European Goldfields Limited
TSX : EGU
AIM : EGU

European Goldfields Limited

June 30, 2005 08:00 ET

European Goldfields Limited on Track Regarding Business Plans for Gold Projects; 17% Increase in Stratoni Reserves

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 30, 2005) - European Goldfields Limited (TSX:EGU)(AIM:EGU) is pleased to provide an update on its operations in Greece.

European Goldfields is on schedule for completion of all studies related to producing new business plans for its Skouries and Olympias gold projects. This will be done in accordance with the requirements of the contract between Hellas Gold and the Greek State whereby Hellas Gold must submit its business plans for the gold projects by the end of 2005. The Greek Government then has two months to review the projects and ten months to issue all the necessary permits so that construction can commence.

The Olympias deposit is located 2 km west of the Aegean Sea in Northern Greece. Olympias is a polymetallic deposit containing 14 Mt proven & probable reserves grading 8.6 g/t gold, 120 g/t silver, 3.9% lead and 5.2% zinc. Olympias benefits from extensive mining and plant infrastructure already in place, and a port facility nearby at Stratoni.

The Skouries deposit is a typical gold-copper porphyry deposit which forms a near vertical pipe and is located 17 km southwest of Olympias. Skouries is located on a high plateau with no habitation in the immediate vicinity and has both potential for open pit and subsequent underground exploitation. Skouries has 130 Mt probable reserves grading 0.9 g/t gold and 0.6% copper.

Skouries

Due to their extensive historical knowledge of the project, Steffen, Robertson and Kirsten (SRK) have been retained to advise and assist European Goldfields and Hellas Gold on completion of a mining plan for the Skouries project.

SRK have undertaken a comprehensive review of all previous feasibility work, and financial scoping models have been outlined for various mining scenarios based on the current resources. This work has indicated that the most appropriate mining solution would include a combination of open pit and underground methods to optimise the production rates and allow maximum flexibility for more selective exploitation. The SRK study will also investigate options for backfill of mining excavations with rock waste and, where appropriate, tailings in order to minimise surface land use.

The Skouries plant facility will generate saleable gold and copper/gold concentrates and its capacity is the subject of new investigations by Aker Kvaerner aimed at updating the capital and operating costs of an appropriately sized process plant in order to dovetail with the mining production plan.

Additional technical studies on the Skouries deposit will focus on updating the environmental baseline work within the project area and determining the appropriate site for the tailings management facility. This work is being undertaken by Greek consultancy groups (ADK and Enveco SA) in collaboration with Hellas Gold personnel.

Finally, further metallurgical test work on oxide material from previous diamond cores at Skouries confirms the copper and gold recoveries outlined in the original Aker Kvaerner feasibility study. For instance, gold recovery is expected to be over 80% after the first year of production with the gravity and flotation circuits that will be used.

Olympias

Hellas Gold and European Goldfields have commissioned Outokumpu and Aker Kvaerner to undertake metallurgical studies to define viable process options for the Olympias deposit. This work will be completed later this year when a decision will be made regarding the preferred option to be taken to produce an updated feasibility study. Cognizance has been taken of the historical issues relating to previous feasibility studies and permitting. Concerted and focused efforts have been made to engage all potential stakeholders and interested parties in the decision process.

It is proposed that the mining of the Olympias deposit will be undertaken in various phases commencing with the processing of surface tailings followed by exploitation of the Eastern zone and then finally an expansion of the underground infrastructure in order to increase production capacity. Initially, a surface tailings stockpile of 2.4 Mt grading 3.4 g/t gold will be re-concentrated over a three-year period followed by mining of the high grade, Eastern deposit (1.3 Mt grading 16 g/t gold, 13% lead plus zinc and 191 g/t silver) at a rate of 400,000 tonnes per annum, and finally expansion of the mine to a rate of 750,000 tonnes of ROM per year to exploit the total reserve. In-house studies are currently in progress to define the optimum capital mining investment for long-term expansion of the production levels at Olympias.

In addition to the mining and metallurgical work, studies are also in progress involving Greek consultants and Hellas Gold personnel in order to define the best site for tailings management facilities and to complete the environmental base line studies. A centralised processing and tailings facility is preferred involving both the Stratoni and Olympias projects. An effort will be made in the current studies to minimise surface rock waste and tailings by utilising underground fill methods. The environmental base line and tailings studies are currently in progress.

Stratoni - 17% Increase in Reserves

The award of environmental permits for Stratoni was announced on 30 March 2005. The permitting process for the final mining permit is progressing in accordance with normal procedure in Greece, with the assistance of European Goldfields' Greek partner, Aktor. Production is ready to commence as soon as the final mining permit is issued, with recently refurbished and fully operational infrastructure already in place.

The new, more efficient mining method adopted by Hellas Gold for the Stratoni mining permit has resulted in a 17% increase in reserves, which can now be reported as follows:



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Reserve Ag Ag Pb Pb Zn Zn
Category '000t g/t Moz % '000t % '000t
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Proven 1,061 191 6.50 8.0 85 10.0 106
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Probable 862 189 5.24 8.1 70 11.7 101
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Total 1,923 190 11.74 8.1 155 10.8 207
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Patrick Forward, General Manager, Exploration of European Goldfields, was the Qualified Person responsible for producing the updated reserve estimates for the Stratoni deposit quoted above. A report will be filed of SEDAR (www.sedar.com) within the next 30 days updating Behre Dolbear & Company, Inc.'s previous prefeasibility study on the Stratoni deposit filed on SEDAR on 29 October 2004 under the category "Technical Report".

Forward-looking statements

This news release contains certain forward-looking statements concerning the Company's future operations, economic performances, financial condition and financing plans. These statements are based on certain assumptions and analyses made by the Company in light of the its experience and its perception of historical trends, current conditions and expected future developments as well as other factors the Company believes are appropriate in the circumstances. However, whether actual results and developments will conform to the Company's expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by the Company will be realised or, even if substantially realised, that they will have the expected consequences to or effects on the Company and its subsidiaries or their businesses or operations. The Company undertakes no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.


Contact Information

  • European Goldfields Limited
    David Reading, Chief Executive Officer
    +44 (0)20 7408 9534 (Office)
    +44 (0)7703 190 652 (Mobile)
    or
    European Goldfields Limited
    David Grannell, Chief Financial Officer
    +44 (0)20 7408 9534 (Office)
    +44 (0)7703 190 652 (Mobile)
    info@egoldfields.com
    www.egoldfields.com
    or
    Buchanan Communications
    Bobby Morse
    +44 (0)20 7466 5000 (Office)
    +44 (0)7802 875 227 (Mobile)
    bobbym@buchanan.uk.com
    or
    Buchanan Communications
    Ben Willey
    +44 (0)20 7466 5000 (Office)
    +44 (0)7802 875 227 (Mobile)