2nd Jul 2007 10:53
European Goldfields Ltd02 July 2007 Immediate Release 2 July 2007 European Goldfields Ltd Closing of Acquisition of an Additional 30% Interest in Hellas Gold 2 July 2007 - European Goldfields Limited (TSX / AIM: EGU) (the "Company" or"European Goldfields") is pleased to announce that it has completed theacquisition of an additional 30% interest in Hellas Gold S.A. ("Hellas Gold") aspreviously explained in the Company's press release dated1 June 2007 (the "Acquisition"). This increases the Company's total interest inHellas Gold to 95%. Summary of the Acquisition • The purchase price is funded essentially through a share swap with Aktor, providing it with a 19.9% stake in European Goldfields and reinforcing a strategic alliance between the two companies • The transaction is accretive for all shareholders, incorporating a 15% discount to the "see-through value" of Hellas Gold • The Acquisition provides European Goldfields' with 95% ownership of the cash flow and net income to be generated from existing and future production in Greece • Following a recent fundraising, European Goldfields now has approximately US$215 million in cash, representing over 50% of the expected capital required to develop the Skouries and Certej projects • European Goldfields remains on track to become the largest unhedged gold producer in Europe, with the development of Skouries and Olympias in Greece and Certej in Romania • With a market capitalisation of over US$900 million following the recent fundraising and the Acquisition, European Goldfields has become the 5th largest mining company listed on AIM Details of the Acquisition On 29 June 2007, the Company completed the acquisition of an additional 30%interest in Hellas Gold, increasing its stake to 95%. The purchase price wasagreed at US$178 million, which incorporates a 15% discount to the "see-throughvalue" of Hellas Gold. The full purchase price is payable by the allotment tothe vendor of 35,447,246 common shares representing 19.9% of the issued andoutstanding shares of the Company on a diluted basis and the balance of US$8.4million in cash. This transaction is, in essence, a share swap and reinforces a strategicalliance with the vendor Aktor S.A. ("Aktor") and its parent company EllinikiTechnodomiki TEB A.E. (ATHEX: ELTEX) ("El-Tech") in that approximately 95% ofthe purchase price is payable to Aktor in common shares of the Company. Of thecash portion, 50% will be re-invested by Aktor into Hellas Gold, as fundingtowards maintaining its residual 5% shareholding interest in Hellas Gold. El-Tech is a large Greek conglomerate with a market capitalisation in excess ofUS$2 billion and investments in four fields: construction, concessions, energyand real estate. Aktor is Greece's largest construction company. Furthermore, to demonstrate and confirm its long-term commitment to the Companyand its projects, Aktor has agreed not to sell the European Goldfields shares itreceives as consideration until the date on which the Company's Skouriesgold-copper porphyry mining project commences production (or four years afterthe closing of the Acquisition, if earlier). The Company also intends to appoint a representative of Aktor to its board ofdirectors. The Company does not propose to make significant changes to HellasGold's operations following the Acquisition. Concurrently with the Acquisition, the Company completed a treasury offering of27.6 million shares, for total gross proceeds of Cdn$138 million. Commenting on the transaction, David Reading, Chief Executive Officer ofEuropean Goldfields, said: "The fundraising and the increase to 95% ownership ofHellas Gold have transformed European Goldfields overnight. The key partnershipwith Aktor has been further strengthened through aligning both companies' longterm interests in the rapidly developing mining industry in South East Europe.With the flexibility of US$215 million of cash on the balance sheet to developour three major gold projects, underpinned by strong cash generative productionfrom Stratoni in a sustainable high metal price environment, European Goldfieldsis on track to become a mid-tier un-hedged gold producer within the next 3years." About European Goldfields European Goldfields is a resource company involved in the acquisition,exploration and development of mineral properties in Greece, Romania andSouth-East Europe. Greece - European Goldfields holds a 95% interest in Hellas Gold S.A. HellasGold owns three major gold and base metal deposits in Northern Greece. Thedeposits are the polymetallic projects of Stratoni and Olympias which containgold, zinc, lead and silver, and the Skouries copper/gold porphyry body. HellasGold commenced production at Stratoni in September 2005 and selling an existingstockpile of Olympias gold concentrates in July 2006. Hellas Gold is applyingfor permits to develop the Skouries and Olympias projects. Romania - European Goldfields owns 80% of the Certej gold/silver project inRomania. European Goldfields submitted in March 2007 a technical feasibilitystudy to the Romanian government, in support of a permit application to developthe project. For further information please contact:European Goldfields: e-mail: [email protected] Reading, Chief Executive Office: +44 (0)20 7408 9534OfficerRBC Capital Markets Office: +44 (0)20 7653 4093Patrick Meier / Peter Barrett-Lennard Evolution Securities Office: +44 (0)20 7071 4300Frank Moxon / Simon Edwards Buchanan Communications: e-mail: [email protected] Morse / Ben Willey Office: +44 (0)20 7466 5000 Renmark Financial Communication: e-mail:[email protected] G. Murray-Lyon Office: +1 514 939 3989 Forward-looking statementsCertain statements and information contained in this document, including anyinformation as to the Company's future financial or operating performance andother statements that express management's expectations or estimates of futureperformance, constitute forward-looking information under provisions of Canadianprovincial securities laws. When used in this document, the words "anticipate","expect", "will", "intend", "estimate", "forecast", "planned" and similarexpressions are intended to identify forward-looking statements or information.Forward-looking statements include, but are not limited to, the estimation ofmineral reserves and resources, the timing and amount of estimated futureproduction, costs and timing of development of new deposits, permitting timelines and expectations regarding metal recovery rates. Forward-lookingstatements are necessarily based upon a number of estimates and assumptionsthat, while considered reasonable by management, are inherently subject tosignificant business, economic and competitive uncertainties and contingencies.The Company cautions the reader that such forward-looking statements involveknown and unknown risks, uncertainties and other factors that may cause theactual financial results, performance or achievements of the Company to bematerially different from its estimated future results, performance orachievements expressed or implied by those forward-looking statements and theforward-looking statements are not guarantees of future performance. Theserisks, uncertainties and other factors include, but are not limited to: changesin the price of gold, base metals or certain other commodities (such as fuel andelectricity) and currencies; uncertainty of mineral reserves, resources, gradesand recovery estimates; uncertainty of future production, capital expendituresand other costs; currency fluctuations; financing and additional capitalrequirements; the successful and timely permitting of the Company's Skouries,Olympias and Certej projects; legislative, political, social or economicdevelopments in the jurisdictions in which the Company carries on business;operating or technical difficulties in connection with mining or developmentactivities; the speculative nature of gold and base metals exploration anddevelopment, including the risks of diminishing quantities or grades ofreserves; the risks normally involved in the exploration, development and miningbusiness; and risks associated with internal control over financial reporting.For a more detailed discussion of such risks and material factors or assumptionsunderlying these forward-looking statements, see the Company's Annual Information Form for the year ended 31 December 2006, filed on SEDAR atwww.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 newinformation, future events or otherwise, except as required by law. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
EGU.L