The Company's cash and cash equivalents as at December 31, 2012 were $9.8 million compared to $10.3 million as at December 31, 2011, representing a decrease of $0.5 million. The decrease was due primarily to corporate and exploration expenditure of $6.7 million, the expenditure on property, plant and equipment of $2.4 million, deferred finance costs of $0.9 million and Orsu's 40% funding of the Talas Project of $0.3 million. This was partially offset by net proceeds, after the legal and professional fees, from the Sale of $9.8 million.
After the completion of the Karchiga DFS in March 2012 the Company considered both the technical feasibility and economic viability of the Karchiga Project to be validated. As a result expenditure incurred from April 2012 onwards, in relation to the construction of a mining and processing facility for the Karchiga Project, was considered by the Company to be development expenditure, or pre-production expenditure, and recorded as property, plant and machinery. In the period from April to December 31, 2012 the Company incurred $2.3 million of development expenditure. In addition, the Company began the process of seeking to secure project financing for the Karchiga Project and incurred financial advisory costs of $0.9 million in the period up to December 31, 2012, which the Company considers to be borrowing costs directly related to the raising of debt finance for the Karchiga Project and have been capitalised as deferred finance costs in the audited consolidated financial statements as at December 31, 2012.
In July 2012, the Company completed the Sale of the Talas Project to the Gold Fields Group for total consideration of $10 million. In addition, the Gold Fields Group also entered into an agreement for the Subscription for gross proceeds of CAD$10 million which have been advanced into escrow until completion which is subject to the Company obtaining the Kazakh Formal Waiver. Until completion of the Subscription the Company considers the Subscription to be a derivative instrument and has recorded a derivative receivable after measuring an initial fair value of $7.6 million, being the excess of the expected gross proceeds from the Subscription, CAD$10 million, over the fair value of the Common Shares and Warrants. In total as at December 31, 2012 including the consideration from the Sale of $10 million and an initial fair value of the Subscription of $7.6 million the Company recorded a net gain on Sale of $7.7 million after deducting the cost of equity investment in the Talas Project, tax and legal and professional fees in relation to the Sale (see section "Sale of equity investment in Talas Project" below). In relation to the Subscription the Company subsequently re-measured the fair value of the Subscription as at December 31, 2012 resulting in a derivative loss of $0.4 million for the year.
In November 2012 the Company entered into the Akdjol-Tokhtazan Exclusivity Agreement with David-Invest. As at December 31, 2012 the Company considers that this asset continues to meet the criteria to be classified as "held for sale" and as a result of re-measuring the fair value less costs to sell of the disposal group, recognized an impairment loss of $1.3 million for the year ended December 31, 2012.
Also in November 2012, the Company announced that, as part of its ongoing objective to seek to acquire new exploration licenses in Kazakhstan, it had entered into the Balkhash Agreement ending in April 2013 (subject to extension) to jointly explore the Balkhash Project. As a result, in the fourth quarter of 2012 the Company funded exploration work totalling $0.8 million which has been recorded as exploration expenditure for the year ended December 31, 2012.
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