EGU.L Regulatory News (EGU)

5 Jul 2005 07:00

European Goldfields Ltd05 July 2005 Suite 200, Financial Plaza 204 Lambert Street Whitehorse, Yukon Canada Y1A 3T2 For Immediate Release 5 July 2005 Certej Pre-feasibility Study Highlights Opportunities Drilling to Commence on Cainel European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to announce that ithas completed an in-house pre-feasibility study on its 80%-owned Certej projectin the Southern Apuseni Mountains of Romania. All the technical and financial components of a full pre-feasibility study havenow been successfully completed. The study has resulted in: - Confirmation that a concentrate can be produced with high grades of 18 to 20 g /t gold and up to 100 g/t silver - An optimised open pit with low strip ratios - The definition of sites for infrastructure and tailings disposal - A clear understanding of all work required to complete an environmental impact assessment and achieve all necessary permitting. David Reading, Chief Executive Officer of European Goldfields, said: "Thedemonstration of the ability to create high grade concentrates for Certejhighlights exciting opportunities for the project and provides a clear wayforward in terms of what is required to demonstrate a viable mining venture." The initial indications from the financial evaluation work show that the projectcould support the necessary capital investment at realistic, long-term metalprices for gold and silver, assuming a sustainable market can be established forthe sale of concentrates. The pre-feasibility study on Certej will be published as soon as currentresources can be converted into economic reserves, which is contingent onidentifying a long-term market for the high grade, gold / silver flotationconcentrate to be produced at Certej. Alternatively, the company's technical team is looking at opportunities toproduce gold dore on site either from an expanded project which includessupplementary feed from surrounding higher grade satellites, or by theoptimisation of a cost-effective metallurgical process. Background Work on the in-house pre-feasibility study has been coordinated by the company'stechnical team, with detailed and specific support studies from variousindependent consultants including RSG Global Pty Ltd and SGS - LakefieldResearch. The study has resulted in a good understanding of the metallurgy and theopportunity to produce high grade concentrates, and the definition of a betterconstrained resource with a high grade core (announced on 28 February 2005). The updated estimate undertaken by RSG Global outlined a measured and indicatedresource of 31.4 Mt grading 2.1 g/t gold and 11 g/t silver for a total of 2.2Moz of gold and 11 Moz of silver. The whittle 4X optimisation carried out onthis resource produced an appropriate pit containing 22.6 Mt grading 2.0 g/tgold and 11.7 g/t silver with an average strip ratio of 2:1. The proposed openpit would therefore contain 68.3 Mt of total material which would include 45.7Mt of waste and 22.6 Mt of ore. It is envisaged that the project could mine and process 2.5 Mt per annum overapproximately nine years. Appropriate infrastructure including the plant site, offices and HV electricalreticulation system will be located close to the open pit. To minimise theenvironmental impact, existing infrastructure has been retained where possible,new or improved facilities have been included when required. A site has been identified for the Tailings Management Facility which canaccommodate up to 50 Mt of tailings. The waste rock dump will be placed close tothe pit. No sites of special scientific interest or of historical importance aresited within the project foot print. No relocation of existing habitation isrequired for the development of the project. A comprehensive review of all previous metallurgical testwork was undertakenwhich indicated that the old sampling was unrepresentative. A further 106samples were taken over the total deposit area which indicated that acceptablecarbon in leach (CIL) recoveries were restricted to only the oxidised portion ofthe material. A flotation testwork programme has confirmed that a gold bearingpyrite concentrate can be produced with high grades of 18 to 20 g/t gold and upto 100 g/t silver. At the proposed production rates, this would yieldapproximately 225,000 tonnes of concentrate per year with a gold recovery ofabout 87.5%. More recent metallurgical studies have highlighted that theconcentrate produced in the early years of mining from the open pit will gradeover 25 g/t gold and up to 150 g/t silver with gold recovery in excess of 90%.Additional metallurgical studies are in progress to endorse the currentassumptions and provide further details in order to optimise process design. Ongoing Exploration Exploration work in Romania is now focused on defining higher grade (+2.5 g/t)satellites within a 10 km radius of Certej which when concentrated can sweetenthe Certej material. As part of this strategy drilling will commence next weekon the principal target within the newly acquired Cainel license. Surface andunderground sampling of accessible areas has returned of 1.0 to 5.6 g/t goldover widths of 1 to 14 metres confirming the north - south veins and mineralizedbreccias. Unfortunately access to sample the main mineralized system has notbeen possible due to the partial collapse of old underground workings and thicksurface colluvium. Historical data obtained from the Romanian state explorationwas restricted to vein sampling only but obtained encouraging intercepts of 1 to398 g/t over one metre widths. Plans of historic workings indicate that thestrike of the system is 1 km and the main vein and splays in the Cainel zoneoccur over a width of some 100 metres with a secondary splay to the eastcovering a 200 metre width. This target area will be assessed by areconnaissance drilling programme. The proposed drill programme comprises 20 holes for 2,310 metres of drilling(860 metres diamond core and 1,450 metres reverse circulation). The programmewill test the continuity of the main vein system, secondary splays andassociated wallrock mineralisation along some 700 metres of strike with four,east - west drill fences. European Goldfields is also assessing prospects within the Certej and BaitaCraciunesti permits, previously investigated for their potential as stand aloneprojects, in an effort to define further feed for the Certej project. The workprogramme comprises geological remodelling, metallurgical testwork and, wherenecessary, drilling. The Way Forward European Goldfields continues to develop the metallurgical testwork programmewhich is directed at improving the Certej concentrate quality while maintaininghigh gold recovery, as well as conducting focused exploration programmes toexpand the resource base. The metallurgical work is also investigating thefeasibility of producing gold dore on site by a cost effective process design.An internal marketing study to explore potential buyers for the Certejconcentrate is also in progress. The objective is to accomplish all of this workwithin the next six months. Completion of a full feasibility study will requirean environmental impact assessment and more detailed engineering design. Qualified Person Patrick Forward, General Manager, Exploration of European Goldfields, was theQualified Person responsible for reviewing this news release. 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 WilleyOffice: +44 (0)20 7466 5000 e-mail: bobbym@buchanan.uk.comMobile: +44 (0)7802 875 227 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