Celtic Resources has made a £21 million first-half profit and is pondering a rescue bid for spin-off Eureka Mining.

Kazakhstan-focused gold play Celtic turned a $2.7 million loss in last year's first six months into $40 million pre-tax profits in the half year to June. A major contributor to this was a $37 million investment sale profit for Celtic, which agreed under pressure to sell its stake in Russia's Nezhdaninskoye gold mine to oligarch Vladimir Potanin for $80 (£44) million.

AIM-quoted Celtic achieved a dramatic increase in gold production from its Suzdal mine in Kazakhstan from 8,859 oz to 24,793 oz, which converted Suzdal's previous interim deficit of $2.9 million into $5.3 million profits. Celtic chief executive Kevin Foo says the company is continuing to assess potential new opportunities in the Former Soviet Union, with Kazakhstan seen as 'particularly attractive'.

Thanks to the Nezhdaninskoye deal, Celtic ended June with £36 million cash, a third of its £109 million AIM value. The company is a major holder of fellow AIM counter Eureka Mining, which Celtic spun off in 2003 after selling certain assets to it.

Eureka has been looking for gold in the South Urals and more recently for an urgent cash injection. Celtic has already provided an £870,000 secured loan and says it is carrying out due diligence before deciding whether or not to make an offer for Eureka.

If it cannot raise further funds, Eureka says 'there can be no guarantee that the company will be able to continue to trade'. Eureka's shares have plunged 32p this morning to 57.5p, possibly vindicating critics of the original spin off, while Celtic's, which topped 530p in 2004, have rallied 1.5p to 226.5p and could make further progress.

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