Certej Feasibility Study
July 23 2008 - 2:01AM
UK Regulatory
RNS Number : 6602Z
European Goldfields Ltd
23 July 2008
Immediate Release 23 July 2008
European Goldfields Limited
Definitive Feasibility Study Demonstrates Certej Project Viability
23 July 2008 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European Goldfields" or the "Company") is pleased to announce the
results of the definitive feasibility study for its Certej project in Romania.
The study has been prepared by European Goldfields using International and Romanian expert consultants in key areas. A Canadian National
Instrument 43-101 report summarising the study will be filed on SEDAR within the next 45 days.
Commenting on the study David Reading, Chief Executive Officer of European Goldfields said:
"The conclusions of this definitive feasibility study underpin Certej as a key component of our portfolio that will contribute
significantly to achieving mid tier gold production. The study represents another important milestone in the development and permitting of
our projects in Southeast Europe."
Study Result Highlights
Reserves
Tonnes 32.8Mt
Gold Grade 2.0 g/t
Silver Grade 11.4 g/t
Strip Ratio 3.1
Annual Throughput 3Mt
Overall Gold Recovery 81%
Overall Silver Recovery 74%
Base Life of Mine 11.2 years
Production Years 1-3 Life of mine
Average gold production, oz pa 172,000 156,000
Average silver production, oz pa 720,000 814,000
Capital EUR million EUR million
Initial Sustaining
Mining Fleet 19.0 7.4
Pre-strip 8.5 -
Plant 91.5 -
Infrastructure 11.0 2.9
TMF 6.5 14.4
Rehabilitation 6.5
TOTAL 136.5 31.2
Cash Operating Cost EUR per tonne US$/oz*
Mining 1.23 (mined) 111
Processing (inc TMF) 10.53 (processed) 234
G & A 0.36 (processed) 8
TOTAL 353
* Net of silver by product credits
Financial
Gold Price ($/oz) 650
Silver Price ($/oz) 12
Post tax IRR 20.3%
Scope
The Certej definitive feasibility study is based on conventional open pit mining of the Certej gold/silver project, processing of 3Mt of
ore a year with production of doron site and tailings storage in an adjacent facility.
Project Location and History
Certej is an epithermal gold/silver deposit located in the "Golden Quadrilateral" area of the Apuseni Mountains of Transylvania in
Western Romania, 12km from the regional town of Deva.
European Goldfields owns 80% of the project through its subsidiary Deva Gold. There is an existing open pit that was operated by the
Romanian State mining entity Minvest, until 2006 for which Deva Gold holds a valid operating permit.
Study Contributors
The definitive feasibility study was carried out by European Goldfields and its subsidiary Deva Gold in collaboration with the following
international consultants:
* Geology - Deva Gold with review by RSG Global, now part of Coffey Mining
* Resources and Reserves - RSG Global, now part of Coffey Mining
* Mine Planning and Scheduling - In Silico Mining
* Metallurgical Testwork - SGS-Minerals Services, HRL Testing, Xstrata Technology, Amtel
* Process Route - Aker Solutions (formerly Aker Kvaerner Engineering Services), Core Resources, Xstrata Technology
* Plant Design - Aker Solutions, Xstrata Technology
* TMF Design - University of Bucharest, Cepromin and Golder Associates United Kingdom
* Environmental - Consortium of internationally recognised Romanian institutes and consultants led by the Faculty of Environmental
Science in Cluj
Reserves
The Certej orebody is well defined based on an extensive drilling and exploration programme which defines a Measured and Indicated
Resource comprising 41.5 Mt of ore with grades of 2.0 g/t Au & 11 g/t Ag at a 0.8 g/t Au cut-off. The main mineralised zone is some 1,500
meters long by 500 meters wide and occurs as sub-horizontal, to moderately dipping zones.
The mineable reserve is included in the resource and comprises 32.8 million tonnes of ore grading 2.0 g/t gold and 11.4 g/t silver,
representing 2.1 million ounces of gold and 12.0 million ounces of silver mined by conventional open pit methods with a strip ratio of
3.1:1.
Mine Planning and Scheduling
The study is based on owner operated mining of 3 million tonnes of ore per annum over at least eleven years by a conventional open pit,
drill/blast and shovel/truck method. The mining will extend the existing open pit at Certej and the mine will eventually comprise a main pit
and a west pit.
Processing
The run of mine ("ROM") ore will be processed in three distinct stages:
* Flotation of ROM material to produce a pyrite, gold-silver concentrate
* Ultra fine grinding and ambient pressure leaching of the concentrate using Xstrata's Albion process, to liberate the gold and
silver
* A standard CIL circuit to process the oxidised concentrate and produce gold and silver doron site
Annual metal production will average approximately 160,000 ounces of gold and 800,000 ounces of silver. The process route is based on
extensive metallurgical sampling and testwork, including a full programme of locked cycle flotation tests, large scale laboratory Albion
Process tests, two continuous pilot scale runs of the Albion Process and a continuous CIL pilot plant test. Material for the testwork was
obtained from diamond drill core and was representative of the entire mineable reserve.
Tailings management
The proposed TMF is located in a valley roughly 1.5 kilometres to the northeast of the mine site. The flotation tailings, comprising
approximately 80% of the total tailings, will be stored in the main dam. The CIL tailings will be held in a separate dam located immediately
upstream of the flotation dam and will re-circulate water back to the CIL plant.
The Company also has a second option for the TMF located closer to the mine. This second option has sufficient capacity to store life of
mine tailings and a study is being undertaken to define the engineering design and establish the expenditure for this alternative.
The costs of the first option have been incorporated into the capital estimate.
A waste management plan has been incorporated in the recently submitted Environmental Impact Study.
Infrastructure
The area has experienced a substantial economic revival in the past four years with major investments from international and local
corporations. It is served by good infrastructure with 110kV power supply and water pipelines arriving within two kilometres of the mine.
The project has paved roads directly to site and the region has a large road-building programme to improve these further. The Certej project
also benefits from two rail loading facilities at the major rail-head at Deva. Deva is connected to the main Black Sea port of Constantia by
the Romanian highway and rail network and is serviced by three international airports, all within two hours drive of the project.
The project will employ over 300 people from the Certej area, whose recent mining history ensures a good skills base is available in the
local labour force.
Environment
There are no settlements in the vicinity of the proposed mine and TMF sites. Detailed field work has established that there are no
archaeological remains on the site. Both the mine site and the TMFs are shielded by topography and there is no visual impact on settlements.
All the necessary studies to comply with Romanian and EU legislation and international best practice have been completed.
Capital Costs
Capital costs comprise the estimates produced by each contributing consulting group.
Aker Solutions made a series of recommendations regarding plant optimisation which were subsequently actioned by Deva Gold. The current
capital cost estimate for the plant incorporates the following optimisation measures:
* Improved site layout following geotechnical investigations
* Competitive up to date quotations for equipment
* Use of local construction rates based on local quotes
* Use of Romanian contractors
* Other in country cost opportunities
Additional opportunities are being investigated, but have not yet been incorporated, into the cost estimate, including:
* Use of second hand grinding mills,
* Use of waste rock for the new highway project in the district that will reduce waste rock disposal quantities and costs
* Increasing the project life to 15 years through the processing of existing dump material and lower grade material that falls
within the current pit design and would be economic above a gold price of $700.
Financial returns
The financial returns achieved by the project show that it is robust at metal prices of $650 per ounce for gold and $12 per ounce for
silver and the IRR exceeds the company threshold of 20%.
The internal rate of return includes taxation of 16% and the deduction of a 2% royalty on gross revenues. In addition, project finance
has been assumed on the basis of a conservative 50:50 debt: equity ratio.
Progress on Permitting
The permitting process is now well advanced and Deva Gold has already submitted a Technical Feasibility Study, an Environmental Impact
Study and a Zonal Urbanisation Plan (PUZ) to the relevant Romanian authorities.
Deva Gold already holds an operating permit for Certej, by virtue of the small scale production and sale of concentrates carried out
from an existing open pit. The EIS and the Technical Feasibility Study address a proposed increase in mine production at Certej and the
processing of ore on site. The environmental permit and an updated mining permit are expected in Q4 2008 following completion of the public
consultation process.
Deva Gold has advanced the planning procedures for the Zonal Urbanisation Plan approval including two public meetings with the affected
local communities. The regional Environmental Department from Timisoara has received an official letter from the local Council of Certej
giving its full support to the project, recognising the sustainable development and benefits the project brings to the local economy.
The Way Forward
The definitive feasibility study demonstrates that Deva Gold has developed an efficient and viable solution for mining and processing
the Certej deposit to produce gold/silver dor This solution has been based on extensive testwork and the flow sheet comprises well
established unit operations. The studies undertaken also demonstrate that the project is technically sound. The acquisition of land needed
to build the project is underway. Following receipt of the necessary Environmental and Construction permits the Company will work toward
raising the necessary project finance. The project will then progress to detailed engineering, procurement and construction.
About European Goldfields
European Goldfields Limited is a resource company involved in the acquisition, exploration and development of mineral properties in
Greece, Romania and South-East Europe.
Greece - European Goldfields holds a 95% interest in Hellas Gold S.A. Hellas Gold owns three major gold and base metal deposits in
Northern Greece. The deposits are the polymetallic operation at Stratoni, the Olympias project which contains gold, zinc, lead and silver,
and the Skouries copper/gold porphyry project. Hellas Gold commenced production at Stratoni in September 2005 and commenced selling an
existing stockpile of gold concentrates from Olympias in July 2006. Hellas Gold is applying for permits to develop the Skouries and Olympias
projects.
Romania - European Goldfields owns 80% of the Certej gold/silver project in Romania. The Company submitted in March 2007 a technical
feasibility study to the Romanian government in support of a permit application to develop the project. In March 2008, European Goldfields
submitted the Environmental Impact Study to the Romanian environmental authorities to start the assessment of the environmental impact of
the Certej Project.
For further information please contact:
European Goldfields: e-mail: info@egoldfields.com
David Reading, Chief Executive Tel: +44 (0)20 7408 9534
Officer
Buchanan Communications: e-mail: bobbym@buchanan.uk.com
Bobby Morse / Ben Willey Tel: +44 (0)20 7466 5000
Renmark Financial Communication: e-mail: hperron@renmarkfinancial.com
Henri Perron Tel: +1 514 939 3989
RBC Capital Markets: e-mail: andrew.smith@rbccm.com
Andrew K Smith Tel: +44 (0)20 7029 7882
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.
Forward-looking statements
Certain statements and information contained in this document, including any information as to the Company's future financial or
operating performance and other statements that express management's expectations or estimates of future performance, constitute
forward-looking information under provisions of Canadian provincial securities laws. When used in this document, the words "anticipate",
"expect", "will", "intend", "estimate", "forecast", "planned" and similar expressions are intended to identify forward-looking statements or
information. Forward-looking statements include, but are not limited to, the estimation of mineral reserves and resources, the timing and
amount of estimated future production, costs and timing of development of new deposits, permitting time lines and expectations regarding
metal recovery rates. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the
Company to be materially different from its estimated future results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other
factors include, but are not limited to: changes in the price of gold, base metals or certain other commodities (such as fuel and
electricity) and currencies; uncertainty of mineral reserves, resources, grades and recovery estimates; uncertainty of future production,
capital expenditures and other costs; currency fluctuations; financing and additional capital requirements; the successful and timely
permitting of the Company's Skouries, Olympias and Certej projects; legislative, political, social or economic developments in the jurisdictions in which the Company carries on business; operating or technical
difficulties in connection with mining or development activities; the speculative nature of gold and base metals exploration and
development, including the risks of diminishing quantities or grades of reserves; the risks normally involved in the exploration,
development and mining business; and risks associated with internal control over financial reporting. For a more detailed discussion of such
risks and material factors or assumptions underlying these forward-looking statements, see the Company's Annual Information Form for the
year ended 31 December 2007, filed on SEDAR at www.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 new information, future events or otherwise, except as required by law.
This information is provided by RNS
The company news service from the London Stock Exchange
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