 5.4g/t (from 46m), 7m @ 17.64g/t (from 100m), 16m @ 5.65 g/t (from 51m) and 7m @ 18.9g/t (from 24m).

Development drilling is now required to establish resources in these areas. Extensions to oxide mineralisation were also intersected immediately to the east of the Discovery Colluvial pit with results including 14m @ 4.59g/t (from 22m) and 32m @ 7.38g/t (from surface). Also contiguous with Discovery Colluvial to the east, high grade results confirmed the potential for down-dip continuity of primary resources in the Discovery Colluvial-West link zone including 15m @ 6.32 g/t (from 52m), 5m @ 16.5 g/t (from 43m) and 5m @ 10.39g/t (from 93m).

Extensions of primary sulphide hosted mineralisation were intersected 200 metres to the west of the Discovery West deposit and follow up drilling is planned for 2006.

At Nalou, down-dip continuity of primary sulphide resources was consolidated with gold intercepts of 30m @ 3.84g/t (from 53m), 14m @ 6.07g/t (from 53m), 11m @ 2.51g/t (from 7m) and 4m @ 7.37g/t (from 31m).

Drilling at Vang Ngang East, a potential new oxide deposit immediately to the east of the Vang Ngang pit, returned encouraging high grade gold mineralisation with better results including 2m @ 218.7 g/t (from surface), 10m @ 16.8g/t (from surface), 14m @ 6.4g/t (from 1m) and 13m @ 5.2g/t (from 45m).

Drilling to estimate an initial resource at Vang Ngang East is ongoing.

Throughout the 400 square kilometres Sepon District, exploration continued to systematically drill test priority targets in the western domain and generate new targets through prospecting and surface exploration in the eastern domain. The discovery of several exciting new prospects approximately 5km east of the mine continued to highlight the extensive potential that exists within economic trucking distance of the Sepon operations.

One of the most promising new areas in the Sepon mineral district last year was Pha Vat North, 10km to the west of the Sepon processing plant, where drilling throughout the year continued to return significant gold mineralisation over 500 metres of strike. Results included 27m @ 4.37g/t (from 112m), 14m @ 6.36g/t (from 37m), 28m @ 5.11g/t (from 19m) and 10m @ 5.2 g/t (from 26m).

By the end of last year sufficient holes had been drilled to estimate an initial inferred resource of 165,000oz and drilling to extend the deposit is continuing. Along strike to the east and north-east, wide spaced drilling in the corridor between Pha Vat North and the Thengkham copper system has also highlighted potential for further oxide and primary gold mineralisation over 2.5km of strike length.

A gold resource comprising 9 million tonnes @ 0.9g/t gold for 260,000oz of gold (0.5g/t gold cut-off) was estimated overlapping in part with the Thengkham North copper deposit. Follow up drilling at the nearby Pha Vat prospect, intersected additional shallow oxide gold mineralisation, with the better intersections remaining open to the south-east. Better results include 20m @ 1.5g/t gold from 4m. Copper results included 16m @ 0.94% copper. An initial resource estimate for this gold-copper deposit will be completed in 2006.

Detailed mapping and prospecting of the extensive Houay Bang drainage system, located about 7km east of the Sepon mine started in 2005. Three large areas of jasperoid hosted gold mineralisation were discovered and scout drill testing of this area continued throughout the year. Encouraging results were returned from first pass drilling and exploration will continue to assess this prospect in 2006.

Geological mapping and prospecting at the nearby Houay Payee and Phu Xo areas delineated extensive gold bearing jasperoid and deep epithermal vein outcrops, in some cases up to 20m wide and 200m in strike. Free gold is common in the area and rock chip assays up to 17.4g/t Au have been returned. Scout drilling is planned for early 2006.

Drilling at the Ban Mai prospect, to test a 2.5km gold and multi-element soil geochemical anomaly associated with prospective geology, identified mineralisation beneath transported cover. Results, were considered encouraging and follow up drilling will be undertaken in 2006.

At the Kenkeuk prospect, 2km north-east of the Sepon mine, drilling was undertaken to test rock chip gold anomalies identified over 500 metres of strike. While drilling intersected some encouraging alteration and mineralisation immediate resource potential was downgraded.

Results including 6m at 1.0g/t gold and 2.4m at 2.2g/t suggest that further work is warranted at a later date.

Reconnaissance aircore drilling at Houay Seun prospect started testing an area of prospective stratigraphy coincident with anomalous multi-element soil geochemistry over 2km. Initial results include 3m at 2.68g/t gold and 5m at 1.49 % copper.