8th Aug 2007 07:04
European Goldfields Ltd08 August 2007 Immediate Release 8 August 2007 European Goldfields Limited RESULTS FOR Q2 2007 BEST QUARTERLY RESULTS TO DATE SUBSTANTAL GROWTH IN RESERVES AND CASH BALANCE 8 August 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("EuropeanGoldfields" or the "Company") today reports its results for the second quarterto 30 June 2007. Highlights are: Corporate highlights • Acquisition of an additional 30% interest in Hellas Gold at an accretive price • Strategic alliance with Aktor and its parent company Elliniki Technodomiki • C$138 million equity financing completed in the period Financial highlights: • Sales increased by 142% to US$42.0m in H1 2007, compared to $17.4m in 2006 • Profit (before tax) of $16.6m in H1 2007, compared to $1.3m in 2006 • Operating cash flow increasing to $19.0m in H1 2007, up $14.5m over 2006 • Working capital of $211.6m at 30 June 2007, compared to $36.5m in 2006 Operational highlights: • Stratoni: Grades higher than expected • Skouries & Olympias: Ministry of Development completes review of business plan - Significant milestone for permits • Skouries: Contract signed with Outotec Minerals OY for the purchase of mill and plant equipment • Olympias: Refurbishment plan underway • Certej: Pilot scale continuous test confirmed 90% gold recovery using the Albion Process • Certej: New mineralisation discovered in open pit Commenting on the results, David Reading, Chief Executive Officer of EuropeanGoldfields, said: "These results demonstrate that European Goldfields is ontrack to become a mid-tier producer. The successful financing and the alignmentof shareholder interests, combined with growing production and profitabilityunderpin the Company's strategy of generating excellent and sustainable returnsfor investors. "We are also pleased with the permitting process for our gold projects with afurther step completed in the period. European Goldfields is now well placed tounlock the further value from these projects with its strategic partner Aktorand realise the value of our reserves for our new and existing shareholders". Conference Call & Webcast - 8 August 2007 at 10am EST / 3pm GMTEuropean Goldfields will host a conference call on Wednesday 8 August 2007 at10:00 a.m. ET / 3:00 pm (London, UK time) to update investors and analysts onits results. Participants may join the call by dialing one of the threefollowing numbers, approximately 10 minutes before the start of the call. From North America: (Local) 416-644-3423 or (toll free): 1-800-589-8577From the U.K. & France (toll free): 00-800-0000-2288From Austria, Belgium, Denmark, Germany, Ireland, Iceland, Netherlands, Norway,Sweden, Switzerland and Italy (toll free): 00-800-0022-8228 A live audio webcast of the call will be available on: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1947880 For those unable to join the live conference call, a replay will be availableuntil 15 August 2007 at midnight by dialing (toll free) 1-877-289-8525 or1-416-640-1917, Passcode 21241908#. SELECTED FINANCIAL DATA Three months ended 30 June Six months ended 30 June --------------------- -------------------(in thousands of 2007 2006 2007 2006US dollars, except per share amounts) $ $ $ $--------------- ----------- ----------- ----------- -----------Statement of lossand deficitSales 24,944 8,274 42,027 17,357Gross profit 14,949 4,330 25,088 8,625Profit before 10,925 252 16,600 1,289income taxProfit/(loss) 8,129 (311) 12,085 (150)after income taxNon-controlling (2,794) (225) (4,642) (700)interestProfit/(loss) for 5,335 (536) 7,443 (850)the periodEarnings/(loss) 0.04 0.00 0.06 (0.01)per share --------------- ----------- ----------- ----------- ----------- (in thousands of US dollars) 30 June 2007 31 December 2006 $ $------------------ ------------ -------------Balance sheetWorking capital 211,637 41,854Total assets 729,774 311,943------------------ ------------ ------------- European Goldfields' unaudited interim consolidated financial statements andmanagement's discussion and analysis for the three- and six-month periods ended30 June 2007 and 2006 are filed on SEDAR at www.sedar.com. CORPORATE ACTIVITY Acquisition of an additional 30% interest in Hellas Gold - On 29 June 2007, theCompany completed the acquisition of an additional 30% interest in Hellas GoldS.A. ("Hellas Gold"), increasing its stake to 95%. The purchase price was agreedat US$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 of35,447,246 common shares, representing 19.9% of the issued and outstandingshares of the Company on a diluted basis, and the balance of US$8.4 million incash. This transaction was, in essence, a share swap and reinforces a strategicalliance with Aktor S.A. ("Aktor") and its parent company Elliniki TechnodomikiTEB A.E. (ATHEX: ELTEX) ("El-Tech") in that approximately 95% of the purchaseprice was paid to Aktor in common shares of the Company. Of the cash portion,50% will be re-invested by Aktor into Hellas Gold, as funding towardsmaintaining 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 itreceived as consideration until the date on which gold production commences inGreece (or four years after the closing of the Acquisition, if earlier). Cdn$138 million equity financing - Concurrently with the Acquisition, theCompany completed a treasury offering of 27.6 million shares, for total grossproceeds of Cdn$138 million. The Acquisition combined with the treasury offeringresulted in a 50% increase in the Company's market capitalisation. Attractive price secured on Stratoni silver stream sold to Silver Wheaton - InApril 2007, Hellas Gold agreed to sell to Silver Wheaton (Caymans) Ltd. ("SilverWheaton") all of the silver metal to be produced from ore extracted during themine-life within an area of some 7 km(2) around its zinc-lead-silver Stratonimine in northern Greece (the "Silver Wheaton Transaction"). Silver production atStratoni is a by-product of lead-zinc operations. The sale was made in consideration of a prepayment to Hellas Gold of US$57.5million in cash, plus a fee per ounce of payable silver to be delivered toSilver Wheaton of the lesser of US$3.90 (subject to an inflationary adjustmentbeginning after year three) and the prevailing market price per ounce. Thecurrent Stratoni proven and probable silver reserve contains approximately 12million ounces of silver. The deal amounts to $11.59 of revenue per payable reserve ounce of silver,compared to the current silver spot price of $13.14/oz. On a discounted basis(at 10%), this amounts to $10.39/oz of payable silver reserve, compared to thecurrent discounted silver spot price of $10.34/oz. The Silver Wheaton Transaction does not apply to any additional silver resourceswithin Hellas Gold's 317 km(2) of mining and exploration licences in northernGreece, for example silver resources at Hellas Gold's other mine of Olympias,except for a right of first refusal granted to Silver Wheaton on similar futuretransactions over the Company's silver assets. STRATONI OPERATIONS (GREECE) Highlights: • Better grades achieved • Development for continued production ramp-up in 2007 • New mineralisation discovered at Stratoni Consistent production from Stratoni - Hellas Gold mined a total of 53,088 tonnesof ore inthe second quarter of 2007 and 108,157 tonnes during the first half of 2007 atits Stratoni mine, which represents the best half-yearly production to date fromthe Stratoni mine and mill. Hellas Gold completed eight shipments ofconcentrates from Stratoni in the second quarter of 2007 and 13 shipments in thefirst half of 2007. This translates into the following sales of concentrates: Q2 2007 Q2 2006 H1 2007 H1 2006ProductionOre mined (wet tonnes) 53,088 47,966 108,157 79,718SalesZinc concentrate (tonnes) 14,007 5,513 22,251 10,796- Containing payable: Zinc (tonnes)* 5,855 2,320 9,318 4,655Lead concentrate (tonnes) 5,651 2,337 9,425 6,960- Containing payable: Lead (tonnes)* 3,636 1,554 6,122 4,720Silver (oz)* 285,349 121,350 475,641 373,909Inventory (end of period)Ore mined (wet tonnes) 4,603 12,326 4,603 12,326Zinc concentrate (tonnes) 2 1,562 2 1,562Lead/silver concentrate (tonnes) 2,150 674 2,150 674 * Net of smelter payable deductions Ore production rates from underground have steadily increased from 400 tonnesper day in the first half of 2006 to a steady 850 - 900 tonnes per day in thefirst half of 2007 and the mine now operates effectively at these levels. Therate of ore production is expected to continue to increase up to the end of2009. This expected increase is supported by the current development plan andthe new decline which is scheduled for completion by end of 2007. Better grades achieved - Mined grades have continued to be in line with the highlevels experienced in the first quarter of 2007. On average, mined and processedgrades have been on average approximately 18% higher than reserve grades in thefirst half of 2007. As a result, concentrate production and sales are at highrelative levels. Forecast ore production for 2007 has been reduced by approximately 10% from theoriginally forecasted 250,000 tonnes due to bad ground conditions in the upperarea of the mine, reducing the access to faces required for expanded operations.However, this is not expected to affect forecast metal production as grades havebeen significantly higher than expected in 2007. Development for continued production ramp-up in 2007 - An internal ramp toaccess the upper parts of the mine is on-going and is providing access to newworking ends in the upper part of the mine to ensure the ramp-up in productioncontinues in 2007. The new decline to the Mavres Petres orebody, critical tofuture production ramp-ups and ventilation, is over 1,400 metres and advancingsatisfactorily. The two filter presses designed to maximise the utilisation of storage space forfine tailings will be commissioned in the third quarter of 2007. The backfillingof old mine workings with coarse tailings to create additional tailings storagespace on surface has resulted in a total of some 20,000 m3 of void in the oldMadem Lakkos mine workings being filled to date. This backfilling should alsoreduce mine water pumping and treatment costs. The second water treatment plantat the Stratoni mine site is scheduled to be commissioned in the third quarterof 2007 to improve efficiency and provide capacity for extreme rainfall events. New mineralisation discovered at Stratoni - New mineralisation has beenencountered during the excavation of the new decline running between theexisting reserve and mined-out areas at Madem Lakkos. Average grades from panelsampling compare favourably with current reserves. A drill programme designed todefine at least 200 metres of strike and 75 metres of dip extent has commencedwith results expected in the fourth quarter of 2007. The new decline will enableimmediate access for mining of any new discovery in this area. Drilling of Stratoni extensions - In October 2006, European Goldfields began anexploration drilling programme at Stratoni with the aim to significantlyincrease reserves and life of mine. The two targets being investigated first areknown extensions to previously mined areas of the Stratoni (Madem Lakkos)deposit, where production grades of 9.0 to 10.7% lead, 9.0 to 9.6% zinc and160.0 to 185.3 g/t silver are recorded. Drilling to date has confirmed to datethe geological model. The drilling programme will also investigate the inferred resources previouslyreported for Stratoni (see the Company's press release of 8 January 2007), whichform extensions to the western deposit at Stratoni (Mavres Petres). The drillingprogramme is designed to upgrade these inferred resources to the measured andindicated categories. These inferred resources are extrapolations from the knownreserves and comprise some 555,000 tonnes grading 7.3% lead, 10.2% zinc and 181g/t silver. SKOURIES & OLYMPIAS PROJECTS (GREECE) Highlights: • Sales of Olympias gold concentrate on track • Olympias refurbishment plan underway • Contract signed for purchase of mill and plant equipment • Ministry of Development completes review of business plan Sales of Olympias gold concentrate on track - Hellas Gold's Olympias projectbenefits from an existing stockpile of gold-bearing pyrite concentratesrepresenting, at December 31, 2006, a reserve of approximately 252,000 tonnesgrading 23.3 g/t gold (containing 188,000 oz of gold), in addition tosubstantial underground reserves of gold, lead, zinc and silver. Hellas Gold completed eight shipments of gold concentrates from the Olympiasstockpile in the second quarter of 2007 and 18 shipments in the first half of2007. This translates into the following sales of concentrates: Q2 2007 Q2 2006 H1 2007 H1 2006SalesGold concentrate (dry tonnes) 12,686 1,905 29,776 1,905 Hellas Gold has secured to date the sale of a total of 209,000 wmt of Olympiasconcentrates (containing approximately 148,000 oz of gold) over a three yearperiod to four different companies - Golden China Resources Corporation(formerly Shandong MIC Biogold Ltd.), MRI Trading AG, Opeloak Limited (asubsidiary of Celtic Resources Holdings Plc) and Euromin S.A. - with expressionsof interest to sell up to an additional 132,000 wmt of concentrates if theinitial shipments are successful. Hellas Gold expects to sell a total 100,000tonnes of gold concentrates in 2007 under the terms of these agreements. Hellas Gold plans to resume underground mining operations at Olympias afterpermits are awarded, producing more gold bearing pyrite concentrates for sale toexisting and new off-take purchasers. Olympias refurbishment plan underway - Preliminary work has already beeninitiated to realise the start-up at Olympias. The main mine infrastructureconsisting of ventilation, dewatering and hoisting are all operable and entry tothe workings is available from the existing ramp. An engineering audit of theunderground mine facilities has been completed and will be put into effect oncepermission to proceed is received. Similarly, the fabric of the existingconcentrator is sound. An audit of the plant has been undertaken and theinternational contractor Outotec Minerals OY inspected the facilities in July2007 and concluded that the plant could be brought back into efficient operationat relatively modest cost. It is firstly planned to reclaim and process the 2.4Mt of stockpiled tailingsarising from the previous operations at Olympias. This material will be fed intothe plant either alone or blended with mined ore and will produce the goldbearing pyrite concentrate similar to that which is already being sold. Theresidue from the concentrator plant will be directed to a backfill plant wherethe course fraction will be mixed with a small quantity of cement and used tofill the underground voids at Olympias; the fine fraction will be filtered andthe dried product transported for storage at the tailings management facility atthe nearby Stratoni mine. In this way, the environment will be improved at theOlympias site and all future tailings managed in a responsible manner utilisingbest practice. Skouries technical feasibility study nearly completed - Hellas Gold hascompleted most technical studies for the final bankable feasibility study on itsSkouries gold-copper project. 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 • Mining studies undertaken by SRK Consulting, Scott Wilson Mining and other international consultants. Mining studies carried out to date confirm that Skouries can be mined as a lowstrip open pit operation and as a highly productive underground mine. This wouldproduce annually up to 43,000 tonnes of copper and 220,000 oz of gold over amine life of over 20 years. This production rate is shown to be sustainablebased on the detailed mine design carried out by independent externalconsultants and benchmarking with other comparable mines. Outstanding work on the bankable feasibility study consists of the incorporationof the environmental impact study and minor optimisation studies on landtakepositioning around the open pit, water diversion and costs in the open pit. Contract signed for purchase of mill and plant equipment - Hellas Gold hassigned a contract with Outotec Minerals OY for the purchase of mill and plantequipment. Hellas Gold is also negotiating withAktor S.A. for the construction of the plant and related infrastructure afterpermits are received. In June 2007, a deposit of €6 million was paid to securethe fabrication of the primary SAG and ball mills and for Outotec to commencewith basic design. A testwork programme has been agreed with Outotec and will becarried out at their laboratory in Finland during August 2007. The programme isaimed at optimising the gravity gold recovery and dore production system, andestablishing basic design criteria for the concentrate regrind mill, theconcentrate thickener and filter. Ministry of Development completes review of business plan - In July 2007, HellasGold received a formal letter confirming that the Greek Ministry of Developmenthad completed its review of Hellas Gold's business plan submitted in January2006 for the joint development of the Skouries and Olympias gold and base metalsprojects in Northern Greece. In the letter, the Ministry of Development also re-declared its positive opinionof Hellas Gold's preliminary environmental impact study ("PEIS") which hasalready been submitted, and formally requested the Ministry of Environment toissue its official approval of the PEIS. The letter also states that the Ministry of Development "is in agreement withthe development of the project described in the business plan, as thisinvestment is particularly beneficial to the national and local economy (...)and reflects the intent of the contract signed between the Greek State andHellas Gold". This letter is addressed to Hellas Gold and the Ministry of Environment andrepresents a statement of support for the projects based on detailed studiescompleted by appropriate technical and advisory bodies appointed by the Ministryof Development. This letter represents the foundation for the fulfilment ofHellas Gold's business plan for Skouries and Olympias, in compliance with theGreek and EU legal framework. The business plan focuses on a phased approach to the development of theSkouries gold-copper porphyry deposit and the Olympias gold-lead-zinc-silverdeposit. The principal revenue stream in the early phases will be through thesale of concentrates. Hellas Gold's current plan is to develop Olympias in threephases to allow refurbishment of existing infrastructure and the subsequentconstruction of new gold processing facilities at Stratoni. Skouries willinitially be mined as a low strip open pit operation, followed by highlyproductive underground mining. This letter from the Ministry of Development re-confirms an earlier statementmade by the General Secretary of the Greek Ministry of Development, Mr NikosStefanou, when he publicly stated that the Government of Greece fully supportsthe development of mining projects in Chalkidiki, the region where the Skouriesand Olympias projects are located. In his speech, Mr Stefanou stated that "Themining industry is extremely important for the regional development of Greece"and more specifically that "The government supports the development of the goldmining business in Chalkidiki, according to the environmental framework. Theexecution of this initiative will develop this region and provided work for 600people in the construction phase and 1300 people in the production." The speechwas made on 10 May 2007 in Athens and is available at www.ypan.gr/c_announce/45_3927_cms.htm. Hellas Gold is currently finalising a full environmental impact study ("EIS")which is expected to be submitted to the Greek government in the fourth quarterof 2007, addressing any comments received on the PEIS.On approval of the EIS, the environmental permits for Skouries and Olympias areexpected to be issued. Hellas Gold will then submit to the Greek government a final technical report onthe Skouries and Olympias projects, which will restate the principles of thebusiness plan and take into account any conditions detailed in the environmentalpermit. The mining permits are expected to be issued on approval of thetechnical report by the Greek government. Permit-wide exploration under way - Twenty exploration targets identified -Hellas Gold holds 317 km(2) of highly prospective exploration licences innorthern Greece. Recent work by Hellas Gold has highlighted a total of twentyexploration targets, including six advance targets and extensions to knowndeposits, seven targets of known mineralisation for follow-up work and sevenconceptual targets. A programme of mapping, reinterpretation and modelling has been undertaken onthe Piavitsa advanced target. This polymetallic massive sulphide targetcomprises a 6 km mineralised structure with a 3.5 km central zone expressed byold manganese oxide open pits. Within the zone, seven holes drilled by theprevious owners over 1,300 metres of strike length and some 500 metres of knowndown dip extent define three mineralised horizons averaging 12 metres widthincluding high grade zones averaging around six metres width. Grades within theintercepts ranged from 0.3 to 22.2 g/t gold, 0 to 533 g/t silver, 0 to 26% zincand 0 to 12% lead. The current programme has confirmed the potential of thePiavitsa target over a three kilometre strike length and has identified a highgrade shoot within the main horizon. The work also identifies previouslyunsampled horizons of potential economic mineralisation and points to thepossibility of further high grade shoots at depth. These targets will be testedwith geophysics in the second half of 2007 and subsequently drilled out. Pilot ground-based geophysical programmes have now been completed over knownmineralisation at Olympias and have proven the effectiveness of EM geophysicalsurveys over areas that are prospective for massive sulphide mineralisation. Onthe basis of these results, Hellas Gold plans to fly airborne magnetic surveysover the entire licence block and airborne EM surveys over the massive sulphidebelts in October 2007. The airborne surveys are aimed at identifying new targetareas and prioritising these with existing targets in preparation for drillingin 2008. CERTEJ PROJECT (ROMANIA) Highlights: • Technical feasibility study submitted • Albion Process Technology achieved 90% gold recovery in continuous pilot plant tests • New mineralisation discovered in open pit Technical feasibility study submitted - In March 2007, European Goldfieldssubmitted a Technical Feasibility Study ("TFS") to the Romanian government, insupport of its permit application to develop its80%-owned Certej project. The Certej reserve for the sale of concentrates contains 27.7 million tonnes ofore grading 2.0 g/t gold and 11.6 g/t silver, representing 1.76 million ouncesof gold and 10.4 million ounces of silver. The deposit extends from surface andwill be mined by open pit methods with a strip ratio of 3.4:1. The project willinvolve the mining and processing of 3.0 million tonnes of ore per annum over atleast nine years. The metallurgical process design is based on extensive comminution and flotationtestwork to produce a gold bearing concentrate and then processing by means ofthe Albion Process. The project is expected to yield an average of 308,000tonnes of flotation concentrate per annum with high grades ranging between 17 -19 g/t gold and 80 - 130 g/t silver (depending on the source of the ore in thedeposit), with a flotation gold recovery of approximately 90%, followed by anAlbion gold recovery of approximately 90%, resulting in a total process goldrecovery of 81%. This translates into an annual planned production ofapproximately 168,000 oz of contained gold in the concentrate. The flotationconcentrate will then be directed to the Albion Process section of the plant forrecovery of gold and silver as dore. The Albion Process is a combination ofultra-fine grinding of concentrates and oxidative leaching at atmosphericpressure. The liberated gold and silver is then recovered as dore by theconventional Carbon in Leach process. The residues from the flotation and gold plants will be disposed of in twoseparate but adjoining tailings management facilities. Albion Process Technology achieved 90% gold recovery in continuous pilot planttests - European Goldfields is currently completing an extensive metallurgicaltestwork programme using the Albion Process at the facilities ofHydrometallurgical Research Laboratories Testing ("HRL") in Australia. Smallscale batch tests had achieved gold recoveries of 90-93% and established theoptimum conditions for the continuous pilot plant testwork required to prove theamenability of the Albion Process for the Certej concentrate. A Phase 1 pilot scale test was carried out which confirmed that gold extractionsin excess of 90% could be achieved on a continuous basis at sulphur oxidationrates in the Albion Process of around 70%. The testwork also confirmed theconsumable levels were in the expected range. A programme of flotation concentrate grade optimisation work was then undertakenand on completion a second Phase 2 continuous pilot plant run was completed inJune 2007. This confirmed the high gold extractions of 90% achieved in the Phase1 run and that the flotation concentrate is amenable to treatment by the AlbionProcess. Further optimising work and equipment tests by vendors are also nearingcompletion and a final design report will then be issued by Core Resources andXstrata Technology allowing an engineering design company to calculate costs forthe bankable feasibility study. During the testwork campaign at HRL, a large batch scale Albion test wascompleted on the concentrate from the West ore zone of the Certej deposit whichhad previously proved to be unresponsive to the Albion Process. This workdemonstrated that by applying a slightly higher oxidation rate, a gold recoveryof 90% could also be achieved from the West ore zone. This is a very positiveresult as it could increase the operating life of the Albion Process by at leasttwo years. A definitive mineralogical study describing the four ore zones of the Certejdeposit was completed by Amtel of Canada which indicated that there is potentialfor increasing flotation gold and silver recoveries above those achieved in thelaboratory scale tests. Environmental impact study nearing completion - In 2006, European Goldfieldscompleted all the necessary Environmental Impact Assessments (Levels I and II)and a Social Impact Assessment Study in support of its permit application todevelop the Certej project. Work is now progressing well on the Certej environmental impact study ("CertejEIS"), which is due for completion in the third quarter of 2007 after somecontributory studies are finalised. The Certej EIS will have been carried outover a period of a year to cover the four seasons for accumulating certainrequired base line data. The Certej EIS is a detailed multi-discipline studyassessing the environmental, social and health impacts of the project on theaffected area. Final bankable feasibility study to be completed by end-2007 - Once the EIS iscompleted, European Goldfields expects to complete a bankable feasibility study("BFS"), which will be used for internal approval and presentation to banks andother sources of potential financing of the project. The BFS is scheduled forcompletion by the end of the fourth quarter of 2007. A contract to undertake an engineering study of the process plant and associatedinfrastructure has been awarded to Aker Kvaerner Engineering Services. This willinclude the final results of the completed Albion Process testwork programme,the design criteria package for the Ultra Fine Grinding IsaMill and the leachingprocess with the associated costs. Site visits have been undertaken to gatherthe additional design and site data needed to produce the definitive costestimate and study. The BFS will include a final open pit optimisation study, which will take intoaccount the latest testwork and the effect on assessing ore extraction andprocessing economics and include the positive results of the completed infillingdrilling programme to convert inferred resources within the pit area to theindicated category (see table below). Conversion of inferred resources isexpected to provide an additional year of feed to the Certej plant. Clear path to permitting - European Goldfields has established a clear path toapplying for permits to develop the Certej project, having already submitted theTFS to the Romanian government in March 2007, which will be followed by thesubmission of the EIS in the third quarter of 2007. In September 2006, European Goldfields announced that the Hunedoara CountyCouncil had issued a General Urbanisation Certificate for the Certej project.The certificate confirms the designation of Certej as an industrial mining areaand confirms local community support for the project. This important milestoneis the first official step in the permitting process for Certej. All mining permits and a detailed urbanisation plan are expected by mid-2008following a standard public consultation process with the local community. New mineralisation discovered in open pit - Exploration in Romania has focusedon extending the life-of-mine of the Certej project. This comprises drilling outinferred resources and deeper, potentially high grade feeder zones, in-filldrilling and metallurgical testwork on satellite deposits, investigation of highgrade vein deposits near to the project that could increase the feed grade inthe early project life and the development of targets that could enhance thevalue of concentrates produced, by the addition of copper rich material forexample. Drilling to convert inferred resources (currently treated as wastewhere they fall in the open pit) to the indicated category has now beencompleted. In May 2007, European Goldfields announced that significant drilling interceptshave been encountered at Certej. In July 2007, European Goldfields completed adiamond and RC drilling campaign on the Certej deposit comprising 29 holes forsome 3,492 metres. The drilling programme was designed to convert inferredresources within the current pit design to the indicated category and to testthe link structure. To date results have been received for all of the 29 holesand significant intercepts are as follows: Hole ID From To Width Au Ag Zone (m) (m) (m) (g/t) (g/t) CJSD282 14 24 10 1.8 4 West_N CJSD284 11 17 6 9.7 2 West_S Inc 11 12 1 55.4 2 " 37 68 31 6.7 6 Inc 48 51 3 51.8 30 " 74 82 8 2.9 4 " 92 96 4 1.6 192 CJSD285 96 108 12 1.5 55 West_SCJSD286(RC) 122 126 4 1.9 1 IntCJSD287(RC) 113 114 1 39.3 1 Int CJSD290 3 7 4 12.3 4 West_N Inc 4 7 3 16 4CJSD291(RC) 146 158 12 2.1 25 Link Str. Inc 157 158 1 12.8 2 " 171 196 25 1.7 3 Link Str. Inc 178 180 2 7.1 6 " 376 414 38 1.7 8 CJSD292 38 70 32 2.4 15 West_S " 79 99 20 3.3 91 CJSD296 0 24 24 1.6 2 West_N " 54 66 12 1.5 8 CJSD297 30 36 6 1.5 14 West_N " 46 56 10 4.7 169 Inc 46 49 3 8.5 487 CJSD298 10 30 20 1.6 4 NW CJSD299 69 84 15 2.2 3 NW " 82 84 2 6.2 2 CJSD300 21 22 1 7.8 145 NW " 44 48 4 1.6 4 CJSD301 0 5 5 2.6 15 West_S " 13 34 21 1.8 15 " 61 66 5 1.8 28 CJSD303 82 87 5 1.9 1 West_S CJSD305 43 45 2 5.1 81 West_N Inc 43 44 1 8.8 132 CJSD306 52 56 4 1.8 1 West_N " 75 83 8 1.8 3 CJSD307 8 10 2 5.1 19 West_N Inc 8 9 1 9 33 " 89 96 7 1.6 5 CJSD308 38 40 2 1.5 5 West_S CJSD309 60 66 6 1.8 23 West_S " 70 75 5 1.6 32 Results are quoted using a 1.0 g/t Au lower cut-off grade, no upper grade cutbeing applied, and include a maximum of 5 m consecutive internal waste. Onlyintercepts equal to or greater than 1.5 g/t Au are reported. The Certej depositis irregular in nature, however drilling has been conducted perpendicular tomineralisation wherever possible and as such drilled widths correspond to truewidths. Unless otherwise indicated, the intercepts reported above are from halfHQ size diamond core and the holes are sampled at one-metre intervals throughoutthe entire hole. High gold grade drill intercepts from the southern flank of the West Zonerepresent a zone of intense potassic and variably silica altered andesite whichtrends southwest and is open along strike and down dip. The drilling confirmedthe inferred resources and also identified these additional higher grademineralised zones in the western part of the deposit. The results are currentlybeing assessed and a new resource calculation will be completed later in 2007followed by a revised pit optimisation and reserve estimation. Sample preparation and analysis was carried out at the independent ISO CertifiedALS-Chemex Laboratory at Gura Rosiei, Romania, using industry standard fireassay techniques for gold on 50-gram sample charges with atomic absorptionspectrometry ("AAS") finish and aqua regia digest for silver with an AAS finish.In addition to the laboratory's standard quality assurance / quality control ("QAQC"), the Company submits field duplicates, crusher duplicates, pulpduplicates and known gold standards on a routine basis and these compriseapproximately 20% of submitted samples. For further information please contact: European Goldfields: e-mail: [email protected] Reading, Chief Executive Office: +44 (0)20 7408 9534Officer RBC Capital Markets Office: +44 (0)20 7653 4093Patrick Meier / Peter Barrett-Lennard Evolution Securities Office: +44 (0)20 7071 4300Simon Edwards / Neil Elliot 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 statements Certain 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