TIDMEGU
RNS Number : 9463C
European Goldfields Ltd
15 March 2011
Suite 200, Financial Plaza
204 Lambert Street
Whitehorse, Yukon
Canada Y1A 3T2
For Immediate Release
RESULTS FOR 2010
15 March 2011 - European Goldfields Limited (TSX / AIM: EGU)
("European Goldfields" or the "Company") today announces its
results for the year ended 31 December 2010 and 2009. The financial
statements, as well as the accompanying management's discussion and
analysis, are available for review at
http://www.egoldfields.com/egoldfields/en/financials/annuals and
should be read in conjunction with this news release.
2010 Highlights
Greece
-- EIS public consultation concluded with unanimous local
government approval in December 2010
-- US$300m Hellas Gold financing - Banks mandated
Romania
-- Final EIS submitted and public consultation underway
-- US$135m financing package secured
Exploration
-- Greece - Piavitsa drill results confirm high grade
mineralisation
-- Romania - Significant assay results in the vicinity of
Certej
-- Turkey - Exploration confirms high grades at Salinbas
-- US$15m budget for 2011
Financial
-- Sales of US$49.9m
-- Gross profit of US$4.8m
-- Q4 Stratoni financial performance the best since 2007
-- Project investment of US$47m in 2010
-- Working capital of US$80m as at 31 December 2010
Martyn Konig, Executive Chairman and President, commented:
"Underpinned by another year of solid performance at our
Stratoni mine in Greece, which had its best financial performance
in Q4 2010 since 2007, mostly due to higher realised base metal
prices, we have made exceptional progress in advancing the
permitting process of our development projects in both Greece and
Romania. We were delighted to receive the unanimous approval of the
local Prefectural Council for our Greek projects at the end of the
year and are now initiating the same public consultation process in
Romania. Quite rightly, the environmental permitting of our
development projects has been a technically detailed and exhaustive
process. We are pleased that this work is now largely complete,
with our Greek EIS approval imminent and the Romanian EIS going
through the public consultation process. We therefore look forward
to commencing construction on all of our development projects in
2011, which will be a transformational year for the Company."
SELECTED FINANCIAL DATA
Year ended 31 December
------------------------------------------------
(in thousands of US
dollars, 2010 2009
except per share amounts) $ $
---------------------------- ----------------------- -----------------------
Statement of profit
and loss
Sales 49,855 62,712
Gross profit 4,816 11,670
(Loss)/Profit before
income tax (42,620) (8,351)
Income taxes (623) (3,376)
(Loss)/Profit after
income tax (43,243) (11,727)
Non-controlling interest 436 (56)
(Loss)/Profit for the
period (42,807) (11,783)
(Loss)/Earnings per
share (0.23) (0.07)
---------------------------- ----------------------- -----------------------
31 December 31 December
(in thousands of US 2010 2009
dollars) $ $
--------------------- ------------ ------------
Balance sheet
Working capital 79,635 146,799
Total assets 718,813 744,100
--------------------- ------------ ------------
European Goldfields' operations in 2010 were limited to the base
metal operation at Stratoni, as the Olympias gold concentrate sales
ceased after the end of 2009. Sales therefore declined by 21% in
2010, as no high margin gold sales were achieved. However, improved
base metal prices allowed the Stratoni mine to record earnings
before interest, taxation, depreciation and amortisation ("EBITDA")
of $13.0m and a gross profit of $5.5m for 2010. Higher expenses,
primarily relating to the corporate build-out in preparation for
the development of our projects and non cash share-based
compensation, resulted in a larger loss before tax of $42.6 million
for 2010 compared to a loss of $8.4 million in 2009.
European Goldfields' audited consolidated financial statements
and management's discussion and analysis for the years ended 31
December 2010 and 2009 are filed on SEDAR at www.sedar.com.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
GREECE SUMMARY
-- EIS public consultation concluded with unanimous support
-- Production from Stratoni mine above schedule for year
-- Update of Skouries and Olympias Resources and Reserves
underway
-- Rehabilitation of the Olympias Plant well advanced
EIS - Public consultation concluded with unanimous support - In
December, the Company was pleased to announce that the public
consultation process for the development of the Project concluded
with unanimous support from the local Prefectural Council for the
Environmental Impact Study ("EIS"). This was the conclusion of the
formal public consultation process as required by law. The
endorsement of the Prefectural Council was sent to the Ministry of
Environment, Energy and Climate Change for its final approval of
the EIS.
The Project consists of:
. Continuation of operations at the Mavres Petres deposit of the
Stratoni Mine.
. The next stages of the Olympias project, namely the mining and
processing of ore and metallurgical treatment of the concentrate,
in accordance with the business plan as originally submitted. This
includes the reprocessing of previously mined tailings.
C. The development of mining and processing at the Skouries
project; and
D. The expansion of port facilities at Stratoni in service of
the above projects' operations.
Project Finance - Mandate for $300m Hellas Gold debt financing
signed - The Company has signed a mandate letter with a group of
financial institutions (collectively, the "MLAs") to arrange a
US$300 million secured term and revolving facility for its Greek
subsidiary Hellas Gold SA ("Hellas Gold"). The Facility will be
used to fund the development of the Skouries open pit and
associated processing facilities, the Olympias concentrator and
underground mine refurbishment and general corporate purposes.
The mandate letter has been signed on the basis of a term sheet
which has been agreed between the Company and the MLAs, each of
which has received approval to proceed with the mandate through
their respective initial credit processes. The terms of the
facility include no gold or silver hedging requirement and a
scheduled tenor of seven years. Since the year end, two additional
banks have received initial approvals to join the facility. SRK has
also been appointed to undertake technical due diligence on behalf
of the MLAs and has recently visited site in that capacity.
Skouries Project - European Goldfields in conjunction with
URS/Scott Wilson Mining have undertaken a new National Instrument
43-101 technical study to revise the Resources and Reserves in line
with current metal prices and operating and capital costs. The
update will be in line with the EIS documentation currently being
evaluated by the Greek authorities.
The final phase of the basic engineering of the process plant by
Greek engineering group, Enoia, is effectively complete and
detailed tender packages to carry out the civil engineering work
have been prepared.
Olympias mine and plant rehabilitation in progress - In
preparation for tailings reprocessing to produce pyrite
arsenopyrite gold rich concentrate, repair work to the concentrator
building and plant is nearing completion. A mechanical and
electrical audit of the plant has been carried out and the
necessary purchase orders prepared ready for placement. Production
of the pyrite arsenopyrite gold rich concentrate is scheduled to
commence later in 2011.
The refurbishment and enlargement of the mine access decline has
also progressed in preparation for the commencement of extending
the mine development to allow ore production once the reclamation
of tailings is finished.
The Company is currently working toward updating the resources
and reserves for Olympias. The update will reflect current metal
prices as well as updating operating and capital costs and be in
line with the EIS documentation currently being evaluated by the
Greek authorities.
Production at Stratoni - Production from the underground mine
was higher than scheduled for 2010. The processing plant continued
to perform well in terms of throughput, recovery and concentrate
quality. In financial terms, the Stratoni operation had its best
performance in Q4 2010 since 2007, generating EBITDA of $5.92
million in the quarter, and $13.0 million for the year.
The Company's 95%-owned subsidiary Hellas Gold mined a total of
235,674 wet tonnes in 2010 (2009 - 231,397). Sales from Stratoni
were as follows:
2010 2009
Production
Ore mined (wet tonnes) 235,674 231,397
Sales
Zinc concentrate (tonnes) 40,892 37,132
- Containing payable Zinc
(tonnes)* 16,842 15,276
Lead concentrate (tonnes) 16,759 17,001
- Containing payable: Lead
(tonnes)* 11,073 10,867
Silver (oz)* 836,718 823,191
Inventory (end of period)
Ore mined (wet tonnes) 24 1
Zinc concentrate (tonnes) 2,517 2,817
Lead/silver concentrate
(tonnes) 1,740 824
* Net of smelter payable deductions
ROMANIA
-- Public consultation underway
-- Project Implementation Strategy has commenced
-- Technical Project nears completion
-- Tender packages prepared
Public consultation underway - Following submission of the EIS
for the Company's Certej Project in Romania the final public
consultation will take place in April and will be conducted in
accordance with EU Directives and Conventions and Romanian Law.
Upon the satisfactory conclusion of this final public consultation
process, the environmental authorities will re-convene the
Technical Analysis Committee to confirm the decision regarding the
issuance of the environmental permit.
The final public consultation follows confirmation from the
Romanian Authorities that the EIS complies with all Romanian
legislation, both from a technical and legal perspective. Notably
the Company recently received approval from CONSIB (the National
Committee for Large Embankments), a specialist committee
constituted under the Ministry of Environment, for the design of
the Tailings Management Facilities for the Certej project.
Certej Implementation Strategy Underway - The Certej Project
team has finalised the procurement and implementation strategy for
the process plant, which divides the flow sheet into three discrete
sections: Minerals Processing, Albion oxidation and gold recovery.
Invitations to bid have been prepared on this basis for the
provision of the equipment and specialist engineering services.
Major international equipment companies have already been engaged
in a pre-qualification exercise and have confirmed their intention
to bid on this basis. As part of their technical due diligence for
the project lenders, SRK have reviewed the Company's implementation
strategy and is satisfied with its progress to date.
It is also planned that the civil engineering and earth moving
works will be awarded to a single contractor to cover the initial
construction of the tailings facilities and the preparation of the
plant, dump and stockpile areas. Corresponding engineering design
work is effectively complete by Cepromin for the Technical Project
report, which is a key requirement under Romanian legislation in
order to obtain the Construction Permit. Pre-qualification
documentation is being prepared to allow early engagement with
suitable contracting groups.
Final geotechnical site investigation including drilling and
associated engineering studies for the process plant, tailings
management facilities and open pits have been completed by the
Company in cooperation with Golder Associates UK.
As part of the ongoing preparation for site establishment and
mobilisation activities, the project team has identified the
critical path items to establish site access. These will be
prioritised as soon as site preparation can commence.
Project Finance - During 2010,the Company significantly advanced
the credit committed US$135 million financing package to part fund
the development costs of the Certej gold-silver Project in Romania,
through legal documentation and technical, environmental and social
due diligence . The structure of the financing package consists of
an eight year US$120 million secured limited recourse debt facility
and a US$15 million secured equipment lease facility. The
commitments are on the basis of detailed term sheets which have
been agreed with the Company and a Technical, Environmental and
Social Audit of the Project conducted by SRK Consulting on behalf
of the banks. The terms of the facility include no hedging that
limits upside exposure of shareholders to gold prices.
EXPLORATION
The Board of Directors has approved a group-wide, results driven
exploration budget of US$15 million for 2011.
Greece - Work has focused on the Piavitsa prospect, which
historic drilling has shown to be an Olympias look-alike target
with high grade polymetallic mineralisation in massive sulphides.
New sampling of previously drilled core has confirmed that the
previously identified high grade massive sulphide mineralisation
occurs within a lower grade halo. Further drilling is planned in
2011 with the objective of delineating a preliminary resource on
this target. Soil geochemical samples have also been taken and
these have confirmed extensions to the known Piavitsa
mineralisation, indicated by conductive units which were revealed
by an airborne geophysical survey. The extension targets will also
be drill tested in 2011.
Romania - Four exploration boreholes were drilled to test
potential gold mineralisation that is close to, but currently
outside, the planned Certej open pit footprint. Significant assay
results include 17m grading 3.40 g/t gold and 3.76 g/t silver west
of the open pit and 16m grading 2.24 g/t gold and 2.94 g/t silver
northwest of the pit. Further drilling and trenching is planned in
early 2011.
A new exploration survey located 12km northwest of Certej,
within the vicinity of an historic gold mining area, has identified
a number of significant anomalies, supported by ground geophysics
soil geochemistry and mapping. The anomalies potentially represent
previously undiscovered extensions to zones of gold mineralisation.
Preparations are currently being made to drill the most significant
anomalies in 2011.
Turkey - Exploration has focused on three targets: the Salinbas
Gold Zone, the Ardala copper-gold porphyry within the Ariana joint
venture and the Derinkoy gold target in the Aldridge Minerals joint
venture. Regional sampling aimed at selecting other targets for
licence applications has also continued across the Pontide region.
Results from the trenching and initial drilling programme in Turkey
have been highly encouraging and continued drilling is expected to
yield further results in the coming months
About European Goldfields
European Goldfields is a developer-producer with globally
significant gold reserves located within the European Union. The
Company generates cash flow from its 95% owned Stratoni operation,
a high grade lead/zinc/silver mine in North-Eastern Greece.
European Goldfields will evolve into a mid-tier producer through
responsible development of its project pipeline of gold and base
metal deposits at Skouries and Olympias in Greece and Certej in
Romania. The Company plans future growth through development of its
highly prospective exploration portfolio in Greece, Romania and
Turkey.
In Turkey, European Goldfields operates an exploration programme
through two Joint Venture ("JV") companies. The JV with Ariana
Resources is focused on the Greater Pontides region of Turkey, a
highly prospective geological terrain containing several major
deposits. The JV with Aldridge focuses on the Derinkoy properties
which are adjacent to the Ardala property in N.E Turkey and show
very encouraging styles of gold mineralisation. The properties lie
within an area of interest known as the "Pontid JV" which is
defined as part of the Ariana JV agreement.
Patrick Forward supervised and prepared the scientific and
technical information included in this press release. Mr. Forward
is a "qualified person" for purposes of National Instrument 43-101.
Mr. Forward is an employee of European Goldfields.
Disclosure of mineral resources and reserves for Deva Gold's
Certej deposit is derived from a technical report dated 26 February
2009 prepared under the supervision of Patrick Forward, the
Company's Vice President, Projects and Exploration, a "Qualified
Person" under NI 43-101. The report discloses the data verification
procedures that have been used in collecting, compiling,
interpreting and processing the data used to estimate resources and
reserves. The data verification procedures for the exploration
boreholes are similar to those described in such report. The data
verification process includes quality assurance and quality control
procedures put in place by the Company as described in the report,
and reviews by independent consultants of drill hole information on
geological sections prepared by the Company and previous
owners.
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 2009, 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.
For further information please see the Company's website at
www.egoldfields.com
For further information please contact:
European Goldfields Liberum Capital Limited
Steve Sharpe, SVP Business Development Simon Atkinson
e-mail: info@egoldfields.com Tom Fyson
Tel: +44 (0)20 7408 9534 Tel: +44 (0)20 3100 2000
Brunswick Evolution Securities Limited
Carole Cable / Fiona Micallef-Eynaud Rob Collins
e-mail: egoldfields@brunswickgroup.com Tim Redfern
Tel: +44 (0)20 7404 5959 Tel: +44 (0)20 7071 4300
This information is provided by RNS
The company news service from the London Stock Exchange
END
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