RNS Number:7034B
European Goldfields Ltd
08 August 2007
Immediate Release 8 August 2007
European Goldfields Limited
RESULTS FOR Q2 2007
BEST QUARTERLY RESULTS TO DATE
SUBSTANTAL GROWTH IN RESERVES AND CASH BALANCE
8 August 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European
Goldfields" or the "Company") today reports its results for the second quarter
to 30 June 2007. Highlights are:
Corporate highlights
* Acquisition of an additional 30% interest in Hellas Gold at an accretive
price
* Strategic alliance with Aktor and its parent company Elliniki
Technodomiki
* C$138 million equity financing completed in the period
Financial highlights:
* Sales increased by 142% to US$42.0m in H1 2007, compared to $17.4m in
2006
* Profit (before tax) of $16.6m in H1 2007, compared to $1.3m in 2006
* Operating cash flow increasing to $19.0m in H1 2007, up $14.5m over 2006
* Working capital of $211.6m at 30 June 2007, compared to $36.5m in 2006
Operational highlights:
* Stratoni: Grades higher than expected
* Skouries & Olympias: Ministry of Development completes review of
business plan - Significant milestone for permits
* Skouries: Contract signed with Outotec Minerals OY for the purchase of
mill and plant equipment
* Olympias: Refurbishment plan underway
* Certej: Pilot scale continuous test confirmed 90% gold recovery using
the Albion Process
* Certej: New mineralisation discovered in open pit
Commenting on the results, David Reading, Chief Executive Officer of European
Goldfields, said: "These results demonstrate that European Goldfields is on
track to become a mid-tier producer. The successful financing and the alignment
of shareholder interests, combined with growing production and profitability
underpin the Company's strategy of generating excellent and sustainable returns
for investors.
"We are also pleased with the permitting process for our gold projects with a
further step completed in the period. European Goldfields is now well placed to
unlock the further value from these projects with its strategic partner Aktor
and realise the value of our reserves for our new and existing shareholders".
Conference Call & Webcast - 8 August 2007 at 10am EST / 3pm GMT
European Goldfields will host a conference call on Wednesday 8 August 2007 at
10:00 a.m. ET / 3:00 pm (London, UK time) to update investors and analysts on
its results. Participants may join the call by dialing one of the three
following numbers, approximately 10 minutes before the start of the call.
From North America: (Local) 416-644-3423 or (toll free): 1-800-589-8577
From the U.K. & France (toll free): 00-800-0000-2288
From Austria, Belgium, Denmark, Germany, Ireland, Iceland, Netherlands, Norway,
Sweden, Switzerland and Italy (toll free): 00-800-0022-8228
A live audio webcast of the call will be available on:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1947880
For those unable to join the live conference call, a replay will be available
until 15 August 2007 at midnight by dialing (toll free) 1-877-289-8525 or
1-416-640-1917, Passcode 21241908#.
SELECTED FINANCIAL DATA
Three months ended 30 June Six months ended 30 June
--------------------- -------------------
(in thousands of 2007 2006 2007 2006
US dollars, except
per share amounts) $ $ $ $
--------------- ----------- ----------- ----------- -----------
Statement of loss
and deficit
Sales 24,944 8,274 42,027 17,357
Gross profit 14,949 4,330 25,088 8,625
Profit before 10,925 252 16,600 1,289
income tax
Profit/(loss) 8,129 (311) 12,085 (150)
after income tax
Non-controlling (2,794) (225) (4,642) (700)
interest
Profit/(loss) for 5,335 (536) 7,443 (850)
the period
Earnings/(loss) 0.04 0.00 0.06 (0.01)
per share
--------------- ----------- ----------- ----------- -----------
(in thousands of US dollars) 30 June 2007 31 December
2006
$ $
------------------ ------------ -------------
Balance sheet
Working capital 211,637 41,854
Total assets 729,774 311,943
------------------ ------------ -------------
European Goldfields' unaudited interim consolidated financial statements and
management's discussion and analysis for the three- and six-month periods ended
30 June 2007 and 2006 are filed on SEDAR at www.sedar.com.
CORPORATE ACTIVITY
Acquisition of an additional 30% interest in Hellas Gold - On 29 June 2007, the
Company completed the acquisition of an additional 30% interest in Hellas Gold
S.A. ("Hellas Gold"), increasing its stake to 95%. The purchase price was agreed
at US$178 million, which incorporated a 15% discount to the "see-through value"
of Hellas Gold. The purchase price was paid by the allotment to the vendor of
35,447,246 common shares, representing 19.9% of the issued and outstanding
shares of the Company on a diluted basis, and the balance of US$8.4 million in
cash.
This transaction was, in essence, a share swap and reinforces a strategic
alliance with Aktor S.A. ("Aktor") and its parent company Elliniki Technodomiki
TEB A.E. (ATHEX: ELTEX) ("El-Tech") in that approximately 95% of the purchase
price was paid to Aktor in common shares of the Company. Of the cash portion,
50% will be re-invested by Aktor into Hellas Gold, as funding towards
maintaining its residual 5% shareholding interest in Hellas Gold.
El-Tech is a large Greek conglomerate with a market capitalisation in excess of
US$2 billion and investments in four fields: construction, concessions, energy
and real estate. Aktor is Greece's largest construction company.
Furthermore, to demonstrate and confirm its long-term commitment to the Company
and its projects, Aktor has agreed not to sell the European Goldfields shares it
received as consideration until the date on which gold production commences in
Greece (or four years after the closing of the Acquisition, if earlier).
Cdn$138 million equity financing - Concurrently with the Acquisition, the
Company completed a treasury offering of 27.6 million shares, for total gross
proceeds of Cdn$138 million. The Acquisition combined with the treasury offering
resulted in a 50% increase in the Company's market capitalisation.
Attractive price secured on Stratoni silver stream sold to Silver Wheaton - In
April 2007, Hellas Gold agreed to sell to Silver Wheaton (Caymans) Ltd. ("Silver
Wheaton") all of the silver metal to be produced from ore extracted during the
mine-life within an area of some 7 km(2) around its zinc-lead-silver Stratoni
mine in northern Greece (the "Silver Wheaton Transaction"). Silver production at
Stratoni is a by-product of lead-zinc operations.
The sale was made in consideration of a prepayment to Hellas Gold of US$57.5
million in cash, plus a fee per ounce of payable silver to be delivered to
Silver Wheaton of the lesser of US$3.90 (subject to an inflationary adjustment
beginning after year three) and the prevailing market price per ounce. The
current Stratoni proven and probable silver reserve contains approximately 12
million ounces of silver.
The deal amounts to $11.59 of revenue per payable reserve ounce of silver,
compared to the current silver spot price of $13.14/oz. On a discounted basis
(at 10%), this amounts to $10.39/oz of payable silver reserve, compared to the
current discounted silver spot price of $10.34/oz.
The Silver Wheaton Transaction does not apply to any additional silver resources
within Hellas Gold's 317 km(2) of mining and exploration licences in northern
Greece, for example silver resources at Hellas Gold's other mine of Olympias,
except for a right of first refusal granted to Silver Wheaton on similar future
transactions over the Company's silver assets.
STRATONI OPERATIONS (GREECE)
Highlights:
* Better grades achieved
* Development for continued production ramp-up in 2007
* New mineralisation discovered at Stratoni
Consistent production from Stratoni - Hellas Gold mined a total of 53,088 tonnes
of ore in
the second quarter of 2007 and 108,157 tonnes during the first half of 2007 at
its Stratoni mine, which represents the best half-yearly production to date from
the Stratoni mine and mill. Hellas Gold completed eight shipments of
concentrates from Stratoni in the second quarter of 2007 and 13 shipments in the
first half of 2007. This translates into the following sales of concentrates:
Q2 2007 Q2 2006 H1 2007 H1 2006
Production
Ore mined (wet tonnes) 53,088 47,966 108,157 79,718
Sales
Zinc concentrate (tonnes) 14,007 5,513 22,251 10,796
- Containing payable: Zinc (tonnes)* 5,855 2,320 9,318 4,655
Lead concentrate (tonnes) 5,651 2,337 9,425 6,960
- Containing payable: Lead (tonnes)* 3,636 1,554 6,122 4,720
Silver (oz)* 285,349 121,350 475,641 373,909
Inventory (end of period)
Ore mined (wet tonnes) 4,603 12,326 4,603 12,326
Zinc concentrate (tonnes) 2 1,562 2 1,562
Lead/silver concentrate (tonnes) 2,150 674 2,150 674
* Net of smelter payable deductions
Ore production rates from underground have steadily increased from 400 tonnes
per day in the first half of 2006 to a steady 850 - 900 tonnes per day in the
first half of 2007 and the mine now operates effectively at these levels. The
rate of ore production is expected to continue to increase up to the end of
2009. This expected increase is supported by the current development plan and
the new decline which is scheduled for completion by end of 2007.
Better grades achieved - Mined grades have continued to be in line with the high
levels experienced in the first quarter of 2007. On average, mined and processed
grades have been on average approximately 18% higher than reserve grades in the
first half of 2007. As a result, concentrate production and sales are at high
relative levels.
Forecast ore production for 2007 has been reduced by approximately 10% from the
originally forecasted 250,000 tonnes due to bad ground conditions in the upper
area of the mine, reducing the access to faces required for expanded operations.
However, this is not expected to affect forecast metal production as grades have
been significantly higher than expected in 2007.
Development for continued production ramp-up in 2007 - An internal ramp to
access the upper parts of the mine is on-going and is providing access to new
working ends in the upper part of the mine to ensure the ramp-up in production
continues in 2007. The new decline to the Mavres Petres orebody, critical to
future production ramp-ups and ventilation, is over 1,400 metres and advancing
satisfactorily.
The two filter presses designed to maximise the utilisation of storage space for
fine tailings will be commissioned in the third quarter of 2007. The backfilling
of old mine workings with coarse tailings to create additional tailings storage
space on surface has resulted in a total of some 20,000 m3 of void in the old
Madem Lakkos mine workings being filled to date. This backfilling should also
reduce mine water pumping and treatment costs. The second water treatment plant
at the Stratoni mine site is scheduled to be commissioned in the third quarter
of 2007 to improve efficiency and provide capacity for extreme rainfall events.
New mineralisation discovered at Stratoni - New mineralisation has been
encountered during the excavation of the new decline running between the
existing reserve and mined-out areas at Madem Lakkos. Average grades from panel
sampling compare favourably with current reserves. A drill programme designed to
define at least 200 metres of strike and 75 metres of dip extent has commenced
with results expected in the fourth quarter of 2007. The new decline will enable
immediate access for mining of any new discovery in this area.
Drilling of Stratoni extensions - In October 2006, European Goldfields began an
exploration drilling programme at Stratoni with the aim to significantly
increase reserves and life of mine. The two targets being investigated first are
known extensions to previously mined areas of the Stratoni (Madem Lakkos)
deposit, where production grades of 9.0 to 10.7% lead, 9.0 to 9.6% zinc and
160.0 to 185.3 g/t silver are recorded. Drilling to date has confirmed to date
the geological model.
The drilling programme will also investigate the inferred resources previously
reported for Stratoni (see the Company's press release of 8 January 2007), which
form extensions to the western deposit at Stratoni (Mavres Petres). The drilling
programme is designed to upgrade these inferred resources to the measured and
indicated categories. These inferred resources are extrapolations from the known
reserves and comprise some 555,000 tonnes grading 7.3% lead, 10.2% zinc and 181
g/t silver.
SKOURIES & OLYMPIAS PROJECTS (GREECE)
Highlights:
* Sales of Olympias gold concentrate on track
* Olympias refurbishment plan underway
* Contract signed for purchase of mill and plant equipment
* Ministry of Development completes review of business plan
Sales of Olympias gold concentrate on track - Hellas Gold's Olympias project
benefits from an existing stockpile of gold-bearing pyrite concentrates
representing, at December 31, 2006, a reserve of approximately 252,000 tonnes
grading 23.3 g/t gold (containing 188,000 oz of gold), in addition to
substantial underground reserves of gold, lead, zinc and silver.
Hellas Gold completed eight shipments of gold concentrates from the Olympias
stockpile in the second quarter of 2007 and 18 shipments in the first half of
2007. This translates into the following sales of concentrates:
Q2 2007 Q2 2006 H1 2007 H1 2006
Sales
Gold concentrate (dry tonnes) 12,686 1,905 29,776 1,905
Hellas Gold has secured to date the sale of a total of 209,000 wmt of Olympias
concentrates (containing approximately 148,000 oz of gold) over a three year
period to four different companies - Golden China Resources Corporation
(formerly Shandong MIC Biogold Ltd.), MRI Trading AG, Opeloak Limited (a
subsidiary of Celtic Resources Holdings Plc) and Euromin S.A. - with expressions
of interest to sell up to an additional 132,000 wmt of concentrates if the
initial shipments are successful. Hellas Gold expects to sell a total 100,000
tonnes of gold concentrates in 2007 under the terms of these agreements.
Hellas Gold plans to resume underground mining operations at Olympias after
permits are awarded, producing more gold bearing pyrite concentrates for sale to
existing and new off-take purchasers.
Olympias refurbishment plan underway - Preliminary work has already been
initiated to realise the start-up at Olympias. The main mine infrastructure
consisting of ventilation, dewatering and hoisting are all operable and entry to
the workings is available from the existing ramp. An engineering audit of the
underground mine facilities has been completed and will be put into effect once
permission to proceed is received. Similarly, the fabric of the existing
concentrator is sound. An audit of the plant has been undertaken and the
international contractor Outotec Minerals OY inspected the facilities in July
2007 and concluded that the plant could be brought back into efficient operation
at relatively modest cost.
It is firstly planned to reclaim and process the 2.4Mt of stockpiled tailings
arising from the previous operations at Olympias. This material will be fed into
the plant either alone or blended with mined ore and will produce the gold
bearing pyrite concentrate similar to that which is already being sold. The
residue from the concentrator plant will be directed to a backfill plant where
the course fraction will be mixed with a small quantity of cement and used to
fill the underground voids at Olympias; the fine fraction will be filtered and
the dried product transported for storage at the tailings management facility at
the nearby Stratoni mine. In this way, the environment will be improved at the
Olympias site and all future tailings managed in a responsible manner utilising
best practice.
Skouries technical feasibility study nearly completed - Hellas Gold has
completed most technical studies for the final bankable feasibility study on its
Skouries gold-copper project. These studies include:
* A cost and definition study for the process plant and associated
infrastructure, undertaken by
Aker Kvaerner Engineering Services
* A cost and definition study for underground mechanical and electrical
utilities, undertaken by
Scott Wilson Mining
* The design of the tailings management facility, undertaken by Golder
Associates
* A study of hydrogeology and creek boundaries by the Greek Institute of
Geology & Mineral Exploration (IGME), to be used in the development of a new
hydrogeological model
* A reserves estimate, undertaken by SRK Consulting
* Mining studies undertaken by SRK Consulting, Scott Wilson Mining and
other international consultants.
Mining studies carried out to date confirm that Skouries can be mined as a low
strip open pit operation and as a highly productive underground mine. This would
produce annually up to 43,000 tonnes of copper and 220,000 oz of gold over a
mine life of over 20 years. This production rate is shown to be sustainable
based on the detailed mine design carried out by independent external
consultants and benchmarking with other comparable mines.
Outstanding work on the bankable feasibility study consists of the incorporation
of the environmental impact study and minor optimisation studies on landtake
positioning around the open pit, water diversion and costs in the open pit.
Contract signed for purchase of mill and plant equipment - Hellas Gold has
signed a contract with Outotec Minerals OY for the purchase of mill and plant
equipment. Hellas Gold is also negotiating with
Aktor S.A. for the construction of the plant and related infrastructure after
permits are received. In June 2007, a deposit of Euro6 million was paid to secure
the fabrication of the primary SAG and ball mills and for Outotec to commence
with basic design. A testwork programme has been agreed with Outotec and will be
carried out at their laboratory in Finland during August 2007. The programme is
aimed at optimising the gravity gold recovery and dore production system, and
establishing basic design criteria for the concentrate regrind mill, the
concentrate thickener and filter.
Ministry of Development completes review of business plan - In July 2007, Hellas
Gold received a formal letter confirming that the Greek Ministry of Development
had completed its review of Hellas Gold's business plan submitted in January
2006 for the joint development of the Skouries and Olympias gold and base metals
projects in Northern Greece.
In the letter, the Ministry of Development also re-declared its positive opinion
of Hellas Gold's preliminary environmental impact study ("PEIS") which has
already been submitted, and formally requested the Ministry of Environment to
issue its official approval of the PEIS.
The letter also states that the Ministry of Development "is in agreement with
the development of the project described in the business plan, as this
investment is particularly beneficial to the national and local economy (...)
and reflects the intent of the contract signed between the Greek State and
Hellas Gold".
This letter is addressed to Hellas Gold and the Ministry of Environment and
represents a statement of support for the projects based on detailed studies
completed by appropriate technical and advisory bodies appointed by the Ministry
of Development. This letter represents the foundation for the fulfilment of
Hellas Gold's business plan for Skouries and Olympias, in compliance with the
Greek and EU legal framework.
The business plan focuses on a phased approach to the development of the
Skouries gold-copper porphyry deposit and the Olympias gold-lead-zinc-silver
deposit. The principal revenue stream in the early phases will be through the
sale of concentrates. Hellas Gold's current plan is to develop Olympias in three
phases to allow refurbishment of existing infrastructure and the subsequent
construction of new gold processing facilities at Stratoni. Skouries will
initially be mined as a low strip open pit operation, followed by highly
productive underground mining.
This letter from the Ministry of Development re-confirms an earlier statement
made by the General Secretary of the Greek Ministry of Development, Mr Nikos
Stefanou, when he publicly stated that the Government of Greece fully supports
the development of mining projects in Chalkidiki, the region where the Skouries
and Olympias projects are located. In his speech, Mr Stefanou stated that "The
mining industry is extremely important for the regional development of Greece"
and more specifically that "The government supports the development of the gold
mining business in Chalkidiki, according to the environmental framework. The
execution of this initiative will develop this region and provided work for 600
people in the construction phase and 1300 people in the production." The speech
was made on 10 May 2007 in Athens and is available at
www.ypan.gr/c_announce/45_3927_cms.htm.
Hellas Gold is currently finalising a full environmental impact study ("EIS")
which is expected to be submitted to the Greek government in the fourth quarter
of 2007, addressing any comments received on the PEIS.
On approval of the EIS, the environmental permits for Skouries and Olympias are
expected to be issued.
Hellas Gold will then submit to the Greek government a final technical report on
the Skouries and Olympias projects, which will restate the principles of the
business plan and take into account any conditions detailed in the environmental
permit. The mining permits are expected to be issued on approval of the
technical report by the Greek government.
Permit-wide exploration under way - Twenty exploration targets identified -
Hellas Gold holds 317 km(2) of highly prospective exploration licences in
northern Greece. Recent work by Hellas Gold has highlighted a total of twenty
exploration targets, including six advance targets and extensions to known
deposits, seven targets of known mineralisation for follow-up work and seven
conceptual targets.
A programme of mapping, reinterpretation and modelling has been undertaken on
the Piavitsa advanced target. This polymetallic massive sulphide target
comprises a 6 km mineralised structure with a 3.5 km central zone expressed by
old manganese oxide open pits. Within the zone, seven holes drilled by the
previous owners over 1,300 metres of strike length and some 500 metres of known
down dip extent define three mineralised horizons averaging 12 metres width
including high grade zones averaging around six metres width. Grades within the
intercepts ranged from 0.3 to 22.2 g/t gold, 0 to 533 g/t silver, 0 to 26% zinc
and 0 to 12% lead. The current programme has confirmed the potential of the
Piavitsa target over a three kilometre strike length and has identified a high
grade shoot within the main horizon. The work also identifies previously
unsampled horizons of potential economic mineralisation and points to the
possibility of further high grade shoots at depth. These targets will be tested
with geophysics in the second half of 2007 and subsequently drilled out.
Pilot ground-based geophysical programmes have now been completed over known
mineralisation at Olympias and have proven the effectiveness of EM geophysical
surveys over areas that are prospective for massive sulphide mineralisation. On
the basis of these results, Hellas Gold plans to fly airborne magnetic surveys
over the entire licence block and airborne EM surveys over the massive sulphide
belts in October 2007. The airborne surveys are aimed at identifying new target
areas and prioritising these with existing targets in preparation for drilling
in 2008.
CERTEJ PROJECT (ROMANIA)
Highlights:
* Technical feasibility study submitted
* Albion Process Technology achieved 90% gold recovery in continuous pilot
plant tests
* New mineralisation discovered in open pit
Technical feasibility study submitted - In March 2007, European Goldfields
submitted a Technical Feasibility Study ("TFS") to the Romanian government, in
support of its permit application to develop its
80%-owned Certej project.
The Certej reserve for the sale of concentrates contains 27.7 million tonnes of
ore grading 2.0 g/t gold and 11.6 g/t silver, representing 1.76 million ounces
of gold and 10.4 million ounces of silver. The deposit extends from surface and
will be mined by open pit methods with a strip ratio of 3.4:1. The project will
involve the mining and processing of 3.0 million tonnes of ore per annum over at
least nine years.
The metallurgical process design is based on extensive comminution and flotation
testwork to produce a gold bearing concentrate and then processing by means of
the Albion Process. The project is expected to yield an average of 308,000
tonnes of flotation concentrate per annum with high grades ranging between 17 -
19 g/t gold and 80 - 130 g/t silver (depending on the source of the ore in the
deposit), with a flotation gold recovery of approximately 90%, followed by an
Albion gold recovery of approximately 90%, resulting in a total process gold
recovery of 81%. This translates into an annual planned production of
approximately 168,000 oz of contained gold in the concentrate. The flotation
concentrate will then be directed to the Albion Process section of the plant for
recovery of gold and silver as dore. The Albion Process is a combination of
ultra-fine grinding of concentrates and oxidative leaching at atmospheric
pressure. The liberated gold and silver is then recovered as dore by the
conventional Carbon in Leach process.
The residues from the flotation and gold plants will be disposed of in two
separate but adjoining tailings management facilities.
Albion Process Technology achieved 90% gold recovery in continuous pilot plant
tests - European Goldfields is currently completing an extensive metallurgical
testwork programme using the Albion Process at the facilities of
Hydrometallurgical Research Laboratories Testing ("HRL") in Australia. Small
scale batch tests had achieved gold recoveries of 90-93% and established the
optimum conditions for the continuous pilot plant testwork required to prove the
amenability of the Albion Process for the Certej concentrate.
A Phase 1 pilot scale test was carried out which confirmed that gold extractions
in excess of 90% could be achieved on a continuous basis at sulphur oxidation
rates in the Albion Process of around 70%. The testwork also confirmed the
consumable levels were in the expected range.
A programme of flotation concentrate grade optimisation work was then undertaken
and on completion a second Phase 2 continuous pilot plant run was completed in
June 2007. This confirmed the high gold extractions of 90% achieved in the Phase
1 run and that the flotation concentrate is amenable to treatment by the Albion
Process. Further optimising work and equipment tests by vendors are also nearing
completion and a final design report will then be issued by Core Resources and
Xstrata Technology allowing an engineering design company to calculate costs for
the bankable feasibility study.
During the testwork campaign at HRL, a large batch scale Albion test was
completed on the concentrate from the West ore zone of the Certej deposit which
had previously proved to be unresponsive to the Albion Process. This work
demonstrated that by applying a slightly higher oxidation rate, a gold recovery
of 90% could also be achieved from the West ore zone. This is a very positive
result as it could increase the operating life of the Albion Process by at least
two years.
A definitive mineralogical study describing the four ore zones of the Certej
deposit was completed by Amtel of Canada which indicated that there is potential
for increasing flotation gold and silver recoveries above those achieved in the
laboratory scale tests.
Environmental impact study nearing completion - In 2006, European Goldfields
completed all the necessary Environmental Impact Assessments (Levels I and II)
and a Social Impact Assessment Study in support of its permit application to
develop the Certej project.
Work is now progressing well on the Certej environmental impact study ("Certej
EIS"), which is due for completion in the third quarter of 2007 after some
contributory studies are finalised. The Certej EIS will have been carried out
over a period of a year to cover the four seasons for accumulating certain
required base line data. The Certej EIS is a detailed multi-discipline study
assessing the environmental, social and health impacts of the project on the
affected area.
Final bankable feasibility study to be completed by end-2007 - Once the EIS is
completed, European Goldfields expects to complete a bankable feasibility study
("BFS"), which will be used for internal approval and presentation to banks and
other sources of potential financing of the project. The BFS is scheduled for
completion by the end of the fourth quarter of 2007.
A contract to undertake an engineering study of the process plant and associated
infrastructure has been awarded to Aker Kvaerner Engineering Services. This will
include the final results of the completed Albion Process testwork programme,
the design criteria package for the Ultra Fine Grinding IsaMill and the leaching
process with the associated costs. Site visits have been undertaken to gather
the additional design and site data needed to produce the definitive cost
estimate and study.
The BFS will include a final open pit optimisation study, which will take into
account the latest testwork and the effect on assessing ore extraction and
processing economics and include the positive results of the completed infilling
drilling programme to convert inferred resources within the pit area to the
indicated category (see table below). Conversion of inferred resources is
expected to provide an additional year of feed to the Certej plant.
Clear path to permitting - European Goldfields has established a clear path to
applying for permits to develop the Certej project, having already submitted the
TFS to the Romanian government in March 2007, which will be followed by the
submission of the EIS in the third quarter of 2007.
In September 2006, European Goldfields announced that the Hunedoara County
Council had issued a General Urbanisation Certificate for the Certej project.
The certificate confirms the designation of Certej as an industrial mining area
and confirms local community support for the project. This important milestone
is the first official step in the permitting process for Certej.
All mining permits and a detailed urbanisation plan are expected by mid-2008
following a standard public consultation process with the local community.
New mineralisation discovered in open pit - Exploration in Romania has focused
on extending the life-of-mine of the Certej project. This comprises drilling out
inferred resources and deeper, potentially high grade feeder zones, in-fill
drilling and metallurgical testwork on satellite deposits, investigation of high
grade vein deposits near to the project that could increase the feed grade in
the early project life and the development of targets that could enhance the
value of concentrates produced, by the addition of copper rich material for
example. Drilling to convert inferred resources (currently treated as waste
where they fall in the open pit) to the indicated category has now been
completed.
In May 2007, European Goldfields announced that significant drilling intercepts
have been encountered at Certej. In July 2007, European Goldfields completed a
diamond and RC drilling campaign on the Certej deposit comprising 29 holes for
some 3,492 metres. The drilling programme was designed to convert inferred
resources within the current pit design to the indicated category and to test
the link structure. To date results have been received for all of the 29 holes
and significant intercepts are as follows:
Hole ID From To Width Au Ag Zone
(m) (m) (m) (g/t) (g/t)
CJSD282 14 24 10 1.8 4 West_N
CJSD284 11 17 6 9.7 2 West_S
Inc 11 12 1 55.4 2
" 37 68 31 6.7 6
Inc 48 51 3 51.8 30
" 74 82 8 2.9 4
" 92 96 4 1.6 192
CJSD285 96 108 12 1.5 55 West_S
CJSD286(RC) 122 126 4 1.9 1 Int
CJSD287(RC) 113 114 1 39.3 1 Int
CJSD290 3 7 4 12.3 4 West_N
Inc 4 7 3 16 4
CJSD291(RC) 146 158 12 2.1 25 Link Str.
Inc 157 158 1 12.8 2
" 171 196 25 1.7 3 Link Str.
Inc 178 180 2 7.1 6
" 376 414 38 1.7 8
CJSD292 38 70 32 2.4 15 West_S
" 79 99 20 3.3 91
CJSD296 0 24 24 1.6 2 West_N
" 54 66 12 1.5 8
CJSD297 30 36 6 1.5 14 West_N
" 46 56 10 4.7 169
Inc 46 49 3 8.5 487
CJSD298 10 30 20 1.6 4 NW
CJSD299 69 84 15 2.2 3 NW
" 82 84 2 6.2 2
CJSD300 21 22 1 7.8 145 NW
" 44 48 4 1.6 4
CJSD301 0 5 5 2.6 15 West_S
" 13 34 21 1.8 15
" 61 66 5 1.8 28
CJSD303 82 87 5 1.9 1 West_S
CJSD305 43 45 2 5.1 81 West_N
Inc 43 44 1 8.8 132
CJSD306 52 56 4 1.8 1 West_N
" 75 83 8 1.8 3
CJSD307 8 10 2 5.1 19 West_N
Inc 8 9 1 9 33
" 89 96 7 1.6 5
CJSD308 38 40 2 1.5 5 West_S
CJSD309 60 66 6 1.8 23 West_S
" 70 75 5 1.6 32
Results are quoted using a 1.0 g/t Au lower cut-off grade, no upper grade cut
being applied, and include a maximum of 5 m consecutive internal waste. Only
intercepts equal to or greater than 1.5 g/t Au are reported. The Certej deposit
is irregular in nature, however drilling has been conducted perpendicular to
mineralisation wherever possible and as such drilled widths correspond to true
widths. Unless otherwise indicated, the intercepts reported above are from half
HQ size diamond core and the holes are sampled at one-metre intervals throughout
the entire hole.
High gold grade drill intercepts from the southern flank of the West Zone
represent a zone of intense potassic and variably silica altered andesite which
trends southwest and is open along strike and down dip. The drilling confirmed
the inferred resources and also identified these additional higher grade
mineralised zones in the western part of the deposit. The results are currently
being assessed and a new resource calculation will be completed later in 2007
followed by a revised pit optimisation and reserve estimation.
Sample preparation and analysis was carried out at the independent ISO Certified
ALS-Chemex Laboratory at Gura Rosiei, Romania, using industry standard fire
assay techniques for gold on 50-gram sample charges with atomic absorption
spectrometry ("AAS") finish and aqua regia digest for silver with an AAS finish.
In addition to the laboratory's standard quality assurance / quality control ("
QAQC"), the Company submits field duplicates, crusher duplicates, pulp
duplicates and known gold standards on a routine basis and these comprise
approximately 20% of submitted samples.
For further information please contact:
European Goldfields: e-mail: info@egoldfields.com
David Reading, Chief Executive Office: +44 (0)20 7408 9534
Officer
RBC Capital Markets Office: +44 (0)20 7653 4093
Patrick Meier / Peter Barrett-Lennard
Evolution Securities Office: +44 (0)20 7071 4300
Simon Edwards / Neil Elliot
Buchanan Communications: e-mail: bobbym@buchanan.uk.com
Bobby Morse / Ben Willey Office: +44 (0)20 7466 5000
Renmark Financial Communication: e-mail:
nmurraylyon@renmarkfinancial.com
Neil G. Murray-Lyon Office: +1 514 939 3989
Forward-looking statements
Certain statements and information contained in this document, including any
information as to the Company's future financial or operating performance and
other statements that express management's expectations or estimates of future
performance, constitute forward-looking information under provisions of Canadian
provincial securities laws. When used in this document, the words "anticipate",
"expect", "will", "intend", "estimate", "forecast", "planned" and similar
expressions are intended to identify forward-looking statements or information.
Forward-looking statements include, but are not limited to, the estimation of
mineral reserves and resources, the timing and amount of estimated future
production, costs and timing of development of new deposits, permitting time
lines and expectations regarding metal recovery rates. Forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by management, are inherently subject to
significant business, economic and competitive uncertainties and contingencies.
The Company cautions the reader that such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual financial results, performance or achievements of the Company to be
materially different from its estimated future results, performance or
achievements expressed or implied by those forward-looking statements and the
forward-looking statements are not guarantees of future performance. These
risks, uncertainties and other factors include, but are not limited to: changes
in the price of gold, base metals or certain other commodities (such as fuel and
electricity) and currencies; uncertainty of mineral reserves, resources, grades
and recovery estimates; uncertainty of future production, capital expenditures
and other costs; currency fluctuations; financing and additional capital
requirements; the successful and timely permitting of the Company's Skouries,
Olympias and Certej projects; legislative, political, social or economic
developments in the jurisdictions in which the Company carries on business;
operating or technical difficulties in connection with mining or development
activities; the speculative nature of gold and base metals exploration and
development, including the risks of diminishing quantities or grades of
reserves; the risks normally involved in the exploration, development and mining
business; and risks associated with internal control over financial reporting.
For a more detailed discussion of such risks and material factors or assumptions
underlying these forward-looking statements, see the Company's Annual Info
rmation Form for the year ended 31 December 2006, filed on SEDAR at
www.sedar.com. The Company does not intend, and does not assume any obligation,
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise, except as required by law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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