EGU.L Regulatory News (EGU)

12 Sep 2005 07:00

European Goldfields Ltd12 September 2005 Suite 200, Financial Plaza 204 Lambert Street Whitehorse, Yukon Canada Y1A 3T2 For Immediate Release 12 September 2005 ALL MINING PERMITS AWARDED FOR STRATONI MINE - PRODUCTION TO COMMENCE EUROPEAN GOLDFIELDS GRADUATING TO PRODUCER European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to announce thatits 65%-owned subsidiary Hellas Gold S.A. has been awarded by the Greek stateall necessary environmental and mining permits to commence mining operations atthe Stratoni deposit. David Reading, Chief Executive Officer of European Goldfields, said: "The gaining of the Stratoni permits is a major milestone in the development ofEuropean Goldfields' strategy. We can now recommence mining operations inStratoni and produce near-term cash flow from the Hellas Gold projects. We have worked closely with the Greek Government and local community to gainthese permits, and this successful outcome paves the way for further developmentof our assets in Greece. he cooperation with our Greek partner, Aktor S.A., has been crucial forobtaining the Stratoni permits and we look forward to working with them insecuring permits for the Olympias and Skouries projects." Improved Mining Efficiency The Stratoni mine is now ready to resume production following the recentcompletion of refurbishment work on the underground infrastructure and plant.Production of ore is expected to reach 170,000 tonnes by the end of the firstyear of full scale production, steadily increasing thereafter. Based on historical production levels which reached 450,000 tonnes per year on acontinuous shift basis, Stratoni is expected to produce consistent grades of8-10% lead, 8-11% zinc and 200 g/t silver, with concentrator recoveriesconsistently high at around 90%. In parallel, a new 1,900-metre access tunnel (or adit) will be developed toprovide improved access to the Stratoni reserve and allow larger scale miningoperations to be effected by the end of Q2 2006. The new adit is expected toraise mine output with a minimal increase of labour, while removing thenecessity to build a large underground maintenance facility. In May 2005, HellasGold signed a fixed priced "turn-key" contract with Aktor S.A., EuropeanGoldfields' partner in Greece, for the construction of the adit. The new mining method at Stratoni will result in more efficient and mechanised"cut and fill" operations designed to excavate from the base of the reserveupwards, with fill being placed on the floor. Fully Operational Infrastructure In addition to existing underground access and tailings facilities, Stratonialready benefits from recently refurbished and fully operational infrastructuresuch as a mill and flotation plant, offices and a laboratory together with aport loading facility for vessels of up to 8,000 tonnes, all located on thecoast at Stratoni. The Stratoni plant is capable of producing 650,000 tonnes ROMper year. Strong Market for Concentrates Stratoni concentrates are considered metallurgically 'clean' with littledeleterious material. This has ensured that in the past they have been easilysold and attract little by way of penalties. Hellas Gold is currently innegotiation with various potential buyers in order to ensure the most beneficialcontract going forward. In September 2004, two shipments of lead and zinc concentrates of US$3.4 millionin value were sold from Stratoni through the refurbished port facility. 17% Increase in Reserves The new, more efficient mining method adopted by Hellas Gold at Stratoni hasresulted in a 17% increase in reserves which has been reported as follows on 30June 2005: Reserve Ag Ag Pb Pb Zn ZnCategory '000t g/t Moz % '000t % '000tProven 1,061 191 6.50 8.0 85 10.0 106Probable 862 189 5.24 8.1 70 11.7 101Total 1,923 190 11.74 8.1 155 10.8 207 Exploration Upside Stratoni has a mine life of six years based on current reserves, but the depositis open in all directions and there is good potential to expand the resource andreserve base. Hellas Gold intends to initiate an aggressive explorationprogramme later this year. The Stratoni mine comprises two deposits that are about 2 km apart, the MavresPetres deposit to the west and the Madem Lakkos to the east. Both deposits arehosted by marble units. The exploration programme will mainly focus on the areasof high potential between Mavres Petres and Madem Lakkos. The new Stratoni aditis ideally placed to allow the exploration of this prospective area, whichremains largely unexplored. In addition, further exploration potential exists to the west of Mavres Petreswhere the upper marble horizon is known to continue. Previous explorationdrilling (seven holes for 2,008 metres along two lines) 800 metres west ofMavres Petres at the Piavitsa target returned encouraging results, being a zoneof massive sulphide mineralisation grading 3 to 14 g/t gold and combined leadand zinc ranging between 1% and 20% over true widths of 2 metres to 7 metres. Finally, the new adit will provide access to conduct further drilling of thecurrent inferred resources in order to upgrade these to measured and indicatedresources and allow them to be converted into additional reserves. Olympias and Skouries Work is progressing according to plan to update feasibility studies and preparenew business plans for Hellas Gold's major gold and base metals projects ofOlympias and Skouries, as previously reported on 30 June 2005. Hellas Gold intends to submit new business plans for Olympias and Skouries tothe Greek government in Q4 2005, followed by updated feasibility studies in Q12006. By contract, the Greek State is committed to review the business plans withintwo months of submission, and issue all necessary environmental, mining anddevelopment permits within 10 months. The Stratoni permits were issued by theGreek State within this timeframe, which reaffirms management's belief that theOlympias and Skouries permits will be issued in a timely manner. About European Goldfields European Goldfields Limited is a resource company involved in the acquisition,exploration and development of mineral properties in Greece, Romania and theBalkans. For additional information on the resource and reserve estimates quoted below,please refer to the Company's Resources & Reserves Declaration atwww.egoldfields.com/goldfields/resources.jsp. Greece - European Goldfields holds a 65% interest in Hellas Gold S.A. HellasGold owns assets in Northern Greece which consist of three near-productiondeposits within 70-year mining concessions covering a total area of 317 km(2).The deposits include the polymetallic projects of Stratoni and Olympias whichcontain gold, lead, zinc and silver, and the copper-gold porphyry body referredto as Skouries. All three deposits have been well defined with over 200,000metres of drilling and the completion of feasibility studies and laterengineering studies. The total proven and probable reserves of these assets are 17.2 Moz on a goldequivalent basis (65% attributable = 11.2 Moz) from a measured and indicatedresource base of 21.8 Moz gold equivalent (65% attributable = 14.2 Moz). Theseassets represent some of the largest defined deposits in Europe. The threedeposits are located within a 10 km radius of each other, making thiseffectively a gold and base metals centre. Furthermore, both Stratoni andOlympias were previously in production and have extensive existing mining andplant infrastructure and a ship loading facility on the Aegean Sea, making themnear-production properties which require new permits. Hellas Gold's assets alsoinclude potential revenue generating stockpiles and tailings located on thesurface. Romania - European Goldfields holds five mineral properties located within the"Golden Quadrilateral" area of Romania, where it has recently completed anin-house pre-feasibility study underpinning the value of its 80%-owned Certejdeposit. The Certej deposit hosts measured and indicated resources of 31.4 Mtgrading 2.1 g/t gold and 11 g/t silver for 2.34 Moz of gold equivalent (80%attributable = 1.88 Moz). Resource & Reserve Parameters Patrick Forward, General Manager, Exploration of European Goldfields, was theQualified Person responsible for reviewing this news release. The quantity and grade of the Piavitsa target are conceptual in nature, therehas been insufficient exploration yet to define a mineral resource on theproperty and it is uncertain if further exploration will result in discovery ofa mineral resource on the property. For further information please contact: European Goldfields:David Reading, Chief Executive OfficerDavid Grannell, Chief Financial Officer Office: +44 (0)20 7408 9534 e-mail: info@egoldfields.comMobile: +44 (0)7703 190 652 website: www.egoldfields.com Buchanan Communications:Bobby Morse / Ben Willey e-mail: bobbym@buchanan.uk.comOffice: +44 (0)20 7466 5000Mobile: +44 (0)7802 875 227 The Sherbourne GroupForbes West e-mail: forbes@sherbournegroup.caOffice: +1 416 203 2200 Forward-looking statements This news release contains certain forward-looking statements concerning theCompany's future operations, economic performances, financial condition andfinancing plans. These statements are based on certain assumptions and analysesmade by the Company in light of the its experience and its perception ofhistorical trends, current conditions and expected future developments as wellas other factors the Company believes are appropriate in the circumstances.However, whether actual results and developments will conform to the Company'sexpectations and predictions is subject to a number of risks, uncertainties andassumptions. Consequently, all of the forward-looking statements made in thisnews release are qualified by these cautionary statements, and there can be noassurance that the results or developments anticipated by the Company will berealised or, even if substantially realised, that they will have the expectedconsequences to or effects on the Company and its subsidiaries or theirbusinesses or operations. The Company undertakes no obligation and do not intendto update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as may be required underapplicable law. This information is provided by RNS The company news service from the London Stock Exchange