15th May 2007 07:04
European Goldfields Ltd15 May 2007 Immediate Release 15 May 2007 European Goldfields Limited RESULTS FOR Q1 2007 STRATONI INCREASES PRODUCTION STRATONI SILVER RESERVE SOLD TO SILVER WHEATON 15 May 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("EuropeanGoldfields" or the "Company") today reports its results for the first quarter to31 March 2007. Highlights during 2007 are: Financial highlights: • Sales of US$17.1m in Q1 2007, compared to $9.1m in 2006 - Sales up 88% • Profit (before tax) of $5.7m in Q1 2007, compared with $1.0m in 2006 • Operating cash flow increasing to $7.3m in Q1 2007, up $4.9m over 2006 • Working capital of $45.2m at 31 March 2007; $102.7m post sale of the Stratoni silver stream in April Operational highlights: • Attractive price secured on Stratoni silver stream sold to Silver Wheaton • Best production to date from Stratoni mine and mill • New economic mineralisation discovered at Stratoni • Two new contracts signed for the sale of Olympias gold concentrates • Skouries technical feasibility study nearly completed • Albion Process Technology achieved 92% gold recovery on Certej composite sample • Technical feasibility study submitted to Romanian government • Target exploration under way to extend Certej life-of-mine Commenting on the results, David Reading, Chief Executive Officer of EuropeanGoldfields, said: "Our Stratoni operations continue to ramp up and producestrong operating cash flow. This combined with the proceeds of the sale of thesilver stream to Silver Wheaton means we now have approximately US$100 millionin cash, which we intend to use to accelerate the development of our major goldprojects in Greece." Conference Call & Webcast - 16 May 2007 at 10am EST / 3pm GMT European Goldfields will host a conference call on Wednesday 16 May 2007 at 10:00 a.m. ET / 3:00 pm (London, UK time) to update investors and analysts on itsresults. Participants may join the call by dialing one of the three following numbers,approximately 10 minutes before the start of the call. From North America: (Local) 416-644-3424 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=1868460 For those unable to join the live conference call, a replay will be availableuntil Wednesday 23 May 2007 at midnight by dialing (toll free) 1-877-289-8525 or1-416-640-1917, Passcode 21232409#. SELECTED FINANCIAL DATA Three months ended 31 March ----------------------- ------------ -------------(in thousands of US dollars, 2007 2006except per share amounts) $ $------------------ ------------ -------------Statement of loss and deficitSales 17,083 9,083Gross profit 10,139 4,295Profit before income tax 5,676 1,037Profit after income tax 3,957 161Non-controlling interest (1,848) (475)Profit/(loss) for the period 2,109 (314)Earnings per share 0.02 0.00------------------ ------------ ------------- ------------------ ------------ -------------(in thousands of US dollars) 31 March 31 December 2007 2006 $ $------------------ ------------ -------------Balance sheetWorking capital 45,201 41,854Total assets 325,501 311,943------------------ ------------ ------------- European Goldfields' unaudited consolidated financial statements andmanagement's discussion and analysis for the three-months periods ended 31 March2007 and 2006 are filed on SEDAR at www.sedar.com. STRATONI OPERATIONS (GREECE) Highlights: • Attractive price secured on Stratoni silver stream sold to Silver Wheaton • Best production to date from mine and mill • New economic mineralisation discovered at Stratoni Attractive price secured on Stratoni silver stream sold to Silver Wheaton - InApril 2007, European Goldfields announced that its 65%-owned subsidiary HellasGold S.A. ("Hellas Gold") had agreed to sell to Silver Wheaton Corp. all of thesilver metal to be produced from ore extracted during the mine-life within anarea of some 7 km(2) around its zinc-lead-silver Stratoni mine in northernGreece. Silver production at Stratoni is a by-product of lead-zinc operations. The sale was made in consideration of an upfront payment to Hellas Gold ofUS$57.5 million in cash, plus a fee per ounce of 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 some 10Moz ofpayable silver. The deal amounts to $11.59 of revenue per payable reserve ounce of silver,compared to the current silver spot price of $13.78/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 $10.84/oz. The transaction does not apply to any additional silver resources within HellasGold's 317 km(2) of mining and exploration licences in northern Greece,including silver resources at Hellas Gold's other mine of Olympias, except for aright of first refusal granted to Silver Wheaton on similar future transactionsinvolving silver. The proceeds of this transaction will be used to accelerate development andprovide flexibility in financing of the European Goldfields project pipeline inGreece. The project development is planned in phases with the Company's flagshipproject, the Skouries copper-gold porphyry, being a priority. Best production to date from mine and mill - Hellas Gold has mined a total of55,069 tonnes of ore in Q1 2007 at its Stratoni zinc-lead-silver plant inNorthern Greece, delivering against 2007 forecast and representing the bestquarterly production to date from the Stratoni mine and mill. Hellas Gold completed five shipments of concentrates from Stratoni in Q1 2007,compared with seven shipments in Q1 2006. This translates into the followingsales of concentrates: Q1 2007 Q1 2006Zinc concentrate (tonnes) 8,244 5,283 - Containing payable: Zinc (tonnes)* 3,463 2,335 Lead concentrate (tonnes) 3,774 4,623 - Containing payable: Lead (tonnes)* 2,486 3,166Silver (oz)* 190,292 252,559 * Net of smelter deductions In addition, Hellas Gold had a stockpile inventory of over 5,000 tonnes of zinc,lead and silver concentrates at the end of Q1 2007. Ore production rates from underground have steadily increased from 400 tonnesper day in Q1 2006 to a steady 900 tonnes per day in Q1 2007 and the mine nowoperates effectively at this level. Ore production is expected to continue toramp-up, up to a maximum of 400,000 tonnes per year by the end of 2009. This issupported by the current development plan and the new decline which is scheduledfor completion by end of 2007. Average ROM grades have increased between 6% and 12% for zinc, lead and silver,reflecting the mining of higher grade areas in the upper levels of the orebody.This has translated into a considerable improvement in concentrate grades in Q12007. A ramp to access the upper parts of the mine is almost completed, along withinfrastructure to connect the upper part of the mine with existing ore bins toimprove ore handling and ventilation. This infrastructure has already started toprovide access to new working ends in the upper part of the mine to ensure theramp-up in production continues in 2007. Significant progress has also been made on the new decline to the Mavres Petresorebody, which has now approximately 1,300 metres and is advancing at over 5mper day on average. The new decline is not necessary for mining in 2007 butbecomes critical for the future production ramp-up involving the deeper portionsof the orebody, as well as providing better ventilation. Tailings strategy outlined - In order to ensure tailings storage capacity forthe life of mine, a global strategy for the management of tailings has beendeveloped by Hellas Gold. Additional tailings storage space has been created byremoving coarse tailings material from existing storage facilities to backfillold mine workings. Dried fine material has also been moved from the existingtailings ponds and placed in the voids created by removing the coarse tailings.Following successful trials, two filter presses have been bought and will becommissioned in Q2 2007. The filter press at the mill will be used forprocessing the current production of fine tailings and water treatment sludge toallow the maximum utilisation of the space created at the existing facility. Thesecond filter press will eventually be installed close to the new watertreatment plant, but will initially be used at the tailings ponds to treat thewet tailings and water treatment sludge for dried cake storage. Currentproduction of coarse tailings from production will be used for backfill ofcurrent workings. Water management programme adopted - To reduce future water pumping andtreatment costs, Hellas Gold commenced backfilling of the old Madem Lakkos mineworkings. A total of some 20,000m3 of void has been filled so far. In addition,a second water treatment plant at the Stratoni mine site will be commissioned in2007 to improve efficiency and provide capacity for extreme rainfall events. Thenew plant will include the second filter press to allow dry storage of treatmentresidue as filter cake. New economic mineralisation discovered at Stratoni - Economic mineralisation hasbeen encountered in the new decline running between the existing reserve andmined-out areas at Madem Lakkos. The decline exposed some 35 metres of strikelength and a minimum of 4 metres width. The zone is located approximatelyhalf-way between the two previously known deposits at Stratoni. Average gradesfrom panel sampling of 6.2% lead, 11.2% zinc and 105 g/t silver comparefavourably with current reserves. The zone is open along strike, up and down dipand towards the hanging wall and is interpreted as a footwall zone to the mainmarble horizon. In addition to the intersected zone, there is a high potentialfor further mineralisation where the zone intercepts the main marble both up dipand to the east. A drill programme designed to define at least 200 metres ofstrike and 75 metres of dip extent will commence in May 2007. The new declinewill enable immediate access for mining of any new discovery in this area. Exploration drilling in progress - In October 2006, European Goldfields began anexploration drilling programme at Stratoni. Stratoni already has well-definedreserves over a six-year life of mine. Six areas targeted by the drilling areobvious extensions to known mineralisation, in addition to more conceptualtargets between the two main Stratoni deposits. The two targets being investigated first are known extensions to previouslymined areas of the Stratoni (Madem Lakkos) deposit, where production grades of9.0 to 10.7% lead, 9.0 to 9.6% zinc and 160.0 to 185.3 g/t silver are recorded.The programme is aimed at drilling out resources in these areas of knowneconomic mineralisation. Drilling into the known extensions of the upper part of the eastern deposit atStratoni (Madem Lakkos) has confirmed the geological model with mineralisationoccurring in the fold hinge of an antiform in the upper levels. Mine workingsthat were not recorded in the old mine plans have been shown to be moreextensive than previously thought. A second deeper target at Madem Lakkos willbe drilled in Q2 of this year. The drilling programme will also investigate inferred resources which formextensions 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. Additional drilling will also be conducted from the new decline at regularintervals along the rest of the 1.5 kilometre zone between the existing reserveand mined-out areas at Madem Lakkos. The drilling programme aims to significantly increase reserves and life of mine.The existing environmental and mining permits for Stratoni will allow HellasGold to immediately exploit any new discoveries resulting from this drillingprogramme. SKOURIES & OLYMPIAS PROJECTS (GREECE) Highlights: • Two new contracts signed for the sale of Olympias gold concentrates • Skouries technical feasibility study nearly completed • Permitting process under way • Permit-wide exploration under way - Twenty exploration targets identified Two new contracts signed for the sale of Olympias gold concentrates - HellasGold's Olympias project benefits from an existing stockpile of gold bearingpyrite concentrates representing at 31 December 2006 a reserve of approximately251,000 tonnes grading 23.27 g/t gold (containing 188,000 oz of gold), inaddition to substantial underground reserves of gold, lead, zinc and silver. In Q1 2007, Hellas Gold completed nine shipments of gold concentrates from theOlympias stockpile, compared to Nil shipments in Q1 2006. This amounts to theshipment of 13,778 wet metric tonnes (wmt) of gold concentrates in Q1 2007,compared to Nil in Q1 2006. February 2007, Hellas Gold entered into a second off-take agreement with GoldenChina Resources Corporation ("Golden China") for the sale of 100,000 tonnes ofgold concentrates. This concentrate will be treated over a three year period onan equal profit share basis at Golden China's new dedicated bacterial oxidationplant in Shandong, China, which is expected to be commissioned in September2007. In April 2007, Hellas Gold S.A. also entered into a third off-take agreementwith MRI Trading AG ("MRI Trading") of Switzerland for the sale of an additional25,000 wmt of gold concentrates previously produced at the Olympias mine inGreece. Hellas Gold will receive payment for the full 25,000 wmt of concentratesup-front upon shipment of the first lot in Q2 2007. MRI Trading also has theoption to increase its order by a further 25,000 wmt, which is exercisable by 31July 2007. Hellas Gold has now secured 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 off-takers - Golden China, MRI Trading AG, a subsidiaryof Celtic Resources and Euromin S.A. - with expressions of interest to sell upto an additional 132,000 wmt of concentrates if the initial shipments aresuccessful. Hellas Gold plans to resume underground mining operations at Olympias after thenecessary permits are awarded, producing further gold bearing pyriteconcentrates for sale to existing and new off-takers. The price payable for the concentrates varies with the prevailing gold price.The agreements produce an attractive return for Hellas Gold at a gold price ofUS$500/oz. Skouries technical feasibility study nearly completed - Hellas Gold hascompleted most technical studies for the final bankable feasibility study on itsSkouries project in Northern Greece. Skouries is a typical gold-copper porphyrydeposit that forms a near vertical pipe. 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 43,000t of copper and 220,000 oz of gold over a mine lifeof over 20 years. This production rate is shown to be sustainable based on thedetailed mine design carried out by SRK Consulting and benchmarking with othercomparable mines. The metallurgy at Skouries is considered to be straight-forward. The processingwill comprise gyratory crushing for open pit and underground ore, single-streamSAG and ball-mill grinding. Approximately 30% of gold will be recovered by agravity circuit to produce dore on site. A highly-marketable copper/goldconcentrate will also be produced by conventional froth flotation, thickeningand filtration. Extensive testwork completed by Lakefield Research and other consultants hasshown average recoveries of 84% gold and 91% copper can be achieved. Concentrategrades of approximately 26% copper and averaging 27g/t gold are expected. The concentrates will be trucked to Hellas Gold's port storage facility atStratoni, which is approximately 15km away by road from the proposed Skouriesplant site. Skouries is located on a high plateau with no habitation in thevicinity. The study by Golder Associates incorporates the latest paste productiontechnology in a phased tailings management facility (TMF) that will minimiseland take and embankment height and provides increased tailings stability. Thestudy shows that the paste tailings are inert. The use of paste tailings and aphased TMF also allows sequential rehabilitation of the tailings managementfacility to minimise active tailings areas. The technical studies indicate to date that the project will requireapproximately US$270 million in initial capital expenditure under the followingcategories: • $188 million for the process plant and associated infrastructure • $53 million for the tailings management facility • $21 million for the open pit • $8 million for other costs Operating costs for the open pit mining are expected to be €1.28 per tonne, and€6.05 per tonne for the underground mining. Hellas Gold plans to publish the results of the final feasibility study onSkouries once the final Environmental Impact Study (EIS) is completed. Hellas Gold has initiated discussions with Outokumpu Oy for the purchase of milland plant equipment and with Aktor S.A. for the construction of the plant andrelated infrastructure. 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 European Goldfields has highlighted a total oftwenty exploration targets, including six advance targets and extensions toknown deposits, seven targets of known mineralisation for follow-up work andseven conceptual targets. The geological context of the targets has beenidentified and a model for the emplacement of known mineralisation has now beendeveloped. The model indicates that there are more than 20 km of structural corridors thathave acted as mineralising pathways with marble hosted polymetallic massivesulphide mineralisation, including the Stratoni and Olympias deposits. The modelalso identifies a 10 km long intrusive belt which hosts the Skouries copper/goldporphyry. 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 1300 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 kilometer 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 H2 2007 and subsequently drilled out. Pilot ground based geophysical programmes are currently under way in order toassess the effectiveness of EM geophysical surveys over areas that areprospective for massive sulphide mineralisation. Once the results have beenconsidered, European Goldfields plans to fly airborne magnetic surveys over theentire licence block and airborne EM surveys over the massive sulphide belts.The airborne surveys are planned for H2 2007 and are aimed at identifying newtarget areas and prioritising these with existing targets in preparation fordrilling in 2008. CERTEJ PROJECT (ROMANIA) Highlights: • Albion Process Technology achieved 92% gold recovery on composite sample • Technical feasibility study submitted • Environmental Impact Study nearly completed • Final bankable feasibility study to be completed by end-2007 • Clear path to permitting • Target exploration under way to extend life-of-mine Albion Process Technology achieved 92% gold recovery on composite sample -European Goldfields' 80%-owned Certej project involves the treatment offlotation concentrate to produce a gold/silver dore by using the Albion Process. The Albion Process is owned jointly by Xstrata and Highlands Pacific/OMRD andthe exclusive global agent is Core Resources. Xstrata and Core Resources offertestwork, design and technical back-up to the technology. The Albion Process is a combination of ultra-fine grinding of concentrates andoxidatative leaching at atmospheric pressure. The liberated gold and silver isthen recovered to dore by the conventional Carbon in Leach process. European Goldfields is currently completing an extensive metallurgical testworkprogramme at the Core Resources nominated test facility, HydrometallurgicalResearch Laboratories (HRL), in Australia. Recent results using the Albion Process suggest recoveries from a compositeconcentrate sample of approximately 92% for gold and up to 95% for silver can beachieved. The estimated residence times for obtaining the required degree ofoxidation and subsequent cyanide leaching together with the consumable levels ofoxygen, cyanide and limestone are in line with what would be expected with thisprocess. These factors impact positively on the project economics in terms ofboth capital and operating costs compared to other technologies for treating theCertej gold ores. European Goldfields is of the opinion that incorporating theAlbion Process into the treatment route provides a viable development option forthe Certej project. 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 the Certej project. The Technical Feasibility Study (TFS) pulls together all the constituent unitoperations of the Certej project from resource estimation to tailings disposalin a single study document which is required by the Romanian government as partof the permitting process. This document has been generated by Cepromin, a wellestablished Romanian consulting engineering group which ensures that it conformsto the procedural requirements. The TFS comprises a number of specialist studiesundertaken by relevant experts and with the active involvement of EuropeanGoldfields engineers. The Certej reserve contains 27.7M tonnes of ore grading 2.0 g/t gold and 11.6 g/t silver, representing 1.76Moz of gold and 10.4Moz of silver. The depositextends from surface and will be mined by open pit methods with a strip ratio of3:1. RSG Global of Australia used all the available geological and technicaldata to carry out pit optimisation work and this has resulted in a project whichis planned to involve the mining and processing of 3.0 Mt of ore per annum overat least nine years. The metallurgical process design is based on extensive testwork coveringcomminution and flotation to produce a gold bearing concentrate and thenprocessing to dore by means of the Albion Process.The comminution and flotationtestwork has mainly been carried out by SGS-Lakefield of Canada who are wellregarded in the field. All the ore types respond well to flotation and at theannual mining rate would yield approximately 275,000 tonnes of concentrate perannum with high grades ranging between 17 - 22 g/t gold and 85 - 165 g/t silver(depending on the source of the ore in the deposit), with a flotation goldrecovery of approximately 88%. This translates into an annual planned productionof approximately 170,000 oz of contained gold in the concentrate. The flotation concentrate will then be directed to the Albion Process section ofthe plant. The main pit material responds the best to the Albion Process and thematerial from the West requires increased oxidation time and achievesapproximately 2% less gold recovery. The West ore will be processed at the endof the project and therefore has less impact on the project economics. The TFShas based the preliminary design and cost estimates of the Albion Process andgold plants on the testwork by HRL. The residues from the flotation and gold plants will be disposed of in twoseparate but adjoining tailings management facilities (TMFs). The design ofthese for the TFS has been carried out by the Department of Civil Engineering atthe University of Bucharest. This centre has carried out the design of many TMFsin Romania which are presently in operation. The TFS has used the data from the mining, processing, TMF and other studies toestablish operating and cost estimates and define the project to confirm theviability of the project and provide technical back-up to the EnvironmentalImpact Study and a basis for the subsequent Bankable Feasibility Study. Environmental impact study nearly completed - In 2006, European Goldfieldscompleted all necessary Environmental Impact Assessments (Levels I and II), aSocial Impact Assessment Study and an Archaeological Study, in support of itspermit application to develop the Certej project. Work is now progressing well on the Environmental Impact Study (EIS), which isdue for completion in Q3 2007. The EIS will have been carried out over a periodof a year to cover the four seasons for accumulating certain required base linedata. The EIS is a detailed multi-discipline study assessing the environmental,social and health impacts of the project on the affected area. This study is being coordinated and managed by the independent Romaniancontractor, National Research and Development Institute for Industrial Ecology(ECOIND) who have conducted many such studies for the Romanian authorities andhave an international reputation. ECOIND will ensure the EIS is prepared to theregulatory framework established by Romanian law. The EIS is a major landmark in the permitting process and the TFS forms part ofthe back-up documentation required. Final bankable feasibility study to be completed by end-2007 - The BankableFeasibility Study (BFS) will be the definitive study which will be used toaccurately assess the viability of the Certej project and for presentation tothe banks and other sources to raise finance for the project. The TFS will provide the majority of the technical information and designcriteria for the BFS phase of the project. The BFS is scheduled for completion in Q4 2007 and will be managed by EuropeanGoldfields. The constituent studies will be conducted by suitably qualifiedindependent international contractors. An Invitation to bid for the processsection of the BFS will be issued to suitable consultants shortly. The contractor conducting the BFS for the process plant and associatedinfrastructure will include all the testwork information, including the finalresults from the ongoing Albion Process testwork programme, the resulting designcriteria package for the Ultra Fine Grinding IsaMill and the leaching processwith the associated costs. The design put forward in the TFS will be refined,expanded upon and carried out in more detail. The BFS will include the final open pit optimisation study, which will take intoaccount the latest testwork and the effect on assessing ore extraction andprocessing economics and include the results of the infilling drilling programmecurrently in progress to convert inferred resources within the pit area. Once the project finance is secured, the next step will be to advance to basicand detailed engineering, construction and commissioning. The Certej project isplanned for a 2010 start up. 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 2006. This will be followed by thesubmission of the EIS in Q3 2007. In September 2006, European Goldfields announced that the Hunedoara CountyCouncil has 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. The permits and a detailed urbanisation plan are expected by the end of 2007following a standard public consultation process with the local community.Customary construction and public utility permits are expected to follow bymid-2008 when the detailed engineering design has been completed for the siteplant. Target exploration under way to extend life-of-mine - Exploration in Romaniawill focus on extending the life-of-mine of the Certej project and increasingthe number of conceptual and regional targets for further exploration in theSouth Apuseni Mountain area. Certej life-of-mine extension work comprises drilling out inferred resources anddeeper, potentially high grade feeder zones, in-fill drilling and metallurgicaltestwork on satellite deposits, investigation of high grade vein deposits nearto the project that could sweeten the feed grade in the early project life andthe development of targets that could enhance the value of concentratesproduced, by the addition of copper rich material for example. Drilling toconvert inferred resources (currently treated as waste where they fall in theopen pit) to the indicated category has now commenced and will be completed intwo phases, the second phase being results dependant. Phase one comprises atotal of eight diamond drillholes and phase two comprises seven diamonddrillholes. European Goldfields has identified thirteen targets in total within its currentconcessions and plans to carry out exploration work on six of them in 2007. Thetwo most advanced targets, Teascu and Pitigus, are effectively contiguous to oneanother and are located some seven kilometres from Certej. In-house resourceestimates on these two targets are expected by Q3 2007 following in-filldrilling. European Goldfields is planning a major programme of airborne geophysics andregional mapping and geochemical surveys in order to generate and prioritiseregional and conceptual targets in the region. The results will be used tofurther develop the model built up during recent generative work whichhighlighted the importance of the overall structural framework in controllingintrusives and for the channeling, concentrating and trapping of mineralisation.Systematic investigation of these targets, including drilling, metallurgicaltestwork and resource definition, is planned for 2008. For further information please contact: European Goldfields: website: www.egoldfields.comDavid Reading, Chief Executive Officer e-mail: info@egoldfields.comOffice: +44 (0)20 7408 9534 Buchanan Communications: e-mail: bobbym@buchanan.uk.comBobby Morse / Ben WilleyOffice: +44 (0)20 7466 5000 Renmark Financial Communication: website: www.renmarkfinancial.comNeil G. Murray-Lyon e-mail: nmurraylyon@renmarkfinancial.comOffice: +1 514 939 3989 Resources & reserves parameters For additional information on the resource and reserve estimates quoted in thisnews release, please refer to the Company's Resources & Reserves Declaration atwww.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager,Exploration of the Company, was the Qualified Person under Canadian NationalInstrument 43-101 responsible for reviewing the disclosure of resource andreserve estimates quoted in this news release. 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 AnnualInformation 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