EGU.L Regulatory News (EGU)

4 Jun 2007 07:02

European Goldfields Ltd04 June 2007 Immediate Release 4 June 2007 European Goldfields Ltd Acquisition of an Additional 30% Interest in Hellas Gold Commencement of Equity Offering NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES 1 June 2007 - European Goldfields Limited (TSX / AIM: EGU) (the "Company" or"European Goldfields") is pleased to announce that it has agreed to acquire anadditional 30% interest in Hellas Gold S.A. ("Hellas Gold") which holds all theCompany's Greek mineral assets, increasing the Company's total interest to 95%.The Company also announces that it has filed a preliminary short form prospectusfor a marketed offering of common shares of the Company (the "Shares"), to raiseapproximately US$112 million in gross proceeds to fund development of theCompany's projects in Greece and Romania, and a secondary offering by ashareholder of up to 3 million existing shares on issue (approximately US$15million). Acquisition of an Additional 30% Interest in Hellas Gold The Company has entered into an agreement with a wholly-owned subsidiary ofAktor S.A. ("Aktor"), a wholly-owned subsidiary of Elliniki Technodomiki TEBA.E. (ATHEX: ELTEX) ("El-Tech"), pursuant to which the Company has conditionallyagreed to acquire an additional 30% interest in Hellas Gold (the "Acquisition")in consideration for US$178 million, payable in common shares representing 19.9%of the issued and outstanding shares of the Company after the completion of theequity offering (described below) and the balance, if any, in cash. TheAcquisition will increase the Company's total interest in Hellas Gold to 95%. El-Tech is a large Greek conglomerate with a market capitalisation in excess ofUS$2 billion and investments in four fields: construction, concessions, energyand real estate. Aktor is Greece's largest construction company. As part of the Acquisition, Aktor has agreed to re-invest into Hellas Gold 50%of the cash consideration it receives, if any, as funding towards maintainingits residual 5% shareholding interest in Hellas Gold. On the completion of theAcquisition, Aktor will also enter into a lock-up undertaking with the Companywhereby it will agree not to sell, transfer, pledge or otherwise dispose of itsShares in the Company until the earlier of the fourth anniversary of the closingof the Acquisition and the date on which the Company's Skouries gold-copperporphyry mining project commences production. Aktor does not currently hold anyShares of the Company and the only shares of the Company it will hold will bethe common shares issued as consideration for the Acquisition. Closing of the Acquisition is subject to certain conditions, including but notlimited to completion of the treasury offering of new shares. The Acquisition isexpected to be completed within five days of the closing date of the equityoffering. The Company does not propose to make significant changes to HellasGold's operations following the Acquisition. The Company intends to appoint arepresentative of Aktor to its board of directors after the closing of theAcquisition. In the year ended December 31, 2006, Hellas Gold reported profits before tax ofUS$10 million. Pursuant to Rule 13 of the AIM Rules published by the LondonStock Exchange, the Acquisition is considered to be a Related Party Transaction.The Company's directors consider, having consulted with its nominated adviser,Evolution Securities Limited, that the terms of the transaction are fair andreasonable insofar as its shareholders are concerned. Commencement of US$127 Million Equity Offering The Company is also pleased to announce that it has filed a preliminary shortform prospectus in all provinces except Quebec, for a public offering of commonshares (the "Offering"). Aggregate gross proceeds from the treasury offering ofnew shares are anticipated to be approximately US$112,000,000. The Companyintends to use the net proceeds of the treasury offering for the development ofthe Company's mineral projects in Greece and Romania, and for general corporatepurposes. The underwriters will have an option, exercisable for a period of 30 days fromthe date of closing, to purchase up to a further 15% in additional Shares overthe treasury offering at a price equal to the offering price to coverover-allotments and for market stabilization purposes (the "Over-AllotmentOption"). The Offering is being led by RBC Capital Markets as lead manager to asyndicate of underwriters including Evolution Securities Ltd, Raymond James Ltd,Dundee Securities Corporation and Orion Securities Inc. The Company intends to use the net proceeds of the treasury offering for thedevelopment of the Company's mineral projects in Greece and Romania, and forgeneral corporate purposes. As part of the Offering, Mr Dimitrios Koutras, a director of the Company, whocurrently owns of record 13,724,074 Shares representing approximately 12% of theexisting issued and outstanding common shares, may offer and sell in a secondaryoffering up to 3 million shares on the same terms as the treasury offering. TheCompany will not be entitled to any of the proceeds of the secondary offering. Closing of the Offering is subject to certain conditions, including, but notlimited to, receipt of all necessary securities regulatory approvals (includingthe approval of the Toronto Stock Exchange). The preliminary short formprospectus has been filed on SEDAR at www.sedar.com. Commenting on the Acquisition and the Offering, David Reading, Chief ExecutiveOfficer of European Goldfields, said: "The acquisition provides European Goldfields with the opportunity to increaseits ownership of high quality projects in an accretive transaction which furtheraligns the interests of Aktor and European Goldfields shareholders." "The offering provides the funding towards European Goldfields' pipeline ofprojects in Greece and Romania and provides flexibility in future financing anddevelopment options to enhance value to shareholders. Together the acquisitionand the offering represent a company transforming transaction, which shouldmaximise the return to our existing and new shareholders." The Shares have not been, nor will be, registered under the United StatesSecurities Act of 1933, as amended, or any state securities laws and may not beoffered or sold in the United States absent registration or applicable exemptionfrom the registration requirement of such Act and applicable state securitieslaws. This press release shall not constitute an offer to sell or thesolicitation of an offer to buy, nor shall there be any sale of these securitiesin any jurisdiction in which such offer, solicitation or sale would be unlawfulprior to qualification under the securities laws of any such jurisdiction.Any public offering of securities to be made in the United States would, ifmade, be made by means of a prospectus that could be obtained from the Companythat would contain detailed information about the Company and management as wellas financial statements. About European Goldfields European Goldfields is a resource company involved in the acquisition,exploration and development of mineral properties in Greece, Romania andSouth-East Europe. Greece - European Goldfields holds a 65% interest in Hellas Gold S.A. HellasGold owns three major gold and base metal deposits in Northern Greece. Thedeposits are the polymetallic projects of Stratoni and Olympias which containgold, zinc, lead and silver, and the Skouries copper/gold porphyry body. HellasGold commenced production at Stratoni in September 2005 and selling an existingstockpile of Olympias gold concentrates in July 2006. Hellas Gold is applyingfor permits to develop the Skouries and Olympias projects. Romania - European Goldfields owns 80% of the Certej gold/silver project inRomania. European Goldfields submitted in March 2007 a technical feasibilitystudy to the Romanian government, in support of a permit application to developthe project. For further information please contact:European Goldfields: e-mail: info@egoldfields.comDavid Reading, Chief Executive Officer Office: +44 (0)20 7408 9534RBC Capital Markets Office: +44 (0)20 7653 4093Patrick Meier / Peter Barrett-Lennard Evolution Securities Office: +44 (0)20 7071 4300Frank Moxon / Simon Edwards Buchanan Communications: e-mail: bobbym@buchanan.uk.comBobby Morse / Ben Willey Office: +44 (0)20 7466 5000Renmark Financial Communication: e-mail: nmurraylyon@renmarkfinancial.comNeil G. Murray-Lyon Office: +1 514 939 3989 Forward-looking statements Certain statements and information contained in this document, including anyinformation as to the Company's future financial or operating performance andother statements that express management's expectations or estimates of futureperformance, constitute forward-looking information under provisions of Canadianprovincial securities laws. When used in this document, the words "anticipate","expect", "will", "intend", "estimate", "forecast", "planned" and similarexpressions are intended to identify forward-looking statements or information.Forward-looking statements include, but are not limited to, the estimation ofmineral reserves and resources, the timing and amount of estimated futureproduction, costs and timing of development of new deposits, permitting timelines and expectations regarding metal recovery rates. Forward-lookingstatements are necessarily based upon a number of estimates and assumptionsthat, while considered reasonable by management, are inherently subject tosignificant business, economic and competitive uncertainties and contingencies.The Company cautions the reader that such forward-looking statements involveknown and unknown risks, uncertainties and other factors that may cause theactual financial results, performance or achievements of the Company to bematerially different from its estimated future results, performance orachievements expressed or implied by those forward-looking statements and theforward-looking statements are not guarantees of future performance. Theserisks, uncertainties and other factors include, but are not limited to: changesin the price of gold, base metals or certain other commodities (such as fuel andelectricity) and currencies; uncertainty of mineral reserves, resources, gradesand recovery estimates; uncertainty of future production, capital expendituresand other costs; currency fluctuations; financing and additional capitalrequirements; the successful and timely permitting of the Company's Skouries,Olympias and Certej projects; legislative, political, social or economicdevelopments in the jurisdictions in which the Company carries on business;operating or technical difficulties in connection with mining or developmentactivities; the speculative nature of gold and base metals exploration anddevelopment, including the risks of diminishing quantities or grades ofreserves; the risks normally involved in the exploration, development and miningbusiness; and risks associated with internal control over financial reporting.For a more detailed discussion of such risks and material factors or assumptionsunderlying these forward-looking statements, see the Company's Annual Information Form for the year ended 31 December 2006, filed on SEDAR atwww.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 newinformation, future events or otherwise, except as required by law. This information is provided by RNS The company news service from the London Stock Exchange