8th Nov 2007 07:03
European Goldfields Ltd08 November 2007 Immediate Release 8 November 2007 European Goldfields Limited RESULTS FOR Q3 2007 PROFITS CONTINUE TO INCREASE SIGNIFICANT PROGRESS AT CERTEJ 8 November 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("EuropeanGoldfields" or the "Company") today reports its results for the third quarter to30 September 2007. Highlights are: Corporate & Financial highlights: • European Goldfields added to S&P/TSX Global Gold Index • Profit (before tax) of $31.9m in the first nine months of 2007, compared to $5.4m in 2006 • Working capital of $224.3m at 30 September 2007, compared to $41.9m at 31 December 2006 Operational highlights: • Stratoni sales up by 70% in the first nine months of 2007 compared to 2006 • Certej reserves increased by 20% - Full feasibility study to be completed in Q1 2008 • Olympias payable gold in concentrate sales almost doubled in Q3 vs. Q2 2007 • Sale agreed for extra 71,000 tonnes of Olympias gold concentrates • Contract signed for purchase of mill and plant equipment in Greece • Airborne geophysics exploration under way in Greece to identify new targets Commenting on the results, David Reading, Chief Executive Officer of EuropeanGoldfields, said: "European Goldfields continues to benefit from strong cashflows from metal production at Stratoni and sales of gold concentrates fromOlympias. With the recent publication of additional reserves, Certej is provingitself to be a robust gold and silver project, whilst our exploration programmein Greece is expected to provide exciting new opportunities in a veryprospective licence area". Conference Call & Webcast - 8 November 2007 at 10am EST / 3pm GMT European Goldfields will host a conference call on Thursday 8 November 2007 at10:00 a.m. EST / 3:00 pm (GMT) to update investors and analysts on its results.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) 416-644-3423 or (toll free): 1-800-595-8550From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Norway & Switzerland (toll free): 00-800-2288-3501From Sweden (toll free): 007-800-2288-3501 or (toll free): 009-800-2288-3501 A live audio webcast of the call will be available on: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2044020 For those unable to join the live conference call, a replay will be availableuntil midnight on 15 November 2007 by dialing (toll free) 1-877-289-8525 or1-416-640-1917, Passcode 2125 0012#. SELECTED FINANCIAL DATA Three months ended 30 Sept. Nine months ended 30 Sept. --------------- ----------- ----------- ----------- -----------(in thousands of 2007 2006 2007 2006US dollars,except per share $ $ $ $amounts) --------------- ----------- ----------- ----------- -----------Statement of lossand deficitSales 21,663 15,211 63,690 32,568Gross profit 11,273 7,958 36,361 16,583Profit before 15,268 4,102 31,868 5,392income taxProfit/(loss) 12,504 2,984 24,589 2,835after income taxNon-controlling (348) (1,509) (4,990) (2,209)interestProfit/(loss) for 12,156 1,475 19,599 626the periodEarnings/(loss) 0.07 0.01 0.14 0.01per share --------------- ----------- ----------- ----------- ----------- --------------------------- ------------ -------------(in thousands of US dollars) 30 Sept. 31 December 2007 2006 $ $--------------------------- ------------ -------------Balance sheetWorking capital 224,289 41,854Total assets 744,998 311,943--------------------------- ------------ ------------- European Goldfields' unaudited interim consolidated financial statements andmanagement's discussion and analysis for the three- and nine-month periods ended30 September 2007 and 2006 are filed on SEDAR at www.sedar.com. CERTEJ PROJECT (ROMANIA) Highlights: • Certej reserves increased by 20% - Life-of-mine extended by two years • Clear path to permitting • Full feasibility study to be completed in Q1 2008 Certej reserves increased by 20% - Life-of-mine extended by two years - On 9October 2007, European Goldfields announced a 20% increase in gold reserveounces for the Certej project, which can now be reported as follows: Certej Reserves Reserve Million Tonnes Average Gold Million Average Silver Million Category Grade (g/t) Ounces Gold Grade (g/t) Ounces Silver Probable 32.8 2.0 2.1 11.4 12.0 Note: Reserve based on pit optimisation using a gold price of $425/oz and asilver price of $7/oz. The new reserve results from a better conversion of resources into reserves,combined with increased resources, and is based on the production of agold-bearing concentrate followed by the production of gold and silver as doreon site by means of the Albion Process. The previous reserve estimate publishedin April 2006 was based on the less-economical development option involving thedirect sale of a gold-bearing flotation concentrate. The better conversion from resources to reserves reflects improved metallurgicalrecoveries following completion of extensive bulk continuous metallurgicaltest-work, an in-house pre-feasibility study and subsequent pit optimisation andpit design work by RSG Global Consulting Pty Ltd ("RSG Global"), which includeda geotechnical drilling programme designed by Golder Associates of the UK. The Albion Process is a combination of ultra-fine grinding of concentrates andoxidative leaching at atmospheric pressure. The liberated gold and silver isthen recovered as dore by the conventional Carbon in Leach ("CIL") process. The deposit will be mined by open pit methods with a strip ratio of 3.1:1. Theproject will involve the mining and processing of 3.0 million tonnes of ore perannum over at least eleven years, compared to the nine-year mine life under theprevious reserve estimate. This is expected to yield approximately 160,000 oz ofgold and 820,000 oz of silver per year in dore, reflecting an average totalprocess recovery of 81% for gold and approximately 75% for silver. Clear path to permitting - European Goldfields is now in the detailed planningphase for the Certej project and has established a clear path to applying forpermits to develop the project, having already submitted a Technical FeasibilityStudy ("TFS") to the Romanian government in March 2007, which will be followedby the submission of an Environmental Impact Study ("EIS") by the end of 2007.The residues from the flotation and gold plants will be disposed of in twoseparate but adjoining tailings management facilities ("TMF"), which are ideallylocated and designed for this project. 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. Full feasibility study to be completed in Q1 2008 - European Goldfields is inthe final stage of completing a full feasibility study for the Certej project,which will be used for internal approval and presentation to banks and othersources of potential financing of the project. The only major pending studiesare the EIS and the TMF review by Golder Associates, which are due forcompletion by the end of 2007, and the engineering study for the process plantand associated infrastructure by Aker Kvaerner Engineering Services, scheduledfor completion in Q1 2008. STRATONI OPERATIONS (GREECE) Highlights: • Sales increased by 70% in the first nine months of 2007 compared to 2006 • Better production grades achieved year to date compared to reserve grades • Filter presses installed to fully utilise available tailings storage capacity • Mining at margin of inferred resources confirms expected grades Sales up by 70% in the first nine months of 2007 compared to 2006 - Hellas Goldmined a total of 56,075 tonnes of ore in the third quarter of 2007 and 164,232tonnes during the first nine months of 2007 at its Stratoni mine. Hellas Goldcompleted 5 shipments of concentrates from Stratoni in the third quarter of 2007(2006 - 6) and 18 shipments in the first nine months of 2007 (2006 - 13). Thistranslates into the following sales of concentrates: Q3 2007 Q3 2006 9 Months 2007 9 Months 2006ProductionOre mined (wet tonnes) 56,075 49,652 164,232 129,370SalesZinc concentrate (tonnes) 5,710 11,130 27,961 21,926- Containing payable:Zinc (tonnes)* 2,364 4,702 11,682 9,357Lead concentrate (tonnes) 5,694 3,696 15,119 10,656- Containing payable:Lead (tonnes)* 3,759 2,418 9,881 7,138Silver (oz)* 297,321 189,349 772,962 563,258Inventory (end of period)Ore mined (wet tonnes) 4,868 3,617 4,868 3,617Zinc concentrate (tonnes) 2,797 1,199 2,797 1,199Lead/silver concentrate(tonnes) 2,042 1,345 2,042 1,345 * Net of smelter payable deductions As at 30 September 2007, concentrate inventory levels represented approximatelyone shipment each of lead and zinc concentrates. Ore production rates from underground have steadily increased from 670 tonnesper day in the first nine months of 2006 to 870 tonnes per day in the first ninemonths of 2007, and the mine now operates effectively at over 925 tonnes perday. The rate of ore production is expected to continue to increase up to theend of 2009. Better production grades achieved year to date compared to reserve grades -Mined grades have continued to be in line with the high levels experienced inthe first half of 2007. On average, mined and processed lead and zinc gradeshave been on average approximately 19% and 6% respectively higher than reservegrades in the first nine months of 2007. As a result, concentrate production andsales are at relatively high levels. Forecast ore production for 2007 has been reduced by approximately 10% from theoriginally forecasted 250,000 tonnes due to poor ground conditions in the upperarea of the mine, requiring shotcrete equipment. As a result, development of aninternal ramp to access the upper parts of the mine is slower than expected andface availability has been reduced from an expected 15 to 11 faces. However,this is not expected to affect forecast metal production as grades have beensignificantly higher than expected in 2007. The excavation of a new decline to the Mavres Petres orebody, critical to futureproduction ramp-ups and ventilation, is over 90% completed at 1,630 metres.Connection of the decline to the lower ramp will enable the introduction ofshotcreting equipment into the upper levels, which is expected to ameliorate thepoor ground conditions encountered there. Filter presses installed to fully utilise available tailings storage capacity -The two filter presses purchased to maximise storage space for fine tailings andwater treatment plant sludge have been fully installed and are in the finalstages of commissioning. Results to date have been excellent. The filter pressesproduce a solid cake from fine tailings and allow solid deposition of fineparticle sludge from the water treatment plant. Previously, this sludge materialrequired thickening and pumping to the tailings dams for storage, which isinefficient in terms of cost and utilisation of dam storage capacity. Thebackfilling of old mine workings with coarse tailings to create additionaltailings storage space on surface has resulted in a total of some 30,000 m3 ofvoid in the old Madem Lakkos mine workings being filled to date. Thisbackfilling should also reduce mine water pumping from underground andassociated treatment costs. 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 designedto define at least 200 metres of strike and 75 metres of dip extent hascommenced with results expected in the fourth quarter of 2007. Initial resultsindicate that the zone has an average width of 6.55 metres with a weightedaverage grade of 0.7 to 14.8% Pb, 1.3 to 22.1% Zn and 16 to 307g/t Ag. The newdecline will enable immediate access for mining of any new discovery in thisarea. Mining at margin of inferred resources confirms expected grades - Stratonibenefits from inferred resources, which are extrapolations from the knownreserves and comprise some 555,000 tonnes grading 7.3% lead, 10.2% zinc and 181g/t silver. These inferred resources are currently being mined at the margin,confirming expected grades. Drilling on 25m centres is planned in early 2008 inthe upper west and lower east parts of the orebody which account for some 85% ofthe inferred resources. The drill programme is expected to convert the inferredresources to the measured and indicated categories, which can be immediatelyconverted to proven and probable reserves as the areas are adjacent to currentmine infrastructure. SKOURIES & OLYMPIAS PROJECTS (GREECE) Highlights: • Payable gold in concentrate sales almost doubled in Q3 vs. Q2 2007 • Sale agreed for extra 71,000 tonnes of gold concentrates • Contract signed for purchase of mill and plant equipment Sale agreed for extra 71,000 tonnes of gold concentrates - Hellas Gold'sOlympias project benefits from an existing stockpile of gold-bearing pyriteconcentrates which represented, at 31 December 2006, a reserve of approximately252,000 tonnes grading 23.3 g/t gold (containing 188,000 oz of gold), inaddition to substantial underground reserves of gold, lead, zinc and silver. Hellas Gold completed 13 shipments of gold concentrates from the Olympiasstockpile in the third quarter of 2007 (2006 - 5) and 31 shipments in the firstnine months of 2007 (2006 - 5). This translates into the following sales ofconcentrates: Q3 2007 Q3 2006 9 Months 2007 9 Months 2006SalesGold concentrate (dry tonnes) 28,393 6,134 58,169 8,039 In Q3 2007, Hellas Gold entered into two off-take agreements with a subsidiaryof Celtic Resources Holdings Plc (AIM: CER) and Trafigura Beheer B.V. for thesale of a total of 71,000 wet metric tonnes (wmt) of gold concentrates. CelticResources has pre-paid for 50,000 wmt of concentrates in October 2007 and agreedto take delivery of the concentrates by the end of September 2009. TrafiguraBeheer B.V. has agreed to take delivery of 21,000 wmt of concentrates by the endof 2007. In total, these 71,000 wmt of concentrate contain approximately 50,000oz of gold. Hellas Gold has now secured the sale of the entire stockpile to six differentpurchasers - Golden China Resources Corporation, Celtic Resources Holdings Plc,MRI Trading AG, Yantai Non-ferrous Metals Group Trading Co. Ltd, Euromin S.A.and Trafigura Beheer B.V. Hellas Gold plans to process 2.4Mt of stockpiled tailings arising from theprevious operations at Olympias, which will produce approximately 350,000 tonnesof concentrates, and resume underground mining operations at Olympias afterpermits are awarded, producing more gold bearing pyrite concentrates for sale toexisting and new off-take purchasers. Olympias benefits from extensive mining and plant infrastructure already inplace, including a concentrator plant, a shaft down to a depth of 400 metresbelow surface and a port facility nearby at Stratoni. International contractorOutotec Minerals OY inspected the facilities in July 2007 and concluded that theplant could be brought back into efficient operation quickly and at relativelymodest cost. Skouries technical feasibility study nearly completed - Hellas Gold hascompleted most technical studies for the full feasibility study on its Skouriesgold-copper project, confirming that Skouries can be mined as a low strip openpit operation and as a highly productive underground mine. This is expected toproduce annually up to 43,000 tonnes of copper and 220,000 oz of gold over amine life of over 20 years. Outstanding work on the full feasibility study consists of the incorporation ofthe 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 - In June 2007, HellasGold signed a contract with Outotec Minerals OY for the supply of a largetechnology package for the copper-gold concentrator plant of Skouries. The totalcontract value exceeds €30 million and cover grinding, flotation, thickening andautomation technologies including engineering and commissioning services. Adeposit of €6 million was paid to secure the fabrication of the primary SAG andball mills and for Outotec to commence with basic design. Hellas Gold is alsoinvestigating ways to cooperate with other parties for the development of theSkouries project. Permitting process moving forward - In July 2007, Hellas Gold received a formalletter confirming that the Greek Ministry of Development had completed itsreview of Hellas Gold's business plan submitted inJanuary 2006 for the joint development of the Skouries and Olympias gold andbase metals projects 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. Hellas Gold is currently finalising a full environmental impact study ("EIS")which is expected to be submitted to the Greek government in the first quarterof 2008, addressing any comments received on the PEIS which are expected by theend of 2007. On approval of the EIS, the environmental permits for Skouries andOlympias are expected 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. Airborne geophysics exploration under way to identify new targets - Hellas Goldholds 317 km(2) of highly prospective exploration licences in northern Greece.No systematic modern exploration has ever been conducted over the licences andthis will be the first survey of its kind. The expected targets can be broadlydivided into massive sulphides in the north and west of the permit area, andporphyry mineralisation in a northeast trending belt to the south. The wholearea is currently being surveyed by Fugro Airborne Surveys using airborneelectromagnetic ("EM") and radiometric techniques which will detect themagnetised porphyries and their alteration haloes as well as improving knowledgeof geological structures over the whole area. Following a successful pilotprogramme of ground based EM, the north and east of the licence area is also tobe covered by Fugro using airborne EM in order to detect massive sulphidebodies. The work is expected to generate significant new targets and will putthese into context along with those previously identified during GIS compilationwork, including the Olympias look-alike orebody at Piavitsa and porphyrymineralisation at Fisoka. This will allow more informed target prioritisation onthe current licence area before more detailed investigation commences in 2008. For further information please contact: European Goldfields: e-mail: [email protected] Reading, Chief Executive Tel: +44 (0)20 7408 9534Officer Buchanan Communications: e-mail: [email protected] Morse / Ben Willey Tel: +44 (0)20 7466 5000 Renmark Financial Communication: e-mail: [email protected] G. Murray-Lyon Tel: +1 514 939 3989 Evolution Securities e-mail: [email protected] Edwards / Neil Elliot Tel: +44 (0)20 7071 4300 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:
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