OSU.L Regulatory News (OSU)

31 Jan 2006 11:46

European Minerals Corporation31 January 2006 EUROPEAN MINERALS CORPORATION LONDON, England, January 31, 2006 Trading Symbols EPM (TSX), EUM (London AIM) EMC TERMINATES CONTRACTOR AT VARVARINSKOYE European Minerals Corporation ("EMC" or "the Company") is currently constructinga gold/copper mine at Varvarinskoye in Kazakhstan. Following the notification given to MDM Ferroman (Pty) Limited ("MDM") referredto in the press release dated January 16 2006, MDM has not delivered therequired Performance Security and the Company has decided to exercise its rightto terminate the lump sum turnkey contract with MDM (for further details of thelump sum contract see press release dated December 1, 2005) in relation to theVarvarinskoye Project. Following a review of alternative contractors, EMC has appointed SenetEngineering Pty ("Senet"), a South African based design, engineering and projectmanagement company, to undertake a review to reconfirm the design and cost ofconstruction of the Varvarinskoye process plant and associated infrastructureand this review is due for completion by mid February 2006. On completion ofthis review, the Company will decide the optimum route to complete theconstruction of the Varvarinskoye process plant. Senet has extensive project and construction experience operating worldwidewithin the mining industry, including the former Soviet Union, specialising inEPCM and EPC/turnkey multi-disciplined projects. All suppliers of "long lead" mechanical and electrical equipment that has beenordered have informed the Company that deliveries are currently on schedule. Themain incoming overhead power line and other associated infrastructure works areall proceeding to the original schedule and within budget. However, until thecompletion of the review by Senet, the Company will not be in a position toassess whether the previously announced completion date of the Project will bedelayed. The Company is in ongoing discussions with its lenders regarding the debtfinance for the Project. Whilst the lenders of the debt facility have indicatedtheir continued support of the Company's actions, there is no assurance that theexisting debt facility (press release dated December 1, 2005) will not bemodified or cancelled by the lenders or the Company. If the existing debtfacility is not immediately available, the Company believes that, under existingmarket conditions, it would be able to access alternative facilities to fundcompletion of the Project. During the period of the review by Senet, the Company will progress the Projectvia its own project team, utilising funds from its treasury. The Company's public documentation is available on www.sedar.com. Investor Information: United KingdomTony WilliamsChairmanorBert KennedyPresident & CEO Tel: +44 (0) 20 7529 7508 North AmericaKeith Schaefer ir@vanguardsolutions.caVanguard Shareholder Solutions Inc.Tel: 1.866.448.0780 This information is provided by RNS The company news service from the London Stock Exchange