EGU European Gold

RNS Number:4591D
European Goldfields Ltd
29 September 2004

For Immediate Release                                          29 September 2004

                        European Goldfields Limited

                      Valuation Report on Hellas Gold S.A.

                      Hellas Gold Valued at US$500 million

European Goldfields Limited (AIM: EGU / TSX-V: EGU) ("European Goldfields" or
the "Company"), a resource company involved in the acquisition, exploration and
development of mineral properties in Romania, Greece and the Balkans, is pleased
to announce that it has filed with securities regulatory authorities in Canada a
valuation report on Hellas Gold S.A. ("Hellas Gold").

The valuation report (the "Valuation Report") prepared by Behre Dolbear
International Limited ("Behre Dolbear"), a pre-eminent international minerals
industry consultant, estimates the fair-market value of Hellas Gold to be
approximately US$500 million.

European Goldfields currently holds 30% of the issued shares of Hellas Gold (on
a fully diluted basis). The Valuation Report was commissioned by a special
independent committee of the Board appointed for the purposes of advising the
Board with respect to the possible acquisition of additional shares in Hellas
Gold.

Hellas Gold's properties are located in the Chalkidiki Prefecture of Northern
Greece. They comprise a group of granted mining licences, covering 317 km2,
which are valid for seventy years. The assets include the Olympias and Stratoni
mines, both currently on care and maintenance, and the Skouries copper-gold
porphyry deposit.

David Reading, Chief Executive Officer, said:

"The independent asset valuation of Hellas Gold illustrates the underlying value
for European Goldfields' shareholders. With significant resources and
infrastructure in place and a strong partnership with Aktor, Greece's largest
construction company, Hellas Gold will become a significant asset for European
Goldfields.

We look forward to developing these assets in Greece, as well as continuing our
strategy of focusing on quality projects in Romania and in the Balkan region."

A copy of the Valuation Report is available on SEDAR at www.sedar.com.

For Further Information:
IR/ Media Contact:
David Grannell
London Office: +44 (0)20 7408 9534           e-mail:  info@egoldfields.com
London Mobile: +44 (0)7703 190652            website: www.egoldfields.com

Buchanan Communications
Bobby Morse/ Catherine Miles/ Ben Willey     +44 (0)20 7466 5000

The TSX Venture Exchange has not reviewed and does not accept responsibility for
the adequacy or accuracy of this release and the information contained herein.

Abridged Valuation Report:

Behre Dolbear has conducted an independent valuation of Hellas Gold and its
associated assets and liabilities. Two visits were made to the project site by
Behre Dolbear professionals involved in this project, including one to evaluate
social issues. Behre Dolbear has reviewed technical data, reports and studies
produced by other consulting firms as well as information provided by the
Company and Hellas Gold. Behre Dolbear's review was conducted on a
reasonableness basis and Behre Dolbear has relied upon the information provided
as being accurate and suitable for use in the Valuation Report.

Assets and Liabilities Considered. Behre Dolbear has included the following
assets and liabilities in its valuation of Hellas Gold:

1. Three near-production properties exist on the concessions, two of which
operated previously and one of which has recently completed a feasibility study.
The assets are described as follows:

   * Stratoni - a small polymetallic massive replacement-type deposit with
    minor gold credits in the concentrate. Present proven and probable reserves
    total 1.64 million tonnes of ore grading 7.6 percent lead, 10.2 percent
    zinc, and 179gAg/t;


   * Olympias - a similar polymetallic replacement deposit, but with high
    gold grades. Proven and probable reserves, including stockpiled material
    total 14.0 million tonnes of ore grading 3.9 percent lead, 5.1 percent zinc,
    119.6gAg/t and 8.6gAu/t; and


   * Skouries - a copper-gold porphyry totalling 127.9 million tonnes
    probable reserves of ore grading 0.88gAu/t and 0.55 percent copper.


The three principal deposits have been well defined with over 190,000 meters of
drilling completed to yield measured and indicated resources, which have been
audited by numerous international companies. The mineral deposits at Olympias,
Skouries and Stratoni would meet the criteria for proven and probable reserves
established by all scenarios and regulatory commissions, as Behre Dolbear
updated previous studies to assure that capital costs, operating costs, smelter
treatment charges and refining charges are those of the present time.
Furthermore, comprehensive feasibility studies have been completed by various
international consultants at Olympias and Skouries, which includes follow up
engineering and design work. At Stratoni, the mine was in production and
achieving the output forecast until its closure in early 2003.

2. Manganese ore stockpiles;

3. Lead and zinc concentrates and ore stockpiles currently stored on the
property;

4. Real estate having residential and/or commercial value;

5. Balance sheet assets and liabilities; and

6. Prospects and exploration potential on the 317 km2 of mining concessions.

Behre Dolbear considers the exploration potential of the concessions to be high
and the discovery, over time, of an equal amount of new mineralisation to that
previously produced and discovered likely. The Valuation Report states that a
prudent and knowledgeable purchaser would ascribe value to this upside potential
and Behre Dolbear has included such in its valuation on a factored basis.

Valuation Methodologies. The valuation conducted was on a fair-market value
basis as a going concern. Fair-market value is defined as the amount a willing
buyer would pay a willing seller in an arms-length transaction, wherein each
party acted knowledgeably, prudently and without compulsion.

The valuation methods utilised to arrive at a fair-market value were conducted
in accordance with the requirements of Appendix 3G "Valuation Standards and
Guidelines for Mineral Properties" of Section 4 of TSX Venture Exchange Rules
and Regulations. The valuation methods used were:

   * Income Approach - to derive a discounted cash flow net present value;
    and

   * Related Transactions - to derive a value based on present day
    transactional values for gold properties where fair market value can be
    determined.

To substantiate the values derived from the above two methods, an additional
valuation was made using:

   * Market Capitalisation - based on the present day value accorded on
    public stock markets for gold companies based upon these companies' proven
    and probable gold reserves.

Behre Dolbear noted in the Valuation Report that the TSX Venture Exchange, while
specifically not precluding this valuation usage, does not specify the validity
of the Market Capitalization valuation method despite its widespread use.

Valuation Results. Behre Dolbear noted that the Related Transaction and Market
Capitalisation approaches to valuation are primarily based on precious metal
transactions. Since the properties controlled by Hellas Gold are polymetallic in
nature, such is accounted for by employing substantial factoring (for example,
equivalent gold ounces calculated from net smelter returns of base metals are
given only half the value of the gold ounces) so as to better reflect the more
likely valuations that would result from the use of these valuation methods.
Such is necessitated by the small number of recorded polymetallic transactions
that preclude there being a reliable statistical basis for their usage.

Behre Dolbear estimates the fair-market value of Hellas Gold to be US$500
million, which is approximately 1.25 times the value of the Income Approach
maximum estimate and corresponds closely to the Related Transaction estimate.
This valuation is based upon:

   * an average Income Approach value of US$266.4 million:

 - The Income Approach was derived from proven and probable reserves, excluding
 all other resources.

 - The range in Income Approach values reflects the use of different commodity
 prices as follows:

    - $130.3 million: 10-year historic prices
    - $402.5 million: First half 2004 prices
    - $266.4 million: Average of 10-year historic prices and first half 2004 
                      prices.

 - Base metals have been converted into equivalent gold ounces by using only 50
 percent of the factored gold acquisition value for a specific property, based 
 on the property's net smelter return.

 - The Income Approach applied an after-tax discount rate averaging 12.3 percent.

 - The Income Approach valuation is highly sensitive to the commodity prices used
 and the discount rate utilised.

   * a Related Transaction value of US$505 million.

To substantiate these values, the Valuation Report states that the Market
Capitalisation valuation of Hellas Gold, as a corporate entity, is estimated at
$615 million.

The Market Capitalisation and Related Transaction valuation approaches have been
used conservatively in that base metals have been converted into equivalent gold
ounces by using only 50 percent of the factored gold acquisition value for a
specific property, based on the property's net smelter return.

The Valuation Report states that, historically, Behre Dolbear would have placed
significant weight on the value derived by the Income Approach. In the opinion
of Behre Dolbear, the valuation results of the Related Transactions and Market
Capitalization approaches, however, clearly reflect the current market and the
belief of mining companies and investors in gold securities that the gold price
will increase, perhaps significantly, above the present US$400 per ounce level.
Behre Dolbear believes such market values cannot be ignored.

Accordingly, Behre Dolbear's preferred value for Hellas Gold is biased toward
market-related values and is estimated at US$500 million, which is approximately
1.25 times the value of the Income Approach maximum estimate and corresponds
closely with the Related Transaction estimate.

Date of the Valuation Report. The effective date of the Valuation Report is
midnight 30 June 2004.

Statement of Independence. The Independent Committee has determined that Behre
Dolbear is qualified and independent for the purpose of providing a formal
valuation of the shares of Hellas Gold.

The Valuation Report states that neither the principals nor associates of Behre
Dolbear have any security ownership position, any financial interest, or any
other pecuniary interest in the Company or Hellas Gold. Behre Dolbear will be
paid a fee for the Valuation Report comprising its normal professional rates and
reimbursement of expenses. The fee is not contingent on the conclusions of the
Valuation Report.

Forward-looking Statements

This news release contains certain forward-looking statements concerning the
Company's future operations, economic performances, financial conditions and
financing plans. These statements are based on certain assumptions and analyses
made by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors the Company believes are appropriate in the circumstances. However,
whether actual results and developments will conform with the Company's
expectations and predictions is subject to a number of risks, uncertainties and
assumptions. Consequently, all of the forward-looking statements made in this
news release are qualified by these cautionary statements, and there can be no
assurance that the results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequences to or effects on the Company and its subsidiaries or their
businesses or operations. The Company undertakes no obligation and does not
intend to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as may be required under
applicable law.





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