TIDMEGU
RNS Number : 7996Q
European Goldfields Ltd
10 August 2010
+-----------------------------------+-----------------------------------+
| Immediate Release | 10 August 2010 |
+-----------------------------------+-----------------------------------+
European Goldfields Ltd
RESULTS FOR Q2 2010
10 August 2010 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European
Goldfields" or the "Company") today reports its results for the quarter ended 30
June 2010. The financial statements, as well as the accompanying Management's
Discussion & Analysis, are available for review
at
http://www.egoldfields.com/egoldfields/en/financials/quarterlies and should
be read in conjunction with this news release.
Operational and development highlights:
· Greece: final EIS submitted
· Romania: final Certej EIS submitted
· Final credit approval for US$135m Certej financing
· Exploration drill permit approved for Greek projects
· Stratoni environmental permit extended
Corporate activity:
· Appointment of Nomad/Joint Brokers
· Appointment of VP Business Development
Financial highlights:
· Sales US$12 million
· Working capital of US$106 million
Commenting on the results, Martyn Konig, Executive Chairman and President of
European Goldfields, said:
"During the first half of 2010 we have made significant progress in the
permitting of our development projects. With the submission of both the Certej
and the Greek EIS, we have reached another significant milestone towards
bringing the projects to production. We are pleased to have our project
financing commitments in place at Certej and the Company is progressing
innovative financing alternatives for the development of the Greek projects. The
recent approval of an exploration drill permit for the Greek projects highlights
our commitment to providing long term value and significant upside potential for
our shareholders."
SELECTED FINANCIAL DATA
+-----------------------+-------------+--------------+
| | Quarter ended 30 June |
| | |
+-----------------------+----------------------------+
| (in thousands of US | 2010 | 2009 |
| dollars, | $ | $ |
| except per share | | |
| amounts) | | |
+-----------------------+-------------+--------------+
| Statement of profit | | |
| and loss | | |
+-----------------------+-------------+--------------+
| Sales | 11,969 | 16,204 |
+-----------------------+-------------+--------------+
| Gross profit | 272 | 3,186 |
+-----------------------+-------------+--------------+
| Profit/(Loss) before | (20,555) | 2,653 |
| income tax | | |
+-----------------------+-------------+--------------+
| Income taxes | 1,941 | (1,078) |
+-----------------------+-------------+--------------+
| Profit/(Loss) after | (18,614) | 1,575 |
| income tax | | |
+-----------------------+-------------+--------------+
| Non-controlling | 341 | (136) |
| interest | | |
+-----------------------+-------------+--------------+
| Profit/(Loss) for the | (18,273) | 1,439 |
| period | | |
+-----------------------+-------------+--------------+
| Earnings/(Loss) per | (0.10) | 0.01 |
| share | | |
+-----------------------+-------------+--------------+
+----------------------+-------------+--------------+
| | 30 June | 30 June 2009 |
| (in thousands of US | 2010 | $ |
| dollars) | $ | |
+----------------------+-------------+--------------+
| Balance sheet | | |
+----------------------+-------------+--------------+
| Working capital | 105,796 | 171,185 |
+----------------------+-------------+--------------+
| Total assets | 724,581 | 753,196 |
+----------------------+-------------+--------------+
Revenues decreased from $16.2 million to $12.0 million in Q2 2010 compared to
the prior year quarter because there were no sales of gold bearing pyrite
concentrates which had been a significant revenue and profit driver for the
Company in the last two years. The performance of the Stratoni base metal mine
showed a marked improvement compared to the prior year quarter, generating a
small gross profit primarily as a result of higher realised metal prices, but
this was unable to replace the profitability of the gold concentrate business.
At the net profit level, the Company made a loss of $18.3 million in the current
quarter, down from a profit of $1.4 million for the same period in 2009. Apart
from the changes in operating profitability, the main driver related to a $10.4
million foreign exchange loss versus a $1.2 million gain in Q2 2009, plus higher
corporate overheads and Hellas Gold related costs. The majority of the exchange
losses are unrealised and have arisen as a result of changes to the US Dollar
values of Euro cash and cash equivalents. With the strengthening of the Euro
since the end of Q2 2010, a large portion of this loss has already reversed.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
GREECE
· Final EIS submitted
· Exploration drill permit approved
· Stratoni environmental permit extended
· Updated reserve statement
Final EIS Submitted - The final Environmental Impact Study ("EIS") for the
Company's Project in Halkidiki (the "Project") in North-Eastern Greece has now
been submitted to the Greek Ministry of Environment, Energy and Climate Change
("MoE").
In late September 2009, the Greek authorities completed the Preliminary
Environmental Assessment and Evaluation based on the Preliminary Environmental
Impact Study ("PEIS") submitted by the Company's 95%-owned subsidiary Hellas
Gold SA, and issued a pre-approval of the construction and operation of the
Project.
The Project consists of:
· The development of mining and processing at the Skouries project
· The next stages of the Olympias project, namely the mining and processing
of ore and metallurgical treatment of the concentrate, in accordance with the
business plan as originally submitted
· Continuation of operations at the Mavres Petres deposit of the Stratoni
Mine
· Development of the port facilities at Stratoni to service the above
projects' operations
The completion and submission of the final EIS is another landmark in European
Goldfields' development of the Project.
The EIS will now be subject to the final stages of a decision-making process
that conforms to the EU Directive on Environmental Impact Assessment. In
summary, the EIS is reviewed by the competent authorities and is subject to
public consultation, the requirements for which are set out in this EU Directive
and embodied in Greek law.
Drill Permit Approved - The Company announced in June the approval of an
exploration drill permit within its 317 km² Greek Licence Area which hosts the
Stratoni mine, the Olympias and Skouries development projects and three
drill-ready exploration targets.
The Company plans to advance a pipeline of highly prospective exploration
targets, all located within 10km of the Company's producing mine and development
projects. The Board of Directors has approved a US$9.2 million exploration
budget for Greece with the primary objective of increasing gold resource ounces
to add to the 7.5 million proven and probable gold reserve ounces already
defined at Olympias and Skouries.
Stratoni Environmental Permit Extended - The Environmental Permit for its
Stratoni lead-zinc-silver mine has been extended until the end of July 2012.
The extended permit was received by the Company from the MoE on the 12th of
July. The extended permit ensures production can continue until the granting of
the overall Environmental Permit for all of European Goldfields' projects in
Northern Greece.
Reserves Update -New reserves have been estimated for the Company's Stratoni
operation as follows:
+----------------+-------+------+------+------+-------+-----+-------+
| Reserve |'000t | Ag | Ag |Pb % | Pb | Zn | Zn |
| Category | | g/t | Moz | |'000t | % |'000t |
+----------------+-------+------+------+------+-------+-----+-------+
| Proven |1,657 | 174 | 9.3 | 6.1 | 101 |8.5 | 141 |
+----------------+-------+------+------+------+-------+-----+-------+
| Probable | 103 | 225 | 0.7 | 8.7 | 9 |9.3 | 10 |
+----------------+-------+------+------+------+-------+-----+-------+
| Total |1,760 | 177 |10.0 | 6.3 | 110 |8.5 | 150 |
+----------------+-------+------+------+------+-------+-----+-------+
The Company's ongoing mining activities at Stratoni depleted the reserve by a
total of some 295,000 wet tonnes over the course of 2009 and Q1 2010 compared to
the January 2009 reserve detailed in the June 2009 report. Additional tonnes
were added through exploration to the lower part of the mine but were offset by
other sections of the mine being inaccessible due to adverse geotechnical
conditions. The deposit is open in several directions and further expansion of
reserves is planned through the 2010 exploration drilling programme.
The Company's Resource and Reserve statement has also been updated to reflect
the depletion of the Olympias gold concentrate stockpile.
Stratoni Production
+-------------+---------+---------+
| | Q2 | Q2 |
| | 2010 | 2009 |
+-------------+---------+---------+
| Production | | |
+-------------+---------+---------+
| Ore | 64,813 | 60,023 |
| mined | | |
| (wet | | |
| tonnes) | | |
+-------------+---------+---------+
| Sales | | |
+-------------+---------+---------+
| Zinc | 10,279 | 10,571 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| - | 4,159 | 4,427 |
| Containing | | |
| payable: | | |
| Zinc | | |
| (tonnes)* | | |
+-------------+---------+---------+
| Lead | 4,682 | 3,786 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| - | 3,071 | 2,448 |
| Containing | | |
| payable: | | |
| Lead | | |
| (tonnes)* | | |
+-------------+---------+---------+
| Silver | 232,212 | 183,452 |
| (oz)* | | |
+-------------+---------+---------+
| Inventory | | |
| (end of | | |
| period) | | |
+-------------+---------+---------+
| Ore | 16,392 | 2,293 |
| mined | | |
| (wet | | |
| tonnes) | | |
+-------------+---------+---------+
| Zinc | 2,663 | 25 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| Lead/silver | 902 | 2,090 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
* Net of smelter payable deductions
ROMANIA
· Final EIS submitted
· Final credit approval for US$135m Certej financing
Final EIS Submitted - The final Environmental Impact Study ("EIS") for the
Company's Certej Project in Romania has now been submitted. This follows the
issue of the Zonal Urbanisation Plan ("PUZ") planning document by local
authorities in May 2010, which included an environmental summary and public
consultation, and the subsequent definitive confirmation of final guidelines for
the EIS. The completion and submission of the final EIS report is another
landmark in European Goldfields' development of the Certej Project.
The EIS will now be subject to the final stages of a Romanian decision-making
process that conforms to the EU Directive on Environmental Impact Assessment.
In summary the EIS is reviewed by the competent authorities and is subject to
public consultation, the requirements for which are set out in this EU Directive
and embodied in Romanian law.
Final Credit Approval for Certej Financing - The Company has received formal
letters of commitment to underwrite a US$135 million financing package to part
fund the development costs of the Certej gold-silver Project in Romania (the
"Project"). The Mandated Lead Arrangers are Caterpillar Financial SARL, ING
Bank N.V., Investec Bank plc, UniCredit Bank AG, London Branch and WestLB AG,
London Branch, (together the "MLAs").
The structure of the financing package has further been optimised since the
signing of the mandate letter and now consists of an 8 year US$120 million
secured, limited recourse debt facility and a US$15 million secured equipment
lease facility. The commitments are on the basis of detailed term sheets which
have been agreed with the Company and a Technical, Environmental and Social
Audit of the Project conducted by SRK Consulting on behalf of the MLAs.
GROUP EXPLORATION UPDATE
Greece - Following the recent approval of the exploration permit for the Greek
Licence area, the Company has initiated a planned programme of drilling totaling
40,500m for the 3 main exploration targets, Piavitsa, Fisoka and Tsikara, aimed
at establishing continuity and delineating resources.
Romania - The Company has identified a series of epithermal and porphyry drill
targets within the Romanian licence area that includes extensions to
historically exploited gold bearing systems, previously unrecognized 'blind
porphyry and epithermal targets and massive sulphide deposits previously
untested for gold and silver. Following infill sampling a programme of drill and
trench testing will be carried out in Q3 and Q4 with a total approved budget of
US$4.4 million for 2010.
Turkey - Detailed surface worked carried out by the Company has defined a number
of new targets on licences held in Joint Venture agreements with Ariana
Resources and Aldridge Minerals. These targets are due to be drilled during the
second half of 2010 under the approved US$2.1 million exploration budget.
CORPORATE ACTIVITY
Appointment of Nominated Advisor and Joint Broker -Liberum Capital Limited was
appointed as NOMAD and Joint Broker and Evolution Securities Limited as Joint
Broker to the Company on 10 June 2010.
New Appointments - Steve Sharpe has been appointed as Vice President, Business
Development. Mr Sharpe has over 25 years investment banking experience, focused
primarily on the mining sector. Before joining European Goldfields he was
Managing Director-Structured Finance at Canaccord Genuity Limited, and prior to
that held senior management positions at Endeavour Financial, Standard Bank and
N M Rothschild & Sons Limited.
About European Goldfields
European Goldfields is a developer-producer with globally significant gold
reserves located within the European Union. The Company generates cash flow from
its 95% owned Stratoni operation, a high grade lead/zinc/silver mine in
North-Eastern Greece. European Goldfields will evolve into a mid-tier producer
through responsible development of its project pipeline of gold and base metal
deposits at Skouries and Olympias in Greece and Certej in Romania. The Company
plans future growth through development of its highly prospective exploration
portfolio in Greece, Romania and Turkey.
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/egoldfields/en/operationsprojects/state Patrick Forward, VP
Projects & 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
Information Form for the year ended 31 December 2009, 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.
For further information please see the Company's new website at
www.egoldfields.com
For further information please contact:
European Goldfields
Liberum Capital Limited
Steve Sharpe, VP Business Development Simon
Atkinson
e-mail: info@egoldfields.comTom Fyson
Tel: +44 (0)20 7408 9534
Tel: +44 (0)20 3100 2000
Buchanan Communications
Evolution Securities Limited
Bobby Morse / Katharine Sutton
Rob Collins
e-mail: bobbym@buchanan.uk.com Tim
Redfern
Tel: +44 (0)20 7466 5000
Tel: +44 (0)20 7071 4300
This information is provided by RNS
The company news service from the London Stock Exchange
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