EGU European Gold

RNS Number:2656G
European Goldfields Ltd
17 July 2006



For Immediate Release                                              17 July 2006





                          European Goldfields Limited



                       Skouries Reserves Increased by 13%



European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to announce a 13%
increase in reserve tonnes for its 65%-owned Skouries deposit in Northern
Greece, which can now be reported as follows:


Reserve Category         '000t         Au         Au          Cu         Cu
                                      g/t         Moz         %         '000t
Proven                   77,563       0.87       2.18        0.54        415
Probable                 68,667       0.78       1.73        0.55        374
Total                   146,202       0.83       3.91        0.54        789



This increase in reserves results from a new mine plan and schedule which
includes the adoption of a deeper open pit, an optimised sub-level cave
underground mine design and improved long-term metal price forecasts.  The
updated reserve was estimated at a gold price of $425/oz and a copper price of
$1.1/lb.



Commenting on the announcement, David Reading, Chief Executive Officer of
European Goldfields, said: "Our work to upgrade reserves has increased our
understanding of the Skouries deposit and optimised its exploitation method.
Independent studies demonstrate that Skouries is a robust project, at metal
prices which remain conservative at $425/oz for gold and $1.1/lb for copper."



The updated reserve is based on a new pit optimisation and subsequent practical
pit design along with a detailed underground mine design based on relevant net
smelter return (NSR) cut-offs and practical mining constraints which takes into
account mining recoveries and dilution.



Geoff Bull, Mike Beare and Edgar Urbaez of independent consultants SRK
Consulting (UK) Limited were the Qualified Persons under Canadian National
Instrument 43-101 responsible for preparing the updated reserve estimates for
the Skouries deposit quoted above. A report from SRK will be filed on SEDAR
(www.sedar.com) within the next 45 days updating parts of the Behre Dolbear &
Company, Inc.'s previous pre-feasibility study on the Skouries deposit filed at
www.egoldfields.com and on SEDAR on 29 October 2004 under the category "
Technical Report".



Background Information on Skouries



Skouries has been optimised as a 7M tonnes per annum operation with a low strip
open pit of at least six years, followed by underground mining which will
produce some 790,000t of copper and 3.9M oz of gold over a 21-year mine life.
The start of full production is planned for 2009. This production rate is shown
to be sustainable based on the detailed mine design carried out by SRK and
benchmarking with other comparable mines.



The Skouries deposit is a typical gold-copper porphyry deposit that forms a near
vertical pipe and is located 35 km by road from the Stratoni port in northern
Greece.  Skouries is located on a high plateau with no habitation in the
immediate vicinity.



The mining at Skouries will be phased with the open pit mined at the target rate
for the first six years and the underground mining development starting in the
fourth year of operation. A continuous feed of 7M tonnes per annum to the plant
is ensured by the use of stockpiled open pit low-grade material.  The current
model uses a 240m deep pit followed by an underground sub-level cave (SLC)
operation, which gives the best economic return according a study by SRK.



The metallurgy at Skouries is straight-forward. The mine will feed a process
plant designed for a nominal throughput of 21,000 tonnes per day.  The
processing will comprise gyratory crushing for open pit and underground ore,
single-stream SAG and ball-mill grinding.  Approximately 30% of gold will be
recovered by a gravity circuit to produce dore on site. A high-quality saleable
copper/gold concentrate will also be produced by conventional froth flotation,
thickening and filtration.



Extensive test-work carried out by Lakefield Research and other consultants has
shown average recoveries of 83.9% gold and 90.8% copper can be achieved.
Concentrate grades of at least 26% copper and averaging 27 g/t gold are
expected.



The concentrates will be trucked to Hellas Gold's port storage facility at
Stratoni, which is some 35 km away by road from the Skouries plant site.



Golder Associates have carried out a pre-feasibility level study which
incorporates the latest paste production technology in a phased tailings
management facility (TMF) that will minimise land take and embankment height and
provides increased stability. Paste tailings also allows a greater proportion of
the process water to be collected and recycled at the process plant, reducing
pumping costs and the quantity of make-up water needed.  Studies have shown that
the paste tailings are inert with low permeability. The use of paste tailings
and a phased TMF also allows sequential rehabilitation of the tailings
management facility to minimise active tailings areas.



The Behre Dolbear report states the total measured and indicated resource at
Skouries to be 191.2 Mt grading 0.82 g/t gold and 0.55% copper at a nominal
cut-off grade of 0.4 g/t gold. The resource estimation is based on a nominal
drillhole spacing of 50 metres.  Gold and copper were analysed geostatistically
for each lithology and an unconstrained 3-D resource block model was generated
using values interpolated by ordinary kriging.



About European Goldfields



European Goldfields Limited (the "Company") is a resource company involved in
the acquisition, exploration and development of mineral properties in Greece,
Romania and the Balkans.



Greece - The Company holds a 65% interest in Hellas Gold S.A. ("Hellas Gold").
Hellas Gold owns assets in northern Greece which consist of three deposits
within 70-year mining concessions covering a total area of 317 km(2). The
deposits include the polymetallic projects of Stratoni and Olympias which
contain gold, lead, zinc and silver, and the copper/gold porphyry body referred
to as Skouries. All three deposits have been well defined with over 200,000
metres of drilling and the completion of feasibility studies and later
engineering studies.



The total proven and probable reserves of these assets are 7.8 Moz gold, 65.8
Moz silver, 0.8 Mt copper, 0.7 Mt lead and 0.9 Mt zinc, from a measured and
indicated resource base of 9.4 Moz gold, 74.5 Moz silver, 1.0 Mt copper, 0.8 Mt
lead and 1.1 Mt zinc (65% attributable).



These assets represent some of the largest defined deposits in Europe. The three
deposits are located within a 10 km radius of each other, making this
effectively a gold and base metals centre. Furthermore, both Stratoni and
Olympias were previously in production and have extensive existing mining and
plant infrastructure and a ship-loading facility on the Aegean Sea.



Hellas Gold's assets also include revenue-generating stockpiles of gold
concentrates.



In September 2005, Hellas Gold resumed production at Stratoni following the
award by the Greek State of all necessary environmental and mining permits.
Hellas Gold is in the process of applying for similar permits for Olympias and
Skouries, having met its first milestone by submitting business plans to the
Greek government in January 2006.



Romania - The Company holds four mineral properties located within the "Golden
Quadrilateral" area of Romania. The Company recently announced the conversion of
resources into Canadian NI 43-101 compliant reserves for its 80%-owned Certej
project, underpinning the value of the project. The Certej deposit hosts
probable reserves of 27.7 Mt grading 2.0 g/t gold and 11.6 g/t silver for 1.76
Moz gold and 10.35 Moz silver (80% attributable). The Company is now completing
a final feasibility study for submission to the Romanian government by the end
of 2006, in support of an application for environmental and mining permits to
develop the Certej project.



Resources & reserves parameters



For additional information on the resource and reserve estimates quoted in this
news release, please refer to the Company's Resources & Reserves Declaration at
www.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager, 
Exploration of the Company, was the Qualified Person under Canadian National 
Instrument 43-101 responsible for reviewing the disclosure of resource and 
reserve estimates quoted in this news release.



For further information please contact:


European Goldfields:                    website: www.egoldfields.com
David Reading, Chief Executive Officer  e-mail: info@egoldfields.com
Office: +44 (0)20 7408 9534


Buchanan Communications:                e-mail: bobbym@buchanan.uk.com
Bobby Morse / Ben Willey
Office: +44 (0)20 7466 5000
Mobile: +44 (0)7802 875 227


Renmark Financial Communication:        website: www.renmarkfinancial.com
Neil Murray-Lyon                        e-mail: nmurraylyon@renmarkfinancial.com
Henri Perron                            e-mail: hperron@renmarkfinancial.com
Office: +1 514 939 3989




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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