EGU.L Regulatory News (EGU)

10 Nov 2005 07:00

European Goldfields Ltd10 November 2005 Suite 200, Financial Plaza 204 Lambert Street Whitehorse, Yukon Canada Y1A 3T2 For Immediate Release 10 November 2005 EUROPEAN GOLDFIELDS LIMITED OFF-TAKE AGREEMENTS SECURE SALE OF STRATONI PRODUCTION European Goldfields Limited (AIM: EGU / TSX: EGU) is pleased to announce thatits 65%-owned subsidiary Hellas Gold S.A. has entered into off-take agreementswith Trafigura Beheer B.V., Euromin S.A. and MDIL (UK) Ltd for the sale of lead/silver & zinc concentrates produced at Stratoni in Northern Greece. Under the off-take agreements, Hellas Gold has agreed to sell concentratesrepresenting approximately 90% of all projected production for 2005, 2006 and2007, and 65% of lead/silver and 25% of zinc production in 2008. The agreementsprovide for fixed penalties and treatment charges for the contract term. Metalprices will vary according to market. Hellas Gold intends to sell excessproduction on the spot market. At current metal prices, the off-take agreements are expected to generate US$114million in total gross revenue by the end of 2008. The final net income willtake into account operating costs, capital depreciation and Hellas Gold'senvironmental commitments. The first shipment of concentrates is expected by the end of November 2005,carried by vessels loaded at Hellas Gold's refurbished Stratoni port. Commenting on the off-take agreements, David Reading, Chief Executive Officer ofEuropean Goldfields, said: "The signing of these off-take agreements is another major milestone achievedthis year, which secures long-term cash flow from Stratoni starting in 2005. Hellas Gold, the only lead & zinc start-up in 2005, commenced production in anenvironment of strong metal demand and depleting global stockpiles, especiallyfor zinc. The favourable terms secured is a reflection of the high demand forthese concentrates and endorses the value of the project. Our attention is now focused on our other major gold and base metals projects ofOlympias and Skouries, where we intend to build on the successful launch atStratoni." The Stratoni mill commenced production of concentrates in September 2005. Basedon historical production levels, the Stratoni mine is expected to produceconsistent grades of 8-10% lead, 8-11% zinc and 200 g/t silver, withconcentrator metal recoveries consistently high at around 90%. New production from underground started in October 2005. Production of ore overthe current life of mine is expected to reach the following volumes of ROM: - Year 1: 170,000 tonnes - Year 2: 250,000 tonnes - Year 3: 300,000 tonnes - Year 4: 375,000 tonnes - Year 5: 400,000 tonnes - Year 6: 400,000 tonnes The total proven and probable reserve at Stratoni is 1.923Mt grading 10.8% zinc,8.1% lead and 190 g/t silver. For additional information on the resource andreserve estimates for the Company's projects, please refer to the Resources &Reserves Declaration at www.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager, Exploration of European Goldfields, was theQualified Person under Canadian National Instrument 43-101 responsible forreviewing this news release. For further information please contact: European Goldfields:David Reading, Chief Executive OfficerDavid Grannell, Chief Financial OfficerOffice: +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 Certain information included in this document, including any information as tothe 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; ability tosuccessfully integrate acquired assets; legislative, political 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; and the risks involved in the exploration, development and miningbusiness. These factors are discussed in greater detail in the Company's mostrecent Management's Discussion and Analysis filed on SEDAR at www.sedar.com. TheCompany disclaims any intention or obligation to update or revise anyforward-looking statements whether as a result of new information, future eventsor otherwise. This information is provided by RNS The company news service from the London Stock Exchange