European Gold Share Discussion Threads

[wassapper] 16/4/2007 15:31

Canaccord have a note out with a target price of 282p - really pushing it this time!

[chipperfrd] 11/4/2007 13:38

Simon, thanks for the update from Ambrian.

Maxim, with rising metal prices, strong partner, moderate political risk, good infrastructure, positive exploration potential, etc, I rate EGU to have really good upside potential with limited probability of downside. But AIMO of course!

TA looks excellent as well. I will look to add on any dips otherwise I am in holding mode for the time being.

Chip

[maxim1999] 11/4/2007 10:38

2 very interesting posts....but what conclusions can we draw on the progress of the EGU share price?

[simon54] 11/4/2007 08:47

Hi Chip -

What % of that value should be ascribed to a market valuation is highly subjective...

Quite so. It's interesting, though, that 'on average' gold at an equivalent stage of development seems to be credited with a higher % of in situ value than copper. I have these figures from 1999, which you may have seen:

END-1999 GOLD PROPERTY ACQUISITION COSTS (US$/OZ)
------------------------------------------PROPERTY TYPE---------------------
--------------------------Exploration-Development-Production-Corporate
Normal Expected Lower Limit--US$ 3------US$ 20------US$ 45------US$ 70
Expected Average-------------US$ 7------US$ 33------US$ 60------US$ 80
Normal Upper Limit-----------US$10------US$ 40------US$ 75------US$100

Lower-% of price*------------1.0%--------6.9%-------15.6%-------24.2%
Average-% of price-----------2.4%-------11.4%-------20.8%-------27.7%
Upper-% of price-------------3.5%-------13.8%-------26.0%-------34.6%
Note Upper and lower limits are for an "average" acquisition, and are
often exceeded for various reasons. Source:Mining Business Digest. *End-1999 price of US$289/oz.


This is the equivalent table for Copper:-

END-1999 COPPER PROPERTY ACQUISITION COSTS (US$/LB)
--------------------------------------PROPERTY TYPE----------------
----------------------------Exploration---Development---Production
Normal Expected Lower Limit--US$0.005------US$0.015------US$0.045
Expected Average-------------US$0.010------US$0.020------US$0.060
Normal Upper Limit-----------US$0.020------US$0.030------US$0.085

Lower-% of price*------------0.6%-----------1.8%----------5.4%
Average-% of price-----------1.2%-----------2.4%----------7.2%
Upper-% of price-------------2.4%-----------3.6%---------10.2%

Note Upper and lower limits are for an "average" acquisition, and are often exceeded for various reasons. Source:Mining Business Digest. *End-1999 price of US$0.837/LB.

Dunno if more recent figures are readily available, but I suspect that the % differences would be similar, although perhaps somewhat lower over all given the level of current spot prices.

It's interesting that the average increase in moving from explo to development is five-fold for gold but only double for copper, whereas for the movement from development to production the 'advantage' is reversed, with copper trebling against gold somewhat less than doubling. Perhaps this simply suggests the relatively less predictable economics of gold deposits at an early explo stage.

[chipperfrd] 06/4/2007 11:39

I try and keep an in-ground estimation of value for a number of companies. For EGU I have the following at current metal prices:

Attrib gold = 5,100,000 oz, value = $3.417b
Attrib silver = 42,900,000 oz, value = $587.7m
Attrib copper = 500,000 t, value = $3.526b
Attrib lead = 500,000 t, value = $969m
Attrib zinc = 600,000 t, value = $1.97b

Providing a grand total of $10.4b of in-ground value at current metal prices.
What % of that value should be ascribed to a market valuation is highly subjective (project economics, costs, location, et al) so it is up to the individual PI to make their own decisions.

However, I never wish to pay more than 10% max - so with 119m shares in issue, that still equates to 449p, leaving plenty of headroom from the current share price

I would be interested to hear any comments. I may well have over/under estimated my numbers and would appreciate any accurate corrections.

Chip

[wassapper] 05/4/2007 21:27

I'll go for 300p - double my money but I won't sell many.

[maiseymouse] 04/4/2007 07:05

evolution reckons the shares are worth nearly £3

[gardenboy] 03/4/2007 17:53

yes, and they're not operating in Greekistan

[wassapper] 03/4/2007 17:45

Hi Stuart - thanks for that. Very useful.

My price target was always higher. Evo will get there eventually! :-))

You cannot post gold equivalent valuations on here. See what happened to me when I tried that. I still bear the scars!

I disagree with their statement anyway. Peers can be valued at anything up to $100 per ounce. Depends who your peers are and were they are. But at least it partly supports my arguement that this company remains severely undervalued.

[stuart14] 03/4/2007 17:24

Hi guys.

Evo updated their Buy rec today. I guess that may help tomorrow.

Evolution says buy up to 296p. Broker adds: '2007 is expected to be a very significant year in European Goldfields' progress, following its move to profitability in 2006 due to the successful ramp-up of production at the Stratoni mine.

'The award of final mining permits for the Olympias and Skouries projects will reduce the risks associated with the development of these projects and hence lead to a significant increase in valuation.

'On a gold equivalent basis, at current spot prices, the group's resources are valued at just US$25/oz compared to peers valued at around twice this level.'

[maxim1999] 03/4/2007 17:17

Up 6% in Canada!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!22 cents above the previous highest close!!!!!!!!!!!!!

[edrifter] 22/3/2007 12:55

Reading the report, it seems that most of the revenue this year (2006) was generated by selling the *stockpile* of concentrates, presumably from previous activity. How much new extraction is happening? 11.9mozau in the ground is fine (apparently proven), and seems to underpin the shareprice at around 2.90 according to several broker estimates, but there doesn't seem to be much operational information - only feasibility studies on the website. Mining permits are only expected at the end of this year!

That aside, if 290 is based on profitability at $500/ozau, then any rise in the price of gold should see this price leveraged upwards. Gold at say $1000 might see a take-out price of about £12.00. Any comments?

Clearly Barrick must have some interest in the company. Even if there was no approach, one assumes the 'business matters' must relate to some operational aspect.

eD

[rambutan2] 22/3/2007 08:59

yes, prospects on all fronts look pretty good and getting better.

[gardenboy] 22/3/2007 08:55

Stratoni production should double by 2009

[rambutan2] 22/3/2007 08:45

LONDON (AFX) - European Goldfields Ltd, a company operating in Greece and
Romania, swung to a pretax profit in 2006 on higher-than-targeted production at
the Stratoni mine.
The AIM-listed company moved to a pretax profit of 12.0 mln usd, from a
pretax loss of 13.3 mln usd in 2005, as sales jumped to 52.4 mln usd from 1.5
mln. Evolution Securities had forecast pretax profit of 15.5 mln usd on sales of 55.5 mln.
The company holds a 65 pct interest in Hellas Gold SA, owner of three major
gold and base metal deposits in Northern Greece. Production at the
zinc-lead-silver Stratoni plant started in the fourth quarter of 2005, while
mining permits for the Olympias and Skouries projects are expected by the end of the second quarter or start of the third.
Stratoni produced a total of 179,950 wet metric tonnes in 2006, exceeding
the target of 170,000 tonnes, and is expected to produce up to 400,000 tonnes a
year by 2009.
Initial results from new exploration drilling at Stratoni, which is expected to increase life of mine by another two years at least, are expected in the first quarter of 2007.
The company started selling existing stockpiles of Olympias gold
concentrates in July 2006 and has signed off-take agreements signed for 70 pct
of the Olympias stockpile of 258,000 tonnes (or about 193,000 ounces at 23.3
grammes a tonne) and received expressions of interest for the balance.
It said a technical feasibility study has nearly been completed at the
gold-copper deposit Skouries and that Hellas Gold plans to publish the results
of the final feasibility study once the final Environmental Impact Study is
completed in the second quarter.
Hellas Gold has started discussions with Outokumpu Oy for the purchase of
mill and plant equipment and with Aktor SA, Greece's largest infrastructure
construction company, for the construction of the plant and related
infrastructure.
Elsewhere, a technical feasibility study on its 80 pct-owned Certej project
in Romania was submitted to the government in March 2007 and European Goldfields plans to submit a final EIS to the government in the third quarter.
The group said it believes it has adequate funds available this year to meet its corporate and administrative obligations and its planned spending on its mineral properties.

[wassapper] 22/3/2007 08:21

RESULTS FOR 2006 - DELIVERING ON PROMISES

22 March 2007 - European Goldfields Limited (AIM: EGU / TSX: EGU) ('European
Goldfields' or the 'Company') today reports its results for the financial year
ended 31 December 2006. Highlights of the year are:

Financial highlights:

• Sales of US$52.4m in 2006, compared to $1.5m in 2005
• Sales up 30% in Q4 over Q3 2006
• Profit (before tax) of $12m in 2006, compared with a loss of $13.3m in
2005
• Operating cash flow increasing to $19.4m in 2006, up $26.3m over 2005
• Annual net earnings reported for the first time; $3m in 2006
• Working capital of $41.9m at 31 December 2006; funded beyond permitting
of new projects

Operational highlights:

• Stratoni production targets exceeded for 2006
• New economic mineralisation discovered at Stratoni
• Off-take agreements signed for 70% of Olympias stockpile of gold
concentrates - Expressions of interest received for the balance
• Two technical feasibility studies for Skouries and Certej nearly
completed in 2006
• Permit-wide exploration underway in Greece - Twenty exploration targets
identified
• Albion Process Technology achieved 92% gold recovery on composite sample
• Target exploration underway to extend Certej life-of-mine

Commenting on the results, David Reading, Chief Executive Officer of European
Goldfields, said: 'We are delighted to be reporting annual net earnings for the
first time in our history, and to have exceeded our production target in 2006
for our Stratoni operations. Future growth will also come from our other three
major gold and base metals projects which have made significant progress during
2006. These are well on track with feasibility work completed and permitting
progressing as planned. With rapidly increasing cash flows and one of the
largest proven gold and base metal reserves in Europe, we remain on track to
become a leading mid-tier producer over the next few years.'

[wassapper] 22/3/2007 08:16

As usual interest in this great stock is almost zero. Results speak for themsleves I suppose.

[wassapper] 21/3/2007 21:26

Results day tomorrow.

[andico] 08/3/2007 15:04

...it was obviously well received!

[andico] 28/2/2007 17:27

Dave Reading will be presenting at PDAC next week. Good for him.

[wassapper] 27/2/2007 08:46

Can't help you there Matty. You could call David Reading. He is very approachable, but would avoid at present as they must be doing their final results now.

Maxim - see one of my posts about six weeks ago for analysis bsed upon the measure of value per oz of gold and copper etc. This is disputed by some but I am always seeing CEOs present it as a comparator.

I would need to find it myself, but it was at least 100% up from where we are. Probably much more than that.

[mattybuoy] 26/2/2007 16:00

BTW ...

No comment on the Skouries PGM stuff I posted the other day? I was hoping for some input from someone who knows what they're talking about, unlike myself ;)

[mattybuoy] 26/2/2007 15:57

At the very least US$1bn I would say.