19th Mar 2009 07:06
For Immediate Release 19 March 2009
EUROPEAN GOLDFIELDS LIMITED
RESULTS FOR 2008
STRONG BALANCE SHEET, NO DEBT
STRONG PRODUCTION PERFORMANCE
CERTEJ COMPLETES FEASIBILITY STUDY- NEW MINING PERMIT AWARDED
19 March 2009 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European Goldfields" or the "Company") today reports its results for the financial year ended 31 December 2008.
Financial highlights:
Sales of $60 million reflecting lower metal prices
Operating profit of $5.6 million
Working capital of $193 million
Profit (after tax) of $5.5 million
Capex of $37 million underwrites future projects
Greek corporate tax rate reduced to 20%
Operational highlights:
Stratoni: Mine production up 26% versus 2007. Focus on cost reduction and productivity efficiencies
Skouries: Continued progress on engineering - mill shells and other major components ready for shipment
Olympias: Continued sale of gold concentrates - submission of EIS for re-treatment of tailings
Certej: Definitive Feasibility Study completed, life of mine extended - new mining permit awarded - permitting process well advanced
Corporate highlights:
European Goldfields added to S&P/TSX Composite Index
Chairman increases personal shareholding
Cameron Mingay and Martyn Konig appointed as Non-Executive Directors
Joint Venture in Turkey with Ariana Resources underway
Total project reserves now exceed 10 million ounces of Gold
Commenting on the results, David Reading, Chief Executive Officer of European Goldfields, said: "We continue to build a successful European mining company. Despite the market downturn during 2008 we made significant progress during the year in project development in Greece and permitting in Romania. With the proven support of our partners and stakeholders, excellent infrastructure and a strong and growing reserve base, we are delivering robust projects through a realistic and phased development programme. Though we are benefiting from the falling costs of building our mines, we remain focused on preserving our substantial cash balances and continuing to develop our business into a mid-tier mining group. In summary the company is well positioned to overcome the current down turn and grow our business. This position is endorsed by our significant capital spend in 2008 and our strong balance sheet."
Conference Call & Webcast - European Goldfields will host a conference call on Thursday 19 March 2009 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 the following numbers, approximately 10 minutes before its start.
From North America: (toll free) 1 866 793 4279
From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Norway, Sweden & Switzerland: +44 (0)20 8609 1435 or (toll free from the UK) 0808 109 1498
Participant pass code: 887754#
A live audio webcast will be available on: http://mediaserve.buchanan.uk.com/webcasts/room8audio/lrframes.htm
A replay of the webcast will be available on:http://mediaserve.buchanan.uk.com/webcasts/eg190309/lrframes.htm
SELECTED FINANCIAL DATA
|
Year ended 31 December |
||
|
(in thousands of US dollars, except per share amounts) |
2008 $ |
2007 $ |
|
Statement of profit and loss |
||
|
Sales |
60,044 |
86,405 |
|
Gross profit |
5,647 |
43,787 |
|
(Loss)/Profit before income tax |
(11,599) |
33,435 |
|
Income taxes |
16,639 |
(5,217) |
|
Profit after income tax |
5,040 |
28,218 |
|
Non-controlling interest |
479 |
(5,019) |
|
Profit for the period |
5,519 |
23,199 |
|
Earnings per share |
0.03 |
0.16 |
|
(in thousands of US dollars) |
31 December 2008 $ |
31 December 2007 $ |
|
Balance sheet |
||
|
Working capital |
192,675 |
226,431 |
|
Total assets |
766,095 |
782,131 |
European Goldfields' audited consolidated financial statements and management's discussion and analysis for the years ended 31 December 2008 and 2007 are filed on SEDAR at www.sedar.com.
Annual revenues fell as a direct result of the fall in zinc and lead prices during 2008, particularly in the second half of the year. From July 2008, the Company's lead hedging programme became effective and generated income of US$4.9 million for the year. Working capital declined as the Company continued its capital expenditure programmes at its operating mine and development projects.
Capex of $37 million underwrites future projects
European Goldfields spent $37 million in 2008 on its portfolio of projects, which underlines its commitment to bringing its project pipeline into production. The new underground infrastructure at Stratoni is almost complete, which is expected to yield further operating and efficiency benefits from mid 2009. At Skouries, the fabrication of the SAG and ball mills by Outotec made significant advances, along with the basic engineering and project design, which will allow the project to be fast tracked upon the receipt of permits. During the year, the company completed its feasibility study on the Certej project and has subsequently increased its life to 16 years. All the Company's development projects now have a project lives of 16 to 20 years and competitive cash costs compared to the global gold industry.
Greek corporate tax rate reduced to 20%
In September 2008, the Greek Government enacted new legislation reducing corporate tax rates from 25% in 2009 to 20% in 2014 by 1% per annum. The Company was therefore required to restate its future tax liability arising from its Greek Mineral Properties using the new lower forecast tax rates. This resulted in a reduction of the future tax liability by $17.6 million, which was recognised in the income statement as a credit to current tax in Q4 2008. This change in future tax rates will also reduce the total tax burden on its Greek operations and development projects by almost 20%.
CORPORATE ACTIVITY
Highlights:
In the last quarter of 2008 Mr Dimitrios Koutras, Non-Executive Chairman of European Goldfields, made purchases in the London market such that he now owns 17,408,715 common shares in the company amounting to approximately 9.7% of total issued common shares.
The Company was also pleased to have been added to the S&P/TSX Composite Index on 24 March 2008 and to have welcomed two new Non-Executive Directors in Cameron Mingay and Martyn Konig.
Cameron Mingay, age 56, is a senior partner in the Cassels Brock & Blackwell LLP, Securities Group. Cam's diverse practice covers the areas of securities, corporate, mergers, acquisitions and divestitures, and natural resource law. He also sits on the Boards of Directors of Allied Nevada Gold Corp. and Silver Bear Resources Inc.
Martyn Konig, age 51, has 27 years experience in investment banking and the commodity markets. Since 2005, Mr. Konig has served as Chief Executive Officer of Blackfish Capital, including managing the Blackfish Capital Resources Fund, a hedge fund focused on small/mid cap mining companies. He has extensive experience in the natural resource sector, acting as CEO from 2004-2008 of AIM listed Latitude Resources Limited, a mining investment company, prior to which he held senior management roles in resource finance and commodity trading operations at various international investment banks. Mr. Konig was a main Board Director of NM Rothschilds and Sons Ltd. for 15 years and held senior positions at Goldman Sachs and UBS. He is a Barrister and Fellow of the Chartered Institute of Bankers, as well as a Non-Executive Director of TSX listed Western Goldfields Inc.
In April 2008 the Company finalised its previously announced Joint Venture ("JV") with Ariana Resources plc (AIM: AAU) ("Ariana"). The JV involves the development of Ariana's properties in north-eastern Turkey, which include the Ardala copper-gold porphyry and 15 other licences covering a total area of 229km2. The company has been active within Turkey since June 2008.
The increase in gold reserves at Certej to 2.41 million ounces resulted in total project gold reserves now exceeding 10 million ounces.
STRATONI OPERATIONS (GREECE)
Highlights:
Production up by 26% versus 2007
Metal concentrate sales increased by 12%
Record process plant performance
Focus on productivity efficiencies and cost reduction
Production up by 26% versus 2007
The Stratoni mine consists of a lead-zinc-silver deposit and lies approximately four km from the coastal town of Stratoni in northern Greece. The Company's 95%-owned subsidiary Hellas Gold mined a total of 271,660 wet tonnes in 2008 (2007 - 214,875). Hellas Gold completed 30 shipments in 2008 (2007 - 26). This translates into an increase of 12% in tonnes of base metal concentrates sold. Sales from Stratoni were as follows:
|
2008 |
2007 |
|
|
Production |
||
|
Ore mined (wet tonnes) |
271,660 |
214,875 |
|
Sales |
||
|
Zinc concentrate (tonnes) |
44,838 |
38,152 |
|
- Containing payable: Zinc (tonnes)* |
18,496 |
15,891 |
|
Lead concentrate (tonnes) |
22,321 |
23,123 |
|
- Containing payable: Lead (tonnes)* |
14,086 |
14,963 |
|
Silver (oz)* |
1,077,550 |
1,172,234 |
|
Inventory (end of period) |
||
|
Ore mined (wet tonnes) |
1,778 |
- |
|
Zinc concentrate (tonnes) |
2,975 |
1,689 |
|
Lead/silver concentrate (tonnes) |
488 |
49 |
* Net of smelter payable deductions
On average, mined and processed lead and zinc grades in 2008 have been 1.0% and 0.8% respectively lower than reserve grades reflecting the high degree of accuracy of the geological model. In 2008, zinc and lead concentrates sales increased by 18% and reduced by 4% respectively.
In the current metal price and general economic environment, Hellas Gold will postpone any further ramp up in production levels until an improvement in metal prices is sustained. Therefore, Stratoni mine production is expected to remain at current levels, resulting in mine production of approximately 300,000 wet metric tonnes for 2009. This approach optimises the overall cost base at the mine and focuses on the achievement of operating efficiencies with the current levels of manpower. The operation also benefits from its lead hedge programme which in 2009 has put options over 7,200 tonnes of lead at a price of $2,500 per tonne.
Record process plant performance
Plant throughput was an annual record of 263,453 dry tonnes for 2008. During August, a monthly record of 34,095 dry tonnes at almost 1,200 per day was achieved. This represented equivalent annualised throughput of over 400,000 tpa during the period of full production. Zinc and lead metal recoveries are being maintained over budget at a consistent 92%. The new on-stream analyser will continue to optimise the metallurgical performance of the operation.
Focus on efficiencies and development to ramp up production
Ore production rates from underground have steadily increased from an average of 885 tonnes per day in 2007 to 1,100 tonnes per day in 2008, and the mine now operates effectively at over 1,200 tonnes per day. The 2009 mine budget focuses on productivity efficiencies and cost reduction.
The Decline connected during the year and the Upper Adit is 64% complete and expected to connect mid 2009 to complete the main Mavres Petres infrastructure. This will improve efficiencies and facilitate future ramp ups in production due to improved access, ventilation and supply facilities.
The Decline has also enabled trialling of 'larger', more productive stopes and these layouts are to be extended to suitable additional lower areas of the orebody.
Second accesses from the Main Internal Ramp to an additional number of levels are being prioritised in 2009 to provide more mining faces enhancing both production and flexibility.
The Company is currently in the final stages of concluding a new and revised mining contract for 2009 that delivers unit cost reductions to the mine.
Long term tailings strategy
The fine and coarse tailings disposal strategy has been successfully implemented during 2008. A key part of that strategy is the commissioning and successful operation of the filter presses for dewatering fine tailings and water treatment plant sludge for dry storage. Coarse tailings are disposed of underground as part of backfilling activities reducing the required surface disposal volumes by 65%. Fine tailings fraction and associated water residues are filter pressed to produce dry cake for surface storage at significantly reduced volumes.
Safety development
The Safety Department commenced working towards compliance with ISO18000 and intends to formally apply for review in 2009 and full accreditation in 2010.
Continued commitment to the environment and the community
Hellas Gold's responsibility to both the environment and local community continues with the full implementation of the tailings plan noted above. The backfilling programme has substantially reduced the ingress of water to historical workings and reduced the volume of contaminated water generated. The new water treatment plant at Stratoni will provide greater capacity for the process plant as well as operational efficiencies. The new facility will treat water from Mavres Petres, allowing the existing plant to treat water from Madem Lakkos. The company also commenced a programme to enable 'small business starts', the first being a plant nursery near Olympiada village.
Stratoni exploration
Exploration completed on the western and down-dip extensions of the Mavres Petres orebody is expected to add to reserves at least replacing what was mined in 2008. Final figures will be published in the near future.
SKOURIES PROJECT (GREECE)
Highlights:
Fabrication of long lead time equipment - SAG and Ball mill shells finished
Continued progress on engineering
The Company's Skouries gold-copper project is located 35 km by road from the Stratoni port in northern Greece. Skouries is situated on a high plateau with no habitation in the immediate vicinity. The project is currently at the development stage. Skouries is a typical gold-copper porphyry deposit that forms a near-vertical pipe. The project has reserves of 3.9 million ounces gold and 800Kt copper. The orebody will be extracted by open pit and underground mining methods. The revenue stream will be through production of Gold doré from gravity concentration as well as the sale of Copper-Gold concentrates.
Fabrication of long lead time equipment
Hellas Gold signed a contract for €36m with Outotec Minerals OY ("Outotec") for the supply of a large technology and services package for Skouries.
Outotec has already delivered a basic engineering package to Hellas Gold for the grinding mills, flotation equipment, process control and paste thickeners. The Basic Engineering has subsequently been developed and advanced by Outotec and the appointed engineer for the project, the Athens based contractor ENOIA. Fabrication of the SAG and ball mills are well advanced with the mills shells, gear boxes, liners and motors all ready for shipment. The remaining components are on schedule for ex works delivery in the third quarter of 2009.
Continued progress on engineering
Orders for the long lead items outside of Outotec's scope are being prepared by, ENOIA, and include a primary crusher, pebble crushers, transformers and switch gear. Detailed fabrication engineering drawings for the flotation tank cells are well advanced in readiness for order placement. Offers for fabrication of those cells in Greece have been received and are under evaluation with the intention of placing orders by year end.
ENOIA are currently optimising the overall project lay out and coordinating project activities both within and outside of Outotec's scope, which includes design and procurement. This work is being managed by a team consisting of both Hellas Gold and European Goldfields personnel.
The Greek civil engineering company, MHXME S.A, has been appointed to carry out the civil design of the Skouries Project. Kion Architects of Athens have been appointed to provide the architectural designs for the project. Greek geotechnical consultants Omicron Kappa have completed the detailed design of the open pit and submitted their engineering work for the roads network, both of which are being reviewed.
OLYMPIAS PROJECT (GREECE)
Highlights:
Continued gold concentrate sales
Submission of EIS for re-treatment of tailings
The Company's Olympias project consists of a polymetallic (gold, lead, zinc and silver) deposit located 8 km north of the Stratoni mine. At present Hellas Gold is selling gold concentrates from the existing stockpile on the property and is pursuing applications for the relevant permits to resume mining. Hellas Gold plans to resume underground mining operations at Olympias after the necessary permits are awarded.
Continued sales of gold concentrates
The Olympias project benefits from an existing stockpile of gold-bearing pyrite concentrates which represented, at 31 December 2008, a reserve of approximately 101,000 tonnes grading 23.5 g/t gold (containing approximately 75,000 oz of gold), in addition to tailings containing 238,000 oz of gold and substantial underground reserves of gold, lead, zinc and silver.
Hellas Gold completed 34 shipments of Olympias concentrates in 2008 (2007 - 47). This translates into 63,533 in tonnes of pyrite concentrates sold. Sales of pyrite concentrates were as follows:
|
2008 |
2007 |
|
|
Sales |
||
|
Gold concentrate (dry tonnes) |
63,533 |
79,554 |
In the latter half of 2008 shipments of gold concentrate were disrupted by industrial action at the port of Thessaloniki, which restricted the availability of containers for use in concentrate shipments. Matters have subsequently improved and in January 2009, more concentrate was shipped than in all of the fourth quarter of 2008 due to the Company's successful sourcing of containers and a normalization of industrial relations at the port.
Total of 313,000 oz of gold reserves still located on surface
In addition to 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. The 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.
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.
Submission of EIS for re-treatment of tailings
Mine schedules, plant refurbishment plans and cost studies for the second phase of the Olympias project approach completion. In Q2 2008 the company submitted an Environmental Impact Study ("EIS") to allow the early processing of existing tailings, which will produce additional gold concentrate and allow the rehabilitation of a significant area of the Olympias valley. It is planned that this re-processing will commence in parallel with refurbishment of the plant lines for run of mine production and the necessary underground development to recommence production in Phase Two. The Company has received expressions of interest for the detailed design phase from Greek engineering companies, which are currently being evaluated pending the outcome of the Olympias EIS application.
PERMITTING PROCESS - SKOURIES AND OLYMPIAS
The Company continues to receive the support of the Greek Ministry of Development for its Business Plan and its preliminary environmental impact study ("PEIS"). 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 two phases to allow refurbishment of existing infrastructure and the subsequent construction of new gold processing facilities in the brownfield Stratoni area. Skouries will initially be mined as a low strip open pit operation, followed by highly productive underground mining.
As reported previously, approval of the PEIS had been delayed due to specific delays relating to ministerial input into the final report. This affected a large number of projects, public and private, in Greece. Progress has continued and the remaining administrative procedures to finalise approval are in process. A site visit by a team of specialists from the Ministry of Culture took place in early October and it is not anticipated that this visit will elicit any new concerns. The political situation in Greece is widely reported and has slowed all decision making, but the Company remains confident of a positive outcome. It has not been advised of any specific delays or new issues. The administrative process has proven lengthier than first anticipated due to a scale of project development that has not been permitted before. Previous permits issued in Greece were all for individual projects, not a business plan.
Approval of the PEIS by the Ministry of Environment will be expressed as a Project Pre-Approval from the Greek State with an invitation to the Company to submit its final EIS to allow public consultation. On approval of the EIS, the environmental permits for Skouries and Olympias will 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
The completion of processing the airborne geophysical survey carried out in late 2007 has revealed four new zones of conductive rocks with electromagnetic ("EM") signatures typical for massive sulphides such as the known mineralisation at Stratoni, Olympias and Piavitsa. All the zones are located within the northern part of Hellas Gold's permit area in Greece, where marble units host polymetallic massive sulphide. The new zones are distinct from any known mineralisation and represent some 20 kilometres of potential strike. Each anomalous area will now be investigated in the field with mapping, geochemistry and possibly follow-up ground geophysics in order to define future drill targets.
The EM survey had already successfully confirmed an anomaly extending eight kilometres of strike at the Piavitsa massive sulphide target. Two kilometres of this strike length have massive sulphide drill intercepts which correspond exactly with the EM anomaly.
In total, the EM survey has now identified or confirmed a total of 28 kilometres of conductive anomalies, some of which host known mineralisation. To put this in context, the massive sulphide reserves at Stratoni and Olympias have a strike extent totalling two kilometres.
In addition, the magnetic component of the survey has already identified a 17 kilometre by six kilometre belt of porphyry intrusives over which a three dimensional model has been completed defining two other major targets. Follow-up reconnaissance mapping on the ground has confirmed the presence of porphyry style mineralisation.
A number of drill sites have good access through existing roads, which will allow some drilling to take place in the coming months. An EIS has been prepared to allow access to drill the remaining sites later in 2009.
CERTEJ PROJECT (ROMANIA)
Highlights:
Definitive Feasibility Study completed.
Updated Mining Permit - permitting process now advanced
Life of mine extended to 16 years
Project progresses to basic and detailed engineering phases
New licences awarded covering approximately 450 square kilometres
Feasibility studies completed and mining permit updated - Deva Gold completed a Technical Feasibility Study ("TFS") for its Certej project that was accepted by the National Agency for Mineral Resources ("NAMR") in July 2008 which means that the company was issued with a modified mining permit and can mine the deposit.
Detailed technical and economic studies on Certej culminated with a Definitive Feasibility Study announced on 23 July 2008). This was further updated to incorporate an optimisation of the tailings facility sites and additional reserves defined from in-pit lower-grade material and existing dumps, announced in January 2009.
The following table summarises the key project indices:
|
Reserves |
|
|
||
|
Tonnes |
Years 1-11.5 |
32.8Mt |
2.0g/t Au, 11.4 g/t Ag |
|
|
|
Years 11.5-16 |
14.1Mt |
0.64 g/t Au, 11.7 g/t Ag |
|
|
Strip Ratio |
Years 1-11.5 |
3.1 |
||
|
Annual Throughput |
|
3Mt |
||
|
Overall Gold Recovery |
|
81% |
||
|
Overall Silver Recovery |
|
74% |
||
|
Life of Mine |
|
16 years |
||
|
Production |
|
|
||
|
|
Years 1-3 |
Years 1-11.5 |
||
|
Average gold production, oz pa |
172,000 |
155,000 |
||
|
Average silver production, oz pa |
720,000 |
816,000 |
||
|
Costs |
|
|
||
|
|
€ million |
€ million |
||
|
Capital |
Initial |
Sustaining |
||
|
|
133.4 |
47.4 |
||
|
Cash Costs* |
US$370/oz Au* 10 |
|||
|
* Net of silver by-product credits at $7.50/oz
|
|
|||
|
Financial |
|
|
||
|
Post tax IRR |
|
21.3% |
||
Project returns have increased slightly, as the increase in the sustaining capital costs has been offset by the extension in the life of the mine, improved foreign exchange factors and slightly reduced initial capital costs.
The Company was pleased to report that the project continues to be on track for permitting. We have concluded that key technical milestones can be achieved and that a fully viable development of the project can now be established within key operational criteria.
Coffey Mining (formerly RSG Global Consulting Pty Ltd) 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 an open life of 11 and a half years. The open pit is expected to yield approximately 160,000 oz of gold and 820,000 oz of silver per year in doré, reflecting an average total process recovery of 81% for gold and approximately 75% for silver. Thereafter, the plant will be fed for a further five years at the same throughput rate by material previously stockpiled from the open pit or historic dumps.
The metallurgical process involves the production of a gold and silver-bearing concentrate followed by the production of gold and silver bullion in doré 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 doré by the conventional Carbon in Leach (CIL) process.
Following on from recommendations made by Aker Solutions the company carried out further work in-house, principally comprising optimising the process plant location, investigating alternative lower costs plant vendors, more fully utilising local contracting services and obtaining more competitive rates for local inputs, which significantly reduced the capital cost estimate.
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 have completed the design and cost study for the TMFs. The location of the two TMFs is in the same valley as the mine and plant, which results in only a single water catchment area and principality for the entire Certej project.
Mine life now 16 years
New probable reserves have been defined extending the total Certej project mine life to 16 years. The reserves are from lower grade material within the existing open pit design and contained by historic dumps adjacent to the Certej deposit and can be summarised as follows:
|
Description |
Category |
Tonnes |
Au g/t |
Au ounces |
Ag g/t |
Ag ounces |
|
In-pit lower grade material |
Probable |
7,829,226 |
0.72 |
181,200 |
14.0 |
3,524,000 |
|
Dumps |
Probable |
6,320,190 |
0.53 |
107,700 |
8.9 |
1,802,000 |
|
Total |
Probable |
14,149,416 |
0.64 |
288,900 |
11.7 |
5,326,000 |
The existing open-pit design was optimised at a gold price of $450 per troy ounce and, whilst the pit forms a natural limit to the mineralisation, there is material within the pit shell that becomes economic at a gold price of $650 per ounce. In the previous mine plan this rock reported to the waste heap.
Drilling and channel sampling of historic dumps situated around the deposit has also defined new resources and reserves. Much of the material would have to be moved to make space for the planned Certej open-pit.
The rock dump and the in-pit lower-grade materials will be stockpiled and fed through the mill after the full grade ore from the pit has been treated in the first 11 and a half years of the life.
The 0.3 million ounces Au and 5.3 million ounces Ag reserves were estimated using mining costs defined in the Certej definitive feasibility study published in September 2008 with an additional cost for re-handling taken into account.
Total reserves at Certej are summarised below:
|
Description |
Category |
Million Tonnes |
Au g/t |
Au million oz |
Ag g/t |
Ag million oz |
|
Existing Reserve |
Probable |
32.8 |
2.01 |
2.12 |
11.4 |
12.0 |
|
New Reserve |
Probable |
14.1 |
0.64 |
0.29 |
11.7 |
5.3 |
|
Total |
Probable |
46.9 |
|
2.41 |
|
17.3 |
Project progresses to basic and detailed engineering phases
The Company has now advanced the process plant design into Basic Engineering phase, which after a rigorous evaluation procedure was awarded to Aker Solutions. This will be carried out with the local engineering company Cepromin. The Company has also contracted Xstrata Technology Ltd in respect of the engineering of the Albion process section of the plant.
Permitting process well advanced
In September 2008 NAMR approved the TFS for the project recognising the quality of the work invested into the Certej project by Deva Gold. The NAMR also confirmed the official approval and registration of the project's resources and reserves. This completed all the approvals required for the project from NAMR and was a very significant step forward in the development of the project, as it effectively updates the mining permit and allows the reserve as outlined in the TFS to be mined.
In February 2008, the Company completed the Environmental Impact Study (the "EIS") to develop the Certej project. This has subsequently been revised to incorporate the improvements to the project described previously. This will be submitted to the Romanian environmental authorities in Timisoara in the early part of 2009.
The EIS addresses the proposed increase in mine production at Certej and the processing of the 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 permitting process is now well advanced and its successful conclusion will allow for construction and full scale operation of the project. As part of that process, Deva Gold received an updated Urbanisation Certificate from Hunedoara County Council, renewing that issued in October 2006. The new Urbanisation Certificate, which incorporates all the modifications to the project since 2006, is valid until 2010 and can be extended further. The award of this new certificate, which legally confirms the designated land use of the project site, again demonstrates the continued support of the Romanian authorities for the development of the Certej project. This confirmation of Certej as a designated industrial mining area also clearly attests to the local community's support for the project.
The permitting process is now in its final stages. Deva Gold has also submitted a Zonal Urbanisation Plan ("PUZ") to the relevant Romanian authorities. Deva Gold has advanced the planning procedures for this next step, the PUZ approval, including public meetings with the affected local communities, and has received almost all the constituent approvals required from various official bodies. The remaining significant approval in the PUZ process is an environmental approval to be issued locally through the Timisoara office of the Ministry of Environment; the process for which is well underway.
The Company expects to be able to announce the dates for the remaining public hearings for the PUZ process in the near future.
Following the approval of the PUZ, the EIS will also then be subject to the last requirement for public consultation prior to the issuance of the environmental permit. These are the final approvals required for the construction and operation of the plant, the tailings design and other related infrastructure.
EXPLORATION IN ROMANIA
The Company has acquired two new prospecting licences totalling some 454 square kilometres. The licences cover two distinct areas. The first area forms a westward extension to the Company's existing group of licences centred on Certej. This western extension covers some 317 square kilometres and is adjacent to the well-known Brad mines, which have produced as much as 20 million ounces of gold according to historic records, and were operated by the Romanian state until 2006. Deposits in this geological terrain include examples of disseminated gold, porphyry mineralisation as well as the more prolific and higher grade epithermal deposits. The Company has also acquired raw data from an airborne magnetic and radiometric geophysical survey which covers much of the area and will begin processing this data in early 2009.
The second area covers some 137 square kilometres and includes the Deva copper gold porphyry and the Muncel-Vetel massive sulphide deposits. The Deva porphyry was operated by the Romanian state owned mining company between 1950 and 2001. During this time it produced some 19 million tonnes of ore at a grade of 0.7% copper. Gold grades were not recorded systematically throughout the mine life but are indicated to be approximately 0.5 g/t gold. The porphyry is defined to a depth of 800 metres and is one of a series of intrusives within a volcanic complex, which is completely under explored. The Muncel-Vitel area hosts known copper, lead and zinc mineralisation in a series of stacked massive sulphide horizons recorded as being Volcanogenic Massive Sulphides (VMS) type. The mineralisation has been traced along more than 5 kilometres of strike length and the area has never been investigated with modern techniques.
European Goldfields plans to commence reconnaissance mapping, geochemical and geophysical surveying and sampling of these exciting and highly prospective areas early in 2009. This will be the first time that modern techniques have been applied to much of the area acquired and the Company will capitalise on its knowledge of porphyry and epithermal deposits gained from our previous work on the Tethyan belt of central and southeast Europe within Greece, Romania and Turkey.
EXPLORATION IN TURKEY
In April 2008 the company entered into a joint venture (JV) with Ariana Resources plc (Ariana) with respect to mineral properties in the Eastern Pontide area of northeast Turkey.
Significant progress has been made both in assessing the properties within the JV and in identifying new areas for acquisition following seven months of exploration.
Mapping and lithological sampling of the advanced Ardala porphyry target has delineated the extents of the various porphyry types and alteration phases. This work has confirmed that porphyry mineralisation continues to the south of the previously recognised outcrops. Modelling of the newly discovered zone is now complete and drill testing will commence in mid 2009.
Sampling and mapping work on the other JV concessions is ongoing together with the generative programme that has so far identified several prospective areas for new ground acquisition. A regional geological model for the Eastern Pontides Belt of Turkey is being produced.
The Company continues to look for new opportunities in Turkey and the exploration team has conducted a number of exploration site visits to various portfolios, properties and deposits, both within the JV area of interest and elsewhere in Turkey.
Documents to be 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 2008, and copies of the Notice of Meeting and Management Proxy Circular for the Annual Meeting of Shareholders of the Company to be held on 20 May 2009, will be sent to Shareholders and filed on SEDAR at www.sedar.com
About European Goldfields
European Goldfields Limited is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and South-East Europe.
Greece - European Goldfields holds a 95% interest in Hellas Gold S.A. Hellas Gold owns three major gold and base metal deposits in Northern Greece. The deposits are the polymetallic operation at Stratoni, the Olympias project which contains gold, zinc, lead and silver, and the Skouries copper/gold porphyry project. Hellas Gold commenced production at Stratoni in September 2005 and started selling an existing stockpile of gold concentrates from Olympias in July 2006. Hellas Gold is applying for permits to develop and build the Skouries and Olympias projects.
Romania - European Goldfields owns 80% of the Certej gold/silver project in Romania. In July 2008, the National Agency of Mineral Resources approved the technical feasibility study in support of its permit application and issued a new mining permit for the Certej project.
For further information please contact:
|
European Goldfields: David Reading, Chief Executive Officer |
e-mail: [email protected] Tel: +44 (0)20 7408 9534 |
|
Buchanan Communications: Bobby Morse / Katharine Sutton |
e-mail: [email protected] Tel: +44 (0)20 7466 5000 |
|
RBC Capital Markets: Sarah Wharry |
e-mail: [email protected] Tel: +44 (0)20 7653 4804 |
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 Information 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.
Related Shares:
EGU.L