TIDMEGU
RNS Number : 1148P
European Goldfields Ltd
19 March 2009
For Immediate Release
19 March 2009
EUROPEAN GOLDFIELDS LIMITED
RESULTS FOR 2008
STRONG BALANCE SHEET, NO DEBT
STRONG PRODUCTION PERFORMANCE
CERTEJ COMPLETES FEASIBILITY STUDY- NEW MINING PERMIT AWARDED
19 March 2009 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European
Goldfields" or the "Company") today reports its results for the financial year
ended 31 December 2008.
Financial highlights:
* Sales of $60 million reflecting lower metal prices
* Operating profit of $5.6 million
* Working capital of $193 million
* Profit (after tax) of $5.5 million
* Capex of $37 million underwrites future projects
* Greek corporate tax rate reduced to 20%
Operational highlights:
* Stratoni: Mine production up 26% versus 2007. Focus on cost reduction and
productivity efficiencies
* Skouries: Continued progress on engineering - mill shells and other major
components ready for shipment
* Olympias: Continued sale of gold concentrates - submission of EIS for
re-treatment of tailings
* Certej: Definitive Feasibility Study completed, life of mine extended - new
mining permit awarded - permitting process well advanced
Corporate highlights:
* European Goldfields added to S&P/TSX Composite Index
* Chairman increases personal shareholding
* Cameron Mingay and Martyn Konig appointed as Non-Executive Directors
* Joint Venture in Turkey with Ariana Resources underway
* Total project reserves now exceed 10 million ounces of Gold
Commenting on the results, David Reading, Chief Executive Officer of European
Goldfields, said: "We continue to build a successful European mining company.
Despite the market downturn during 2008 we made significant progress during the
year in project development in Greece and permitting in Romania. With the proven
support of our partners and stakeholders, excellent infrastructure and a strong
and growing reserve base, we are delivering robust projects through a realistic
and phased development programme. Though we are benefiting from the falling
costs of building our mines, we remain focused on preserving our substantial
cash balances and continuing to develop our business into a mid-tier mining
group. In summary the company is well positioned to overcome the current down
turn and grow our business. This position is endorsed by our significant capital
spend in 2008 and our strong balance sheet."
Conference Call & Webcast - European Goldfields will host a conference call on
Thursday 19 March 2009 at 10:00 a.m. ET / 2:00 pm (London, UK time) to update
investors and analysts on its results.
Participants may join the call by dialing the following numbers, approximately
10 minutes before its start.
* From North America: (toll free) 1 866 793 4279
* From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy,
Netherlands, Norway, Sweden & Switzerland: +44 (0)20 8609 1435 or (toll free
from the UK) 0808 109 1498
* Participant pass code: 887754#
A live audio webcast will be available on:
http://mediaserve.buchanan.uk.com/webcasts/room8audio/lrframes.htm
A replay of the webcast will be available
on:http://mediaserve.buchanan.uk.com/webcasts/eg190309/lrframes.htm
SELECTED FINANCIAL DATA
+--------------------------+----------------+------------------+
| Year ended 31 December |
| |
+-------------------------------------------+
| (in thousands of US | 2008 | 2007 |
| dollars, | $ | $ |
| except per share | | |
| amounts) | | |
+--------------------------+----------------+------------------+
| Statement of profit and | | |
| loss | | |
+--------------------------+----------------+------------------+
| Sales | 60,044 | 86,405 |
+--------------------------+----------------+------------------+
| Gross profit | 5,647 | 43,787 |
+--------------------------+----------------+------------------+
| (Loss)/Profit before | (11,599) | 33,435 |
| income tax | | |
+--------------------------+----------------+------------------+
| Income taxes | 16,639 | (5,217) |
+--------------------------+----------------+------------------+
| Profit after income tax | 5,040 | 28,218 |
+--------------------------+----------------+------------------+
| Non-controlling interest | 479 | (5,019) |
+--------------------------+----------------+------------------+
| Profit for the period | 5,519 | 23,199 |
+--------------------------+----------------+------------------+
| Earnings per share | 0.03 | 0.16 |
+--------------------------+----------------+------------------+
+--------------------------+----------------+------------------+
| (in thousands of US | 31 December | 31 December 2007 |
| dollars) | 2008 | $ |
| | $ | |
+--------------------------+----------------+------------------+
| Balance sheet | | |
+--------------------------+----------------+------------------+
| Working capital | 192,675 | 226,431 |
+--------------------------+----------------+------------------+
| Total assets | 766,095 | 782,131 |
+--------------------------+----------------+------------------+
European Goldfields' audited consolidated financial statements and management's
discussion and analysis for the years ended 31 December 2008 and 2007 are filed
on SEDAR at www.sedar.com.
Annual revenues fell as a direct result of the fall in zinc and lead prices
during 2008, particularly in the second half of the year. From July 2008, the
Company's lead hedging programme became effective and generated income of US$4.9
million for the year. Working capital declined as the Company continued its
capital expenditure programmes at its operating mine and development projects.
Capex of $37 million underwrites future projects
European Goldfields spent $37 million in 2008 on its portfolio of projects,
which underlines its commitment to bringing its project pipeline into
production. The new underground infrastructure at Stratoni is almost complete,
which is expected to yield further operating and efficiency benefits from mid
2009. At Skouries, the fabrication of the SAG and ball mills by Outotec made
significant advances, along with the basic engineering and project design, which
will allow the project to be fast tracked upon the receipt of permits. During
the year, the company completed its feasibility study on the Certej project and
has subsequently increased its life to 16 years. All the Company's development
projects now have a project lives of 16 to 20 years and competitive cash costs
compared to the global gold industry.
Greek corporate tax rate reduced to 20%
In September 2008, the Greek Government enacted new legislation reducing
corporate tax rates from 25% in 2009 to 20% in 2014 by 1% per annum. The Company
was therefore required to restate its future tax liability arising from its
Greek Mineral Properties using the new lower forecast tax rates. This resulted
in a reduction of the future tax liability by $17.6 million, which was
recognised in the income statement as a credit to current tax in Q4 2008. This
change in future tax rates will also reduce the total tax burden on its Greek
operations and development projects by almost 20%.
CORPORATE ACTIVITY
Highlights:
* Chairman increases personal shareholding
* Added to S&P/TSX Composite Index
* New Non-Executive Directors
* Joint Venture finalised with Ariana Resources
* Total project reserves exceed 10 million ounces of Gold
In the last quarter of 2008 Mr Dimitrios Koutras, Non-Executive Chairman of
European Goldfields, made purchases in the London market such that he now owns
17,408,715 common shares in the company amounting to approximately 9.7% of total
issued common shares.
The Company was also pleased to have been added to the S&P/TSX Composite Index
on 24 March 2008 and to have welcomed two new Non-Executive Directors in Cameron
Mingay and Martyn Konig.
Cameron Mingay, age 56, is a senior partner in the Cassels Brock & Blackwell
LLP, Securities Group. Cam's diverse practice covers the areas of securities,
corporate, mergers, acquisitions and divestitures, and natural resource
law. He also sits on the Boards of Directors of Allied Nevada Gold Corp. and
Silver Bear Resources Inc.
Martyn Konig, age 51, has 27 years experience in investment banking and the
commodity markets. Since 2005, Mr. Konig has served as Chief Executive Officer
of Blackfish Capital, including managing the Blackfish Capital Resources Fund, a
hedge fund focused on small/mid cap mining companies. He has extensive
experience in the natural resource sector, acting as CEO from 2004-2008 of AIM
listed Latitude Resources Limited, a mining investment company, prior to which
he held senior management roles in resource finance and commodity trading
operations at various international investment banks. Mr. Konig was a main Board
Director of NM Rothschilds and Sons Ltd. for 15 years and held senior positions
at Goldman Sachs and UBS. He is a Barrister and Fellow of the Chartered
Institute of Bankers, as well as a Non-Executive Director of TSX listed Western
Goldfields Inc.
In April 2008 the Company finalised its previously announced Joint Venture
("JV") with Ariana Resources plc (AIM: AAU) ("Ariana"). The JV involves the
development of Ariana's properties in north-eastern Turkey, which include the
Ardala copper-gold porphyry and 15 other licences covering a total area of
229km2. The company has been active within Turkey since June 2008.
The increase in gold reserves at Certej to 2.41 million ounces resulted in total
project gold reserves now exceeding 10 million ounces.
STRATONI OPERATIONS (GREECE)
Highlights:
* Production up by 26% versus 2007
* Metal concentrate sales increased by 12%
* Record process plant performance
* Focus on productivity efficiencies and cost reduction
Production up by 26% versus 2007
The Stratoni mine consists of a lead-zinc-silver deposit and lies approximately
four km from the coastal town of Stratoni in northern Greece. The Company's
95%-owned subsidiary Hellas Gold mined a total of 271,660 wet tonnes in 2008
(2007 - 214,875). Hellas Gold completed 30 shipments in 2008 (2007 - 26). This
translates into an increase of 12% in tonnes of base metal concentrates sold.
Sales from Stratoni were as follows:
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Production | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Ore mined (wet tonnes) | 271,660 | 214,875 |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Sales | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Zinc concentrate (tonnes) | 44,838 | 38,152 |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| - Containing payable: | 18,496 | 15,891 |
| Zinc (tonnes)* | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Lead concentrate (tonnes) | 22,321 | 23,123 |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| - Containing payable: | 14,086 | 14,963 |
| Lead (tonnes)* | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Silver | 1,077,550 | 1,172,234 |
| (oz)* | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Inventory (end of period) | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Ore mined (wet tonnes) | 1,778 | - |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Zinc concentrate (tonnes) | 2,975 | 1,689 |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
| Lead/silver concentrate | 488 | 49 |
| (tonnes) | | |
+---------------------------------------------------------------------------------------------------------------------+------------+------------+
* Net of smelter payable deductions
On average, mined and processed lead and zinc grades in 2008 have been 1.0% and
0.8% respectively lower than reserve grades reflecting the high degree of
accuracy of the geological model. In 2008, zinc and lead concentrates sales
increased by 18% and reduced by 4% respectively.
In the current metal price and general economic environment, Hellas Gold will
postpone any further ramp up in production levels until an improvement in metal
prices is sustained. Therefore, Stratoni mine production is expected to remain
at current levels, resulting in mine production of approximately 300,000 wet
metric tonnes for 2009. This approach optimises the overall cost base at the
mine and focuses on the achievement of operating efficiencies with the current
levels of manpower. The operation also benefits from its lead hedge programme
which in 2009 has put options over 7,200 tonnes of lead at a price of $2,500 per
tonne.
Record process plant performance
Plant throughput was an annual record of 263,453 dry tonnes for 2008. During
August, a monthly record of 34,095 dry tonnes at almost 1,200 per day was
achieved. This represented equivalent annualised throughput of over 400,000 tpa
during the period of full production. Zinc and lead metal recoveries are being
maintained over budget at a consistent 92%. The new on-stream analyser will
continue to optimise the metallurgical performance of the operation.
Focus on efficiencies and development to ramp up production
Ore production rates from underground have steadily increased from an average of
885 tonnes per day in 2007 to 1,100 tonnes per day in 2008, and the mine now
operates effectively at over 1,200 tonnes per day. The 2009 mine budget focuses
on productivity efficiencies and cost reduction.
The Decline connected during the year and the Upper Adit is 64% complete and
expected to connect mid 2009 to complete the main Mavres Petres infrastructure.
This will improve efficiencies and facilitate future ramp ups in production due
to improved access, ventilation and supply facilities.
The Decline has also enabled trialling of 'larger', more productive stopes and
these layouts are to be extended to suitable additional lower areas of the
orebody.
Second accesses from the Main Internal Ramp to an additional number of levels
are being prioritised in 2009 to provide more mining faces enhancing both
production and flexibility.
The Company is currently in the final stages of concluding a new and revised
mining contract for 2009 that delivers unit cost reductions to the mine.
Long term tailings strategy
The fine and coarse tailings disposal strategy has been successfully implemented
during 2008. A key part of that strategy is the commissioning and successful
operation of the filter presses for dewatering fine tailings and water treatment
plant sludge for dry storage. Coarse tailings are disposed of underground as
part of backfilling activities reducing the required surface disposal volumes by
65%. Fine tailings fraction and associated water residues are filter pressed to
produce dry cake for surface storage at significantly reduced volumes.
Safety development
The Safety Department commenced working towards compliance with ISO18000 and
intends to formally apply for review in 2009 and full accreditation in 2010.
Continued commitment to the environment and the community
Hellas Gold's responsibility to both the environment and local community
continues with the full implementation of the tailings plan noted above. The
backfilling programme has substantially reduced the ingress of water to
historical workings and reduced the volume of contaminated water generated. The
new water treatment plant at Stratoni will provide greater capacity for the
process plant as well as operational efficiencies. The new facility will treat
water from Mavres Petres, allowing the existing plant to treat water from Madem
Lakkos. The company also commenced a programme to enable 'small business
starts', the first being a plant nursery near Olympiada village.
Stratoni exploration
Exploration completed on the western and down-dip extensions of the Mavres
Petres orebody is expected to add to reserves at least replacing what was mined
in 2008. Final figures will be published in the near future.
SKOURIES PROJECT (GREECE)
Highlights:
* Fabrication of long lead time equipment - SAG and Ball mill shells finished
* Continued progress on engineering
The Company's Skouries gold-copper project is located 35 km by road from the
Stratoni port in northern Greece. Skouries is situated on a high plateau with no
habitation in the immediate vicinity. The project is currently at the
development stage. Skouries is a typical gold-copper porphyry deposit that forms
a near-vertical pipe. The project has reserves of 3.9 million ounces gold and
800Kt copper. The orebody will be extracted by open pit and underground mining
methods. The revenue stream will be through production of Gold doré from gravity
concentration as well as the sale of Copper-Gold concentrates.
Fabrication of long lead time equipment
Hellas Gold signed a contract for EUR36m with Outotec Minerals OY ("Outotec") for
the supply of a large technology and services package for Skouries.
Outotec has already delivered a basic engineering package to Hellas Gold for the
grinding mills, flotation equipment, process control and paste thickeners. The
Basic Engineering has subsequently been developed and advanced by Outotec and
the appointed engineer for the project, the Athens based contractor ENOIA.
Fabrication of the SAG and ball mills are well advanced with the mills shells,
gear boxes, liners and motors all ready for shipment. The remaining components
are on schedule for ex works delivery in the third quarter of 2009.
Continued progress on engineering
Orders for the long lead items outside of Outotec's scope are being prepared by,
ENOIA, and include a primary crusher, pebble crushers, transformers and switch
gear. Detailed fabrication engineering drawings for the flotation tank cells are
well advanced in readiness for order placement. Offers for fabrication of those
cells in Greece have been received and are under evaluation with the intention
of placing orders by year end.
ENOIA are currently optimising the overall project lay out and coordinating
project activities both within and outside of Outotec's scope, which includes
design and procurement. This work is being managed by a team consisting of both
Hellas Gold and European Goldfields personnel.
The Greek civil engineering company, MHXME S.A, has been appointed to carry out
the civil design of the Skouries Project. Kion Architects of Athens have been
appointed to provide the architectural designs for the project. Greek
geotechnical consultants Omicron Kappa have completed the detailed design of the
open pit and submitted their engineering work for the roads network, both of
which are being reviewed.
OLYMPIAS PROJECT (GREECE)
Highlights:
* Continued gold concentrate sales
* Submission of EIS for re-treatment of tailings
The Company's Olympias project consists of a polymetallic (gold, lead, zinc and
silver) deposit located 8 km north of the Stratoni mine. At present Hellas Gold
is selling gold concentrates from the existing stockpile on the property and is
pursuing applications for the relevant permits to resume mining. Hellas Gold
plans to resume underground mining operations at Olympias after the necessary
permits are awarded.
Continued sales of gold concentrates
The Olympias project benefits from an existing stockpile of gold-bearing pyrite
concentrates which represented, at 31 December 2008, a reserve of approximately
101,000 tonnes grading 23.5 g/t gold (containing approximately 75,000 oz of
gold), in addition to tailings containing 238,000 oz of gold and substantial
underground reserves of gold, lead, zinc and silver.
Hellas Gold completed 34 shipments of Olympias concentrates in 2008 (2007 - 47).
This translates into 63,533 in tonnes of pyrite concentrates sold. Sales of
pyrite concentrates were as follows:
+----------------------------+------------+------------+
| | 2008 | 2007 |
+----------------------------+------------+------------+
| Sales | | |
+----------------------------+------------+------------+
| Gold concentrate (dry | 63,533 | 79,554 |
| tonnes) | | |
+----------------------------+------------+------------+
In the latter half of 2008 shipments of gold concentrate were disrupted by
industrial action at the port of Thessaloniki, which restricted the availability
of containers for use in concentrate shipments. Matters have subsequently
improved and in January 2009, more concentrate was shipped than in all of the
fourth quarter of 2008 due to the Company's successful sourcing of containers
and a normalization of industrial relations at the port.
Total of 313,000 oz of gold reserves still located on surface
In addition to the stockpile of gold concentrates, Hellas Gold plans to process
2.4Mt of stockpiled tailings arising from the previous operations at Olympias,
which will produce approximately 350,000 tonnes of concentrates (containing
238,000 oz of gold), and resume underground mining operations at Olympias
producing more gold bearing pyrite concentrates for sale to existing and new
off-take purchasers.
Olympias benefits from extensive mining and plant infrastructure already in
place, including a concentrator plant, a shaft down to a depth of 400 metres
below surface and a port facility nearby at Stratoni. The International
contractor Outotec Minerals OY inspected the facilities in July 2007 and
concluded that the plant could be brought back into efficient operation quickly
and at relatively modest cost.
The Olympias project is expected to be self-sustaining over the initial phases
with the sale of concentrates and the high recoveries for the on-site gold
processing are considered promising for the latter phase.
Submission of EIS for re-treatment of tailings
Mine schedules, plant refurbishment plans and cost studies for the second phase
of the Olympias project approach completion. In Q2 2008 the company submitted an
Environmental Impact Study ("EIS") to allow the early processing of existing
tailings, which will produce additional gold concentrate and allow the
rehabilitation of a significant area of the Olympias valley. It is planned that
this re-processing will commence in parallel with refurbishment of the plant
lines for run of mine production and the necessary underground development to
recommence production in Phase Two. The Company has received expressions of
interest for the detailed design phase from Greek engineering companies, which
are currently being evaluated pending the outcome of the Olympias EIS
application.
PERMITTING PROCESS - SKOURIES AND OLYMPIAS
The Company continues to receive the support of the Greek Ministry of
Development for its Business Plan and its preliminary environmental impact study
("PEIS"). The business plan focuses on a phased approach to the development of
the Skouries gold-copper porphyry deposit and the Olympias gold-lead-zinc-silver
deposit. The principal revenue stream in the early phases will be through the
sale of concentrates. The Company's current plan is to develop Olympias in two
phases to allow refurbishment of existing infrastructure and the subsequent
construction of new gold processing facilities in the brownfield Stratoni area.
Skouries will initially be mined as a low strip open pit operation, followed by
highly productive underground mining.
As reported previously, approval of the PEIS had been delayed due to specific
delays relating to ministerial input into the final report. This affected a
large number of projects, public and private, in Greece. Progress has continued
and the remaining administrative procedures to finalise approval are in process.
A site visit by a team of specialists from the Ministry of Culture took place in
early October and it is not anticipated that this visit will elicit any new
concerns. The political situation in Greece is widely reported and has slowed
all decision making, but the Company remains confident of a positive outcome. It
has not been advised of any specific delays or new issues. The administrative
process has proven lengthier than first anticipated due to a scale of project
development that has not been permitted before. Previous permits issued in
Greece were all for individual projects, not a business plan.
Approval of the PEIS by the Ministry of Environment will be expressed as a
Project Pre-Approval from the Greek State with an invitation to the Company to
submit its final EIS to allow public consultation. On approval of the EIS, the
environmental permits for Skouries and Olympias will be issued.
The Company will then submit to the Greek government a final technical report on
the Skouries and Olympias projects, which will restate the principles of the
business plan and take into account any conditions detailed in the environmental
permit. The mining permits are expected to be issued on approval of the
technical report by the Greek government.
EXPLORATION IN GREECE
The completion of processing the airborne geophysical survey carried out in late
2007 has revealed four new zones of conductive rocks with electromagnetic ("EM")
signatures typical for massive sulphides such as the known mineralisation at
Stratoni, Olympias and Piavitsa. All the zones are located within the northern
part of Hellas Gold's permit area in Greece, where marble units host
polymetallic massive sulphide. The new zones are distinct from any known
mineralisation and represent some 20 kilometres of potential strike. Each
anomalous area will now be investigated in the field with mapping, geochemistry
and possibly follow-up ground geophysics in order to define future drill
targets.
The EM survey had already successfully confirmed an anomaly extending eight
kilometres of strike at the Piavitsa massive sulphide target. Two kilometres of
this strike length have massive sulphide drill intercepts which correspond
exactly with the EM anomaly.
In total, the EM survey has now identified or confirmed a total of 28 kilometres
of conductive anomalies, some of which host known mineralisation. To put this in
context, the massive sulphide reserves at Stratoni and Olympias have a strike
extent totalling two kilometres.
In addition, the magnetic component of the survey has already identified a 17
kilometre by six kilometre belt of porphyry intrusives over which a three
dimensional model has been completed defining two other major targets. Follow-up
reconnaissance mapping on the ground has confirmed the presence of porphyry
style mineralisation.
A number of drill sites have good access through existing roads, which will
allow some drilling to take place in the coming months. An EIS has been prepared
to allow access to drill the remaining sites later in 2009.
CERTEJ PROJECT (ROMANIA)
Highlights:
* Definitive Feasibility Study completed.
* Updated Mining Permit - permitting process now advanced
* Life of mine extended to 16 years
* Project progresses to basic and detailed engineering phases
* New licences awarded covering approximately 450 square kilometres
Feasibility studies completed and mining permit updated - Deva Gold completed a
Technical Feasibility Study ("TFS") for its Certej project that was accepted by
the National Agency for Mineral Resources ("NAMR") in July 2008 which means that
the company was issued with a modified mining permit and can mine the deposit.
Detailed technical and economic studies on Certej culminated with a Definitive
Feasibility Study announced on 23 July 2008). This was further updated to
incorporate an optimisation of the tailings facility sites and additional
reserves defined from in-pit lower-grade material and existing dumps, announced
in January 2009.
The following table summarises the key project indices:
+----------------------------+-------------------+-------+-------+-------------------+
| Reserves | | |
+----------------------------+-------------------+-----------------------------------+
| Tonnes | Years 1-11.5 | 32.8Mt | 2.0g/t Au, 11.4 |
| | | | g/t Ag |
+----------------------------+-------------------+---------------+-------------------+
| | Years 11.5-16 | 14.1Mt | 0.64 g/t Au, 11.7 |
| | | | g/t Ag |
+----------------------------+-------------------+---------------+-------------------+
| Strip Ratio | Years 1-11.5 | 3.1 |
+----------------------------+-------------------+-----------------------------------+
| Annual Throughput | | 3Mt |
+----------------------------+-------------------+-----------------------------------+
| Overall Gold | | 81% |
| Recovery | | |
+----------------------------+-------------------+-----------------------------------+
| Overall Silver | | 74% |
| Recovery | | |
+----------------------------+-------------------+-----------------------------------+
| Life of Mine | | 16 years |
+----------------------------+-------------------+-----------------------------------+
| Production | | |
+----------------------------+-------------------+-----------------------------------+
| | Years 1-3 | Years 1-11.5 |
+----------------------------+-------------------+-----------------------------------+
| Average gold | 172,000 | 155,000 |
| production, oz pa | | |
+----------------------------+-------------------+-----------------------------------+
| Average silver | 720,000 | 816,000 |
| production, oz pa | | |
+----------------------------+-------------------+-----------------------------------+
| Costs | | |
+----------------------------+-------------------+-----------------------------------+
| | EUR million | EUR million |
+----------------------------+-------------------+-----------------------------------+
| Capital | Initial | Sustaining |
+----------------------------+-------------------+-----------------------------------+
| | 133.4 | 47.4 |
+----------------------------+-------------------+-----------------------------------+
| Cash Costs* | US$370/oz Au* |
| | 10 |
+----------------------------+-------------------------------------------------------+
| * Net of silver by-product credits at $7.50/oz | |
| | |
+--------------------------------------------------------+---------------------------+
| Financial | | |
+----------------------------+---------------------------+---------------------------+
| Post tax IRR | | 21.3% |
+----------------------------+-------------------+-------+-------+-------------------+
Project returns have increased slightly, as the increase in the sustaining
capital costs has been offset by the extension in the life of the mine, improved
foreign exchange factors and slightly reduced initial capital costs.
The Company was pleased to report that the project continues to be on track for
permitting. We have concluded that key technical milestones can be achieved and
that a fully viable development of the project can now be established within key
operational criteria.
Coffey Mining (formerly RSG Global Consulting Pty Ltd) completed a pit
optimisation and pit design study, which included a geotechnical drilling
programme designed by Golder Associates. The study resulted in a better
conversion from resources to reserves and confirmed that the deposit will be
mined with an open pit strip ratio of 3.1:1.
The project will involve the mining and processing of 3.0 million tonnes of ore
per annum over an open life of 11 and a half years. The open pit is expected to
yield approximately 160,000 oz of gold and 820,000 oz of silver per year in
doré, reflecting an average total process recovery of 81% for gold and
approximately 75% for silver. Thereafter, the plant will be fed for a further
five years at the same throughput rate by material previously stockpiled from
the open pit or historic dumps.
The metallurgical process involves the production of a gold and silver-bearing
concentrate followed by the production of gold and silver bullion in doré on
site by means of the Albion Process. The Albion Process is a combination of
ultra-fine grinding of concentrates and oxidative leaching at atmospheric
pressure. The liberated gold and silver is then recovered as doré by the
conventional Carbon in Leach (CIL) process.
Following on from recommendations made by Aker Solutions the company carried out
further work in-house, principally comprising optimising the process plant
location, investigating alternative lower costs plant vendors, more fully
utilising local contracting services and obtaining more competitive rates for
local inputs, which significantly reduced the capital cost estimate.
The residues from the flotation and gold plants will be disposed of in two
separate but adjoining tailings management facilities (TMFs), which are ideally
located and designed for this project. The EIS confirms that the Certej project
and its TMFs will have a negligible impact on the local water streams, flora and
fauna. Golder Associates have completed the design and cost study for the TMFs.
The location of the two TMFs is in the same valley as the mine and plant, which
results in only a single water catchment area and principality for the entire
Certej project.
Mine life now 16 years
New probable reserves have been defined extending the total Certej project mine
life to 16 years. The reserves are from lower grade material within the existing
open pit design and contained by historic dumps adjacent to the Certej deposit
and can be summarised as follows:
+---------------------+----------+------------+----------+----------+----------+-----------+
| Description |Category | Tonnes | Au g/t | Au | Ag g/t | Ag |
| | | | | ounces | | ounces |
+---------------------+----------+------------+----------+----------+----------+-----------+
| In-pit lower grade |Probable | 7,829,226 | 0.72 | 181,200 | 14.0 |3,524,000 |
| material | | | | | | |
+---------------------+----------+------------+----------+----------+----------+-----------+
| Dumps |Probable | 6,320,190 | 0.53 | 107,700 | 8.9 |1,802,000 |
+---------------------+----------+------------+----------+----------+----------+-----------+
| Total |Probable |14,149,416 | 0.64 | 288,900 | 11.7 |5,326,000 |
+---------------------+----------+------------+----------+----------+----------+-----------+
The existing open-pit design was optimised at a gold price of $450 per troy
ounce and, whilst the pit forms a natural limit to the mineralisation, there is
material within the pit shell that becomes economic at a gold price of $650 per
ounce. In the previous mine plan this rock reported to the waste heap.
Drilling and channel sampling of historic dumps situated around the deposit has
also defined new resources and reserves. Much of the material would have to be
moved to make space for the planned Certej open-pit.
The rock dump and the in-pit lower-grade materials will be stockpiled and fed
through the mill after the full grade ore from the pit has been treated in the
first 11 and a half years of the life.
The 0.3 million ounces Au and 5.3 million ounces Ag reserves were estimated
using mining costs defined in the Certej definitive feasibility study published
in September 2008 with an additional cost for re-handling taken into account.
Total reserves at Certej are summarised below:
+---------------------+----------+-----------+----------+-----------+--------+-----------+
| Description |Category | Million | Au g/t | Au |Ag g/t | Ag |
| | | Tonnes | | million | | million |
| | | | | oz | | oz |
+---------------------+----------+-----------+----------+-----------+--------+-----------+
| Existing Reserve |Probable | 32.8 | 2.01 | 2.12 | 11.4 | 12.0 |
+---------------------+----------+-----------+----------+-----------+--------+-----------+
| New Reserve |Probable | 14.1 | 0.64 | 0.29 | 11.7 | 5.3 |
+---------------------+----------+-----------+----------+-----------+--------+-----------+
| Total |Probable | 46.9 | | 2.41 | | 17.3 |
+---------------------+----------+-----------+----------+-----------+--------+-----------+
Project progresses to basic and detailed engineering phases
The Company has now advanced the process plant design into Basic Engineering
phase, which after a rigorous evaluation procedure was awarded to Aker
Solutions. This will be carried out with the local engineering company Cepromin.
The Company has also contracted Xstrata Technology Ltd in respect of the
engineering of the Albion process section of the plant.
Permitting process well advanced
In September 2008 NAMR approved the TFS for the project recognising the quality
of the work invested into the Certej project by Deva Gold. The NAMR also
confirmed the official approval and registration of the project's resources and
reserves. This completed all the approvals required for the project from NAMR
and was a very significant step forward in the development of the project, as it
effectively updates the mining permit and allows the reserve as outlined in the
TFS to be mined.
In February 2008, the Company completed the Environmental Impact Study (the
"EIS") to develop the Certej project. This has subsequently been revised to
incorporate the improvements to the project described previously. This will be
submitted to the Romanian environmental authorities in Timisoara in the early
part of 2009.
The EIS addresses the proposed increase in mine production at Certej and the
processing of the ore on site. The EIS has been carried out over a 12-month
period in order to accumulate all the required base line data during the
different seasons. The EIS is a detailed multi-discipline study comprising over
2,000 pages subdivided into a number of volumes assessing the environmental,
social and health impacts of the project on the mine area.
The EIS was prepared with the contribution of several Romanian institutes of
international reputation, namely the National Institute of Research and
Development for Industrial Ecology (ECOIND), the National Institute of Research
and Development for Environment Protection (ICIM), the Technical University of
Construction Bucharest and the Babes-Bolyai University of Cluj. The EIS was
prepared to the regulatory framework established by Romanian and EU legislation.
The environmental permitting process is now well advanced and its successful
conclusion will allow for construction and full scale operation of the project.
As part of that process, Deva Gold received an updated Urbanisation Certificate
from Hunedoara County Council, renewing that issued in October 2006. The new
Urbanisation Certificate, which incorporates all the modifications to the
project since 2006, is valid until 2010 and can be extended further. The award
of this new certificate, which legally confirms the designated land use of the
project site, again demonstrates the continued support of the Romanian
authorities for the development of the Certej project. This confirmation of
Certej as a designated industrial mining area also clearly attests to the local
community's support for the project.
The permitting process is now in its final stages. Deva Gold has also submitted
a Zonal Urbanisation Plan ("PUZ") to the relevant Romanian authorities. Deva
Gold has advanced the planning procedures for this next step, the PUZ approval,
including public meetings with the affected local communities, and has received
almost all the constituent approvals required from various official bodies. The
remaining significant approval in the PUZ process is an environmental approval
to be issued locally through the Timisoara office of the Ministry of
Environment; the process for which is well underway.
The Company expects to be able to announce the dates for the remaining public
hearings for the PUZ process in the near future.
Following the approval of the PUZ, the EIS will also then be subject to the last
requirement for public consultation prior to the issuance of the environmental
permit. These are the final approvals required for the construction and
operation of the plant, the tailings design and other related infrastructure.
EXPLORATION IN ROMANIA
The Company has acquired two new prospecting licences totalling some 454 square
kilometres. The licences cover two distinct areas. The first area forms a
westward extension to the Company's existing group of licences centred on
Certej. This western extension covers some 317 square kilometres and is adjacent
to the well-known Brad mines, which have produced as much as 20 million ounces
of gold according to historic records, and were operated by the Romanian state
until 2006. Deposits in this geological terrain include examples of disseminated
gold, porphyry mineralisation as well as the more prolific and higher grade
epithermal deposits. The Company has also acquired raw data from an airborne
magnetic and radiometric geophysical survey which covers much of the area and
will begin processing this data in early 2009.
The second area covers some 137 square kilometres and includes the Deva copper
gold porphyry and the Muncel-Vetel massive sulphide deposits. The Deva porphyry
was operated by the Romanian state owned mining company between 1950 and 2001.
During this time it produced some 19 million tonnes of ore at a grade of 0.7%
copper. Gold grades were not recorded systematically throughout the mine life
but are indicated to be approximately 0.5 g/t gold. The porphyry is defined to a
depth of 800 metres and is one of a series of intrusives within a volcanic
complex, which is completely under explored. The Muncel-Vitel area hosts known
copper, lead and zinc mineralisation in a series of stacked massive sulphide
horizons recorded as being Volcanogenic Massive Sulphides (VMS) type. The
mineralisation has been traced along more than 5 kilometres of strike length and
the area has never been investigated with modern techniques.
European Goldfields plans to commence reconnaissance mapping, geochemical and
geophysical surveying and sampling of these exciting and highly prospective
areas early in 2009. This will be the first time that modern techniques have
been applied to much of the area acquired and the Company will capitalise on its
knowledge of porphyry and epithermal deposits gained from our previous work on
the Tethyan belt of central and southeast Europe within Greece, Romania and
Turkey.
EXPLORATION IN TURKEY
In April 2008 the company entered into a joint venture (JV) with Ariana
Resources plc (Ariana) with respect to mineral properties in the Eastern Pontide
area of northeast Turkey.
Significant progress has been made both in assessing the properties within the
JV and in identifying new areas for acquisition following seven months of
exploration.
Mapping and lithological sampling of the advanced Ardala porphyry target has
delineated the extents of the various porphyry types and alteration phases. This
work has confirmed that porphyry mineralisation continues to the south of the
previously recognised outcrops. Modelling of the newly discovered zone is now
complete and drill testing will commence in mid 2009.
Sampling and mapping work on the other JV concessions is ongoing together with
the generative programme that has so far identified several prospective areas
for new ground acquisition. A regional geological model for the Eastern Pontides
Belt of Turkey is being produced.
The Company continues to look for new opportunities in Turkey and the
exploration team has conducted a number of exploration site visits to various
portfolios, properties and deposits, both within the JV area of interest and
elsewhere in Turkey.
Documents to be sent to shareholders
Copies of the Company's Annual Report, Management's Discussion and Analysis and
Consolidated Financial Statements for the year ended 31 December 2008, and
copies of the Notice of Meeting and Management Proxy Circular for the Annual
Meeting of Shareholders of the Company to be held on 20 May 2009, will be sent
to Shareholders and filed on SEDAR at www.sedar.com
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
started selling an existing stockpile of gold concentrates from Olympias in July
2006. Hellas Gold is applying for permits to develop and build the Skouries and
Olympias projects.
Romania - European Goldfields owns 80% of the Certej gold/silver project in
Romania. In July 2008, the National Agency of Mineral Resources approved the
technical feasibility study in support of its permit application and issued a
new mining permit for 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 / Katharine Sutton | Tel: +44 (0)20 7466 5000 |
| | |
+------------------------------------+--------------------------------------+
| RBC Capital Markets: | e-mail: sarah.wharry@rbccm.com |
| Sarah Wharry | Tel: +44 (0)20 7653 4804 |
+------------------------------------+--------------------------------------+
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
END
FR JLMFTMMBBMAL
European Gold (LSE:EGU)
Historical Stock Chart
From Jun 2024 to Jul 2024
European Gold (LSE:EGU)
Historical Stock Chart
From Jul 2023 to Jul 2024
