EURO Ressources S.A.
TSX : EUR

EURO Ressources S.A.

April 03, 2006 06:40 ET

EURO Ressources S.A. Announces Results for Year Ended December 31, 2005

PARIS--(CCNMatthews - Apr 3, 2006) -

EURO Ressources S.A. (TSX:EUR)(Euronext of the Bourse de Paris:EUR) today announced its audited financial results for the year ended December 31, 2005 prepared in accordance with Canadian GAAP.

During 2005, the Company benefited from the royalty income payable from the Rosebel Gold Mine and recorded $4.89 million of revenue compared to $97,000 in 2004. Substantially all of this revenue is income from the Rosebel Royalty. Hedging costs associated with this revenue were $0.55 million (2004: nil) providing net revenue of $4.34 million (2004: $97,000).

James Dunnett, Directeur-General of EURO stated: "Our much improved financial situation is reflective of these revenues from Rosebel and the outlook is promising. The performance of the Rosebel mine continues to impress with 2005 gold production of 341,400 ounces. Cambior reports mineral reserves at 31 December 2005 representing an increase of over 30% from 2004, after the production for the year."

"However, I am disappointed that the company reports a net loss of $1.48 million for the financial year due to recognition of mark-to-market losses on gold derivative used to hedge certain of the future cash flow from the Rosebel Royalty. Notwithstanding the economic effectiveness of these derivatives, we have been required to recognize against income the total unrealized mark-to-market position of our outstanding gold hedge position. These derivative losses of $9.56 million (2004: nil), before tax adjustment, reflect additional earnings that will be recorded in future periods from that portion of the Rosebel Royalty income that is matched to these derivatives."

"These hedging losses do not reflect current cash-flow. If hedge accounting had been available, as we had anticipated, these prospective losses would have been brought to account against future matching income, and we would have recorded a substantial earnings position for 2005. We are now in the unfortunate situation that due to these derivative hedges that we entered into to provide assured cash-flow for our debt financing, an increase in gold price will provide increased cash flow and increased economic value for our Rosebel Royalty asset, but may result in our reporting losses."

"Reflecting the greater certainty of future profitability for the Company, a deferred tax asset was established in 2005, recording the value of the income losses incurred by the Company in prior years that are available to offset tax liability on future income. Prior to unrealized derivative losses associated with future income from the Rosebel Royalty, this gave rise to a deferred tax credit of $4.72 million (2004: nil), and the Company would have reported net income of $4.93 million." A further deferred tax credit of $3.16 million was recognized against the $9.56 million derivative losses recorded.

The resultant net loss of $1.48 million compares to a loss of $2.24 million in 2004. The net loss per common share in issue during 2005 was 3.3 cents compared to a net loss of 5.0 cents per share during 2004.

Further analysis of the financial results follows:

-- Expenses specific to the Rosebel Royalty, namely, depletion ($1.36 million) and debt accretion ($0.54 million) did not arise in 2004. The debt accretion expense is the equivalent of interest on the outstanding and contingent purchase price for the Rosebel Royalty.

-- General and administrative expenses were $1.32 million (2004: $1.30 million) reflecting continued high legal and accounting expenses related to the reorganization of the Company and its Rosebel acquisition.

-- Interest of $472,000 on loans from Macquarie Bank and Golden Star, compared to the interest expense of $824,000 recorded in 2004.

Consolidated cash and short-term investments as of December 31, 2005 totalled $1.47 million versus $1,000 at December 31, 2004. Total current assets net of accounts payable were $2.79 million compared to ($86,000) at December 31, 2004.

As reported by Cambior Inc., gold production from the Rosebel mine was 341,400 ounces during 2005 and Cambior currently forecasts production of 335,000 ounces of gold for Rosebel during calendar 2006. More detailed information about the Rosebel gold mine is available on Cambior's website at: www.cambior.com.

EURO Ressources S.A. is a French company, presently focused on acquiring and holding mineral royalties on operating gold mines. Additionally, EURO continues to hold certain exploration and development mineral rights, principally gold, in French Guiana, which are the subject of joint venture arrangements. EURO has approximately 49 million shares outstanding.

Statement Regarding Forward-Looking Information: Some statements in this news release are forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. There can be no assurance that further developments affecting EURO will be those anticipated by management.

Additional information relating to EURO Ressources S.A. is available on SEDAR at www.sedar.com.

Contact Information

  • EURO Ressources S.A.
    James H. Dunnett, 604-710-2242
    (Fax) 604-608-3283
    jhdunnett@aol.com
    or
    Allan J. Marter, 303-894-4631