Q1 2010 Results - Part 1

 

TIDMEGU 
 
RNS Number : 8263L 
European Goldfields Ltd 
13 May 2010 
 

 
 
 
+-----------------------------------+-----------------------------------+ 
| Immediate Release                 |                       13 May 2010 | 
+-----------------------------------+-----------------------------------+ 
 
 
 
                          European Goldfields Limited 
 
                              RESULTS FOR Q1 2010 
 
13 May 2010 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European 
Goldfields" or the "Company") today reports its results for the quarter ended 31 
March 2010. The financial statements, as well as the accompanying Management's 
Discussion & Analysis, are available for review at 
http://www.egoldfields.com/egoldfields/en/media/news and should be read in 
conjunction with this news release. 
 
Operational highlights: 
·     Final permit approved for grant of the PUZ at Certej 
·     Mandate for Certej project finance signed 
·     Expansion of Certej Project Team 
·     Olympias surface stockpile sold 
·     Olympias plant refurbishment well advanced 
·     Stratoni production up 11% 
 
Corporate activity: 
·      Increase in institutional shareholder base and traded free float 
 
Financial highlights: 
·      Sales of $10.4 million excluding gold sales 
·      Return to gross profit versus Q1 2009 
·      Working capital of $129 million 
 
Commenting on the results, Martyn Konig, Executive Chairman and President of 
European Goldfields, said: 
 
"2010 is a year of delivery for European Goldfields. We remain on course to 
reach our targets of securing final permits in both Greece and Romania within 
the year. During this quarter, we have demonstrated steady progress on 
permitting, engineering and financing and over the course of the next quarter we 
expect to demonstrate further progress as we build on our achievements this 
year." 
 
                            SELECTED FINANCIAL DATA 
 
 
+-----------------------+-------------+--------------+ 
|                       |  Quarter ended 31 March    | 
|                       |                            | 
+-----------------------+----------------------------+ 
| (in thousands of US   |        2010 |         2009 | 
| dollars,              |           $ |            $ | 
| except per share      |             |              | 
| amounts)              |             |              | 
+-----------------------+-------------+--------------+ 
| Statement of profit   |             |              | 
| and loss              |             |              | 
+-----------------------+-------------+--------------+ 
| Sales                 |      10,435 |       10,742 | 
+-----------------------+-------------+--------------+ 
| Gross profit          |         679 |        (342) | 
+-----------------------+-------------+--------------+ 
| Loss before income    |     (5,824) |      (3,979) | 
| tax                   |             |              | 
+-----------------------+-------------+--------------+ 
| Income taxes          |       (438) |          540 | 
+-----------------------+-------------+--------------+ 
| Loss after income tax |     (6,262) |      (3,439) | 
+-----------------------+-------------+--------------+ 
| Non-controlling       |        (77) |          183 | 
| interest              |             |              | 
+-----------------------+-------------+--------------+ 
| Loss for the period   |     (6,339) |      (3,256) | 
+-----------------------+-------------+--------------+ 
| Loss per share        |      (0.03) |       (0.02) | 
+-----------------------+-------------+--------------+ 
 
 
+----------------------+-------------+--------------+ 
|                      |    31 March |  31 December | 
| (in thousands of US  |        2010 |         2009 | 
| dollars)             |           $ |            $ | 
+----------------------+-------------+--------------+ 
| Balance sheet        |             |              | 
+----------------------+-------------+--------------+ 
| Working capital      |     129,143 |      144,899 | 
+----------------------+-------------+--------------+ 
| Total assets         |     737,871 |      744,100 | 
+----------------------+-------------+--------------+ 
 
 
                             OPERATIONAL HIGHLIGHTS 
 
ROMANIA 
·     Final permit approved for grant of the PUZ at Certej 
·     Mandate for Certej project finance signed 
·     Expansion of Certej Project Team 
 
Final permit approved for grant of the PUZ at Certej - The last remaining 
approval required for the grant of the Zonal Urbanisation Plan ("PUZ") relating 
to Certej was recently issued by the Ministry of Environment. Formal public 
notice of this approval has been issued in Romania. The grant of the PUZ 
represents a significant milestone which takes European Goldfields one step 
closer to production.  Certej contains 2.4 million reserve ounces of gold, plus 
17.3 million reserve ounces of silver, and lies in an area which was a major 
gold producer historically and retains considerable future potential.  The 
Company is well advanced in the next and final substantive part of the 
permitting process for Certej, which is the approval of the full Environmental 
Impact Study. 
 
 Romanian engineering group Cepromin are contracted to produce the 
documentation required for submission to the Romanian state in order to obtain 
the construction permit for Certej and work is well advanced with final site 
investigations being undertaken in parallel with the required detailed design 
packages. 
 
Mandate for Certej project finance signed - A Mandate letter was signed on 30 
March with a group of financial institutions to arrange and underwrite a US$125 
million debt financing to be used to part fund the development costs of the 
Certej project. This has been signed on the basis of a term sheet which has been 
agreed between the Company and the mandate lead arrangers, each of which has 
received approval to proceed with the transaction through their respective 
initial credit processes. 
 
This is an important further step in the development of the Certej project and 
in the Company's wider relationships with the debt capital markets.  European 
Goldfields is very pleased to be working with this group of financial 
institutions all with extensive experience and excellent credentials in global 
mining finance. 
 
Expansion of Certej Project team - The recent appointment of Alan Baker as 
Project Manager for the Certej gold-silver project in Romania is a valuable 
addition to the team. Alan takes responsibility for advancing the Certej project 
through the development process towards production using his vast experience in 
the mining sector. Over the past 30 years he has gained experience in project 
management and the design and construction of plant infrastructure and open pit 
operations. The build out of the Certej Project team will continue as the 
project progresses. 
 
 
GREECE 
·     Sale of Olympias gold stockpile complete 
·     Olympias plant refurbishment well advanced 
·     Stratoni production up 11% 
 
Sale of Olympias gold stockpile complete - Hellas Gold has fully depleted the 
surface stockpile of pyrite gold concentrate at Olympias.  Sales of Olympias 
gold concentrate will resume once Hellas Gold receives the permits to process 
2.4Mt of stockpiled tailings arising from the previous operations at Olympias 
and when plant rehabilitation is completed. 
 
Olympias plant refurbishment well advanced - Hellas Gold has signed an 
Engineering and Refurbishment Contract with the engineering group Renewable, an 
engineering consultancy based in Athens. Work on the design and procurement 
lists for the Olympias mill and flotation plant refurbishment is well advanced 
in preparation for the retreatment of gold-bearing tailings. The tailings total 
2.4 million tonnes grading 3.4 g/t Au and extensive test work indicates they 
will yield some 350,000 tonnes of gold bearing concentrate grading 20 to 23 g/t. 
Quotes have been received for the majority of the major equipment required for 
refurbishment and improvements to existing infrastructure are underway including 
the re-surfacing of the access road and site preparation. 
 
Stratoni production up 11% - The Company's cash flow positive mining operations 
at Stratoni continue to demonstrate European Goldfields' permitting and 
environmental capabilities and commitment to the highest levels of social 
responsibility. 
 
The Company's 95% owned subsidiary Hellas Gold mined a total of 63,294 wet 
tonnes in Q1 2010 (Q1 2009 - 56,892).  This exceeds the budgeted production by 
some 11%.  This was in spite of an extreme rainfall event in early February that 
did not materially impact either facilities or production. Hellas Gold and Aktor 
were the major contributors to successful efforts in assisting the local 
community and effected rapid repairs to both local infrastructure and dwellings. 
 
 
+-------------+---------+---------+ 
|             |      Q1 |      Q1 | 
|             |    2010 |    2009 | 
+-------------+---------+---------+ 
| Production  |         |         | 
+-------------+---------+---------+ 
| Ore         |  63,294 |  56,892 | 
| mined       |         |         | 
| (wet        |         |         | 
| tonnes)     |         |         | 
+-------------+---------+---------+ 
| Sales       |         |         | 
+-------------+---------+---------+ 
| Zinc        |   8,830 |  10,286 | 
| concentrate |         |         | 
| (tonnes)    |         |         | 
+-------------+---------+---------+ 
| -           |   3,633 |   4,144 | 
| Containing  |         |         | 
| payable:    |         |         | 
| Zinc        |         |         | 
| (tonnes)*   |         |         | 
+-------------+---------+---------+ 
| Lead        |   3,759 |   3,762 | 
| concentrate |         |         | 
| (tonnes)    |         |         | 
+-------------+---------+---------+ 
| -           |   2,385 |   2,347 | 
| Containing  |         |         | 
| payable:    |         |         | 
| Lead        |         |         | 
| (tonnes)*   |         |         | 
+-------------+---------+---------+ 
| Silver      | 178,184 | 183,504 | 
| (oz)*       |         |         | 
+-------------+---------+---------+ 
| Inventory   |         |         | 
| (end of     |         |         | 
| period)     |         |         | 
+-------------+---------+---------+ 
| Ore         |  14,089 |   4,010 | 
| mined       |         |         | 
| (wet        |         |         | 
| tonnes)     |         |         | 
+-------------+---------+---------+ 
| Zinc        |   2,839 |     621 | 
| concentrate |         |         | 
| (tonnes)    |         |         | 
+-------------+---------+---------+ 
| Lead/silver |   1,105 |   1,393 | 
| concentrate |         |         | 
| (tonnes)    |         |         | 
+-------------+---------+---------+ 
    *     Net of smelter payable deductions 
 
 
 
                               CORPORATE ACTIVITY 
 
Increase in Institutional Shareholder Base and Traded Free Float -On 8 April 
2010 a number of major institutional investors bought 6,684,641 common shares in 
the Company from Mr. Dimitrios Koutras, a Non-Executive Director of European 
Goldfields, in the London market at a price of GBP4.35 per share. This 
transaction reflects strong investor appetite for the Company resulting from 
recent progress in its permitting processes.  Mr. Koutras now owns 10,408,715 
common shares in the Company representing approximately 5.7% of the total issued 
common shares. 
 
 The shares sold by Mr. Koutras were purchased in the market in November 
2008 at a time when European Goldfields needed to demonstrate the support of its 
management and directors.  Accordingly, in selling the shares on 8 April 2010, 
Mr. Koutras' position in the Company reverts back to his core long term holding 
level in European Goldfields.  The Company's management is particularly pleased 
that this sale has facilitated a further broadening of the Company's investor 
base. The Company is also pleased to report that Mr. Koutras remains fully 
committed to European Goldfields and expects no further reduction in his holding 
in the Company. 
 
 Aktor Constructions International, European Goldfields' 
largest shareholder with 35,447,246 common shares, or approximately 19.4% of the 
total issued common shares, is also fully supportive of the Company and does not 
have any plans to reduce its current position. 
 
 
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 will 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. 
 
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 timing and amount of estimated future 
production, costs and timing of development of new deposits, permitting time 
lines and expectations regarding metal recovery rates. 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 successful and timely permitting of the Company's Skouries, 
Olympias and Certej 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 2009, 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 new website at 
www.egoldfields.com 
 
For further information please contact: 
 
European Goldfields: 
  Buchanan Communications: 
Sally Schofield, VP Investor Relations 
Bobby Morse / Katharine Sutton 
e-mail: [e-mail] 
  e-mail: [e-mail] 
Tel: [phone] 
   Tel: [phone] 
 
RBC Capital Markets: 
Josh Critchley 
         Matthew Coakes 
e-mail: [e-mail]-mail: [e-mail] 
Tel: [phone] 
   Tel: [phone] 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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