Q3 2010 Results - Part 1
11 November 2010 - 6:01PM
UK Regulatory
TIDMEGU
RNS Number : 9949V
European Goldfields Ltd
11 November 2010
Suite 200, Financial Plaza
204 Lambert Street
Whitehorse, Yukon
Canada Y1A 3T2
RESULTS FOR Q3 2010
11 November 2010 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European
Goldfields" or the "Company") today reports its results for the quarter ended 30
September 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 and public consultation underway
· Romania: final Certej EIS submitted
· Olympias mine and plant rehabilitation in progress
Corporate activity:
· Greece: financing alternatives under consideration
· Appointment of Company Secretary
Financial highlights:
· Sales US$9.2 million
· Working capital of US$97 million
Commenting on the results, Martyn Konig, Executive Chairman and President of
European Goldfields, said:
"During the quarter we were pleased to announce that the Company submitted both
the Greek and Certej EIS's which are now being reviewed by the relevant
authorities and which remain on schedule for final approval. In particular in
Greece we recently announced that the EIS has been passed from the Ministry of
Environment, Energy and Climate Change to the local authorities in Halkidiki,
thereby initiating the public consultation process.
We have already announced a financing package for Certej and are in the advanced
stages of finalising a financing solution for our Greek development projects.
Our primary consideration has been to minimise shareholder dilution and a formal
announcement will be made shortly. Whilst our operating mine continued to
perform well during the quarter, our key development projects in both Greece and
Romania remain fully on track to advance European Goldfields towards becoming a
mid-tier gold producer by 2013".
SELECTED FINANCIAL DATA
+-----------------------+-------------+--------------+
| |Quarter ended 30 September |
| | |
+-----------------------+----------------------------+
| (in thousands of US | 2010 | 2009 |
| dollars, | $ | $ |
| except per share | | |
| amounts) | | |
+-----------------------+-------------+--------------+
| Statement of profit | | |
| and loss | | |
+-----------------------+-------------+--------------+
| Sales | 9,204 | 17,037 |
+-----------------------+-------------+--------------+
| Gross profit | 336 | 3,563 |
+-----------------------+-------------+--------------+
| Profit/(Loss) before | (2,746) | (1,332) |
| income tax | | |
+-----------------------+-------------+--------------+
| Income taxes | 960 | (1,847) |
+-----------------------+-------------+--------------+
| Profit/(Loss) after | (1,786) | (3,179) |
| income tax | | |
+-----------------------+-------------+--------------+
| Non-controlling | 141 | 56 |
| interest | | |
+-----------------------+-------------+--------------+
| Profit/(Loss) for the | (1,645) | (3,123) |
| period | | |
+-----------------------+-------------+--------------+
| Earnings/(Loss) per | (0.01) | (0.02) |
| share | | |
+-----------------------+-------------+--------------+
+----------------------+-------------+--------------+
| | 30 | 30 September |
| (in thousands of US | September | 2009 |
| dollars) | 2010 | $ |
| | $ | |
+----------------------+-------------+--------------+
| Balance sheet | | |
+----------------------+-------------+--------------+
| Working capital | 97,359 | 146,158 |
+----------------------+-------------+--------------+
| Total assets | 734,252 | 749,870 |
+----------------------+-------------+--------------+
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
GREECE
· Final EIS submitted
· EIS public consultation underway
· Stratoni production on schedule
· Olympias mine and plant rehabilitation in progress
Final EIS Submitted - The final Environmental Impact Study ("EIS") for the
Company's Project in Halkidiki (the "Project") in North-Eastern Greece was
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 is 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 being 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.
EIS Public Consultation Underway - As announced on 8 November 2010, the MOE has
completed its review and delivered the EIS to the local authorities in Halkidiki
and notices were issued in local newspapers thereby initiating the process of
public consultation. The MOE acting through a Special Technical Committee has
reviewed the EIS in detail and provided important guidance to Hellas Gold in
concluding that the EIS conforms to relevant Greek and EU requirements.
Public Consultation will last for 35 days from 30th of October thereby both
allowing local stakeholders and potentially affected communities to offer their
comments and any further views to be communicated to the Special Technical
Committee as part of the conclusion of the environmental permitting process for
the Project.
Stratoni Production
+-------------+---------+---------+
| | Q3 | Q3 |
| | 2010 | 2009 |
+-------------+---------+---------+
| Production | | |
+-------------+---------+---------+
| Ore | 54,093 | 57,235 |
| mined | | |
| (wet | | |
| tonnes) | | |
+-------------+---------+---------+
| Sales | | |
+-------------+---------+---------+
| Zinc | 8,818 | 7,937 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| - | 3,672 | 3,325 |
| Containing | | |
| payable: | | |
| Zinc | | |
| (tonnes)* | | |
+-------------+---------+---------+
| Lead | 2,691 | 4,736 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| - | 1,798 | 3,042 |
| Containing | | |
| payable: | | |
| Lead | | |
| (tonnes)* | | |
+-------------+---------+---------+
| Silver | 135,361 | 228,574 |
| (oz)* | | |
+-------------+---------+---------+
| Inventory | | |
| (end of | | |
| period) | | |
+-------------+---------+---------+
| Ore | 9,074 | 8,097 |
| mined | | |
| (wet | | |
| tonnes) | | |
+-------------+---------+---------+
| Zinc | 4,143 | 607 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| Lead/silver | 2,841 | 901 |
| concentrate | | |
| (tonnes) | | |
+-------------+---------+---------+
| * | | |
| Net of | | |
| smelter | | |
| payable | | |
| deductions | | |
+-------------+---------+---------+
Production from the underground mine continued to be on schedule for the year.
The processing plant performed well in terms of throughput, recovery and
concentrate quality. Significant amounts of concentrate production remained
unsold at quarter end, resulting in unusually high concentrate inventory levels.
This inventory was shipped in October and will be reflected in Q4 results.
Olympias mine and plant rehabilitation in progress - The refurbishment and
enlargement of the mine access decline progressed well during the quarter.
Following a structural survey, repair work to the Concentrator building and
plant is nearing completion in preparation for tailings reprocessing to produce
pyrite gold concentrate. A mechanical and electrical audit has been carried out
and the necessary purchase orders prepared.
The Company is currently working toward optimising and updating the resources
and reserves for Olympias. The original resource model from 1999 rejected
certain mineralised areas as uneconomic at the then prevailing metal prices.
These are being reassessed in a more realistic metal price environment with the
expectation of restoring these mineralised areas into the resource model and
expanding the resource and reserve base. In parallel with this, the mine plan
will be updated and revised.
ROMANIA
· Final EIS submitted
· Certej Implementation Strategy Underway
Final EIS Submitted - The final EIS for the Company's Certej Project in Romania
was submitted during the quarter. 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 is now 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 being 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.
Certej Implementation Strategy Underway - The Certej Project team have finalised
the procurement and implementation strategy for the process plant, which divides
the flow sheet into three discrete sections: Comminution and concentration,
Albion oxidation and gold recovery. Invitations to bid have been prepared on
this basis for the provision of the equipment and specialist engineering
services to major international equipment companies who have already been
engaged in a pre-qualification exercise and have confirmed their intention to
bid on this basis.
It is also planned that the civil engineering and earth moving works will be
awarded in no more than two major contracts to cover the initial construction of
the tailings facilities and the preparation of the plant, dump and stockpile
areas. Corresponding engineering design work is approximately 95% complete by
our local contractor Cepromin who have been commissioned to prepare the
Technical Project report which is required under Romanian legislation for the
Construction Permit.
Final geotechnical drilling and associated engineering studies for the process
plant, tailings management facilities and open pits have been completed by the
Company in cooperation with Golder Associates UK.
GROUP EXPLORATION UPDATE
Greece - Work has focused on the Piavitsa prospect, which historic drilling has
shown to be an Olympias look-alike target with high grade polymetallic
mineralisation in massive sulphides. New sampling of previously drilled core is
being carried out in order to confirm historic assays over previously identified
massive sulphide mineralisation and to test new zones of previously unrecognised
mineralisation and alteration. Soil geochemical samples have also been taken
aimed at confirming extensions to the known Piavitsa mineralisation, indicated
by conductive units which were revealed by an airborne geophysical survey.
Results from the sampling are expected in the coming weeks.
Romania - Four exploration boreholes were drilled to test potential gold
mineralisation that is close to, but currently outside the planned Certej open
pit footprint. Significant assay results include 17 m grading 3.40 g/t gold and
3.76 g/t silver west of the open pit and 16m grading 2.24 g/t gold and 2.94 g/t
silver northwest of the pit. Further drilling and trenching is planned in Q4
2010.
A new exploration survey located 12 km northwest of Certej, within the vicinity
of an historic gold mining area, has identified a number of significant
anomalies, supported by soil geochemistry and mapping. The anomalies potentially
represent previously undiscovered extensions to zones of gold mineralisation.
Preparations are currently being made to drill the most significant anomalies in
late Q4 2010 and early 2011.
Turkey - Drill testing of the Ardala porphyry copper gold target and Salinbas
epithermal gold zone, both held in joint venture with Ariana Resources plc,
continued during the quarter. Results of the programme have confirmed
mineralised targets and will be published during Q4 2010.
CORPORATE ACTIVITY
Financing - Work with the Certej project finance banks has progressed, with
facility documentation in an advanced form and technical due diligence
essentially complete. Following the submission of the final EIS in Greece, the
Company has advanced the negotiation of a bank facility for the development of
its Skouries project. It is anticipated that this facility will provide
substantially all the anticipated US$300 million construction capital for the
project. As with Certej, the Company will require that this facility also does
not commit to any hedging of the gold price upside. A term sheet is in final
draft form prior to agreeing mandate terms with the new bank group, and it is
expected that commercial terms will be similar to those already negotiated for
Certej. A further announcement on this is expected shortly.
Euromines Gold Group - We are pleased to announce that Mark Rachovides,
Executive Vice President of the Company, has been appointed as Chairman of the
Euromines Gold Group, a body to which we are pleased to give our full support.
New Appointments - Deborah Paxford has been appointed as Company Secretary.
Before joining European Goldfields, Ms. Paxford was Company Secretary at ZincOx
Resources plc where she was responsible for all company secretarial matters as
well as providing legal advice to management. Ms. Paxford qualified as
solicitor in 1995 and spent eight years working in private practice at two
leading London law firms before moving in-house as legal adviser for an
international software company, where she spent five years advising on corporate
and commercial matters.
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
Brunswick
Evolution Securities Limited
Carole Cable / Fiona Micallef-Eynaud Rob Collins
e-mail: egoldfields@brunswickgroup.com Tim Redfern
Tel: +44 (0)20 7404 5959 Tel: +44
(0)20 7071 4300
This information is provided by RNS
The company news service from the London Stock Exchange
END
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