European Goldfields Limited
TSX : EGU
AIM : EGU

European Goldfields Limited

September 29, 2005 08:30 ET

European Goldfields Limited: Operational Update-Stratoni Mill Producing

WHITEHORSE, YUKON--(CCNMatthews - Sept. 29, 2005) - European Goldfields Limited (AIM:EGU)(TSX:EGU) is pleased to provide the following update on Hellas Gold S.A.'s operations following the award of the mining permit for Stratoni on 12 September:

- Greek Ministry of Development publicly announces reopening of the Stratoni mine

- Production has now resumed at the Stratoni mill

- Underground mining to start in October

- Work on the new Stratoni decline under way

- Invitations to bid for lead & zinc concentrates issued to international traders

- First shipment of concentrates from Hellas Gold's Stratoni port facility expected in November

Commenting on the announcement, David Reading, Chief Executive Officer of European Goldfields, said: "We are delighted to have commenced production at Stratoni, with cash-flow from the Hellas Gold project expected this year. The project has received strong support from the Greek government and local communities. This successful outcome paves the way for further development of our Olympias and Skouries projects in Greece."

Stratoni Mill

The Stratoni Mill has now resumed production in Northern Greece. The mill has a capacity of more than 400,000 tonnes per year of run of mine ore. The mill is currently treating a stockpile of ROM material totalling some 15,000 tonnes. The first shipment of lead and zinc concentrates is expected in November carried by vessels loaded at Hellas Gold's refurbished Stratoni port.

Underground Mining

Production faces have been made available through the recent refurbishment of the Stratoni mine and new backfill plants have been installed to open up additional production areas and also for backfilling the old workings.

Hellas Gold is in the final stages of negotiating a "turn-key" mining contract with Aktor S.A., European Goldfields' partner and the largest construction company in Greece.

New production will be delivered from underground in October. Production of ore is expected to reach 170,000 tonnes by the end of the first year of full scale production, steadily increasing thereafter. The total proven and probable reserve at Stratoni is 1.923Mt grading 10.8% zinc, 8.1% lead and 190 g/t silver.

New Stratoni Decline

In May 2005, Hellas Gold signed a fixed priced "turn-key" contract with Aktor for the construction of a new 1,900-metre access tunnel (or decline) at Stratoni. Work on the new decline has now commenced, following the award of the Stratoni mining permit in September.

The decline is being developed to provide improved access to the Stratoni reserve and allow larger scale mining operations to be effected by the end of Q2 2006. The new decline is expected to raise mine output with a minimal increase of labour, while removing the necessity to build a large underground maintenance facility.

The new decline will also provide access to conduct further drilling of the current inferred resources in order to upgrade these into additional reserves.

The new decline will pass from the old workings of Madem Lakkos to the current reserves at Mavres Petres intersecting marble units in the process. Marbles are the host rock to the mineralisation at Stratoni and a drill programme has been designed with the potential to find more resources in these areas, which have previously been inaccessible for drilling.

Sale of Lead & Zinc Concentrates

Hellas Gold has issued invitations to bid for lead and zinc concentrates to a selection of international traders. Responses are expected shortly, with a view to securing a three-year plus off-take agreement by the end of Q4 2005.

Stratoni concentrates are considered metallurgically 'clean' with little deleterious material. This has ensured that in the past they have been easily sold and attract little by way of penalties.

In September 2004, two shipments of lead and zinc concentrates of US$3.4 million in value were sold from Stratoni through the refurbished port facility.

About European Goldfields

European Goldfields Limited is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and the Balkans.

Greece - European Goldfields holds a 65% interest in Hellas Gold S.A. Hellas Gold owns assets in Northern Greece which consist of three deposits within 70-year mining concessions covering a total area of 317 km2. The deposits include the polymetallic projects of Stratoni and Olympias which contain gold, lead, zinc and silver, and the copper-gold porphyry body referred to as Skouries. All three deposits have been well defined with over 200,000 metres of drilling and the completion of feasibility studies and later engineering studies.

The total proven and probable reserves of these assets are 17.2 Moz on a gold equivalent basis (65% attributable equals 11.2 Moz) from a measured and indicated resource base of 21.8 Moz gold equivalent (65% attributable equals 14.2 Moz). These assets represent some of the largest defined deposits in Europe. The three deposits are located within a 10 km radius of each other, making this effectively a gold and base metals centre. Furthermore, both Stratoni and Olympias were previously in production and have extensive existing mining and plant infrastructure and a ship loading facility on the Aegean Sea, making them near-production properties which require new permits. Hellas Gold's assets also include potential revenue generating stockpiles and tailings located on the surface.

Romania - European Goldfields holds five mineral properties located within the "Golden Quadrilateral" area of Romania, where it has recently completed an in-house pre-feasibility study underpinning the value of its 80%-owned Certej deposit. The Certej deposit hosts measured and indicated resources of 31.4 Mt grading 2.1 g/t gold and 11 g/t silver for 2.34 Moz of gold equivalent (80% attributable equals 1.88 Moz).

For additional information on the resource and reserve estimates quoted above, please refer to the Company's Resources & Reserves Declaration at www.egoldfields.com/goldfields/resources.jsp.

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:
    David Reading
    Chief Executive Officer
    Office: +44 (0)20 7408 9534, Mobile: +44 (0)7703 190 652
    or
    European Goldfields:
    David Grannell
    Chief Financial Officer
    Office: +44 (0)20 7408 9534, Mobile: +44 (0)7703 190 652
    info@egoldfields.com
    www.egoldfields.com
    or
    Buchanan Communications:
    Bobby Morse / Ben Willey
    Office: +44 (0)20 7466 5000, Mobile: +44 (0)7802 875 227
    bobbym@buchanan.uk.com
    or
    The Sherbourne Group
    Forbes West
    Office: +1 416 203 2200
    forbes@sherbournegroup.ca