TIDMEGU
RNS Number : 2453M
European Goldfields Ltd
12 August 2011
Suite 200, Financial Plaza
204 Lambert Street
Whitehorse, Yukon
Canada Y1A 3T2
For Immediate Release
RESULTS FOR Q2 2011
12 August 2011 - European Goldfields Limited (TSX / AIM: EGU)
("European Goldfields" or the "Company") today reports its results
for the quarter ended 30 June 2011. The financial statements, as
well as the accompanying management's discussion and analysis, are
available for review at
http://www.egoldfields.com/egoldfields/en/financials/quarterlies
and should be read in conjunction with this news release.
Highlights
Greece
-- Greek State delivers Joint Ministerial Decision to formally
approve EIS
-- Major progress on Olympias plant refurbishment
-- On schedule at Olympias for first gold production Q2 2012
-- Bid document for Skouries project construction ready for
issue
Romania
-- Local public consultation complete, final cross-border
consultation well advanced
-- Pre-qualification of equipment suppliers complete
-- Expansion of project team with technical software training
underway
Exploration
-- Aiming to define maiden resource at 3 targets in Greece in
2012
Financial
-- Sales of US$11.1 million
-- Gross profit of US$2.8 million
-- Working capital US$31 million
Corporate
-- Appointment of David Cather as COO
-- London Main Market evaluation initiated
Martyn Konig, Executive Chairman and President, commented:
"The recent formal approval of our Greek EIS in the form of the
final Joint Ministerial Decision announced by the Greek Government
is a key milestone for European Goldfields. This approval
represents the culmination of over five years of tireless effort,
particularly on the part of our Greek colleagues at Hellas Gold,
and allows us to progress towards our goal of becoming the largest
primary gold producer in Europe. With build-out timelines clearly
defined, we were able to revisit our business plan, review our
reserve base and update the project economics. Accordingly, we have
increased our total mineral resource base by approximately 10% to
24 million oz gold equivalent and while the majority of the
industry is experiencing rising capital costs, we have successfully
contained both our operating and capital costs at highly
competitive levels. With the EIS approval in hand and under the
stewardship of our newly appointed COO, we have hit the ground
running both at Olympias and Skouries and we are firmly on schedule
for first gold production from our Olympias tailings project in Q2
2012.
In Romania, we have been building out the technical team and
intensive training on project management software is currently
underway. Our longer term exploration programmes are focused on
increasing our resource base significantly over the coming years.
We are looking forward to drill testing near mine targets in Greece
and also working toward defining a resource at our three
advance-stage exploration targets, with Piavitsa our first
priority. We also aim to provide an update on drilling in Turkey in
the next couple of months."
SELECTED FINANCIAL DATA
Quarter ended 30 June
-----------------------------------------------
(in thousands of US
dollars, 2011 2010
except per share amounts) $ $
---------------------------- ----------------------- ----------------------
Statement of profit
and loss
Sales 11,109 11,969
Gross profit 2,847 579
Profit/(loss) before
income tax (15,237) (20,321)
Income taxes (141) (445)
Profit/(loss) after
income tax (15,378) (20,766)
Non-controlling interest 37 341
Profit/(loss) for the
period (15,341) (20,425)
Earnings/(loss) per
share (0.08) (0.11)
---------------------------- ----------------------- ----------------------
(in thousands of US 30 June 2011 30 June 2010
dollars) $ $
--------------------- ------------- -------------
Balance sheet
Working capital 31,132 102,320
Total assets 505,617 510,721
--------------------- ------------- -------------
The Company's base metal operation at Stratoni had a strong
quarter, generating revenues of US$11.1 million and gross profits
of US$2.8 million driven by positive base metal price performance
in the quarter. After overheads and other expenses, the Company
recorded a loss before taxes of US$15.2 million for the three-month
period ended 30 June 2011, compared to a loss before taxes of
US$20.3 million for the same period of 2010. Working capital
balances totalled US$31 million at the quarter end.
Financing - The Company continues to progress technical and
legal due diligence in respect of the debt facilities for Greece
and Romania that have previously been announced. The Company is
also well advanced in structuring prepaid off-take funding from the
short term production at its Stratoni Operation and Olympias
Tailings Project. In addition, the Company continues to make
significant progress across a suite of complementary financing
options, such as long term off-taker supported financing, equipment
financing, base metal streaming and capital markets structures, so
as to determine the optimal complete financing solution.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
GREECE
Greek EIS Approval - The Greek Government announced after the
quarter end that the Joint Ministerial Decision had been delivered
thereby formally approving the Environmental Impact Study ("EIS")
submitted by the Company's 95%-owned subsidiary, Hellas Gold SA,
for the development of the Company's Greek assets. This completes
the official approval process for the EIS.
Olympias Project Development - Major progress has been made on
the plant refurbishment including completing building repairs, a
new plant roof, renewal of the motor control centre, installation
of process mixing and holding tanks and rehabilitation of all
access and internal roads. Orders have been placed for the apron
feeder and the filter press, being the two longest lead items in
the renovation of the Olympias concentrator plant, and the project
is on schedule to produce gold concentrate from existing tailings
in Q2 2012.
Refurbishment of the current mine access decline is also
progressing with more than 50% completed. Proposals for the
engineering studies that will define the detail of the remaining
underground mine refurbishment are currently in preparation. This
will help to ensure that underground production commences, as
planned, directly after the processing of existing tailings is
complete in 2015, as defined in the Company's phased development
plan for the Olympias project.
Skouries Project Development - A comprehensive bidding document
for the Skouries project construction is ready for issue to major
contractors. This contract would cover the civil engineering
aspects of the project and include the plant construction and site
infrastructure such as power supply, internal and external access
roads and the construction of the tailings starter embankment. With
the assistance of our Greek partners, the recruitment process for
key owner's team personnel is well advanced. On the ground, planned
detailed geotechnical work is due to commence in Q3.
Production at Stratoni - The Company's 95%-owned subsidiary,
Hellas Gold, mined a total of 59,150 wet tonnes of ore in Q2 2011
(2010 - 64,813). Key operational data from Stratoni were as
follows:
Q2 2011 Q2 2010
Production
Ore mined (wet tonnes) 59,150 64,813
Zinc concentrate (tonnes) 10,310 10,103
- Containing: Zinc (tonnes)* 5,109 4,942
Lead concentrate (tonnes) 4,277 4,479
- Containing: Lead (tonnes)* 3,055 3,092
Silver (oz)* 224,837 233,760
Sales
Zinc concentrate (tonnes) 5,584 10,279
- Containing payable:
Zinc (tonnes)* 2,311 4,159
Lead concentrate (tonnes) 3,751 4,682
- Containing payable:
Lead (tonnes)* 2,500 3,071
Silver (oz)* 184,299 232,212
Inventory (end of period)
Ore mined (wet tonnes) 3,006 16,392
Zinc concentrate (tonnes) 6,958 2,663
Lead/silver concentrate
(tonnes) 1,913 902
* Net of smelter payable deductions
In Q2 2011, production from the underground mine was up on Q1
2011 as a result of revised planning, ameliorating the geotechnical
issues experienced during the last quarter. There was a significant
accrued stockpile ready for shipment at the end of the quarter due
to the timing of shipments, the first of which was made in early Q3
2011.
ROMANIA
Certej Project - During the quarter significant progress was
made in the EIS approval process. Local public consultation was
satisfactorily completed in accordance with both Romanian and EU
requirements. Final cross border consultation with both Serbia and
Hungary is now underway and is expected to be completed in
accordance with international agreements, by the early part of Q4.
The EIS approval process is expected to conclude soon
afterwards.
The Company's Certej project team is well established with a
project manager already in place. Pre-qualification of equipment
suppliers is complete and bid documents have been prepared. Bidding
documents for the project construction have also been drawn up and
pre-qualification of contractors is well advanced. Project
management software has also been installed and training to allow
its implementation is underway.
EXPLORATION
Piavitsa - The Piavitsa massive sulphide gold-polymetallic
target occurs within two kilometres of the Stratoni mine
underground workings and is hosted by the same structure. An 8km
strike length of electromagnetic conductors was identified by a
geophysical survey and historic drilling along 2km of this has
shown mineralisation very similar in style and tenor to that at
Olympias. The remaining 6km of the anomaly has displayed anomalous
gold in soils and resource definition drilling is planned, aiming
at maiden resource estimation by Q1 2012.
Fisoka- Fisoka comprises three porphyry centres, the most
northerly of which was drill tested in the past, a chalcocite
blanket of copper mineralisation was defined but with no gold
present. However, geophysical and geochemical surveys combined with
detailed mapping indicate the un-tested central and southern
porphyries carry gold as well as copper mineralisation. Drill
testing of these previously unrecognised central and southern
Fisoka porphyry targets is planned to define maiden resources in
2012.
Tsikara- The intrusives at Tsikara represent newly identified
targets and the Company has defined several potential porphyry
centres within the overall volcanic complex that underlies the
area. Follow up mapping and geological sampling has confirmed the
presence of porphyry style veining and alteration with anomalous
copper and gold values. Drilling will be aimed at defining maiden
resources in 2012.
Romania - Work in 2009 and 2010 identified numerous porphyry and
epithermal targets along the Certej volcanic belt and further work
is planned pending acceptance of licence applications. In addition,
drilling of satellites to the Certej deposit within existing
licences continues with additional open-pittable resources expected
to be defined during 2012.
CORPORATE ACTIVITY
Appointment of Chief Operating Officer - The Company was pleased
to announce the appointment of David Cather C.Eng, MIMMM as Senior
Vice President and Chief Operating Officer.
Mr. Cather graduated from the Royal School of Mines, Imperial
College London in 1981 with a first class degree in mining
engineering. Over a career spanning more than 25 years, Mr. Cather
has gained extensive senior level project development experience
and management skills in both open pit and underground
operations.
His early career with De Beers gave him extensive underground
mining and mine development experience. His expertise and
experience developed further during 10 years in a senior management
role at Redland Aggregates Ltd, after which, as Development
Director of Miller Mining, Mr. Cather spearheaded the development
of a portfolio of open-cast coal mines. Mr. Cather spent the next 9
years with Anglo American where, as Technical Director of Anglo
American's Industrial Minerals Division, he was responsible for
Tarmac Group (construction materials in 13 countries), Cleveland
Potash (fertiliser operations in the UK) and Copebras Brazil. Since
2006, Mr. Cather has acted as a retained mining consultant to
Grafton Resources, a London based natural resources fund with major
investments in gold projects in Russia, India and the Philippines,
Brazilian iron ore and a Bulgarian water project.
London Main Market Evaluation Initiated - The Company has
initiated an evaluation of a potential upgrade of the current AIM
listing to the Main Market of the London Stock Exchange. In that
regard, the Company announced the appointment of Goldman Sachs
International to assist with this evaluation which includes a
review of the Company's corporate structure with a view to
facilitating better access to, and servicing of, the UK and
international capital markets and a potential re-domiciliation of
the Company. Lazard & Co., Limited are also providing financial
advice in connection with this evaluation.
About European Goldfields
European Goldfields is a developer-producer with globally
significant gold reserves located within the European Union. The
Company generates cash flow from its 95% owned Stratoni operation,
a high grade lead/zinc/silver mine in North-Eastern Greece.
European Goldfields is expected to evolve into a mid-tier producer
through responsible development of its project pipeline of gold and
base metal deposits at Skouries and Olympias in Greece and Certej
in Romania. The Company plans future growth through development of
its highly prospective exploration portfolio in Greece, Romania and
Turkey.
Patrick Forward supervised and prepared the scientific and
technical information included in this press release. Mr. Forward
is a "qualified person" for purposes of National Instrument 43-101.
Mr. Forward is the Company's Vice President of Projects and
Exploration.
Forward-looking statements
Certain statements and information contained in this document,
including any information as to the Company's future financial or
operating performance and other statements that express
management's expectations or estimates of future performance,
constitute forward-looking information under provisions of Canadian
provincial securities laws. When used in this document, the words
"anticipate", "expect", "will", "intend", "estimate", "forecast",
"planned" and similar expressions are intended to identify
forward-looking statements or information. Forward-looking
statements include, but are not limited to, the estimation of
mineral reserves and resources, the conversion of mineral resources
to mineral reserves, the timing and amount of estimated future
production, costs and timing of development of the Skouries,
Olympias and Certej projects, completion of various financing
options and permitting time lines. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies.
The Company cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual financial results, performance or
achievements of the Company to be materially different from its
estimated future results, performance or achievements expressed or
implied by those forward-looking statements and the forward-looking
statements are not guarantees of future performance. These risks,
uncertainties and other factors include, but are not limited to:
changes in the price of gold, base metals or certain other
commodities (such as fuel and electricity) and currencies;
uncertainty of mineral reserves, resources, grades and recovery
estimates; uncertainty of future production, capital expenditures
and other costs; currency fluctuations; financing and additional
capital requirements; the receipt in a timely fashion of any
further permitting for the Company's projects; legislative,
political, social or economic developments in the jurisdictions in
which the Company carries on business; operating or technical
difficulties in connection with mining or development activities;
the speculative nature of gold and base metals exploration and
development, including the risks of diminishing quantities or
grades of reserves; the risks normally involved in the exploration,
development and mining business; and risks associated with internal
control over financial reporting. For a more detailed discussion of
such risks and material factors or assumptions underlying these
forward-looking statements, see the Company's Annual Information
Form for the year ended 31 December 2010, filed on SEDAR at
www.sedar.com. The Company does not intend, and does not assume any
obligation, to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by law.
For further information please see the Company's website at
www.egoldfields.com
For further information please contact:
European Goldfields Liberum Capital Limited
Steve Sharpe, SVP Business Development Simon Atkinson
e-mail: info@egoldfields.com Tom Fyson
Tel: +44 (0)20 7408 9534 Tel: +44 (0)20 3100 2000
Brunswick Evolution Securities Limited
Carole Cable / Fiona Micallef-Eynaud Tim Redfern
e-mail: egoldfields@brunswickgroup.com Neil Elliot
Tel: +44 (0)20 7404 5959 Tel: +44 (0)20 7071 4300
This information is provided by RNS
The company news service from the London Stock Exchange
END
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