European Goldfields Limited

European Goldfields Limited

November 10, 2005 08:00 ET

European Goldfields Limited: Off-Take Agreements Secure Sale of Stratoni Production

WHITEHORSE, YUKON--(CCNMatthews - Nov. 10, 2005) - European Goldfields Limited (TSX:EGU)(AIM:EGU)is pleased to announce that its 65%-owned subsidiary Hellas Gold S.A. has entered into off-take agreements with Trafigura Beheer B.V., Euromin S.A. and MDIL (UK) Ltd for the sale of lead/silver & zinc concentrates produced at Stratoni in Northern Greece.

Under the off-take agreements, Hellas Gold has agreed to sell concentrates representing approximately 90% of all projected production for 2005, 2006 and 2007, and 65% of lead/silver and 25% of zinc production in 2008. The agreements provide for fixed penalties and treatment charges for the contract term. Metal prices will vary according to market. Hellas Gold intends to sell excess production on the spot market.

At current metal prices, the off-take agreements are expected to generate US$114 million in total gross revenue by the end of 2008. The final net income will take into account operating costs, capital depreciation and Hellas Gold's environmental commitments.

The first shipment of concentrates is expected by the end of November 2005, carried by vessels loaded at Hellas Gold's refurbished Stratoni port.

Commenting on the off-take agreements, David Reading, Chief Executive Officer of European Goldfields, said:

"The signing of these off-take agreements is another major milestone achieved this year, which secures long-term cash flow from Stratoni starting in 2005.

Hellas Gold, the only lead & zinc start-up in 2005, commenced production in an environment of strong metal demand and depleting global stockpiles, especially for zinc. The favourable terms secured is a reflection of the high demand for these concentrates and endorses the value of the project.

Our attention is now focused on our other major gold and base metals projects of Olympias and Skouries, where we intend to build on the successful launch at Stratoni."

The Stratoni mill commenced production of concentrates in September 2005. Based on historical production levels, the Stratoni mine is expected to produce consistent grades of 8-10% lead, 8-11% zinc and 200 g/t silver, with concentrator metal recoveries consistently high at around 90%.

New production from underground started in October 2005. Production of ore over the current life of mine is expected to reach the following volumes of ROM:

- Year 1: 170,000 tonnes
- Year 2: 250,000 tonnes
- Year 3: 300,000 tonnes
- Year 4: 375,000 tonnes
- Year 5: 400,000 tonnes
- Year 6: 400,000 tonnes

The total proven and probable reserve at Stratoni is 1.923Mt grading 10.8% zinc, 8.1% lead and 190 g/t silver. For additional information on the resource and reserve estimates for the Company's projects, please refer to the Resources & Reserves Declaration at

Patrick Forward, General Manager, Exploration of European Goldfields, was the Qualified Person under Canadian National Instrument 43-101 responsible for reviewing this news release.

Forward-looking Statements

Certain information included 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 statements." The words "expect", "will", "intend", "estimate" and similar expressions identify forward-looking statements. 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 worldwide price of gold, base metals or certain other commodities (such as fuel and electricity) and currencies; ability to successfully integrate acquired assets; legislative, political 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; and the risks involved in the exploration, development and mining business. These factors are discussed in greater detail in the Company's most recent Management's Discussion and Analysis filed on SEDAR at The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Contact Information

  • European Goldfields
    David Reading
    Chief Executive Officer
    Office: +44 (0)20 7408 9534, Mobile: +44 (0)7703 190 652
    European Goldfields
    David Grannell
    Chief Financial Officer
    Office: +44 (0)20 7408 9534, Mobile: +44 (0)7703 190 652
    Buchanan Communications
    Bobby Morse / Ben Willey
    Office: +44 (0)20 7466 5000, Mobile: +44 (0)7802 875 227
    The Sherbourne Group
    Forbes West
    Office: +1 416 203 2200