TIDMEGU
RNS Number : 8270R
European Goldfields Ltd
10 November 2011
Suite 200, Financial Plaza
204 Lambert Street
Whitehorse, Yukon
Canada Y1A 3T2
For Immediate Release
RESULTS FOR Q3 2011
10 November 2011 - European Goldfields Limited (TSX / AIM: EGU)
("European Goldfields" or the "Company") today reports its results
for the quarter ended 30 September 2011. The financial statements,
as well as the accompanying management's discussion and analysis
should be read in conjunction with this news release and are
available for review at
http://www.egoldfields.com/egoldfields/en/financials/quarterlies
Highlights
Corporate
-- US$750 million debt package arranged
-- All projects fully financed
-- Additional funding for exploration
Greece
-- Formal approval of Environmental Impact Study
-- Invitation to Bid issued for construction of Skouries plant
-- Olympias mill start-up on schedule for Q2 2012
Romania
-- Cross-border public consultation complete
-- Technical Analysis Committee due to reconvene to issue formal
decision on environmental permit
Exploration
-- Preparation work for Piavitsa drill programme complete
-- Drilling at Salinbas, Turkey, confirms mineralisation
Financial
-- Sales of US$16.0 million
-- Gross profit of US$4.8 million
-- Working capital US$23.1 million
-- Terms signed with Qatar Holding for US$600 million Loan Facility
Mark Rachovides, Executive Vice President, commented:
"We are very pleased to announce that during the quarter the
Company entered into Heads of Terms with Qatar Holding for a
US$600m loan facility, placing the company in a unique position and
fully financed to production. Documentation for the transaction is
progressing on schedule, and we expect to have completed all of the
regulatory formalities and sought shareholder approval of the
financing package by the end of the year. Following our recent
permitting approvals and reserve update and with build out
schedules firmly in place, this comprehensive and flexible solution
allows us to drive construction and development of our gold
projects forward at pace. We also have the financing flexibility to
accelerate our exploration programmes, starting at Piavitsa, and
thus unlock the resource potential of our area of operation."
SELECTED FINANCIAL DATA
Quarter ended 30 September
----------------------------------------------------
(in thousands of US 2011 2010
dollars,
except per share amounts) $ $
---------------------------- --------------------------- -----------------------
Statement of profit
and loss
Sales 16,015 9,204
Gross profit 4,803 548
Profit/(loss) before
income tax (9,785) (2,601)
Income taxes (1,316) (37)
Profit/(loss) after
income tax (11,101) (2,638)
Non-controlling interest 72 141
Profit/(loss) for the
period (11,029) (2,497)
Earnings/(loss) per
share (0.06) (0.01)
---------------------------- --------------------------- -----------------------
30 Sept 2011 31 Dec 2010
(in thousands of US $ $
dollars)
--------------------- ------------- ------------
Balance sheet
Working capital 23,141 75,887
Total assets 498,608 507,293
--------------------- ------------- ------------
The Company's Stratoni base metal operation had another strong
quarter, generating revenues of $16.0 million and gross profits of
$4.8 million, driven by strong sales and metal prices. After
overheads and other expenses, the Company recorded a loss before
tax of $9.8 million for the three month period to 30 September
2011, compared to a loss before tax of $2.6 million for the three
month period to 30 September 2010. Working capital balances fell to
$23.1 million, but after the period end this was increased by the
receipt of $14.7 million (EUR10.8 million) of recoverable taxes
paid to Hellas Gold by the Greek Government.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
CORPORATE
Financing - On 1 October, the Company announced Heads of Terms
with Qatar Holding LLC ("Qatar Holding") for the provision of a
US$600 million 7 year Senior Secured Loan Facility. The Company
also proposes to offer unsecured Loan Notes for US$150 million to
be made available to certain existing shareholders on the same
economic terms as the Facility. This US$750 million debt package
will provide all the required capital for the Company's current
project development, with additional funding for exploration. In
addition, the Company will issue 50.5 million warrants pro-rata to
Qatar Holding and the subscribers to the Loan Notes. The financing
package is subject to shareholder approval and the Company will be
distributing the Proxy Circular and Proxy Form to shareholders
shortly, with the meeting scheduled to take place in December. The
Company is also pleased to welcome Qatar Holding as a major
shareholder in the Company further to their recent acquisition of
18,202,687 Common Shares.
Management - The Company recently announced that the Executive
Chairman and President, Martyn Konig has taken a medical leave of
absence as he recovers from a sudden illness. The Board is
delighted to report that he is already making excellent progress in
his recovery and looks forward to his return to the Company in the
near future. Mr. Fred Vinton has been appointed as acting
Non-Executive Chairman with effect from 9 November 2011.
GREECE
The Company is pleased to report that the prevailing economic
and political uncertainty has not impacted either the Stratoni
operation or the progress of Skouries and Olympias. With a full
financing package arranged the Company remains on track for first
gold production in Q2 2012.
Skouries - During the quarter a formal Invitation to Bid has
been issued for the processing plant construction package and key
conditions of the contracts agreed, with responses expected to be
received by mid-November. The earthworks and civil tender
documentation and scope of work have been compiled and the contract
prepared. The invitations to established vendors for the remaining
process equipment packages have been prepared and are being issued
to ensure delivery times are within the project schedule. The
recruitment process for key owner's team personnel continues to
advance.
Olympias - Refurbishment continues at site and the adit has now
been repaired to over 1,650m: the old timber support has been
replaced with shotcrete and the adit has been enlarged to
accommodate larger vehicles. Sandblasting of the mill steel
structures is complete and refurbishment of the existing conveyor
belts will commence shortly. The earthworks and civils are also
complete, and the buildings are being finished in preparation for
plant commissioning and production of gold concentrate in 2012. A
full review of existing cement silos was carried out with
replacements and repairs done as necessary. Improved guarding and
infrastructure has been put in place facilitating easier and safer
access to site. All outstanding equipment required for the
re-commissioning of the flotation plant has been ordered with the
last deliveries scheduled to take place in Q1 2012 with start-up
occurring in Q2 2012.
Detailed plans for the development of underground infrastructure
are being put in place to enable underground work to commence
swiftly once contracts have been agreed in early 2012. This
includes an additional decline to facilitate haulage and improve
ventilation, pumping and electrical distribution whilst affording
the opportunity to decommission the shaft for hoisting
purposes.
A programme of testwork which will lead to a Feasibility Study
of the Flash Smelter to improve the gold payability has been
initiated with Outotec. One of the deliverables of this programme
will be enhanced accuracy of the capital and operating costs of the
smelter.
Production at Stratoni - Key operational data from Stratoni were
as follows:
Q3 2011 Q3 2010
---------------------------------------------------- -------- --------
Production
Ore mined (wet tonnes) 57,414 54,093
Zinc concentrate (tonnes) 10,998 10,298
- Containing: Zinc (tonnes)* 5,514 5,123
Lead concentrate (tonnes) 4,739 4,630
- Containing: Lead (tonnes)* 3,448 3,307
Silver (oz)* 263,661 249,717
Sales
Zinc concentrate (tonnes) 13,939 8,818
- Containing payable:
Zinc (tonnes)* 5,795 3,672
Lead concentrate (tonnes) 3,744 2,691
- Containing payable:
Lead (tonnes)* 2,579 1,798
Silver (oz)* 192,377 135,361
Inventory (end of period)
Ore mined (wet tonnes) 185 9,074
Zinc concentrate (tonnes) 4,017 4,143
Lead/silver concentrate
(tonnes) 2,908 2,841
---------------------------------------------------- -------- --------
* Net of smelter payable deductions
The concentrator plant continued to work well during the quarter
with steady operational efficiencies achieved. Hellas Gold, mined a
total of 57,414 wet tonnes of ore in Q3 2011 (2010 - 54,093) and
completed seven shipments for the period. Significant stockpiles of
both lead and zinc concentrates remained accrued at the end of the
quarter ready for shipment.
ROMANIA
Certej Project - The Invitation to Bid ("ITB") for the process
plant was modified and re-issued and positive responses received.
The technical projects have been completed ready for submission
when required by the Romanian authorities.
The Company has completed the cross-border public consultations
with Serbia and Hungary as required by international agreements.
Deva Gold management team were present to address all queries
relating to the development and operation of the project. With this
complete, the Technical Analysis Committee ("TAC") and the
environmental authorities are due to reconvene during Q4 in
anticipation of final environmental endorsement for the project by
year end.
EXPLORATION
Piavitsa - In preparation for imminent mobilisation of drill
rigs at Piavitsa, new drill core logging and storage areas have
been prepared and a new sample preparation laboratory is in place.
The team has conducted soil and lithological sampling over the
entire Piavitsa extensions and the area has been re-mapped with all
information captured and modelled in GIS.
Tsikara - The Company has identified new targets and several
potential porphyry centres over the volcanic complex. Systematic
mapping of the porphyry target areas has further indicated the
presence of mineralisation including gold in grab samples of around
1.5 g/t.
Romania - Mapping, lithological sampling and trenching of
potential extensions to known mineralisation has been completed in
preparation for drill testing anticipated in 2012.
Turkey - Drilling at Salinbas has confirmed the presence of
high-sulphidation epithermal gold mineralisation. The drill
programme is almost complete, results of which will be announced
before year end.
HEALTH, SAFETY AND THE ENVIRONMENT
The Company continues to work toward a policy of zero harm and
is actively working to improve the culture of proactively taking
responsibility for individuals' actions. In this regard, the
Company has launched a series of initiatives known on site as the
"Golden Rules" which apply to the Mavres Petres mine site and also
the Stratoni mill. The policy is actively supported both by on site
management and at senior management level and will be rolled out
across the other sites as work commences.
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 is expected to 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.
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 the Company's Vice President of Projects and
Exploration.
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 conversion of mineral resources
to mineral reserves, the timing and amount of estimated future
production, costs and timing of development of the Skouries,
Olympias and Certej projects, completion of various financing
options and permitting time lines. 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 receipt in a timely fashion of any
further permitting for the Company's 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 2010, 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 Tim Redfern
e-mail : egoldfields@brunswickgroup.com Neil Elliot
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
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