European Goldfields Ltd
RESULTS FOR Q2 2010
10 August 2010 - European Goldfields Limited (AIM: EGU / TSX: EGU)
("European Goldfields" or the "Company") today reports its results for
the quarter ended 30 June 2010. The financial statements, as well as
the accompanying Management's Discussion & Analysis, are available for
review at http://www.egoldfields.com/egoldfields/en/financials/
quarterlies and should be read in conjunction with this news release.
The above documents can also be viewed by following the links below;
http://www.rns-pdf.londonstockexchange.com/rns/8003Q_1-2010-8-9.pdf
http://www.rns-pdf.londonstockexchange.com/rns/8003Q_2-2010-8-9.pdf
Operational and development highlights:
- Greece: final EIS submitted
- Romania: final Certej EIS submitted
- Final credit approval for US$135m Certej financing
- Exploration drill permit approved for Greek projects
- Stratoni environmental permit extended
Corporate activity:
- Appointment of Nomad/Joint Brokers
- Appointment of VP Business Development
Financial highlights:
- Sales US$12 million
- Working capital of US$106 million
Commenting on the results, Martyn Konig, Executive Chairman and
President of European Goldfields, said:"During the first half of 2010 we
have made significant progress in the
permitting of our development projects. With the submission of both
the Certej and the Greek EIS, we have reached another significant
milestone towards bringing the projects to production. We are pleased
to have our project financing commitments in place at Certej and the
Company is progressing innovative financing alternatives for the
development of the Greek projects. The recent approval of an
exploration drill permit for the Greek projects highlights our
commitment to providing long term value and significant upside
potential for our shareholders."
SELECTED FINANCIAL DATA
Quarter ended 30 June
(in thousands of US dollars, 2010 2009
except per share amounts) $ $
Statement of profit and loss
Sales 11,969 16,204
Gross profit 272 3,186
Profit/(Loss) before income tax (20,555) 2,653
Income taxes 1,941 (1,078)
Profit/(Loss) after income tax (18,614) 1,575
Non-controlling interest 341 (136)
Profit/(Loss) for the period (18,273) 1,439
Earnings/(Loss) per share (0.10) 0.01
30 June 2010 30 June 2009
(in thousands of US dollars) $ $
Balance sheet
Working capital 105,796 171,185
Total assets 724,581 753,196
Revenues decreased from $16.2 million to $12.0 million in Q2 2010
compared to the prior year quarter because there were no sales of gold
bearing pyrite concentrates which had been a significant revenue and
profit driver for the Company in the last two years. The performance
of the Stratoni base metal mine showed a marked improvement compared to
the prior year quarter, generating a small gross profit primarily as a
result of higher realised metal prices, but this was unable to replace
the profitability of the gold concentrate business.
At the net profit level, the Company made a loss of $18.3 million in
the current quarter, down from a profit of $1.4 million for the same
period in 2009. Apart from the changes in operating profitability, the
main driver related to a $10.4 million foreign exchange loss versus a
$1.2 million gain in Q2 2009, plus higher corporate overheads and
Hellas Gold related costs. The majority of the exchange losses are
unrealised and have arisen as a result of changes to the US Dollar
values of Euro cash and cash equivalents. With the strengthening of
the Euro since the end of Q2 2010, a large portion of this loss has
already reversed.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
GREECE
- Final EIS submitted
- Exploration drill permit approved
- Stratoni environmental permit extended
- Updated reserve statement
Final EIS Submitted - The final Environmental Impact Study ("EIS") for
the Company's Project in Halkidiki (the "Project") in North-Eastern
Greece has now been submitted to the Greek Ministry of Environment,
Energy and Climate Change ("MoE").
In late September 2009, the Greek authorities completed the Preliminary
Environmental Assessment and Evaluation based on the Preliminary
Environmental Impact Study ("PEIS") submitted by the Company's
95%-owned subsidiary Hellas Gold SA, and issued a pre-approval of the
construction and operation of the Project.
The Project consists of:
- The development of mining and processing at the Skouries project
- The next stages of the Olympias project, namely the mining and
processing of ore and metallurgical treatment of the concentrate, in
accordance with the business plan as originally submitted
- Continuation of operations at the Mavres Petres deposit of the
Stratoni Mine
- Development of the port facilities at Stratoni to service the
above projects' operations
The completion and submission of the final EIS is another landmark in
European Goldfields' development of the Project.
The EIS will now be subject to the final stages of a decision-making
process that conforms to the EU Directive on Environmental Impact
Assessment. In summary, the EIS is reviewed by the competent
authorities and is subject to public consultation, the requirements for
which are set out in this EU Directive and embodied in Greek law.
Drill Permit Approved - The Company announced in June the approval of
an exploration drill permit within its 317 km2 Greek Licence Area which
hosts the Stratoni mine, the Olympias and Skouries development projects
and three drill-ready exploration targets.
The Company plans to advance a pipeline of highly prospective
exploration targets, all located within 10km of the Company's producing
mine and development projects. The Board of Directors has approved a
US$9.2 million exploration budget for Greece with the primary objective
of increasing gold resource ounces to add to the 7.5 million proven and
probable gold reserve ounces already defined at Olympias and Skouries.
Stratoni Environmental Permit Extended - The Environmental Permit for
its Stratoni lead-zinc-silver mine has been extended until the end of
July 2012. The extended permit was received by the Company from the
MoE on the 12th of July. The extended permit ensures production can
continue until the granting of the overall Environmental Permit for all
of European Goldfields' projects in Northern Greece.
Reserves Update -New reserves have been estimated for the Company's
Stratoni operation as follows:
Reserve Category '000t Ag g/t Ag Moz Pb % Pb '000t Zn % Zn '000t
Proven 1,657 174 9.3 6.1 101 8.5 141
Probable 103 225 0.7 8.7 9 9.3 10
Total 1,760 177 10.0 6.3 110 8.5 150
The Company's ongoing mining activities at Stratoni depleted the
reserve by a total of some 295,000 wettonnes over the course of 2009
and Q1 2010 compared to the January 2009 reserve detailed in the June
2009 report. Additional tonnes were added through exploration to the
lower part of the mine but were offset by other sections of the mine
being inaccessible due to adverse geotechnical conditions. The deposit
is open in several directions and further expansion of reserves is
planned through the 2010 exploration drilling programme.
The Company's Resource and Reserve statement has also been updated to
reflect the depletion of the Olympias gold concentrate stockpile.
Stratoni Production
Q2 2010 Q2 2009
Production
Ore mined (wet tonnes) 64,813 60,023
Sales
Zinc concentrate (tonnes) 10,279 10,571
- Containing payable: Zinc (tonnes)* 4,159 4,427
Lead concentrate (tonnes) 4,682 3,786
- Containing payable: Lead (tonnes)* 3,071 2,448
Silver (oz)* 232,212 183,452
Inventory (end of period)
Ore mined (wet tonnes) 16,392 2,293
Zinc concentrate (tonnes) 2,663 25
Lead/silver concentrate (tonnes) 902 2,090
* Net of smelter payable deductions
ROMANIA
- Final EIS submitted
- Final credit approval for US$135m Certej financing
Final EIS Submitted - The final Environmental Impact Study ("EIS") for
the Company's Certej Project in Romania has now been submitted. This
follows the issue of the Zonal Urbanisation Plan ("PUZ") planning
document by local authorities in May 2010, which included an
environmental summary and public consultation, and the subsequent
definitive confirmation of final guidelines for the EIS. The completion
and submission of the final EIS report is another landmark in European
Goldfields' development of the Certej Project.
The EIS will now be subject to the final stages of a Romanian
decision-making process that conforms to the EU Directive on
Environmental Impact Assessment. In summary the EIS is reviewed by the
competent authorities and is subject to public consultation,the
requirements for which are set out in this EU Directive and embodied in
Romanian law.
Final Credit Approval for Certej Financing - The Company has received
formal letters of commitment to underwrite a US$135 million financing
package to part fund the development costs of the Certej gold-silver
Project in Romania (the "Project"). The Mandated Lead Arrangers are
Caterpillar Financial SARL, ING Bank N.V., Investec Bank plc, UniCredit
Bank AG, London Branch and WestLB AG, London Branch, (together the"MLAs").
The structure of the financing package has further been optimised since
the signing of the mandate letter and now consists of an 8 year US$120
million secured, limited recourse debt facility and a US$15 million
secured equipment lease facility. The commitments are on the basis of
detailed term sheets which have been agreed with the Company and a
Technical, Environmental and Social Audit of the Project conducted by
SRK Consulting on behalf of the MLAs.
GROUP EXPLORATION UPDATE
Greece - Following the recent approval of the exploration permit for
the Greek Licence area, the Company has initiated a planned programme
of drilling totaling 40,500m for the 3 main exploration targets,
Piavitsa, Fisoka and Tsikara, aimed at establishing continuity and
delineating resources.
Romania - The Company has identified a series of epithermal and
porphyry drill targets within the Romanian licence area that includes
extensions to historically exploited gold bearing systems, previously
unrecognized 'blind porphyry and epithermal targets and massive
sulphide deposits previously untested for gold and silver. Following
infill sampling a programme of drill and trench testing will be carried
out in Q3 and Q4 with a total approved budget of US$4.4 million for
2010.
Turkey - Detailed surface worked carried out by the Company has defined
a number of new targets on licences held in Joint Venture agreements
with Ariana Resources and Aldridge Minerals. These targets are due to
be drilled during the second half of 2010 under the approved US$2.1
million exploration budget.
CORPORATE ACTIVITY
Appointment of Nominated Advisor and Joint Broker -Liberum Capital
Limited was appointed as NOMAD and Joint Broker and Evolution
Securities Limited as Joint Broker to the Company on 10 June 2010.
New Appointments - Steve Sharpe has been appointed as Vice President,
Business Development. Mr Sharpe has over 25 years investment banking
experience, focused primarily on the mining sector. Before joining
European Goldfields he was Managing Director-Structured Finance at
Canaccord Genuity Limited, and prior to that held senior management
positions at Endeavour Financial, Standard Bank and N M Rothschild &
Sons Limited.
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.
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/egoldfields/en/operationsprojects/state
Patrick Forward, VP Projects & 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
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 Liberum Capital Limited
Steve Sharpe, VP Business Development Simon Atkinson
e-mail: info@egoldfields.com Tom Fyson
Tel: +44 (0)20 7408 9534 Tel: +44 (0) 20 3100 2000
Buchanan Communications Evolution Securities Limited
Bobby Morse / Katharine Sutton Rob Collins
e-mail: bobbym@buchanan.uk.com Tim Redfern
Tel: +44 (0)20 7466 5000 Tel: +44 (0)20 7071 4300
This information is provided by RNS
The company news service from the London Stock Exchange
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