RNS Number:4853T
European Goldfields Ltd
22 March 2007
Immediate Release 22 March 2007
European Goldfields Limited
The following table is a correction to that which appeared in RNS number 4744T,
which was released at 7am this morning. Profit / (Loss) for the three months
ended 31st December 2005 was US$ (4,309,000).
SELECTED FINANCIAL DATA
Three months ended 31 December Year ended 31 December
-------------------- --------------------
(in thousands of 2006 2005 2006 2005
US dollars,
except per share $ $ $ $
amounts) ----------- ----------- ----------- -----------
---------------
Statement of loss
and deficit
Sales 19,870 1,464 52,438 1,521
Gross profit 10,669 97 27,252 154
Profit/(loss) 6,616 (4,643) 12,008 (13,316)
before income tax
Profit/(loss) 4,349 (4,254) 7,184 (11,622)
after income tax
Non-controlling (1,973) 55 (4,182) 1,212
interest
Profit/(loss) for 2,376 (4,309) 3,002 (10,410)
the period
Earnings/(loss) 0.02 (0.04) 0.03 (0.09)
per share ----------- ----------- ----------- -----------
---------------
RESULTS FOR 2006 - DELIVERING ON PROMISES
22 March 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European
Goldfields" or the "Company") today reports its results for the financial year
ended 31 December 2006. Highlights of the year are:
Financial highlights:
* Sales of US$52.4m in 2006, compared to $1.5m in 2005
* Sales up 30% in Q4 over Q3 2006
* Profit (before tax) of $12m in 2006, compared with a loss of $13.3m in
2005
* Operating cash flow increasing to $19.4m in 2006, up $26.3m over 2005
* Annual net earnings reported for the first time; $3m in 2006
* Working capital of $41.9m at 31 December 2006; funded beyond permitting
of new projects
Operational highlights:
* Stratoni production targets exceeded for 2006
* New economic mineralisation discovered at Stratoni
* Off-take agreements signed for 70% of Olympias stockpile of gold
concentrates - Expressions of interest received for the balance
* Two technical feasibility studies for Skouries and Certej nearly
completed in 2006
* Permit-wide exploration underway in Greece - Twenty exploration targets
identified
* Albion Process Technology achieved 92% gold recovery on composite sample
* Target exploration underway to extend Certej life-of-mine
Commenting on the results, David Reading, Chief Executive Officer of European
Goldfields, said: "We are delighted to be reporting annual net earnings for the
first time in our history, and to have exceeded our production target in 2006
for our Stratoni operations. Future growth will also come from our other three
major gold and base metals projects which have made significant progress during
2006. These are well on track with feasibility work completed and permitting
progressing as planned. With rapidly increasing cash flows and one of the
largest proven gold and base metal reserves in Europe, we remain on track to
become a leading mid-tier producer over the next few years."
Conference Call & Webcast - 22 March 2007 at 10am EST / 2pm GMT
European Goldfields will host a conference call on Thursday, 22 March 2007 at
10:00 a.m. EST / 2:00 pm GMT 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 (toll free): 1-800-731-5319
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=1758240
For those unable to join the live conference call, a replay will be available
until Thursday, 29 March 2007 at midnight by dialing (toll free) 1-877-289-8525
or 1-416-640-1917, Passcode 21221811#.
SELECTED FINANCIAL DATA
Three months ended 31 December Year ended 31 December
-------------------- --------------------
(in thousands of 2006 2005 2006 2005
US dollars,
except per share $ $ $ $
amounts) ----------- ----------- ----------- -----------
---------------
Statement of loss
and deficit
Sales 19,870 1,464 52,438 1,521
Gross profit 10,669 97 27,252 154
Profit/(loss) 6,616 (4,643) 12,008 (13,316)
before income tax
Profit/(loss) 4,349 (4,254) 7,184 (11,622)
after income tax
Non-controlling (1,973) 55 (4,182) 1,212
interest
Profit/(loss) for 2,376 (4,309) 3,002 (10,410)
the period
Earnings/(loss) 0.02 (0.04) 0.03 (0.09)
per share ----------- ----------- ----------- -----------
---------------
(in thousands of US dollars) 31 December 31 December
2006 2005
$ $
------------------ ------------ -------------
Balance sheet
Working capital 41,854 33,765
Total assets 311,943 266,618
------------------ ------------ -------------
European Goldfields' audited consolidated financial statements and management's
discussion and analysis for the years ended 31 December 2006 and 2005 are filed
on SEDAR at www.sedar.com.
STRATONI OPERATIONS (GREECE)
Highlights:
* Production targets exceeded for 2006
* Stratoni reserves increased by 23%
* New economic mineralisation discovered at Stratoni
* Strong community support achieved for Stratoni operations
Production targets exceeded for 2006 - European Goldfields' 65%-owned subsidiary
Hellas Gold S.A. ("Hellas Gold") has milled a total of 179,950 wet metric tonnes
(wmt) of ore in 2006 at its Stratoni zinc-lead-silver plant in Northern Greece,
exceeding the production target of 170,000 wmt for the year.
Hellas Gold completed seven shipments of concentrates from Stratoni in Q4 2006,
and 20 shipments for the whole of 2006. This translates into the following sales
of concentrates:
Q4 2006 Total 2006
Zinc concentrate (tonnes) 10,425 32,351
- Containing payable: Zinc (tonnes)* 4,418 13,775
Lead concentrate (tonnes) 5,124 15,780
- Containing payable: Lead (tonnes)* 3,329 10,467
Silver (oz)* 254,881 818,139
* Net of smelter deductions
Sales of contained metals increased by 38% for lead and 35% for silver in Q4
2006 compared to Q3 2006, while decreasing by a marginal 6% for zinc.
Production ramp-up in 2006 - Ore production rates from underground have steadily
increased from 400 to almost 900 tonnes per day during 2006. Ore production is
expected to continue to increase more rapidly than initially anticipated, up to
a maximum of 400,000 tonnes per year by the end of 2009.
The successful ramp-up in production to date is a result of extensive
refurbishment of mine infrastructure undertaken in 2006. This included the
refurbishment and re-equipping of mine workings and equipment, installation of
key items such as a backfill pump to ensure tight fill in the upper levels, and
backfilling a large void inventory to provide working faces. Rehabilitation work
at the Stratoni mill was also essentially complete by Q3 2006.
In summary, Hellas Gold has redesigned the mine and is now operating at a steady
rate while completing the underground development required for 2007 production
and the new decline to ramp-up production in 2008.
Hellas Gold has also started an improved programme of detailed grade control in
Q3 2006. This has already increased the understanding of grade distribution
within the orebody and should improve mining efficiency and plant recovery over
time.
Ongoing investment in the plant includes new pumps and commissioning of the
already installed on-stream analyser for improved recovery.
Stratoni reserves increased by 23% - European Goldfields announced in January
2007 an increase in reserves at Stratoni, which were reported as follows under
Canadian NI 43-101:
Reserve '000t* Silver Silver Lead Lead Zinc Zinc
Category
(g/t) (Moz)* (%) ('000t)* (%) ('000t)*
Proven 1,923 172 10.63 6.9 19 9.4 30
Probable 259 172 1.43 7.3 133 11.6 181
Total 2,182 172 12.06 6.9 152 9.7 211
* After deduction of ore extracted since the start of mining operations in Q4
2005.
Total reserve tonnes have increased by 23% over the reserves published prior to
the start of operations at Stratoni in Q4 2005, accounting for deduction of ore
since then. The new reserve will add an extra year to Stratoni's life of mine, a
20% increase over the remaining five-year mine life under the prior reserve.
A marginal reduction in grades is expected to be more than offset by greater
quantities of metal to be produced over the total life of mine and the
ramping-up of production going forward.
The new reserve has allowed Hellas Gold to ramp-up its planned yearly ore
production schedule as follows:
- Year 2006: 170,000 tonnes
- Year 2007: 250,000 tonnes
- Year 2008: 350,000 tonnes
- Year 2009: 400,000 tonnes
- Year 2010: 400,000 tonnes
- Year 2011: 400,000 tonnes
- Year 2012: 400,000 tonnes
This new reserve is based on an updated measured & indicated resource estimate
for the Stratoni orebody, which results from a new optimised geological model
based on revised geological mapping, additional data from underground sampling,
and a more reliable understanding of the orebody after a full year of mining at
Stratoni.
A better understanding of the orebody has also allowed Hellas Gold to define
increased inferred resources comprising some 555,000 tonnes grading 7.3% lead,
10.2% zinc and 181 g/t silver.
In addition, Hellas Gold recently started a new exploration drilling programme
at Stratoni, which is expected to increase life of mine by another two years at
least. Initial drilling results are expected in Q1 2007. An important objective
of the drilling programme is to upgrade existing inferred resources to full
Canadian NI 43-101 compliant reserves.
Development underway for continued production ramp-up in 2007 - A ramp to access
the upper parts of the mine has been commenced, along with infrastructure to
connect the upper part of the mine with existing ore bins to improve ore
handling and ventilation. This infrastructure will provide access to new working
ends in the upper part of the mine to ensure the ramp-up in production continues
in 2007.
Significant progress has also been made on the new decline to the Mavres Petres
orebody, which is now approximately 1,100 metres in and advancing at over 5m per
day on average. The new decline is not necessary for mining in 2007 but becomes
critical for the future production ramp-up involving the deeper portions of the
orebody, as well as providing better ventilation.
Tailings strategy outlined - In order to ensure tailings storage capacity for
the life of mine, a global strategy for the management of tailings has been
developed by Hellas Gold. Additional tailings storage space has been created by
removing coarse tailings material from existing storage facilities to backfill
old mine workings.
Dried fine material has also been moved from the existing tailings ponds and
placed in the voids created by removing the coarse tailings. Following
successful trials, two filter presses have been bought and will be commissioned
in Q2 2007. The filter press at the mill will be used for processing the current
production of fine tailings and water treatment sludge to allow the maximum
utilisation of the space created at the existing facility. The second filter
press will eventually be installed close to the new water treatment plant, but
will initially be used to treat the wet tailings and water treatment sludge for
dried cake storage. Current production of coarse tailings from production will
be used for backfill of current workings.
Water management programme adopted - To reduce future water pumping and
treatment costs, Hellas Gold commenced backfilling of the old Madem Lakkos mine
workings. A total of 13,000m3 of void has been filled so far. In addition, a
second water treatment plant at the Stratoni mine site will be commissioned in
2007 to improve efficiency and provide capacity for extreme rainfall events. The
new plant will include the second filter press to allow dry storage of treatment
residue as filter cake.
New economic mineralisation discovered at Stratoni - In October 2006, European
Goldfields began an exploration drilling programme at Stratoni. Stratoni already
has well-defined reserves over a six-year life of mine. Six areas targeted by
the drilling are obvious extensions to known mineralisation, in addition to more
conceptual targets between the two main Stratoni deposits.
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. The programme is aimed at drilling out resources
in these areas of known economic mineralisation.
Drilling into the known extensions of the upper part of the eastern deposit at
Stratoni (Madem Lakkos) has confirmed the geological model with mineralisation
occurring in the fold hinge of an antiform in the upper levels. Mine workings
that were not recorded in the old mine plans have been shown to be more
extensive than previously thought. A second deeper target at Madem Lakkos will
be drilled in Q2 of this year.
The drilling programme will also investigate inferred resources 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.
Economic mineralisation has been encountered in the new decline running between
the existing reserve and mined-out areas at Madem Lakkos. The decline exposed
some 35 metres of strike length and a minimum
of 4 metres width. The zone is located approximately half-way between the two
previously known deposits at Stratoni. Average grades from panel sampling of
6.2% lead, 11.2% zinc and 105 g/t silver compare favourably with current
reserves. The zone is open along strike, up and down dip and towards the hanging
wall and is interpreted as a footwall zone to the main marble horizon. In
addition to the intersected zone, there is a high potential for further
mineralisation where the zone intercepts the main marble both up dip and to the
east.
A drill programme designed to define at least 200 metres of strike and 75 metres
of dip extent will commence in April 2007. The new decline will enable immediate
access for mining of any new discovery.
Additional drilling will also be conducted from the new decline at regular
intervals along the rest of
the 1.5 kilometre zone between the existing reserve and mined-out areas at Madem
Lakkos.
The drilling programme aims to significantly increase reserves and life of mine.
The existing environmental and mining permits for Stratoni will allow Hellas
Gold to immediately exploit any new discoveries resulting from this drilling
programme.
SKOURIES & OLYMPIAS PROJECTS (GREECE)
Highlights:
* Off-take agreements signed for 70% of Olympias stockpile of gold
concentrates - Expressions of interest received for the balance
* Skouries technical feasibility study nearly completed
* Skouries reserves increased by 13%
* Phasing of Olympias established
* Permitting process underway
* Permit-wide exploration underway - Twenty exploration targets identified
Off-take agreements signed for 70% of Olympias stockpile of gold concentrates -
Expressions of interest received for the balance - Hellas Gold's Olympias
project benefits from an existing stockpile of gold concentrates representing a
reserve of approximately 258,000 tonnes grading 23.3 g/t gold (containing
193,000 oz of gold), in addition to substantial underground reserves of gold,
lead, zinc and silver. An additional 9,000 wet metric tonnes (wmt) of
concentrates (containing 6,000 oz of gold) is also located at Hellas Gold's port
facility in Stratoni.
In 2006, Hellas Gold secured the sale of a total of 184,000 wmt of Olympias
concentrates (containing approximately 130,000 oz of gold) over a three year
period to four different off-takers - Shandong MIC BioGold Ltd (a subsidiary of
Michelago Limited of Australia), MRI Trading AG, 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.
In Q4 2006, Hellas Gold completed six shipments of gold concentrates from the
Olympias stockpile, representing half of the 12 shipments completed in 2006.
This amounts to the shipment of 9,041 wet metric tonnes of gold concentrates in
Q4 2006 and 17,649 for the whole of 2006.
The price payable for the concentrates varies with the prevailing gold price.
The agreements produce an attractive return for Hellas Gold at a gold price of
US$500/oz.
Skouries technical feasibility study nearly completed -Hellas Gold has completed
most technical studies for the final bankable feasibility study on its Skouries
project in Northern Greece. Skouries is a typical gold-copper porphyry deposit
that forms a near vertical pipe. 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 confirm that Skouries could be mined as a low strip open pit
(0.6:1) operation and as a highly productive underground mine, either in
sequence or concurrently, at a rate between 6 and 8M tonnes per annum. This
would produce annually approximately 40,000t of copper and 200,000 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 SRK Consulting and
benchmarking with other comparable mines. Other international consultants
involved in these mining studies are Scott Wilson Mining, Diogo Caupers and
Steve Nicol.
The metallurgy at Skouries is considered to be straight-forward. The mine will
feed a process plant designed for a nominal throughput of 21,000 tonnes per day.
The processing will comprise gyratory crushing for open pit and underground ore,
single-stream SAG and ball-mill grinding. Approximately 30% of gold will be
recovered by a gravity circuit to produce dore on site. A highly-marketable
copper/gold concentrate will also be produced by conventional froth flotation,
thickening and filtration.
Extensive testwork completed by Lakefield Research and other consultants has
shown average recoveries of 84% gold and 91% copper can be achieved. Concentrate
grades of approximately 26% copper and averaging 27g/t gold are expected.
The concentrates will be trucked to Hellas Gold's port storage facility at
Stratoni, which will be approximately 15km away by road from the Skouries plant
site. Skouries is located on a high plateau with no habitation in the vicinity.
The study by Golder Associates incorporates the latest paste production
technology in a phased tailings management facility (TMF) that will minimise
land take and embankment height and provides increased tailings stability. The
study shows that the paste tailings are inert. The use of paste tailings and a
phased TMF also allows sequential rehabilitation of the tailings management
facility to minimise active tailings areas.
The technical studies indicate to date that the project will require
approximately US$270 million in initial capital expenditure under the following
categories:
* $188 million for the process plant and associated infrastructure
* $53 million for the tailings management facility
* $21 million for the open pit
* $8 million for other costs
Operating costs for the open pit mining are expected to be $1.28 per tonne, and
$6.05 per tonne for the underground mining.
Hellas Gold plans to publish the results of the final feasibility study on
Skouries once the final Environmental Impact Study (EIS) is completed in Q2
2007. The EIS is being carried out by the Greek consulting group Enveco.
Hellas Gold has initiated discussions with Outokumpu Oy for the purchase of mill
and plant equipment and with Aktor S.A. for the construction of the plant and
related infrastructure.
Skouries reserves increased by 13% - In July 2006, European Goldfields announced
a 13% increase in reserve tonnes for Hellas Gold's Skouries deposit, which were
reported as follows:
Reserve category '000t Gold Gold Copper Copper
(g/t) (Moz) (%) ('000t)
Proven 77,535 0.87 2.18 0.54 415
Probable 68,667 0.78 1.73 0.55 374
Total 146,202 0.83 3.91 0.54 789
The increase in reserves resulted from a new mine plan and schedule which
includes the adoption of a deeper open pit, an optimised sub-level cave
underground mine design and improved long-term metal price forecasts. The
updated reserve was estimated by SRK Consulting (UK) Ltd at a gold price of
$425/oz and a copper price of $1.1/lb.
The updated reserve is based on a new pit optimisation and subsequent practical
pit design along with a detailed underground mine design based on relevant net
smelter return (NSR) cut-offs and practical mining constraints which takes into
account mining recoveries and dilution.
Phasing of Olympias established - Development at Olympias will progress in three
phases, which will allow the phasing of capital. Phase 1 will consist in Hellas
Gold processing old tailings at Olympias, which will have the added benefit of
cleaning up the valley, together with underground refurbishment and limited
mining in the upper levels of the mine. These tailings contain 2,400,000 tonnes
of material grading 3.4 g/t gold and 14.2 g/t silver, which could yield 385,000
tonnes of marketable concentrates grading 19.2 g/t gold and 75.7 g/t silver.
Phase 2 will consist in underground mining around the existing shaft and other
infrastructure, thereby minimising capital investment. Hellas Gold has recently
completed a mining schedule for Phase 2, which indicates that ore will be
extracted at a rate progressing between 200,000 and 400,000 tonnes per annum,
expected to commence in 2008. Revenue during Phase 2 will be generated from the
sale of lead/silver, zinc and gold pyrite/arsenopyrite concentrates.
Finally, Phase 3 will consist in the construction of infrastructure , including
a new gold processing facilities at Stratoni.
Permitting process underway - In January 2006, Hellas Gold submitted a business
plan to the Greek State for the joint development of its major gold and base
metal projects of Skouries and Olympias. This submission represents a
significant milestone in obtaining the permits for these projects.
The business plan focuses on a phased approach to the development of the
projects with emphasis on achieving full production at the Skouries gold-copper
porphyry deposit as soon as possible, and the phasing of the Olympias
gold-lead-zinc-silver deposit. This approach minimises financial risk by the
phased injection of capital. The principal revenue stream in the early phases
will be through the sale of concentrates.
In March 2006, Hellas Gold received an official response from the Greek Ministry
of Development (the "Ministry") on the business plan. The response states that
the Ministry is in agreement with the principles stated in the business plan,
and that the Ministry considers the business plan to be in the best interests of
the Greek economy. This response was received by Hellas Gold within the
timeframe provided for in its contract with the Greek State.
In March 2006, Hellas Gold submitted a preliminary environmental impact study
(PEIS) to the Greek government, on which comments are expected shortly. Hellas
Gold is currently finalising a full environmental impact study (EIS) which is
expected to be submitted to the Greek government in Q2 2007, addressing any
comments made 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 underway - Twenty exploration targets identified -
Hellas Gold holds 317 km(2) of highly prospective exploration licences in
northern Greece. Recent work by European Goldfields 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. The geological context of the targets has been
identified and a model for the emplacement of known mineralisation has now been
developed.
The model indicates that there are more than 20 km of structural corridors that
have acted as mineralising pathways with marble hosted polymetallic massive
sulphide mineralisation, including the Stratoni and Olympias deposits. The model
also identifies a 10 km long intrusive belt which hosts the Skouries copper/gold
porphyry.
A programme of mapping, reinterpretation and modelling is underway 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 1300 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 is designed to better define targets and assist in the
interpretation of geophysical surveys planned for later in the year.
Pilot ground based geophysical programmes are being commissioned in order to
assess the effectiveness of EM geophysical surveys over areas that are
prospective for massive sulphide mineralisation. Once the results have been
considered, European Goldfields plans to fly airborne magnetic surveys over the
entire licence block and airborne EM surveys over the massive sulphide belts.
The airborne surveys are planned for H2 2007 and are aimed at identifying new
target areas and prioritising these with existing targets in preparation for
drilling in 2008.
CERTEJ PROJECT (ROMANIA)
Highlights:
* Viability of two development options confirmed
* Albion Process Technology achieved 92% gold recovery on composite sample
* Resources converted into Canadian NI 43-101 compliant reserves
* Urbanisation Certificate received - First milestone in the permitting
process
* Technical feasibility study submitted to Romanian government
* Target exploration underway to extend life-of-mine
Viability of two development options confirmed - European Goldfields is actively
pursuing two viable development options for its 80%-owned Certej project:
* the production and sale of high-grade gold/silver flotation concentrates
* the production of gold dore on site using the Albion Process.
The project is expected to involve the mining and processing of 3.0 Mt per annum
over at least nine years. This would yield approximately 275,000 tonnes of
concentrate per annum with high grades ranging realistically between 17 - 22 g/t
gold and 85 - 165 g/t silver (depending on the source of the ore in the
deposit), with a flotation gold recovery of approximately 88%. This translates
into an annual planned production of approximately 170,000 oz of contained gold
in the concentrate.
Albion Process Technology achieved 92% gold recovery on composite sample - Using
the Albion Process to produce gold dore on site is expected to significantly
increase project profitability and returns. Recent results using the Albion
Process suggest recoveries from concentrates of approximately 92% for gold and
up to 95% for silver. The Albion Process is a combination of ultra-fine grinding
of concentrates and oxidatative leaching at atmospheric pressure.
Hydrometallurgy Research Laboratories (HRL, a subsidiary of Xstrata PLC) is
completing the Stage III pilot plant scale continuous testwork programme using
the Albion Process, after which European Goldfields expects to publish Canadian
NI 43-101 compliant reserves based on this process. HRL has already successfully
completed Stages I and II of the metallurgical testwork programme.
In October 2006, European Goldfields entered into licence agreements securing
the Albion Process Technology for the Certej project. The licence agreements
were entered into with Xstrata Queensland Limited and Highlands Frieda Limited,
the co-owners of the technology.
Resources converted into Canadian NI 43-101 compliant reserves - In April 2006,
European Goldfields announced the conversion of resources into Canadian NI
43-101 compliant reserves for the Certej deposit, based on the sale of
concentrates option. The reserve estimation was carried out by independent
consultants RSG Global Pty Ltd ("RSG Global") and can be summarised as follows:
Reserve category Million tonnes Gold Gold Siver Silver
(g/t) (Moz) (g/t) (Moz)
Probable 27.7 2.0 1.76 11.6 10.35
Note: Lower cut-off grade of 0.8 g/t gold. Uniform conditioning and based on a
selected mining unit model using 6.25 X 12.5 X 2.5 metre blocks.
The reserve was estimated at a gold price of $425/oz and a silver price of
$7/oz. This estimation followed the completion of extensive metallurgical
testwork, an in-house pre-feasibility study and subsequent pit optimisation and
pit design work by RSG Global, which included a geotechnical drilling programme
and geotechnical pit design parameters completed by Golder Associates of the UK.
The conversion of resources into reserves means that the project can support the
necessary capital investment and produce a robust return at a gold price of
$425/oz and above.
Urbanisation Certificate received - First milestone in the permitting process -
In September 2006, European Goldfields announced that the Hunedoara County
Council has 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.
Technical feasibility study submitted to Romanian government - European
Goldfields has established a clear path to applying for permits to develop the
Certej project. In 2006, European Goldfields completed the following studies in
support of its permit application:
* all necessary Environmental Impact Assessments (Levels I and II)
* a Social Impact Assessment Study
* an Archaeological Study
* a Technical Feasibility Study (TFS), submitted to the government in
March 2007
The TFS will provide the majority of technical analysis for a bankable
feasibility study to be produced in Q2 2007 for project financing.
Environmental impact study nearing completion - To complete its application for
environmental and mining permits, European Goldfields plans to submit a final
Environmental Impact Study (EIS) to the Romanian government in Q3 2007, allowing
an increase in production at Certej and the processing of ore on site. European
Goldfields already holds a mining permit for Certej, which is currently being
exploited on a small scale by the Company's partner in Romania.
The permits and a detailed urbanisation plan are expected by the end of 2007
following a standard public consultation process with the local community.
Customary construction and public utility permits are expected to follow by
mid-2008 when the detailed engineering design has been completed for the site
plant.
ECOIND and Cepromin, Romanian companies with proven track records in
environmental research and permitting procedures, and the Technical University
of Civil Engineering Bucharest have been employed to assist in preparing the TFS
and the EIS. These studies also include significant input from international
consultants such as RSG Global, Golder Associate and Core Resources.
Target exploration underway to extend Certej life-of-mine - Exploration in
Romania will focus on extending the life-of-mine of the Certej project and
increasing the number of conceptual and regional targets for further exploration
in the South Apuseni Mountain area.
Certej life-of-mine extension work 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 sweeten 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 commenced and will be completed in
two phases, the second phase being results dependant. Phase one comprises a
total of eight diamond drillholes and phase two comprises seven diamond
drillholes. European Goldfields has identified thirteen targets in total within
its current concessions and plans to carry out exploration work on six of them
in 2007. The two most advanced targets, Teascu and Pitigus, are effectively
contiguous to one another and are located some seven kilometres from Certej.
In-house resource estimates on these two targets are expected by Q3 2007
following in-fill drilling.
European Goldfields is planning a major programme of airborne geophysics and
regional mapping and geochemical surveys in order to generate and prioritise
regional and conceptual targets in the region. The results will be used to
further develop the model built up during recent generative work which
highlighted the importance of the overall structural framework in controlling
intrusives and for the channeling, concentrating and trapping of mineralisation.
Systematic investigation of these targets, including drilling, metallurgical
testwork and resource definition, is planned for 2008.
For further information please contact:
European Goldfields: website: www.egoldfields.com
David Reading, Chief Executive Officer e-mail: info@egoldfields.com
Office: +44 (0)20 7408 9534
Buchanan Communications: e-mail: bobbym@buchanan.uk.com
Bobby Morse / Ben Willey
Office: +44 (0)20 7466 5000
Renmark Financial Communication: website: www.renmarkfinancial.com
Neil G. Murray-Lyon e-mail: nmurraylyon@renmarkfinancial.com
Office: +1 514 939 3989
Resources & reserves parameters
For additional information on the resource and reserve estimates quoted in this
news release, please refer to the Company's Resources & Reserves Declaration at
www.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager,
Exploration of the Company, was the Qualified Person under Canadian National
Instrument 43-101 responsible for reviewing the disclosure of resource and
reserve estimates quoted in this news release.
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 2005, 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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