EGU.L Regulatory News (EGU)

30 Jun 2005 07:00

European Goldfields Ltd30 June 2005 For Immediate Release 30 June 2005 European Goldfields Limited On Track Regarding Business Plans for Gold Projects 17% Increase in Stratoni Reserves European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to provide an update on its operations in Greece. European Goldfields is on schedule for completion of all studies related toproducing new business plans for its Skouries and Olympias gold projects. Thiswill be done in accordance with the requirements of the contract between HellasGold and the Greek State whereby Hellas Gold must submit its business plans forthe gold projects by the end of 2005. The Greek Government then has two monthsto review the projects and ten months to issue all the necessary permits so thatconstruction can commence. The Olympias deposit is located 2 km west of the Aegean Sea in Northern Greece.Olympias is a polymetallic deposit containing 14 Mt proven & probable reservesgrading 8.6 g/t gold, 120 g/t silver, 3.9% lead and 5.2% zinc. Olympiasbenefits from extensive mining and plant infrastructure already in place, and aport facility nearby at Stratoni. The Skouries deposit is a typical gold-copper porphyry deposit which forms anear vertical pipe and is located 17 km southwest of Olympias. Skouries islocated on a high plateau with no habitation in the immediate vicinity and hasboth potential for open pit and subsequent underground exploitation. Skourieshas 130 Mt probable reserves grading 0.9 g/t gold and 0.6% copper. Skouries Due to their extensive historical knowledge of the project, Steffen, Robertsonand Kirsten (SRK) have been retained to advise and assist European Goldfieldsand Hellas Gold on completion of a mining plan for the Skouries project. SRK have undertaken a comprehensive review of all previous feasibility work, andfinancial scoping models have been outlined for various mining scenarios basedon the current resources. This work has indicated that the most appropriatemining solution would include a combination of open pit and underground methodsto optimise the production rates and allow maximum flexibility for moreselective exploitation. The SRK study will also investigate options for backfillof mining excavations with rock waste and, where appropriate, tailings in orderto minimise surface land use. The Skouries plant facility will generate saleable gold and copper/goldconcentrates and its capacity is the subject of new investigations by AkerKvaerner aimed at updating the capital and operating costs of an appropriatelysized process plant in order to dovetail with the mining production plan. Additional technical studies on the Skouries deposit will focus on updating theenvironmental baseline work within the project area and determining theappropriate site for the tailings management facility. This work is beingundertaken by Greek consultancy groups (ADK and Enveco SA) in collaboration withHellas Gold personnel. Finally, further metallurgical test work on oxide material from previous diamondcores at Skouries confirms the copper and gold recoveries outlined in theoriginal Aker Kvaerner feasibility study. For instance, gold recovery isexpected to be over 80% after the first year of production with the gravity andflotation circuits that will be used. Olympias Hellas Gold and European Goldfields have commissioned Outokumpu and AkerKvaerner to undertake metallurgical studies to define viable process options forthe Olympias deposit. This work will be completed later this year when adecision will be made regarding the preferred option to be taken to produce anupdated feasibility study. Cognizance has been taken of the historical issuesrelating to previous feasibility studies and permitting. Concerted and focusedefforts have been made to engage all potential stakeholders and interestedparties in the decision process. It is proposed that the mining of the Olympias deposit will be undertaken invarious phases commencing with the processing of surface tailings followed byexploitation of the Eastern zone and then finally an expansion of theunderground infrastructure in order to increase production capacity. Initially,a surface tailings stockpile of 2.4 Mt grading 3.4 g/t gold will bere-concentrated over a three-year period followed by mining of the high grade,Eastern deposit (1.3 Mt grading 16 g/t gold, 13% lead plus zinc and 191 g/tsilver) at a rate of 400,000 tonnes per annum, and finally expansion of the mineto a rate of 750,000 tonnes of ROM per year to exploit the total reserve.In-house studies are currently in progress to define the optimum capital mininginvestment for long-term expansion of the production levels at Olympias. In addition to the mining and metallurgical work, studies are also in progressinvolving Greek consultants and Hellas Gold personnel in order to define thebest site for tailings management facilities and to complete the environmentalbase line studies. A centralised processing and tailings facility is preferredinvolving both the Stratoni and Olympias projects. An effort will be made in thecurrent studies to minimise surface rock waste and tailings by utilisingunderground fill methods. The environmental base line and tailings studies arecurrently in progress. Stratoni - 17% Increase in Reserves The award of environmental permits for Stratoni was announced on 30 March 2005.The permitting process for the final mining permit is progressing in accordancewith normal procedure in Greece, with the assistance of European Goldfields'Greek partner, Aktor. Production is ready to commence as soon as the finalmining permit is issued, with recently refurbished and fully operationalinfrastructure already in place. The new, more efficient mining method adopted by Hellas Gold for the Stratonimining permit has resulted in a 17% increase in reserves, which can now bereported as follows: Reserve Category '000t Ag Ag Pb Pb Zn Zn 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 Patrick Forward, General Manager, Exploration of European Goldfields, was theQualified Person responsible for producing the updated reserve estimates for theStratoni deposit quoted above. A report will be filed of SEDAR (www.sedar.com)within the next 30 days updating Behre Dolbear & Company, Inc.'s previousprefeasibility study on the Stratoni deposit filed on SEDAR on 29 October 2004under the category "Technical Report". 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 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