Q1 Results News Release Part 1

 

TIDMEGU 
 
RNS Number : 0709S 
European Goldfields Ltd 
12 May 2009 
 

+------------------------------------------+------------------------------------------+ 
| Immediate Release                        |                              12 May 2009 | 
+------------------------------------------+------------------------------------------+ 
 
 
 
 
 
 
European Goldfields Limited 
RESULTS FOR Q1 2009 
 
 
STRONG RECOVERY IN GOLD SALES 
CERTEJ BASIC ENGINEERING CONTRACT AWARDED 
 
 
12 May 2009 - European Goldfields Limited (AIM: EGU / TSX: EGU) ("European 
Goldfields" or the "Company") today reports its results for the quarter ended 31 
March 2009. 
 
 
Financial highlights: 
  *  Strong gold sales - up by 45% on Q4 2008 
  *  Total sales of $11 million reflecting lower base metal prices and mining 
  performance 
  *  Working capital of $176 million 
  *  US$10 million invested in future projects 
 
 
 
Operational highlights: 
  *  Stratoni: Reserve increase of 16%. Excellent progress in mine and capital 
  development 
  *  Skouries: The Outotec Final Basic Engineering Package received and some 
  equipment items delivered to Greece 
  *  Olympias: Strong recovery in Gold sales 
  *  Certej: Permitting process advances with public hearing dates set for May 2009 
 
 
 
Commenting on the results, David Reading, Chief Executive Officer of European 
Goldfields, said: "The Stratoni mine managed to pull out a reasonable 
performance despite challenging conditions. I am pleased to report that our gold 
sales are now back on track. The company continues to invest in its future gold 
projects and engineering works continue unabated. Permitting procedures in 
Greece and Romania are making significant progress and we expect positive 
results in the near future." 
 
 
Conference Call & Webcast - European Goldfields will host a conference call on 
Tuesday 12 May 2009 at 10:00 a.m. ET / 3:00 pm (London, UK time) to update 
investors and analysts on its results. 
 
 
Participants may join the call by dialling one of the three following numbers, 
approximately 10 minutes before the start of the call. 
 
 
From North America: (toll free) 1 866 850 2201 
From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy, 
Netherlands, 
Norway, Sweden & Switzerland: [phone] or (toll free from the UK) 
0800 032 3808 
Participant pass code: 1421823 
 
 
A live audio webcast of the call and a replay (available from 4:00pm London UK 
time) will be available on: 
 
http://mediaserve.buchanan.uk.com/2009/eg120509/registration.asp 
 
 
 
SELECTED FINANCIAL DATA 
 
 
+-----------------------------------+----------------------+------------------------+ 
|                                   | Quarter ended 31 March                        | 
|                                   |                                               | 
+-----------------------------------+-----------------------------------------------+ 
| (in thousands of US dollars,      |                 2009 |                   2008 | 
| except per share amounts)         |                    $ |                      $ | 
+-----------------------------------+----------------------+------------------------+ 
| Statement of profit and loss      |                      |                        | 
+-----------------------------------+----------------------+------------------------+ 
| Sales                             |               10,742 |                 12,708 | 
+-----------------------------------+----------------------+------------------------+ 
| Gross profit                      |                (342) |                  4,849 | 
+-----------------------------------+----------------------+------------------------+ 
| Profit/(loss) before income tax   |              (3,979) |                  4,263 | 
+-----------------------------------+----------------------+------------------------+ 
| Income taxes                      |                  540 |                  (621) | 
+-----------------------------------+----------------------+------------------------+ 
| Profit/(loss) after income tax    |              (3,439) |                  3,642 | 
+-----------------------------------+----------------------+------------------------+ 
| Non-controlling interest          |                  183 |                  (233) | 
+-----------------------------------+----------------------+------------------------+ 
| Profit/(loss) for the period      |              (3,256) |                  3,409 | 
+-----------------------------------+----------------------+------------------------+ 
| Earnings/(loss) per share         |               (0.02) |                   0.02 | 
+-----------------------------------+----------------------+------------------------+ 
 
 
 
 
+-----------------------------------+----------------------+------------------------+ 
|                                   |        31 March 2009 |       31 December 2008 | 
| (in thousands of US dollars)      |                    $ |                      $ | 
+-----------------------------------+----------------------+------------------------+ 
| Balance sheet                     |                      |                        | 
+-----------------------------------+----------------------+------------------------+ 
| Working capital                   |              176,319 |                192,675 | 
+-----------------------------------+----------------------+------------------------+ 
| Total assets                      |              757,206 |                766,095 | 
+-----------------------------------+----------------------+------------------------+ 
 
 
European Goldfields' unaudited consolidated financial statements and 
management's discussion and analysis for the three month periods ended 31 March 
2009 and 2008 are filed on SEDAR at www.sedar.com. 
 
 
Revenues fell as a direct result of the fall in zinc and lead prices between Q1 
2009 and Q1 2008, particularly in the second half of 2008.  In addition, poor 
ground conditions in Q1 2009 hampered production activities resulting in lower 
base metal production levels. This was offset by a strong performance from gold 
concentrate sales.The Company's lead hedging programme will remain in place 
until the end of 2009 and generated income of US$2.4 million for the quarter. 
Working capital declined as the Company continued its capital expenditure 
programmes at its operating mine and development projects, but the Company's 
balance sheet remains strong. 
 
 
  STRATONI OPERATIONS (GREECE) 
 
 
Highlights: 
  *  Lower production due to poor mining conditions 
  *  Internal mine development well ahead of budget 
  *  Major mine infrastructure nears completion 
  *  Water management measures control exceptional rainfall event 
  *  Reserve increase of 16% 
 
 
 
 
 
Production 
The Stratoni mine consists of a lead-zinc-silver deposit and lies approximately 
four km from the coastal town of Stratoni in northern Greece. The Company's 
95%-owned subsidiary Hellas Gold mined a total of 56,892 wet tonnes in Q1 2009 
(Q1 2008 - 58,208). Hellas Gold completed 7 shipments in Q1 2009 (Q1 2008 - 4), 
five shipments of zinc and two of lead/silver. Sales from Stratoni were as 
follows: 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
|                                                                                                                     |    Q1 2009 |    Q1 2008 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Production                                                                                                          |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Ore mined (wet tonnes)                                                                                              |     56,892 |     58,208 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Sales                                                                                                               |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Zinc concentrate (tonnes)                                                                                           |     10,306 |      8,371 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| - Containing payable:                                                                                               |      4,152 |      3,454 | 
| Zinc (tonnes)*                                                                                                      |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Lead concentrate (tonnes)                                                                                           |      3,762 |      1,872 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| - Containing payable:                                                                                               |      2,347 |      1,188 | 
| Lead (tonnes)*                                                                                                      |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
|                                                                                                              Silver |    183,504 |     95,582 | 
|                                                                                                              (oz)*  |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Inventory (end of period)                                                                                           |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Ore mined (wet tonnes)                                                                                              |      4,010 |      2,816 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Zinc concentrate (tonnes)                                                                                           |        602 |      2,745 | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
| Lead/silver concentrate                                                                                             |      1,393 |      2,213 | 
| (tonnes)                                                                                                            |            |            | 
+---------------------------------------------------------------------------------------------------------------------+------------+------------+ 
*    Net of smelter payable deductions 
 
 
Mining production, year to date, is under budget due to poor mining conditions 
delaying the commencement of the more productive secondary mining and forcing 
operations into lower grade areas. Q2 plans have been redrawn and an H2 revision 
is in progress emphasising production from higher grade areas to maintain metal 
targets for 2009. 
 
 
The large dimension, more productive lower level stopes have been successfully 
backfilled for the first time and secondary mining has commenced which will 
improve productivity. These are also higher grade areas of the operation. 
 
 
Internal development is 213 metres against a budget of 140 metres (52% above 
budget) and this work will enhance production face availability later in the 
year. 
 
 
The 360 level Upper Adit is 78% finished. It is planned to complete by mid June 
and be equipped and fully operational during July. The new adit will facilitate 
improved ventilation, access and backfill to the upper levels of the mine, where 
the majority of mine life extension is expected. With the completion of the 360 
adit the mine will have completed all its major infrastructure upgrades within a 
three year programme and no further major capital spend is anticipated. 
 
 
Process plant performance 
 
 
Zinc and lead metal recoveries are being maintained on budget at a consistent 
92% and silver at 87%. The plant continues to run efficiently and planned 
maintenance was carried out on schedule, which is providing high equipment 
availabilities. 
 
 
Water management measures control exceptional rainfall event 
 
 
Excessive rainfall was experienced during the Quarter; approximately 25% of the 
average annual precipitation occurred within a thirty six hour period. The new 
water retreatment measures and the upgraded water retreatment facilities 
successfully managed this situation. Stratoni mine personnel are commended for 
their diligence in controlling this issue. 
 
 
Reserves 
 
 
Exploration of the western extensions and the lower portion of the mine has 
increased the reserve base by some 16%, effectively replenishing 2008 
production. Proven and probable reserves now stand at 2.3 million tonnes, which 
will support a further six years of mine life.  The year on year expansion of 
reserves has taken the life of the mine to ten years from commencement of mining 
by the company in 2005. 
 
 
+-------------------+----------+--------+--------+--------+--------+--------+--------+ 
| Reserve Category  |  '000t   |Ag g/t  | Ag Moz |  Pb %  | Pb     |  Zn %  | Zn     | 
|                   |          |        |        |        | '000t  |        | '000t  | 
+-------------------+----------+--------+--------+--------+--------+--------+--------+ 
| Proven            |    2,120 |    185 |   12.6 |    7.1 |    150 |    9.9 |    209 | 
+-------------------+----------+--------+--------+--------+--------+--------+--------+ 
| Probable          |      190 |    216 |    1.3 |    8.6 |     16 |    9.3 |     18 | 
+-------------------+----------+--------+--------+--------+--------+--------+--------+ 
| Total             |    2,310 |    188 |   13.9 |    7.2 |    166 |    9.8 |    227 | 
+-------------------+----------+--------+--------+--------+--------+--------+--------+ 
 
 
Stratoni exploration 
 
 
Exploration continues with drilling to the west and southwest of the currently 
defined orebody and it is expected that the Company will continue to more than 
replenish the reserves mined each year. 
 
SKOURIES PROJECT (GREECE) 
 
 
Highlights: 
  *  Outotec final Basic Engineering Package received 
  *  Fabrication and delivery of long lead process equipment continues 
 
 
 
 
 
The Company's Skouries gold-copper project is located 35 km by road from the 
Stratoni port in northern Greece. Skouries is situated on a high plateau with no 
habitation in the immediate vicinity. The project is currently at the 
development stage. Skouries is a typical gold-copper porphyry deposit that forms 
a near-vertical pipe. The project has reserves of 3.9 million ounces gold and 
800Kt copper. The orebody will be extracted by open pit and underground mining 
methods. The revenue stream will be through production of Gold doré from gravity 
concentration as well as the sale of Copper-Gold concentrates. 
 
 
Outotec delivers BE package - Fabrication and delivery of equipment continues 
 
 
Hellas Gold signed a contract for EUR36m with Outotec Minerals OY ("Outotec") for 
the supply of a large technology and services package for Skouries.  Outotec has 
delivered the Basic Engineering package to Hellas Gold and are now progressing 
the Detailed Engineering phase for the process control of the plant. Outotec 
has also submitted an offer for the Gravity Gold section of the Concentrator for 
consideration. 
 
 
Fabrication of the mills is well advanced and some equipment items have been 
delivered to Greece. The SAG mill shells, gear boxes, liners and motors 
are ready for shipment and the remaining components are on schedule for ex works 
delivery in the third quarter of 2009. The manufacturing of the regrind mill, 
flotation cell mechanisms and the paste thickeners internals and bases are 
progressing well. The offers for fabrication of the floatation cell tanks in 
Greece have been received. 
 
 
Continued progress on engineering 
 
 
Orders for the long lead items outside of Outotec's scope are being finalised 
by the Skouries project engineer ENOIA and include the Open Pit primary crusher, 
pebble crushers, transformers and switch gear.  ENOIA have optimised the overall 
project layout, subject to final confirmatory geotechnical investigations and 
are coordinating project activities both within and outside of Outotec's scope, 
which includes design and procurement. This work is being managed by a team 
consisting of both Hellas Gold and European Goldfields personnel. 
 
 
The Greek civil engineering company, MHXME S.A, has been appointed to carry out 
the civil design of the Skouries Project. Kion Architects of Athens have been 
appointed to provide the architectural designs. Greek geotechnical consultants 
Omicron Kappa have completed a report for the excavation and foundation 
requirements of the process plant and the detailed design of the open pit. They 
have also submitted their engineering work for the roads network, which is being 
reviewed by Hellas Gold.  Final detailed geotechnical work has now commenced to 
finalise infrastructure design prior to construction. 
 
 
ENOIA is expected to complete all the basic engineering for the Skouries project 
by the end of Q2, at which point the Company will update its capital expenditure 
estimate for the project. 
 
 
  OLYMPIAS PROJECT (GREECE) 
 
 
Highlights: 
  *  Sale of gold concentrates up by 45% over Q4 2008 
 
 
 
The Company's Olympias project consists of a polymetallic (gold, lead, zinc and 
silver) deposit located 8 km north of the Stratoni mine. At present Hellas Gold 
is selling gold concentrates from the existing stockpile on the property and is 
pursuing applications for the relevant permits to resume mining. Hellas Gold 
plans to resume underground mining operations at Olympias after the necessary 
permits are awarded. 
 
 
Continued sales of gold concentrates 
 
 
The Olympias project benefits from an existing stockpile of gold-bearing pyrite 
concentrates which represented, at 1st January 2009, a reserve of approximately 
101,000 tonnes grading 23.5 g/t gold (containing approximately 75,000 oz of 
gold), in addition to tailings containing 238,000 oz of gold and substantial 
underground reserves of gold, lead, zinc and silver. 
 
 
Hellas Gold completed 18 shipments of Olympias concentrates in Q1 2009 (Q1 2008 
- 3). This translates into 26,832 tonnes of pyrite concentrates sold. Sales of 
pyrite concentrates were as follows: 
+----------------------------+------------+------------+ 
|                            |    Q1 2009 |    Q1 2008 | 
+----------------------------+------------+------------+ 
| Sales                      |            |            | 
+----------------------------+------------+------------+ 
| Gold concentrate (dry      |     26,832 |      9,778 | 
| tonnes)                    |            |            | 
+----------------------------+------------+------------+ 
 
 
The disruptions caused by industrial action at the port of Thessaloniki, which 
restricted the availability of containers for use in concentrate shipments was 
resolved in January 2009 due to the Company's successful sourcing of containers 
and a normalisation of industrial relations at the port. 
 
 
In addition to the stockpile of gold concentrates, Hellas Gold plans to process 
2.4Mt of stockpiled tailings arising from the previous operations at Olympias. 
This will produce approximately 350,000 tonnes of concentrates (containing 
238,000 oz of gold), and resume underground mining operations at Olympias, 
producing more gold bearing pyrite concentrates for sale to existing and new 
off-take purchasers. 
 
 
Olympias benefits from extensive mining and plant infrastructure already in 
place, including a concentrator plant, a shaft down to a depth of 400 metres 
below surface and a port facility nearby at Stratoni. 
 
 
The Olympias project is expected to be self-sustaining over the initial phases 
with the sale of concentrates and the high recoveries for the on-site gold 
processing considered promising for the latter phase. 
 
 
Submission of EIS for re-treatment of tailings 
 
 
Mine schedules, plant refurbishment plans and cost studies for the second phase 
of the Olympias project are approaching completion. In Q2 2008 the company 
submitted an Environmental Impact Study ("EIS") to allow the early processing of 
existing tailings, which will produce additional gold concentrate and allow the 
rehabilitation of a significant area of the Olympias valley. The Company has 
worked closely with the Ministry of Environment and anticipates approval of the 
EIS in the near future. It is planned that this re-processing will commence in 
parallel with refurbishment of the plant lines for run of mine production and 
the necessary underground development to recommence production in Phase Two. The 
Company has received expressions of interest for the detailed design phase from 
Greek engineering companies, which are currently being evaluated pending the 
outcome of the Olympias EIS application. 
  PERMITTING PROCESS - SKOURIES AND OLYMPIAS 
 
 
The Company continues to receive the support of the Greek Ministry of 
Development for its Business Plan and its preliminary environmental impact study 
("PEIS"). The business plan focuses on a phased approach to the development of 
the Skouries gold-copper porphyry deposit and the Olympias gold-lead-zinc-silver 
deposit. The principal revenue stream in the early phases will be through the 
sale of concentrates. The Company's current plan is to develop Olympias in two 
phases. The Company will refurbish the underground mine in the early stage and 
in the final phase will construct a new gold processing facility in the 
brownfield Stratoni area. Skouries will initially be mined as a low strip open 
pit operation, followed by highly productive underground mining. 
 
 
Further to site visits in late 2008 by specialists from the Ministry of Culture 
and subsequent discussions, the Company now anticipates the approval of the PEIS 
within Q2 2009. 
 
 
Approval of the PEIS by the Ministry of Environment will be expressed as a 
Project Pre-Approval from the Greek State with an invitation to the Company to 
submit its final EIS to allow public consultation. On approval of the EIS, the 
environmental permits for Skouries and Olympias will be issued. 
 
 
The Company will then submit to the Greek government a final technical report on 
the Skouries and Olympias projects, which will restate the principles of the 
business plan and take into account any conditions detailed in the environmental 
permit. The mining permits are expected to be issued on approval of the 
technical report by the Greek government. 
 
 
 
 
EXPLORATION IN GREECE 
 
 
Airborne geophysical surveys have revealed four new zones of conductive rocks 
with electromagnetic ("EM") signatures typical for massive sulphides, such as 
the known mineralisation at Stratoni, Olympias and Piavitsa. The new zones are 
distinct from any known mineralisation and represent some 20 kilometres of 
potential strike, which represents approximately 10 times the strike of known 
massive sulphide reserves in the licence area. Each anomalous area will now be 
investigated in the field with mapping, geochemistry and possibly follow-up 
ground geophysics in order to define future drill targets. 
 
 
The EM survey had already successfully confirmed an anomaly extending eight 
kilometres of strike at the Piavitsa massive sulphide target. Two kilometres of 
this strike length have massive sulphide drill intercepts which correspond 
exactly with the EM anomaly.  A phased drilling programme is planned to commence 
in 2009 with the first phase drilled from existing access roads starting in 
Q2 and aimed at confirming mineralisation continuity and depth extent. 
 Follow-on phases aimed at resource definition will require new access roads and 
therefore an EIS has been submitted to the local authorities. The EIS is 
expected to be approved by the end of the year. 
 
 
In addition, the magnetic component of the survey has already identified a 17 
kilometre by six kilometre belt of porphyry intrusives over which a three 
dimensional model has been completed defining two other major targets. Follow-up 
reconnaissance mapping on the ground has confirmed the presence of porphyry 
style mineralisation and drill sites have been selected for test drilling. This 
drilling will be carried out in parallel with the second phase of drilling at 
Piavitsa since it will also require new access roads. 
 
 
  CERTEJ PROJECT (ROMANIA) 
 
 
Highlights: 
  *  Basic Engineering for process plant awarded 
  *  Permitting process continues to advance, public hearings set for May 2009 
 
 
 
The Company's Certej gold-silver project is located 12km from the town of Deva 
in the "Golden Quadrilateral" area of the Apuseni Mountains of Transylvania in 
Western Romania. Certej has recent previous mining activity and boasts excellent 
infrastructure. The project is currently at the development stage. Certej is a 
typical epithermal gold-silver deposit. The project has reserves of 2.41 million 
ounces gold and 11.7 million ounces silver. The orebody will be mined by open 
pit methods. The gold and silver will be extracted from a pyrite flotation 
concentrate using the Albion Leach Process and conventional Carbon in Leach 
("CIL") of the leach residue. The revenue stream will be through the production 
and marketing of gold-silver doré. 
 
 
Basic Engineering Contract awarded 
 
 
The Basic Engineering ("BE") contract for the Certej project process plant and 
associated infrastructure was awarded to Aker Solutions Engineering & 
Construction.  Work started in February 2009 and the scheduled completion date 
is August. The BE covers the entire process plant engineering encompassing the 
three main areas of mineral processing, the concentrator area, the Albion 
section and gold-silver doré production by CIL. Xstrata Technology, who are the 
owners of the Albion Process, are part of the BE team for the Albion section of 
the plant. The Romanian contractor Cepromin is also an important contributor to 
the work as it progresses through to detailed engineering and will ensure the 
submissions comply with Romanian procedures for issuing the Construction Permit 
and beyond. 
 
 
Detailed technical and economic studies on Certej culminated with an updated 
Definitive Feasibility Study in Q1. This updated study incorporated a new 
tailings facility site within the Certej valley and additional reserves defined 
from in-pit lower-grade material and existing dumps. 
 
 
The key project indices are summarised in the Table below: 
+----------------------------+-------------------+-------+-------+-------------------+ 
|        Reserves            |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|        Tonnes              |   Years 1-11.5    |    32.8Mt     | 2.0g/t Au, 11.4   | 
|                            |                   |               | g/t Ag            | 
+----------------------------+-------------------+---------------+-------------------+ 
|                            |   Years 11.5-16   |    14.1Mt     | 0.64 g/t Au, 11.7 | 
|                            |                   |               | g/t Ag            | 
+----------------------------+-------------------+---------------+-------------------+ 
|        Strip Ratio         |   Years 1-11.5    |                3.1                | 
+----------------------------+-------------------+-----------------------------------+ 
|        Annual Throughput   |                   |                3Mt                | 
+----------------------------+-------------------+-----------------------------------+ 
|        Overall Gold        |                   |                81%                | 
|        Recovery            |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|        Overall Silver      |                   |                74%                | 
|        Recovery            |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|        Life of Mine        |                   |             16 years              | 
+----------------------------+-------------------+-----------------------------------+ 
|        Production          |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|                            |    Years 1-3      |           Years 1-11.5            | 
+----------------------------+-------------------+-----------------------------------+ 
|        Average Gold        |      172,000      |              155,000              | 
|        Production, oz pa   |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|        Average Silver      |      720,000      |              816,000              | 
|        Production, oz pa   |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|        Costs               |                   |                                   | 
+----------------------------+-------------------+-----------------------------------+ 
|                            |    EUR million      |            EUR million              | 
+----------------------------+-------------------+-----------------------------------+ 
|        Capital             |      Initial      |            Sustaining             | 
+----------------------------+-------------------+-----------------------------------+ 
|                            |      133.4        |               47.4                | 
+----------------------------+-------------------+-----------------------------------+ 
|        Cash Costs*         |                                         US$370/oz Au* | 
|                            |                                                       | 
+----------------------------+-------------------------------------------------------+ 
|        * Net of silver by-product credits at $7.50/oz  |                           | 
|                                                        |                           | 
+--------------------------------------------------------+---------------------------+ 
|        Financial           |                           |                           | 
+----------------------------+---------------------------+---------------------------+ 
|        Post tax IRR        |                   |                  21.3%            | 
+----------------------------+-------------------+-------+-------+-------------------+ 
 
 
The project will involve the mining and processing of 3.0 million tonnes of ore 
per annum over an open pit life of 11 and a half years.  The pit is expected to 
yield approximately 160,000 oz of gold and 820,000 oz of silver per year in 
doré, reflecting an average total process recovery of 81% for gold and 
approximately 75% for silver. Thereafter, the plant will be fed for a further 
five years at the same throughput rate by material previously stockpiled from 
the open pit or historic dumps which has been defined and is Canadian NI 43-101 
compliant. 
 
 
The metallurgical process involves the production of a flotation concentrate 
followed by the extraction of gold and silver into doré on site, incorporating 
an oxidation stage using the Albion Process. The Albion Process is a combination 
of ultra-fine grinding of concentrates and oxidative leaching at atmospheric 
pressure. The liberated gold and silver is then recovered as doré by the 
conventional CIL process. 
 
 
The residues from the flotation and gold plants will be disposed of in two 
separate but adjoining tailings management facilities (TMFs), which are ideally 
located and designed for this project. The EIS confirms that the Certej project 
and its TMFs will have a negligible impact on the local water streams, flora and 
fauna. Golder Associates have completed the design and cost study for the TMFs. 
The location of the two TMFs is in the same valley as the mine and plant, which 
results in only a single water catchment area and principality for the entire 
Certej project. 
 
 
Permitting process continues to advance 
 
 
The Certej project has already received all the technical mining approvals and 
permits required for the operation of mining activities: in September 2008, the 
Romanian National Agency for Mineral Resources ("NAMR") approved the Technical 
Feasibility Study ("TFS") for the project, as required under Romanian 
legislation, and also confirmed the official approval and registration of the 
project's resources and reserves. This completed all the mining approvals 
required for the project from NAMR and was a very significant step forward in 
the development of the project, as it effectively updates the mining permit and 
allows the TFS reserve to be mined. 
 
 
The Company recently updated the Certej Environmental Impact Study ("EIS"), 
incorporating the improved location of the TMFs in the same water catchment area 
as the rest of the mine infrastructure. This was submitted to the Romanian 
environmental authorities in Timisoara and has been incorporated into both the 
EIS and Zonal Urbanisation Plan ("PUZ") processes. The PUZ process is almost 
complete: the public notice period has already been concluded without any 
adverse comments and the dates for public meetings with the affected local 
communities have been agreed. A positive outcome of this process is expected in 
Q2 and represents a significant step forward in the environmental permitting 
process.  Following the approval of the PUZ, the EIS will also then be subject 
to the last requirement for public consultation prior to the issuance of the 
environmental permit. These are the final approvals required for the 
construction and operation of the plant, the tailings design and other related 
infrastructure. 
 
 
 
 
 
 
 
EXPLORATION IN ROMANIA 
 
 
  *   Exploration has commenced on the new licences 
 
 
 
In late 2008 and early 2009, the Company has acquired four new prospecting 
licences totalling some 466 square kilometres.  The licences cover two separate 
and highly-prospective areas.  The first area forms a westward extension to the 
Company's existing group of licences centred on Certej.  This western extension 
covers some 329 square kilometres. The block of licences includes the well-known 
Brad mines, which have produced as much as 20 million ounces of gold according 
to historic records, and were operated by the Romanian state until 2006. 
Deposits in this geological terrain include examples of disseminated gold, 
porphyry mineralisation as well as the more prolific and higher-grade epithermal 
deposits.  The Company has also acquired raw data from an airborne magnetic and 
radiometric geophysical survey which covers much of the area. Re-processing of 
the data has assisted in defining structures which have controlled intrusive 
activity and mineralisation along the belt allowing more detailed surveys to 
focus on the prospective areas.  A programme of geochemical sampling is underway 
to ensure there is complete cover along the Brad belt and this will be combined 
with geological mapping and the geophysical data to define drill targets.  This 
is the first time that an integrated modern exploration programme has been 
executed over the whole Brad-Certej belt. 
 
 
The second area covers some 137 square kilometres and includes the Deva copper 
gold porphyry and the Muncel-Vetel massive sulphide deposits.  The Deva porphyry 
was operated by the Romanian state owned mining company between 1950 and 2001. 
 During this time it produced some 19 million tonnes of ore at a grade of 0.7% 
copper. Gold grades were not recorded systematically throughout the mine life 
but are indicated to be approximately 0.5 g/t gold. The porphyry is defined to a 
depth of 800 metres and is one of a series of intrusives within a volcanic 
complex, which is completely under explored. The Muncel-Vitel area hosts known 
copper, lead and zinc mineralisation in a series of stacked massive sulphide 
horizons recorded as being Volcanogenic Massive Sulphides (VMS) type.  The 
mineralisation has been traced along more than 5 kilometres of strike length and 
the area has never been investigated with modern techniques. The Company has 
commenced detailed remapping of the Deva Porphyry volcanic complex and a 
programme of ground magnetic surveying is also underway.  Reconnaissance work, 
including measurements of magnetic susceptibility, has shown that the method is 
highly effective in identifying new areas of porphyry mineralisation, which have 
not been recognised historically or are concealed by cover, for future drill 
testing. 
 
 
  EXPLORATION IN TURKEY 
 
 
  *  New higher grade gold zone identified near Ardala 
 
 
 
In April 2008 the company entered into a joint venture (JV) with Ariana 
Resources plc (Ariana) with respect to mineral properties in the Eastern Pontide 
area of northeast Turkey. Significant progress has been made both in assessing 
the properties within the JV and in identifying new areas for acquisition 
following ten months of exploration. 
 
 
Mapping and lithological sampling of the advanced Ardala porphyry target has 
confirmed that porphyry mineralisation continues to the south of the previously 
recognised outcrops. Modelling of the newly discovered zone is now complete and 
drill testing will commence in mid 2009. 
 
 
Within the Ardala concession, a higher-grade gold zone has been identified by 
rock chip and soil sampling some three kilometres to the southwest of the main 
porphyry. A programme of detailed mapping and lithological sampling is underway 
to estimate strike and width prior to trenching and drilling.  The Company is 
also consolidating ground to the south of Ardala over known alteration systems 
relating to high-sulphidation systems with potential porphyry mineralisation 
underlying these. 
 
 
The Company continues to look for new opportunities in Turkey and the 
exploration team has conducted a number of exploration site visits to various 
portfolios, properties and deposits, both within the JV area of interest and 
elsewhere in Turkey. 
 
 
Documents to be sent to shareholders 
 
 
Copies of the Company's Annual Report, Management's Discussion and Analysis and 
Consolidated Financial Statements for the year ended 31 December 2008, and 
copies of the Notice of Meeting and Management Proxy Circular for the Annual 
Meeting of Shareholders of the Company to be held on 20 May 2009, will be sent 
to Shareholders and filed on SEDAR at www.sedar.com 
 
 
About European Goldfields 
European Goldfields Limited is a resource company involved in the acquisition, 
exploration and development of mineral properties in Greece, Romania and 
South-East Europe. 
Greece - European Goldfields holds a 95% interest in Hellas Gold S.A. Hellas 
Gold owns three major gold and base metal deposits in Northern Greece. The 
deposits are the polymetallic operation at Stratoni, the Olympias project which 
contains gold, zinc, lead and silver, and the Skouries copper/gold porphyry 
project. Hellas Gold commenced production at Stratoni in September 2005 and 
started selling an existing stockpile of gold concentrates from Olympias in July 
2006. Hellas Gold is applying for permits to develop and build the Skouries and 
Olympias projects. 
Romania - European Goldfields owns 80% of the Certej gold/silver project in 
Romania. In July 2008, the National Agency of Mineral Resources approved the 
technical feasibility study in support of its permit application and issued a 
new mining permit for the Certej project. 
 
 
 
For further information please contact: 
+------------------------------------+--------------------------------------+ 
| European Goldfields:               | e-mail: [e-mail]         | 
| David Reading, Chief Executive     | Tel: [phone]             | 
| Officer                            |                                      | 
+------------------------------------+--------------------------------------+ 
| Buchanan Communications:           | e-mail: [e-mail]       | 
| Bobby Morse / Katharine Sutton     | Tel: [phone]             | 
|                                    |                                      | 
+------------------------------------+--------------------------------------+ 
| RBC Capital Markets:               | e-mail: [e-mail]       | 
| Sarah Wharry                       | Tel: [phone]             | 
+------------------------------------+--------------------------------------+ 
 
 
Resources & reserves parameters 
 
 
For additional information on the resource and reserve estimates quoted in this 
news release, please refer to the Company's Resources & Reserves Declaration at 
www.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager, 
Exploration of the Company, was the Qualified Person under Canadian National 
Instrument 43-101 responsible for reviewing the disclosure of resource and 
reserve estimates quoted in this news release. 
 
 
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 2007, 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. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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