RNS Number:4311Q
European Goldfields Ltd
19 March 2008
Immediate Release 19 March 2008
RESULTS FOR 2007
STRONG FINANCIAL PERFORMANCE
$43.6M OPERATING CASH FLOW - $219M CASH BALANCE
SOLID PLATFORM FOR GROWTH
19 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 2007. Highlights are:
Financial highlights:
* Sales of $86.4m, up 65% over 2006
* Operating cash flow of $43.6m, up 125% over 2006
* Profit (before tax) of $33.4m, up 178% over 2006
* Working capital of $226.4m at 31 December 2007; compared to $41.9m at 31
December 2006
* Earnings per share of $0.16, compared to $0.03 in 2006
Operational highlights:
* Stratoni: Production up 27% versus 2006 - New reserves continue to
replace mining depletion
* Skouries: Fabrication of long lead time equipment has commenced
* Olympias: Market created for gold concentrates - Six-fold increase in
sales versus 2006
* Certej: Key feasibility studies completed to high accuracy
level - Permitting process well underway
* Exploration in Greece: Airborne survey outlines intrusive belt -
rogress in target definition
Corporate highlights:
* Acquisition of an additional 30% interest in Hellas Gold, increasing
stake to 95%; total cost of investment in Hellas Gold of $25 per gold
equivalent reserve ounce
* Reinforced strategic alliance with Aktor and its parent company Elliniki
Technodomiki, consolidating the partnership for building of gold projects in
Greece and South-East Europe
* $180 million raised through equity financing and sale of Stratoni silver
stream
* Joint venture in Turkey with Ariana Resources, endorsing growth in
South-East Europe
* Added to S&P/TSX Global Gold Index in September 2007; S&P/TSX Composite
Index in March 2008
Commenting on the results, David Reading, Chief Executive Officer of European
Goldfields, said: "The year ended 31 December 2007 saw significant progress in
the stated growth strategy of building European Goldfields into a mid-tier
mining company. In less than four years, shareholders in European Goldfields
have benefited from a dramatic turnaround from being a loss-making exploration
company into one which produced in 2007 over $23 million in net profits,
generated $44 million in operating cash flow, and increased its ownership from
30% to 95% of its Greek assets. In addition, European Goldfields has
approximately $220 million of cash in the bank with net attributable reserves of
over 9Moz of gold and 72Moz of silver, 750,000 tonnes of copper, 664,000 tonnes
of lead and 889,000 tonnes of zinc at the end of the financial year. The last 12
months has provided a strong growth platform for the next phase of our
development."
Conference Call & Webcast - 19 March 2008 at 10am ET / 2pm GMT - European
Goldfields will host a conference call on Wednesday 19 March 2008 at 10:00 a.m.
ET / 2:00 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) 416-644-3416 or (toll free): 1-800-732-9307
- From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy,
Netherlands, Norway, Sweden & Switzerland (toll free): 00-800-2288-3501
A live audio Webcast will be available on: http://www.newswire.ca/en/webcast/
viewEvent.cgi?eventID=2190100
SELECTED FINANCIAL DATA
Year ended 31 December
-----------------------
------------ -------------
(in thousands of US dollars, 2007 2006
except per share amounts) $ $
------------------ ------------ -------------
Statement of loss and deficit
Sales 86,405 52,438
Gross profit 43,787 27,252
Profit before income tax 33,435 12,008
Profit after income tax 28,218 7,184
Non-controlling interest (5,019) (4,182)
Profit for the period 23,199 3,002
Earnings per share 0.16 0.03
------------------ ------------ -------------
------------------ ------------ -------------
(in thousands of US dollars) 31 December 31 December
2007 2006
$ $
------------------ ------------ -------------
Balance sheet
Working capital 226,431 41,854
Total assets 782,131 311,943
------------------ ------------ -------------
European Goldfields' audited consolidated financial statements and management's
discussion and analysis for the years ended 31 December 2007 and 2006 are filed
on SEDAR at www.sedar.com.
CORPORATE ACTIVITY
Highlights:
* Acquisition of an additional 30% interest in Hellas Gold, increasing
stake to 95%
* $180 million raised through equity financing and sale of Stratoni
silver stream
* Joint venture in Turkey with Ariana Resources, endorsing growth in
South-East Europe
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 $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 Aktor
S.A. ("Aktor") 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 $8.4
million in cash, 50% of which Aktor has agreed to re-invest into Hellas Gold as
funding towards maintaining its residual 5% shareholding interest in Hellas
Gold.
This transaction was, in essence, a share swap in that approximately 95% of the
purchase price was paid to Aktor in common shares of the Company. This
reinforces the Company's strategic alliance with Aktor and its parent company
Elliniki Technodomiki TEB A.E. (ATHEX: ELTEX) ("El-Tech") and consolidates the
partnership for the building of gold projects in Greece and South-East Europe.
El-Tech is a large Greek conglomerate with a market capitalisation in excess of
$2 billion with investments in five fields: construction, concessions, energy,
real estate, and mining and quarries. Aktor, Greece's largest construction
company, employs over 600 engineers, has extensive expertise in the construction
of large industrial projects and, due to its tunnelling expertise, possesses one
of the largest fleets of underground equipment in Europe.
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).
$180 million raised through equity financing and sale of Stratoni silver stream
- 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.
Also, 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 its lead-zinc operations.
The sale was made in consideration of a prepayment to Hellas Gold of $57.5
million in cash, plus a fee per ounce of payable silver to be delivered to
Silver Wheaton of the lesser of $3.90 (subject to an inflationary adjustment
beginning after year three) and the prevailing market price per ounce. The
Stratoni proven and probable silver reserve contained approximately 12 Moz of
silver.
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 the Company's other mines of Olympias
and Certej which contain 66 Moz of proven and probable silver reserves, except
for a right of first refusal granted to Silver Wheaton on similar future
transactions over the Company's silver assets.
Joint venture in Turkey with Ariana Resources, endorsing growth in South-East
Europe - In February 2008, the Company signed a Heads of Agreement with Ariana
Resources plc (AIM: AAU) ("Ariana") for the joint development of Ariana's
properties in North-eastern Turkey, which includes the Ardala copper-gold
porphyry and eleven other licences covering a total area of 168 km2.
These projects are located in the Pontides region of Turkey, a highly
prospective geological terrain containing several major deposits. The Ardala
Cu-Au porphyry has been the subject of reconnaissance drilling around the
periphery of a porphyry intrusion, which identified encouraging grades of copper
and gold. It has a 600m x 700m surface exposure centered on a magnetic high of
1,000m x 1,000m extent. Copper-gold mineralisation has also been identified on
other properties in the vicinity of Ardala within granitoids and in the
surrounding country rocks.
Under the agreement, European Goldfields will initially own 51% of the
properties transferred by Ariana into the joint venture. European Goldfields
will then fund all development costs of these initial properties and any future
properties located within a defined area in North-eastern Turkey until
completion of a Bankable Feasibility Study, at which time European Goldfields'
interest in each relevant project will increase to between 80% and 90%,
respectively.
In addition, European Goldfields has agreed to subscribe for new shares in
Ariana at 5 pence per share in a private placement, resulting in European
Goldfields owning 20% of the outstanding shares in Ariana following the
placement, for a total consideration of approximately �890,000.
Ariana also holds properties in Western Turkey where exploration of epithermal
vein systems has drill tested a number of targets and defined other targets for
further investigation. Ariana has also developed an extensive remote sensing
database covering the most prospective parts of Turkey.
Completion of the joint venture and the placing is expected by mid-April 2008,
conditional upon satisfactory due diligence and the signing of definitive
agreements.
STRATONI OPERATIONS (GREECE)
Highlights:
* Production up by 27% versus 2006
* New reserves continue to replace mining depletion
* Focus on development to ramp up production
* Exploration continues to define new resources
Production up by 27% versus 2006 - The Stratoni mine consists of a
lead-zinc-silver deposit and lies approximately 4 km from the coastal town of
Stratoni in northern Greece. The Company's 95%-owned subsidiary Hellas Gold
mined a total of 214,875 wet tonnes in 2007 (2006 - 176,691) at its Stratoni
mine. Hellas Gold completed 26 shipments in 2007 (2006 - 20). This translates
into an increase of 27% in tonnes of base metal concentrates sold. Sales from
Stratoni were as follows:
2007 2006
Production
Ore mined (wet tonnes) 214,875 176,691
Sales
Zinc concentrate (tonnes) 38,152 32,351
- Containing payable: Zinc (tonnes)* 15,891 13,775
Lead concentrate (tonnes) 23,123 15,780
- Containing payable: Lead (tonnes)* 14,963 10,467
Silver (oz)* 1,172,234 818,139
Inventory (end of period)
Ore mined (wet tonnes) - 2,499
Zinc concentrate (tonnes) 1,689 37
Lead/silver concentrate (tonnes) 49 214
* Net of smelter payable deductions
On average, mined and processed lead and zinc grades in 2007 have been 16.2% and
3.6% respectively higher than reserve grades. In 2007, zinc and lead
concentrates sales increased by 18% (to 38,152 tonnes) and 46% (to 23,123
tonnes), respectively.
New reserves continue to replace mining depletion - European Goldfields is
pleased to announce an increase in reserves at Stratoni, which can now be
reported as follows under Canadian National Instrument 43-101 as at 31 December
2007:
Reserve Category '000t* Ag Ag Pb Pb Zn Zn
g/t Moz* % '000t* % '000t*
Proven 1,904 193.3 11.8 7.3 139 9.1 173
Probable 313 190.0 1.9 7.5 24 11.2 35
Total 2,217 192.9 13.7 7.3 163 9.4 208
* After depletion of ore extracted from the start of mining operations in Q4
2005 until 31 December 2007.
Total reserve tonnes have increased by 11% over the previous reserves published
in January 2007, accounting for deduction of ore since then. The additional
tonnes are from the upper-west part of the orebody, which remains open along
strike. In addition, the grade of lead and silver has been increased in the
reserve, based on the underground sampling programme which has allowed accurate
modeling of higher grade zones. This has resulted in an increase of 20% in lead
metal, 10% in zinc metal and 25% in silver metal over the previous reserve
estimate published in January 2007, accounting for deduction of ore since then.
The new reserve will add an extra year to Stratoni's life of mine and the
improved grades will result in better revenues. Since the Stratoni mine resumed
production in September 2005, Hellas Gold has essentially managed to replace
mining depletion by new reserves.
The new reserve has allowed Hellas Gold to adjust its yearly ore production
schedule as follows:
- Year 2008: 290,000 tonnes
- Year 2009: 375,000 tonnes
- Year 2010: 400,000 tonnes
- Year 2011: 400,000 tonnes
- Year 2012: 400,000 tonnes
- Year 2013: 352,000 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.
Patrick Forward, General Manager, Exploration of European Goldfields, was the
Qualified Person under Canadian National Instrument 43-101 responsible for
preparing the updated resource and reserve estimates for the Stratoni deposit
quoted above. A technical report from Patrick Forward will be filed on SEDAR
(www.sedar.com) within the next forty-five days.
Focus on development to ramp up production - Ore production rates from
underground have steadily increased from an average of 727 tonnes per day in
2006 to 885 tonnes per day in 2007, and the mine now operates effectively at
over 900 tonnes per day. The rate of ore production is expected to continue to
increase and reach 290,000 tonnes in 2008.
Actual ore production for 2007 has been approximately 13% lower than the
originally forecasted 250,000 tonnes due in part to poor ground conditions in
the upper area of the mine. As a result, development of the main internal ramp
and cross-cut accesses in the upper parts of the mine was slower than expected
and face availability was reduced over most of the year. For the same reason,
forecast ore production for 2008 has been reduced from the originally forecasted
350,000 tonnes to 290,000 tonnes.
The excavation of a new decline to the base of the Mavres Petres orebody is now
essentially completed. Connection of the decline to the bottom of the main ramp
will improve material movement and ventilation and enable the introduction of
equipment as a support mechanism to ameliorate poor ground conditions. The
completion of the decline and the development of the internal ramp and stope
accesses to the higher, more extensive, levels of the orebody, expected to
provide additional reserves to the west, are now the main focus to ensure a
ramp-up in production to 400,000 tonnes of ore per year.
Continued commitment to the environment and the community - Hellas Gold's
commitment to the environment continues in conjunction with investments in
social initiatives for the benefit of local communities in what is essentially
an under-developed region of Greece. For example, Hellas Gold (i) constructed a
new water treatment plant to ensure capacity to treat all mine water under
extreme conditions; (ii) installed two filter presses to produce a solid cake
requiring less surface storage space for fine tailings and water treatment plant
sludge; (iii) is backfilling voids at the old Madem Lakkos mine workings with
coarse tailings (49,000 m3 of voids filled to date), which reduces storage space
on surface and mine water pumping from underground;
and (iv) improving the lighting and transport facilities in the local
communities as well as other social improvements. This responsible approach to
the environment and local communities demonstrates the Company's commitment to
sustainable development.
Exploration continues to define new resources - Stratoni benefits from inferred
resources comprising some 639,000 tonnes grading 7.7% lead, 9.9% zinc and 203.4
g/t silver. These inferred resources are currently being mined at the margin,
confirming expected grades. Drilling on 25m centres is planned in 2008 in the
upper west and lower east parts of the orebody which account for some 85% of the
inferred resources. The drill programme is designed to convert the inferred
resources to the measured and indicated categories, which can be immediately
converted to proven and probable reserves as the areas are adjacent to current
mine infrastructure.
New mineralisation has been encountered during the excavation of the new decline
running between the existing reserve and mined-out areas at Madem Lakkos.
Initial results indicate that the zone has an average width of 6.55 metres with
a weighted average grade of 0.7 to 14.8% Pb, 1.3 to 22.1% Zn and 16 to 307g/t
Ag. A drill programme designed to define indicated and measured resources along
at least 200 metres of strike and 75 metres of dip has commenced with results
expected in the second quarter of 2008. The new decline will enable immediate
access for mining of any new discovery in this area.
Drilling in 2008 of inferred resources and of the newly identified zone is
expected to add an additional three years in total to the mine reserves, and
with the zones open further along strike, particularly to the west where
suitable host marbles and feeder structures are known to exist, additional
further reserves are expected to be defined in the future.
SKOURIES PROJECT (GREECE)
Highlights:
* Fabrication of long lead time equipment has commenced
* Low cost production due to low strip ratio and high grade gold-copper
core at depth
Fabrication of long lead time equipment has commenced - In June 2007, Hellas
Gold signed a Euro30 million contract with Outotec Minerals OY ("Outotec") for the
supply of a large technology package for the Company's 95%-owned Skouries
gold-copper project, which is located 35 km by road from the Stratoni port in
northern Greece.
Outotec has already delivered a basic engineering package to Hellas Gold for the
grinding mills, flotation equipment, process control and paste thickeners.
Fabrication of the SAG and ball mills has commenced and they are due ex works in
the third quarter of 2009.
Low cost production due to low strip ratio and high grade gold-copper core at
depth - The Company has completed the key technical studies for the full
feasibility study on Skouries. 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
* A basic engineering package by Outotec for the grinding mills, flotation
equipment, process control and paste thickeners
Basic and detailed engineering for the process plant and associated
infrastructure is being conducted by the firm ENOIA of Athens, Greece.
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. Ore production is shown to be sustainable based on
the detailed mine design carried out by independent external consultants and
benchmarking with other comparable mines.
Extensive testwork completed by the independent external consultants has shown
average recoveries of 84% gold and 91% copper can be achieved. Concentrate
grades of approximately 26% copper and averaging 26 g/t gold are expected.
The concentrates will be trucked to Hellas Gold's port storage facility at
Stratoni, which will be approximately 15 km away by road from the proposed
Skouries plant site. Skouries is located on a high plateau with no habitation in
the vicinity.
The design of the tailings management facility ("TMF") incorporates the latest
paste production technology in a phased 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.
Management believes that, based on technical studies to date and taking into
account a stronger Euro versus the US dollar, the project will require
approximately $300 million in initial capital expenditure for the process plant
and associated infrastructure, the tailings management facility, the open pit
and other costs.
Operating costs for the open pit mining are expected to be Euro1.28 per tonne, and
Euro6.05 per tonne for the underground mining. This translates into a co-product
operating cost ranging between $250 and $300 per gold ounce, depending on fuel
cost and exchange rate assumptions. The Company plans to publish the results of
the final feasibility study on Skouries once the final Environmental Impact
Study is completed.
OLYMPIAS PROJECT (GREECE)
Highlights:
* Market created for gold concentrates - Six-fold increase in sales versus 2006
* Total of 395,000 oz of gold reserves still located on surface
* Olympias development plan underway
Market created for gold concentrates - Six-fold increase in sales versus 2006 -
The Company's 95%-owned Olympias project benefits from an existing stockpile of
gold-bearing pyrite concentrates which represented, at 31 December 2007, a
reserve of approximately 172,000 tonnes grading 23.5 g/t gold (containing
130,000 oz of gold), in addition to substantial underground reserves of gold,
lead, zinc and silver.
Hellas Gold completed 47 shipments in 2007 (2006 - 9). This translates into a
six fold increase in tonnes of pyrite concentrates sold. Sales of pyrite
concentrates were as follows:
2007 2006
Sales
Gold concentrate (dry tonnes) 79,554 11,338
Also, Hellas Gold received in 2007 payments totalling $6.8 million for the sale
of an additional 69,979 dry tonnes of gold concentrates expected to be
recognised in 2008 and future years, bringing the total of gold concentrates
sold or paid for in 2007 to 149,533 dry tonnes.
Hellas Gold has now secured the sale of the entire stockpile to six different
purchasers, thereby creating a market for gold concentrates which did not exist
prior to 2006.
Total of 395,000 oz of gold reserves still located on surface - In addition the
stockpile of gold concentrates, Hellas Gold plans to process 2.4Mt of stockpiled
tailings arising from the previous operations at Olympias, which will produce
approximately 350,000 tonnes of concentrates (containing 238,000 oz of gold),
and resume underground mining operations at Olympias producing more gold bearing
pyrite concentrates for sale to existing and new off-take purchasers.
Olympias benefits from extensive mining and plant infrastructure already in
place, including a concentrator plant, a shaft down to a depth of 400 metres
below surface and a port facility nearby at Stratoni. International contractor
Outotec Minerals OY inspected the facilities in July 2007 and concluded that the
plant could be brought back into efficient operation quickly and at relatively
modest cost.
Hellas Gold is ready to start reprocessing these tailings and refurbishing these
facilities, and resume underground production as soon as permits are awarded.
Olympias refurbishment plan underway - Olympias is a polymetallic (gold, lead,
zinc and silver) deposit located 8 km north of the Stratoni mine in northern
Greece. The Company's current plan is for development at Olympias to progress in
three phases to allow refurbishment and construction of infrastructure, a
realistic ramp-up in production within the mine and the subsequent construction
of new gold processing facilities at Stratoni. This staged approach also allows
the phasing of capital investment, as follows:
* Phase 1 has already started, with the sale of the existing stockpile of
gold-bearing pyrite concentrates located on surface at Olympias. Revenues
from Phase 1 are intended to fund Phase 2.
* Phase 2 will consist of reprocessing 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. Revenue
during Phase 2 will be generated from the sale of lead/silver, zinc and gold
pyrite/arsenopyrite concentrates.
* Phase 3 will consist of underground mining initially around the existing
shaft and other infrastructure. Production of ore is expected to ramp up
progressively from 200,000 to 900,000 tonnes per annum through the expansion
of underground infrastructure, which will include a new decline from the base
of the Olympias deposit for conveying the ore to a new centralised
concentrator, gold plant and tailings management facility at a brown field
site to be located in the Stratoni mine area. Revenue during Phase 3 will be
generated from the sale of lead/silver and zinc concentrates and the sale of
gold and silver bullion produced at the new gold processing plant.
The phasing of the project allows time for optimisation and development of the
metallurgical process for treating the auriferous arsenopyrite/pyrite
concentrates.
The Olympias project is expected to be self-sustaining over the initial phases
with the sale of concentrates and the high recoveries for the on-site gold
processing are considered promising for the latter phase.
PERMITTING PROCESS (SKOURIES & OLYMPIAS PROJECTS)
Permitting process moving forward - In July 2007, the Company received a formal
letter confirming that the Greek Ministry of Development had completed its
review of the Company'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 the Company'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 the
Company'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. The Company'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.
The Company is currently finalising a full environmental impact study ("EIS")
which is expected to be submitted to the Greek government in the second quarter
of 2008, addressing any comments received on the PEIS which are expected within
the next few weeks. On approval of the EIS, the environmental permits for
Skouries and Olympias are expected to be issued.
The Company 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.
EXPLORATION IN GREECE
Airborne survey outlines intrusive belt; progress in target definition - Hellas
Gold holds 317 km(2) of highly prospective licences in northern Greece over
which an airborne geophysical survey was completed by Fugro Airborne Surveys in
December 2007. Twenty targets had already been identified from existing data;
however, the survey represents the first systematic modern exploration ever been
conducted over the licence area. The survey comprises magnetics and radiometrics
over the entire licence area and an electromagnetic ("EM") survey over the
northern part of the licence area, which is host to massive sulphide targets.
Early processing of the magnetics has defined an intrusive belt some 17 km by 6
km in the South-East part of the licence area. This clearly defines known
porphyry deposits at Skouries and at the previously identified Fisoka target.
Fisoka is shown by the geophysics to comprise three porphyry bodies. The
northern body was drilled historically with grades of between 0.4% and 0.65%
copper over widths of 20 to 81 metres and no gold analyses. Ground truthing has
shown that the central area shows the most intense veining with copper oxides
visible at surface. Re-analysis of stream sediment sampling has shown that the
more anomalous samples were in stream draining from the central area. These
factors indicate that the untested central and southern Fisoka porphyries offer
the best potential. Hellas Gold plans to drill test the central and southern
Fisoka porphyries later this year.
The magnetics have also highlighted a series of strong anomalies, similar in
magnitude to Skouries, over a 3 km by 4.5 km area, which is believed to
represent a complex of intrusives some 3 km to the South-East of Skouries which
will be investigated on the ground in the next few weeks.
The raw EM data indicated conductors over the known massive sulphide orebodies,
including the Olympias look-alike massive sulphide target at Piavitsa. Post
processing of the EM will be used to confirm continuity of the Piavitsa
mineralisation along its 2 km strike length prior to drill testing in the second
half of 2008.
The fully processed geophysics will also be used to prioritise the remainder of
the twenty identified targets and develop new ones over the licence area.
CERTEJ PROJECT (ROMANIA)
Highlights:
* Key feasibility studies completed to high accuracy level
* Reserves increased by 20% - Life-of-mine extended by two years
* Environmental Impact Study completed - Permitting process well underway
* Continuing exploration programme
Key feasibility studies completed to high accuracy level - European Goldfields
is in the final stage of completing a full feasibility study for its 80%-owned
Certej project, located within a mining district in Romania known as the "Golden
Quadrilateral". In 2007, European Goldfields completed feasibility level studies
to a high level of accuracy of +/-15% on the open pit mine design, the
processing plant and the tailings management facilities (TMFs).
RSG Global Consulting Pty Ltd ("RSG Global") completed a pit optimisation and
pit design study, which included a geotechnical drilling programme designed by
Golder Associates. The study resulted in a better conversion from resources to
reserves and confirmed that the deposit will be mined with an open pit strip
ratio of 3.1:1.
The project will involve the mining and processing of 3.0 million tonnes of ore
per annum over at least eleven years. This is expected to yield approximately
160,000 oz of gold and 820,000 oz of silver per year in dore, reflecting an
average total process recovery of 81% for gold and approximately 75% for silver.
The metallurgical process involves the production of a gold-bearing concentrate
followed by the production of gold and silver as dore on site by means of the
Albion Process. 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 (CIL)
process.
The second phase of the continuous Albion and CIL pilot plant trials have been
completed and Aker Kvaerner Engineering Services has now finalised an
engineering and cost study for the processing plant and associated
infrastructure to an accuracy of +/- 15%.
The residues from the flotation and gold plants will be disposed of in two
separate but adjoining tailings management facilities (TMFs), which are ideally
located and designed for this project. The EIS confirms that the Certej project
and its TMFs will have a negligible impact on the local water streams, flora and
fauna. Golder Associates has completed a design and cost study for the TMFs.
Reserves increased by 20% - Life-of-mine extended by two years - In October
2007, European Goldfields announced a 20% increase in gold reserve ounces for
the Certej project, reported as follows under Canadian National Instrument
43-101:
Reserve Category Million Tonnes Au Au Ag Ag
g/t Moz g/t Moz
Probable 32.8 2.0 2.1 11.4 12.0
Note: Reserve based on pit optimisation using a gold price of $425/oz and a
silver price of $7/oz.
The new reserve results from a better conversion of resources into reserves,
combined with increased resources. It is based on the generation of a
gold-bearing concentrate followed by the production of gold and silver as dore
on site by means of the Albion Process.
Environmental Impact Study completed - Permitting process well underway -In
February 2008, European Goldfields completed the final Environmental Impact
Study (the "EIS") to develop the Certej project, which is expected to be
submitted to the Romanian environmental authorities in Timisoara by the end of
March 2008. This follows the submission of a Technical Feasibility Study to the
Romanian authorities in March 2007 and the grant by the local county council of
a General Urbanisation Certificate in September 2006. This certificate confirms
the designation of Certej as an industrial mining area and attests to the local
community's support for the project.
European Goldfields already holds a mining permit for Certej, which is currently
being exploited on a small scale by way of an existing open pit. The EIS
addresses a proposed increase in mine production at Certej and the processing of
ore on site.
The EIS has been carried out over a 12-month period in order to accumulate all
the required base line data during the different seasons. The EIS is a detailed
multi-discipline study comprising over 2,000 pages subdivided into a number of
volumes assessing the environmental, social and health impacts of the project on
the mine area.
The EIS was prepared with the contribution of several Romanian institutes of
international reputation, namely the National Institute of Research and
Development for Industrial Ecology (ECOIND), the National Institute of Research
and Development for Environment Protection (ICIM), the Technical University of
Construction Bucharest and the Babes-Bolyai University of Cluj. The EIS was
prepared to the regulatory framework established by Romanian and EU legislation.
The environmental permit and an updated mining permit are expected in Q4 2008
following a standard public consultation process with local communities, which
is expected to start 45 days after submission of the EIS. Customary construction
and public utility permits are expected to follow by end-2008 when the detailed
engineering design has been completed for the site plant.
Continuing exploration programme - Ongoing exploration activities in adjacent
concessions to Certej are aimed at increasing satellite resources to provide
extension to life of mine or higher grade feed to the Certej operation. This
will include step out exploration over satellite resources to investigate strike
and down dip potential. As part of an ongoing generative programme, satellite
image and pilot geochemical programmes over known mineralisation are currently
being carried out. This will enable exploration to focus activities along
structures that were active during the mineralising events.
European Goldfields has pending applications for new exploration licences in the
"Golden Quadrilateral" area of West-central Romania where the Certej deposit is
located. The applications cover complex geological terrains that host
significant epithermal, porphyry and volcanogenic massive sulphide (VMS)
mineralisation. Remote sensing surveys and mapping are proposed over the
concessions combined with geochemical surveys using results of the above
mentioned pilot studies in order to define the exact methodology. The aim of the
programme is to generate high quality targets that represent significant
mineralised systems that can be drill tested in 2009.
Documents sent to shareholders
Copies of the Company's Annual Report, Management's Discussion and Analysis and
Consolidated Financial Statements for the year ended 31 December 2007, and
copies of the Notice of Meeting and Management Proxy Circular for the Annual
Meeting of shareholders of the Company to be held on 19 May 2008 have been sent
to shareholders and filed on SEDAR at www.sedar.com
Director's shareholding
The Company approved the grant on 20 March 2008 of 40,000 restricted share units
("RSUs") to Philip Johnson, a director of the Company, under the Company's
Restricted Share Unit Plan. Such RSUs will be redeemed into an equal number of
Common Shares of the Company on 19 May 2008, from which the Company will
withhold 16,800 shares for tax purposes and sold in the public market. As a
result, Philip Johnson will hold 37,200 Common Shares of the Company
representing 0.02% of the issued share capital of the Company.
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 2007, 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 contact:
European Goldfields: e-mail: info@egoldfields.com
David Reading, Chief Executive Officer Tel: +44 (0)20 7408 9534
Buchanan Communications: e-mail: bobbym@buchanan.uk.com
Bobby Morse / Ben Willey Tel: +44 (0)20 7466 5000
Renmark Financial Communication: e-mail: jroy@renmarkfinancial.com
Jason Roy Tel: +1 514 939 3989
RBC Capital Markets: e-mail: andrew.smith@rbccm.com
Andrew K Smith Tel: +44 (0)20 7029 7882
This information is provided by RNS
The company news service from the London Stock Exchange
END
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