European Goldfields Limited

European Goldfields Limited

April 10, 2006 08:00 ET

European Goldfields: Reserves Announced for Certej Project

WHITEHORSE, YUKON--(CCNMatthews - April 10, 2006) - European Goldfields Limited (TSX:EGU)(AIM:EGU) is pleased to announce the conversion of resources into Canadian NI 43-101 compliant reserves for its 80%-owned Certej project in the Southern Apuseni Mountains of Romania.

The reserve estimation was carried out by independent consultants RSG Global Pty Ltd ("RSG Global") and can be summarised as follows:

Average Million Average Million
Million Gold Grade Ounces Siver Grade Ounces
Reserve Category Tonnes (g/t) Gold (g/t) Silver
Probable 27.7 2.0 1.76 11.6 10.35
Note: Lower cut-off grade of 0.8 g/t gold. Uniform conditioning and
based on a selected mining unit model using 6.25 X 12.5 X 2.5
metre blocks.

The reserve was estimated at a gold price of $425/oz and a silver price of $7/oz, and is based on the sale of gold rich concentrates. The estimation follows the completion of extensive metallurgical test-work, an in-house pre-feasibility study and subsequent pit optimisation and pit design work by RSG Global, which included a geotechnical drilling programme designed by Golders Associates of the UK. These studies resulted in:

- Confirmation that a flotation concentrate can be produced with high gold grades and recoveries

- An open pit with a low strip ratio of 2.6:1

- The definition of sites for infrastructure and tailings disposal

- A clear understanding of all work required to complete environmental studies and achieve all necessary permitting

It is envisaged that the project could mine and process 3.0 Mt per annum over at least nine years. At the proposed production rates, this would yield approximately 249,000 tonnes of concentrate per annum with grades averaging 21 g/t gold and 125 g/t silver, with a flotation gold recovery of approximately 88%. This translates into an annual production of approximately 170,000 oz of contained gold in the concentrate.

The conversion of resources into reserves means that the project can support the necessary capital investment and produce a robust return at a gold price of $425/oz and above.

David Reading, Chief Executive Officer of European Goldfields, said: "With the publication of reserves, the Certej project has now turned the corner. We are now completing a final feasibility study for submission to the Romanian government by year end in support of our permit application. Levels I and II of the Environmental Impact Assessment have already been completed. We have now defined a clear roadmap to permitting and project development."

Key Parameters for Reserve Estimation

Metallurgical data - During 2005, four representative, composite samples of ore were extensively tested by SGS-Lakefield of Canada to optimise the gold grade and recovery of a pyrite flotation concentrate. SAG mill modelling was also carried out to estimate the capital cost of a future processing plant. A summary of the flotation results for different zones of the deposit, based on averages from several locked-cycle flotation tests, is given below.

Sample ID Area Conc. Grade (gpt) Metal Recovery
Gold Silver Gold Silver
662 Central 26.8 495 96.8% 97.9%
679 Intermediate 19.8 76 89.5% 92.8%
663 East 19.4 42 84.2% 79.4%
670 West 18.7 79 84.2% 84.4%

The weighted average gives a gold recovery of 88% to a concentrate of 21 g/t gold and 125 g/t silver.

Concentrate sales - European Goldfields has received letters of interest from two East European metal traders indicating their willingness to negotiate the purchase of all the high-grade gold/silver flotation concentrates to be produced at Certej. The terms received confirm that the sale of concentrates would support the necessary capital investment and produce a viable return for the Certej project at a gold price of $425/oz and above and an assumed net smelter return (NSR) of 60%. Generally, the NSR improves as the gold price appreciates.

Capital and operating costs - The in-house pre-feasibility study calculated the total capital expenditure to be $69 million for the purchase of mining equipment and construction of a flotation plant, tailings and other infrastructure. The mining costs are estimated at $1.28/tonne of material mined, and the processing costs are estimated at $5.11/tonne of ore processed.

Certej Resources - The reported resources for the Certej deposit, as estimated by RSG Global in March 2005 and reported above a 1g/t gold lower cut-off grade, are summarised below.

Average Million Average Million
Million Gold Grade Ounces Siver Grade Ounces
Resource Category Tonnes (g/t) Gold (g/t) Silver
Measured 3.14 2.6 0.26 5 0.5
Indicated 28.29 2.1 1.91 12 10.5
Measured + Indicated 31.43 2.1 2.17 11 11.0
Inferred (East
/West Domains) 5.17 1.9 0.32 7 1.1
Inferred (Central
Domains) 3.47 1.5 0.17 10 1.1
Total Inferred 8.64 1.8 0.49 7.9 2.2
Note: Uniform conditioning and based on a selected mining unit model
using 6.25 X 12.5 X 2.5 metre blocks for the eastern and
western domains and inverse distance squared (using no
gold cut-off) for the central domains.

Disclosure of mineral resources for the Certej project is derived from a technical report prepared by RSG Global in accordance with the guidelines set out in Canadian National Instrument 43-101. The technical report was filed on SEDAR at on 23 March 2005 under the category "Technical Report".

A technical report from RSG Global on the Certej mineral reserve estimates will be filed on SEDAR within the next 45 days as an update to their technical report of 23 March 2005. Harry Warries of RSG Global was the Qualified Person under Canadian National Instrument 43-101 responsible for preparing and verifying the Certej reserve estimates quoted in this news releases.

On-site Production of Gold Dore Being Investigated

European Goldfields is also actively reviewing other development options to progress the project forward, such as confirming a process route for producing gold dore on site.

Of the available techniques, the Albion Process followed by cyanidation is considered the most promising. The Albion process is a combination of ultra-fine grinding and oxidatative leaching at atmospheric pressure. Samples of flotation concentrates produced from the locked-cycle test-work at SGS-Lakefield have been tested at Hydrometallurgy Research Laboratories of Australia. The results indicate that a flotation concentrate produced from Certej ore can be economically processed by the Albion Process to produce gold dore on site. European Goldfields has completed Stages I and II of a metallurgical test-work programme utilising the Albion process and expects to be reporting on these results during Q2 2006.

Exploration of Satellite Targets

Further exploration work in Romania is now focused on defining additional resources to add to the open-pitable reserves at Certej and extend the life of the project. European Goldfields has identified a number of satellite targets which comprise open-pitable mineralisation within the Certej licence area and the adjacent Baita-Craciunesti licence area. In addition, surface dumps are being evaluated for their tonnage grade and metallurgical characteristics.

Environmental Studies Underway

European Goldfields has completed the necessary Environmental Impact Assessments (EIA Levels I and II). The next stage will be to complete an Environmental Impact Study (EIS) in order to progress to full feasibility study and permit application by year end. ECOIND, a Romanian company with a well-proven track record in environmental research and permitting procedures, have been employed to assist in this process.

About European Goldfields

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

In addition to its Romanian assets, the Company holds a 65% interest in Hellas Gold S.A. ("Hellas Gold"). 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 7.6 Moz gold, 65.8 Moz silver, 0.7 Mt copper, 0.7 Mt lead and 0.9 Mt zinc, from a measured and indicated resource base of 9.4 Moz gold, 74.5 Moz silver, 1.0 Mt copper, 0.8 Mt lead and 1.1 Mt zinc (65% attributable).

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.

Hellas Gold's assets also include potential revenue-generating stockpiles of gold concentrates.

In September 2005, Hellas Gold resumed production at Stratoni following the award by the Greek State of all necessary environmental and mining permits. Hellas Gold is in the process of applying for similar permits for Olympias and Skouries, having met its first milestone by submitting business plans to the Greek government in January 2006.

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 Patrick Forward, General Manager, 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 information included in this news release, 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; 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; and the risks normally involved in the exploration, development and mining business. These factors are discussed in greater detail in the Company's Annual Information Form for the year ended 31 December 2005, 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.

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