European Gold Share Discussion Threads

[gardenboy] 31/3/2006 22:15

seagreen,

thanks

[seagreen] 30/3/2006 16:32

RBC View I have their full research report if anyone interested I will check back for e mails requesting it

European Goldfields Limited
(TSX:EGU - C$3.80)
Outperform
Speculative
Stratoni Ramping Up - Cash Flows Funding Development

FOR REQUIRED DISCLOSURES, PLEASE SEE PAGE 3 OF THE ATTACHED DOCUMENT.
Priced as of prior trading day's market close, EST (unless otherwise stated).
All values in US$ unless otherwise noted.

Stephen D. Walker (Analyst) [phone]; [e-mail]
Ryan Dolan, CFA (Associate) [phone]; [e-mail]
March 29, 2006

Event
European Goldfields reported its Q4/05 and FY2005 results.
Investment Thesis
· 2005 Results. European Goldfields reported a loss of $0.09/sh for 2005, or a $0.07 /sh loss excluding a $2.4 million impairment charge assigned to one of its non-core Roman assets, in-line with our ($0.05)/sh forecast.

· Operating Update. Production at Stratoni began in October, with 16,000 tonnes of ore processed in Q4. As a result, 2,400 tonnes of zinc concentrate and 1,300 tonnes of lead concentrate were produced. Throughput at Stratoni is currently 500 tpd, and we expect it to reach its target rate of 1,000 tpd by August. Our 2006 production forecast for Stratoni remains unchanged at 960,000 oz of silver, 11,900 tonnes of lead and 13,100 tonnes of zinc.

· Looking Ahead. In 2006, we expect EGU to make announcements on the sale of its gold-bearing stockpiles at Olympias, and a royalty sale of the silver production from Stratoni. The capital provided to EGU by these sales underpins our view that the company may not require equity financings to support the $500 million in capex needed for its Greek development projects over the next 5 years. The company is fully funded through to the end of 2007.

· In addition to ramping up production at Stratoni, the company is focused on securing permits and updating feasibility studies for Olympias and Skouries. Having already been successful in permitting and developing the Stratoni mine, we expect EGU to be able to secure permits for these other projects by late 2006 or early 2007.

· EGU continues to advance its Certej Project in Romania, and we expect a reserves and resource estimate in April that will allow completion of final feasibility and permitting. We have ascribed a value of C$0.42/sh to the Certej project, but see the potential for significant upside.

· We recently increased our base metal price assumptions for 2006 and beyond (Exhibit 1), and as a result, our earnings and cash flow estimates for the company have improved. For 2006, we forecast EGU to report EPS of $0.17 and CFPS of $0.32 (from $0.15 and $0.28 per share, respectively). Our NAV has increased slightly, from C$4.82/sh to C$4.88/sh (Exhibit 2).

Investment Rationale. With Hellas generating a small gross profit in Q4/05, and with positive earnings expected in Q1/06, EGU is becoming a mid-tier producer. Steady cash flow generation from Stratoni should allow the company to continue to progress with its development milestones, which in turn should provide good upside to EGU's shares.

Valuation. We maintain our one-year target price of C$4.75 (£2.35), derived by applying a 1x multiple to our 2006 NAV of C$4.88/sh, using discount rates of 8% or 10%, depending on the asset. It also reflects a 9x multiple to our 2007 CFPS estimate of C$0.52 ($0.43). These metrics are inline with trading multiples of small-cap metal companies at a similar stage in development.

[amantis] 29/3/2006 19:22

Opportunities are, have a good pro read !

[gardenboy] 29/3/2006 19:21

...extract from the results today,

Stratoni underpins the value


The year 2005 was a busy one at the Stratoni mine. Refurbishment of existing
underground, plant and port facilities was completed by mid year and by
September all the necessary environmental and mining permits were received. The
mill and flotation plant was successfully commissioned in the same month and by
late October we were in the position to start underground mining operations.


During the two months to the end of December, the Stratoni plant processed over
16,000 tonnes of ore and a further 11,000 remained on the stockpile. In
December, some 2,500 tonnes of concentrates grading 52% zinc was shipped and
sold. The modest Stratoni figures represent a promising start as over ten
working ends were opened up and the underground infrastructure was repaired and
equipped in order to increase production. This preparatory work has facilitated
a solid platform for production build-up, which saw us move from 300 tonnes per
day (tpd) in December to 400 tpd in January and 500 tpd in March 2006.
Furthermore, the plant was commissioned without any technical problems, and
optimum recoveries of above 90% are now being achieved.


Good progress has also been made on the new decline, which is now 130 metres in,
and through the bad ground associated with the footwall fault zone. The decline
is not necessary for mining in 2006 but becomes critical for the future
production ramp-up involving the deeper portions of the orebody as well as
providing potential exploration upside. The ore production forecast for 2006 is
170,000 tonnes, which is expected to increase steadily thereafter up to a
maximum of 400,000 tonnes per annum.


The Stratoni project underpins the value of the Company. Off-take agreements for
the sale of concentrates have been signed and secure our sales until mid 2008.
The Company negotiated very favourable terms which included some of the lowest
treatment charges on record. This reflects the fact that Stratoni is the only
new zinc and lead producer to come on stream in 2005 and coincides with a strong
upturn in the prices of these metals.

[gardenboy] 29/3/2006 08:20

looks like zinc production is rising rapidly.....

[holdontightuk] 27/3/2006 23:35

good one this, ram.......wish I held!!

[rambutan2] 27/3/2006 17:25

folks forget that this is a zinc producer.

[maxim1999] 27/3/2006 15:58

Results due this week

[seagreen] 27/3/2006 15:50

arb opportunity they are £1.90 to go in the us and only £1.80 here ok they pushed it up to £1.85 now

[maxim1999] 23/2/2006 12:04

I watch this stock v closely....but I have no idea why the move recently with no obviuos news outside a couple of bullish broker notes and FT selling a stake...any views from others on the recent run?

[rambutan2] 22/2/2006 19:30

yes, can't complain!

[chartsmart] 22/2/2006 17:25

chart looking healthy following recent buying.

[maxim1999] 13/2/2006 15:41

Seems now we look forward to updated reserves and production on Stratoni and Certej reserves. Could also get update on Skouries reserves. All in the next couple of months. Also will get news on the environmental feasibility studies....In other words all positive progress....

[rambutan2] 10/2/2006 00:08

well worth reading 07/02 business plans rns...


and the...

APPOINTMENT OF WILLIAMS DE BROE & RBC CAPITAL MARKETS AS BROKERS

European Goldfields Limited (AIM: EGU / TSX: EGU) (the "Company") is pleased to
announce the appointment of Williams de Broe Plc as corporate broker and
nominated advisor under the rules of the AIM Market of the London Stock
Exchange, effective today. Williams de Broe is one of the City of London's
oldest financial institutions with over 135 years' experience in stockbroking,
advising a range of private, institutional and corporate clients.

The Company is also pleased to announce that it has appointed RBC Capital
Markets as joint broker with the aim of furthering the Company's exposure in the North American market. RBC Capital Markets is a global leader in the mining
sector with operations in North America, Europe and Australia.

Commenting on the appointments, David Reading, Chief Executive Officer of
European Goldfields, said: "We look forward to working with Williams de Broe and RBC Capital Markets in continuing to build European Goldfields into a
significantly larger company. We believe this collaboration between us and their commitment to the resources sector make them the ideal partners for us going forward."

Sale of Shares by Frank Timis

The Company has been informed that on 18 January and 7 February 2006, Mr. Frank
Timis sold a total of 12,115,684 common shares in the Company in the open
market. The shares were placed by RBC Capital Markets and Evolution Securities,
primarily to institutional investors in North America and the United Kingdom. Of such shares, 7,500,000 were subject to a broker lock-in agreement until 31 March 2006, which was waived in response to market demand for the shares. Following such sales, to the knowledge of the Company, Frank Timis now exercises control or direction over 7.8% of all outstanding common shares of the Company, which remain subject to a lock-in until 31 March 2006.

[rui sa] 09/2/2006 16:50

Holdontight,

1 oz of "gold equivalent" is the amount of some other metal (silver, copper, zinc, etc) whose value is the same as 1 oz of gold.

1 oz of "gold equiv." = 58 oz of silver = 250 lbs of copper = etc

[maxim1999] 07/2/2006 15:21

6% of the co changes hands at $3.25 in Canada. Now only 2 people hold stock in that size ...that can only be good news.

[holdontight] 05/2/2006 20:28

What is the difference between gold and gold equivalent? What is the difference in value/oz?

[rambutan2] 30/1/2006 12:23

up nicely this morning.

[davethechef] 29/1/2006 10:25

I'm not in(yet) but very encouraging article in present SHARES mag.
Worth reading, basically says exciting future, projects moving forward nicely.

[rambutan2] 29/1/2006 01:59

why piddle around with 6-10p if holding for a while?

lead/silver concentrate shipment was due this month.

price of silver looking promising, while of course zinc going great guns.

[leesonlookalike] 27/1/2006 19:32

looks interesting this one...:-)

may buy some next week, if it re-traces approx. 6 to 10p, then hold for a while....

[rambutan2] 27/1/2006 17:30

been rather a good week for egu.

[aishah] 27/1/2006 12:28

Evolution maintains buy rating with a £3.04 price target.