EGU.L Regulatory News (EGU)

10 Apr 2006 07:02

European Goldfields Ltd10 April 2006 For Immediate Release 10 April 2006 European Goldfields Limited Reserves Announced for Certej Project European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to announce theconversion of resources into Canadian NI 43-101 compliant reserves for its80%-owned Certej project in the Southern Apuseni Mountains of Romania. The reserve estimation was carried out by independent consultants RSG Global PtyLtd ("RSG Global") and can be summarised as follows: Reserve Average Gold Million Average MillionCategory Grade (g/t) Ounces Siver Ounces Million Tonnes Gold Grade (g/t) Silver Probable 27.7 2.0 1.76 11.6 10.35 Note: Lower cut-off grade of 0.8 g/t gold. Uniform conditioning and basedon a selected mining unit model using 6.25 X 12.5 X 2.5 metre blocks. The reserve was estimated at a gold price of $425/oz and a silver price of $7/oz, and is based on the sale of gold rich concentrates. The estimation followsthe completion of extensive metallurgical test-work, an in-house pre-feasibilitystudy and subsequent pit optimisation and pit design work by RSG Global, whichincluded a geotechnical drilling programme designed by Golders Associates of theUK. These studies resulted in: - Confirmation that a flotation concentrate can be produced with high gold grades and recoveries - An open pit with a low strip ratio of 2.6:1 - The definition of sites for infrastructure and tailings disposal - A clear understanding of all work required to complete environmental studies and achieve all necessary permitting It is envisaged that the project could mine and process 3.0 Mt per annum over atleast nine years. At the proposed production rates, this would yieldapproximately 249,000 tonnes of concentrate per annum with grades averaging 21 g/t gold and 125 g/t silver, with a flotation gold recovery of approximately 88%.This translates into an annual production of approximately 170,000 oz ofcontained gold in the concentrate. The conversion of resources into reserves means that the project can support thenecessary capital investment and produce a robust return at a gold price of $425/oz and above. David Reading, Chief Executive Officer of European Goldfields, said: "With thepublication of reserves, the Certej project has now turned the corner. We arenow completing a final feasibility study for submission to the Romaniangovernment by year end in support of our permit application. Levels I and II ofthe Environmental Impact Assessment have already been completed. We have nowdefined a clear roadmap to permitting and project development." Key Parameters for Reserve Estimation Metallurgical data - During 2005, four representative, composite samples of orewere extensively tested by SGS-Lakefield of Canada to optimise the gold gradeand recovery of a pyrite flotation concentrate. SAG mill modelling was alsocarried out to estimate the capital cost of a future processing plant. A summaryof the flotation results for different zones of the deposit, based on averagesfrom several locked-cycle flotation tests, is given below. Sample ID Area Conc. Grade (gpt) Metal Recovery Gold Silver Gold Silver 662 Central 26.8 495 96.8% 97.9% 679 Intermediate 19.8 76 89.5% 92.8% 663 East 19.4 42 84.2% 79.4% 670 West 18.7 79 84.2% 84.4% The weighted average gives a gold recovery of 88% to a concentrate of 21 g/tgold and 125 g/t silver. Concentrate sales - European Goldfields has received letters of interest fromtwo East European metal traders indicating their willingness to negotiate thepurchase of all the high-grade gold/silver flotation concentrates to be producedat Certej. The terms received confirm that the sale of concentrates wouldsupport the necessary capital investment and produce a viable return for theCertej project at a gold price of $425/oz and above and an assumed net smelterreturn (NSR) of 60%. Generally, the NSR improves as the gold price appreciates. Capital and operating costs - The in-house pre-feasibility study calculated thetotal capital expenditure to be $69 million for the purchase of mining equipmentand construction of a flotation plant, tailings and other infrastructure. Themining costs are estimated at $1.28/tonne of material mined, and the processingcosts are estimated at $5.11/tonne of ore processed. Certej Resources - The reported resources for the Certej deposit, as estimatedby RSG Global in March 2005 and reported above a 1g/t gold lower cut-off grade,are summarised below. Resource Category Average Gold Million Ounces Average Siver Million Ounces Grade (g/t) Gold Grade (g/t) Silver Million TonnesMeasured 3.14 2.6 0.26 5 0.5Indicated 28.29 2.1 1.91 12 10.5Measured + Indicated 31.43 2.1 2.17 11 11.0Inferred (East/West Domains) 5.17 1.9 0.32 7 1.1Inferred (Central Domains) 3.47 1.5 0.17 10 1.1Total Inferred 8.64 1.8 0.49 7.9 2.2 Note: Uniform conditioning and based on a selected mining unit model using6.25 X 12.5 X 2.5 metre blocks for the eastern and western domains and inversedistance squared (using no gold cut-off) for the central domains. Disclosure of mineral resources for the Certej project is derived from atechnical report prepared by RSG Global in accordance with the guidelines setout in Canadian National Instrument 43-101. The technical report was filed onSEDAR at www.sedar.com on 23 March 2005 under the category "Technical Report". A technical report from RSG Global on the Certej mineral reserve estimates willbe filed on SEDAR within the next 45 days as an update to their technical reportof 23 March 2005. Harry Warries of RSG Global was the Qualified Person underCanadian National Instrument 43-101 responsible for preparing and verifying theCertej reserve estimates quoted in this news releases. On-site Production of Gold Dore Being Investigated European Goldfields is also actively reviewing other development options toprogress the project forward, such as confirming a process route for producinggold dore on site. Of the available techniques, the Albion Process followed by cyanidation isconsidered the most promising. The Albion process is a combination ofultra-fine grinding and oxidatative leaching at atmospheric pressure. Samples offlotation concentrates produced from the locked-cycle test-work at SGS-Lakefieldhave been tested at Hydrometallurgy Research Laboratories of Australia. Theresults indicate that a flotation concentrate produced from Certej ore can beeconomically processed by the Albion Process to produce gold dore on site.European Goldfields has completed Stages I and II of a metallurgical test-workprogramme utilising the Albion process and expects to be reporting on theseresults during Q2 2006. Exploration of Satellite Targets Further exploration work in Romania is now focused on defining additionalresources to add to the open-pitable reserves at Certej and extend the life ofthe project. European Goldfields has identified a number of satellite targetswhich comprise open-pitable mineralisation within the Certej licence area andthe adjacent Baita-Craciunesti licence area. In addition, surface dumps arebeing evaluated for their tonnage grade and metallurgical characteristics. Environmental Studies Underway European Goldfields has completed the necessary Environmental Impact Assessments(EIA Levels I and II). The next stage will be to complete an EnvironmentalImpact Study (EIS) in order to progress to full feasibility study and permitapplication by year end. ECOIND, a Romanian company with a well-proven trackrecord in environmental research and permitting procedures, have been employedto assist in this process. About European Goldfields European Goldfields Limited (the "Company") is a resource company involved inthe acquisition, exploration and development of mineral properties in Greece,Romania and the Balkans. In addition to its Romanian assets, the Company holds a 65% interest in HellasGold S.A. ("Hellas Gold"). Hellas Gold owns assets in northern Greece whichconsist of three deposits within 70-year mining concessions covering a totalarea of 317 km(2). The deposits include the polymetallic projects of Stratoniand Olympias which contain gold, lead, zinc and silver, and the copper/goldporphyry body referred to as Skouries. All three deposits have been well definedwith over 200,000 metres of drilling and the completion of feasibility studiesand later engineering studies. The total proven and probable reserves of these assets are 7.6 Moz gold, 65.8Moz silver, 0.7 Mt copper, 0.7 Mt lead and 0.9 Mt zinc, from a measured andindicated resource base of 9.4 Moz gold, 74.5 Moz silver, 1.0 Mt copper, 0.8 Mtlead and 1.1 Mt zinc (65% attributable). These assets 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. Hellas Gold's assets also include potential revenue-generating stockpiles ofgold concentrates. In September 2005, Hellas Gold resumed production at Stratoni following theaward by the Greek State of all necessary environmental and mining permits.Hellas Gold is in the process of applying for similar permits for Olympias andSkouries, having met its first milestone by submitting business plans to theGreek government in January 2006. For further information please contact: European Goldfields: e-mail: info@egoldfields.comDavid Reading, Chief Executive Officer website: www.egoldfields.comOffice: +44 (0)20 7408 9534 Buchanan Communications: e-mail: bobbym@buchanan.uk.comBobby Morse / Ben WilleyOffice: +44 (0)20 7466 5000Mobile: +44 (0)7802 875 227 The Sherbourne Group: e-mail: forbes@sherbournegroup.caForbes WestOffice: +1 416 203 2200 Resources & Reserves Parameters For additional information on the resource and reserve estimates quoted in thisnews release, please refer to the Company's Resources & Reserves Declaration atwww.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager,Exploration of the Company, was the Qualified Person under Canadian NationalInstrument 43-101 responsible for reviewing the disclosure of resource andreserve estimates quoted in this news release. Forward-looking statements Certain information included in this news release, including any information asto the Company's future financial or operating performance and other statementsthat express management's expectations or estimates of future performance,constitute "forward-looking statements". The words "expect", "will", "intend","estimate" and similar expressions identify forward-looking statements.Forward-looking statements are necessarily based upon a number of estimates andassumptions that, while considered reasonable by management, are inherentlysubject to significant business, economic and competitive uncertainties andcontingencies. The Company cautions the reader that such forward-lookingstatements involve known and unknown risks, uncertainties and other factors thatmay cause the actual financial results, performance or achievements of theCompany to be materially different from its estimated future results,performance or achievements expressed or implied by those forward-lookingstatements and the forward-looking statements are not guarantees of futureperformance. These risks, uncertainties and other factors include, but are notlimited to: changes in the worldwide price of gold, base metals or certain othercommodities (such as fuel and electricity) and currencies; the successful andtimely permitting of the Company's Skouries, Olympias and Certej projects;legislative, political, social or economic developments in the jurisdictions inwhich the Company carries on business; operating or technical difficulties inconnection with mining or development activities; the speculative nature of goldand base metals exploration and development, including the risks of diminishingquantities or grades of reserves; and the risks normally involved in theexploration, development and mining business. These factors are discussed ingreater detail in the Company's Annual Information Form for the year ended 31December 2005, filed on SEDAR at www.sedar.com. The Company disclaims anyintention or obligation to update or revise any forward-looking statementswhether as a result of new information, future events or otherwise. This information is provided by RNS The company news service from the London Stock Exchange