European Minerals Corporation
TSX : EPM
AIM : EUM

European Minerals Corporation

May 15, 2008 10:03 ET

European Minerals Corporation: Press Release

LONDON, ENGLAND--(Marketwire - May 15, 2008) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES

RESULTS FOR THE QUARTER ENDED MARCH 31, 2008

European Minerals Corporation ("EMC or the "Company")(TSX:EPM)(AIM:EUM) an international mining, mineral exploration and development company focused on identifying, acquiring and developing resource projects, today reports its results for the quarter ended March 31, 2008. All amounts are expressed in US dollars unless otherwise indicated.

Tony Williams, Chairman of EMC commented today:

"We continue to make good progress at Varvarinskoye. As we have previously stated the mine is on target to reach commercial production in Q3 this year. We recently announced an increase in estimated measured and indicated mineral resources at Varvarinskoye. All this bodes well for the future of the mine. We are also pleased to announce the signature of the Agreements for our acquisition of Lero Gold Corporation. In the next few weeks the Lero shareholders will vote on the acquisition, if the transaction is completed we firmly believe that the opportunities available to the enlarged company should enhance shareholder value for all our shareholders"

HIGHLIGHTS

Operational

- Plant commissioning completed

- First six gold sales and cash generated from the Varvarinskoye Project

- Additional resources (See Press Release dated May 9, 2008)

- First copper-gold concentrate produced

- First shipment of copper concentrate expected in May 2008

- Potential Acquisition of Lero Gold Corporation (See Press Releases dated April 18, 2008 and May 13, 2008).

Financial

- As at March 31, 2008, the Company had assets of $264.6 million with cash balances totalling $6.8 million.

- EBITDA loss of $2.1 million (2007 - $1.8 million).

MANAGEMENT'S DISCUSSION AND ANALYSIS

A full Management's Discussion and Analysis of results for the period ended March 31, 2008 ("MD&A") together with the Financial Statements ("Financials") for the same period are available on SEDAR at www.sedar.com. These documents can also be obtained on application to the Company.

The following information has been extracted from the MD&A and the Financials.

Description

EMC is a mining, mineral exploration and development company focused on identifying, acquiring and developing resource projects. The Company's principal asset is the Varvarinskoye Gold-Copper Mine ("Varvarinskoye" or "Varvarinskoye Project") located in the Republic of Kazakhstan and held by a wholly-owned subsidiary of the Company, JSC Varvarinskoye ("JSCV").

The Company's shares are traded on the Toronto Stock Exchange and on the Alternative Investment Market of the London Stock Exchange under the symbols "EPM" and "EUM" respectively.

VARVARINSKOYE PROJECT

The Varvarinskoye Project is located close to the village of Varvarinka, 130 km southwest of Kustanai in Northern Kazakhstan. The project occupies an area of approximately 1,300 hectares. During the Quarter ended March 31, 2008 ("Q1 2008") management's main focus was progressing the commissioning of the Plant which was completed by April 2008 and now is ramping up to commercial production.

Progress update

Further positive progress was made during Q1 2008 and continues to be made in bringing the plant to commercial production. Mechanical availability of the process equipment continued to improve and reached 93% in April 2008 with no unplanned shutdown of major equipment. Commissioning and commencement of operating ramp up during a severe winter has been successfully achieved with no major impact on operations. Gold continues to be poured on a regular basis; six shipments have now been delivered to the Metalor refinery in Switzerland. JSCV has approximately 4,000 tonnes of copper gold concentrate (18% copper and 22 g/t gold) bagged at its Tobol railhead, awaiting Russian Railway wagons to dispatch the concentrate to a smelter, expected before the end of May 2008. Until commercial production is achieved cash generated from metal sales will be deducted from the carrying value of Property, Plant and Equipment in the Company's consolidated balance sheet.

Other highlights are:-

- JSCV has made adjustments to the crusher which has improved product size, alleviating downstream transfer restrictions to the grinding mills.

- The copper flotation circuit is operating at about 60% design through-put. Polysius, the mill manufacturer, visited Varvarinskoye to advise on how to increase the throughput so the milling circuit will meet its design specification.

- The direct gold milling and leach circuit reached 45% of design through-put in April. Plans are in place to continue ramp up in the next few months as the grinding ball charge is increased and design modifications to the mill discharge pump motors are completed.

- Water return to plant from tailings dam has been achieved following the spring thaw.

- The site evaluation visit by Ausenco Limited of Perth as part of a Scoping Study for a possible expansion of the Varvarinskoye plant was completed in April.

Varvarinskoye Exploration

Additional Resources

Assay results from diamond drilling completed in the 2007 field season combined with historical data enabled the Company to outline additional resources beneath the current pit design which is approximately 300 metres below ground surface.

The Company's internally generated resource estimates were calculated under the definitions and guidelines specified in National Instrument 43-101 of the Canadian Securities Administrators ("NI 43-101") and utilized the key assumptions, parameters and methods used in the preparation of the resource estimates contained in the technical report dated November 2004 and amended March 2005 entitled "Varvarinskoye Gold-Copper Project - Northern Kazakhstan - Technical Report" prepared by MDM Ferroman (Pty) Limited and Mintec Inc. in accordance with NI 43-101 (the "Technical Report")(which is available for review on the SEDAR database at www.sedar.com) and on the same basis outlined in the 2007 estimated mineral resource previously reported (the "2007 Resource Estimate")(see the Company's press release dated January 15, 2007).

The revised resource estimates increase the previously announced estimated measured and indicated mineral resources by approximately 26 million tonnes of ore (at 1.24 g/t gold, 0.32% copper(1)) containing approximately one million ounces of gold and 157 million lbs of copper, representing an increase of approximately 20% of the total estimated measured and indicated mineral resources tonnages and an increase of approximately 25% in contained gold and 35% in contained copper for the estimated measured and indicated mineral resources. Table 1 provides a more detailed analysis of the additional mineral resource estimates.

The key assumptions, parameters and methods used in the preparation of the following mineral resource estimates are detailed in the Technical Report and on the same basis outlined in the 2007 Resource Estimate. The effective date for the following mineral resource estimates is April 30, 2008 (see the Company's press release dated May 9, 2008).



Table 1 - Additional Mineral Resources as at April 30, 2008

-------------------------------------------------------------
MEASURED MINERAL RESOURCES @ 0.01 gpt Gold Cut-off
-------------------------------------------------------------
Ore Type K Tonnes Gold gpt % Copper Oz Gold Lbs Copper
-------------------------------------------------------------
HGCF 4,348 1.51 0.705 211,082 67,577,491
-------------------------------------------------------------
LGCF 6,642 1.07 0.076 228,491 N/A
-------------------------------------------------------------
TOTAL 10,990 1.24 0.324 439,573 67,577,491
-------------------------------------------------------------


-------------------------------------------------------------
INDICATED MINERAL RESOURCES @ 0.01 gpt Gold Cut-off
-------------------------------------------------------------
Ore Type K Tonnes Gold gpt % Copper Oz Gold Lbs Copper
-------------------------------------------------------------
HGCF 6,938 1.38 0.582 307,828 89,020,602
-------------------------------------------------------------
LGCF 8,052 1.13 0.08 292,541 N/A
-------------------------------------------------------------
TOTAL 14,990 1.24 0.312 600,369 89,020,602
-------------------------------------------------------------


--------------------------------------------------------------
MEASURED & INDICATED MINERAL RESOURCES @ 0.01 gpt Gold Cut-off
--------------------------------------------------------------
Ore Type K Tonnes Gold gpt % Copper Oz Gold Lbs Copper
--------------------------------------------------------------
HGCF 11,286 1.43 0.63 518,909 156,598,093
--------------------------------------------------------------
LGCF 14,694 1.10 0.08 521,032 N/A
--------------------------------------------------------------
TOTAL 25,980 1.24 0.32 1,039,941 156,598,093
--------------------------------------------------------------

(1) % copper based on HGCF only

Note: - HGCF is High Grade Copper Feed - flotation ore
HGCP is material stockpiled for treatment in the future
LGCF is Low Grade Copper Feed - Gold leach ore
LGCP is Low Grade Copper Feed - Gold leach ore from the
weathering zone


Qualified Person

Bert Kennedy, the Company's President and Chief Executive Officer, is the "qualified person" (as such term is defined in NI 43-101) responsible for all the technical and scientific information contained in this MD&A under the heading "Varvarinskoye Project".

FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2008

The Company's EBITDA for Q1 2008 is a loss of $2.1 million compared to $1.8 million for Q1 2007, an increase of approximately $0.3 million. The main reasons for year-on-year variations are increased administration costs of $0.1 million and increased expenditure on development of $0.2 million. The increase in administration costs is not significant and in line with expectations. The increase in development expenditure over the Q1 2007 relates to differences in the phasing of the expenditure between fiscal years 2008 and 2007.

During Q1 2008 the Company settled hedge transactions utilizing cash of approximately $6.2 million (Q1 2007 - $nil). These have been recorded in the statement of income and deficit as derivative losses for Q1 2008. Following an increase in the market price of gold between January 1, 2008 and March 31, 2008 the market to market valuation of the Company's derivative contracts has given rise to non-cash unrealized derivative losses in the quarter of approximately $22.3 million (2007- $9.2 million).

Interest charges for the three months ended March 31, 2008 are $1.2 million (Q1, 2007- $nil). Prior to January 1, 2008 interest on borrowings relating to the development of the Varvarinskoye Project were capitalized and carried as a component of Property, Plant and Equipment in the consolidated balance sheet. Since the construction of the Varvarinskoye Project was completed by the beginning of fiscal 2008, interest has been expensed from that date.

The Company's expenses are denominated in US Dollars, British Pounds, Kazakh Tenge and South African Rand. During Q1, 2008 and Q1, 2007, the Company also held significant levels of funds in Canadian dollars. Consequently the Company was susceptible to currency variations.

Foreign exchange losses in Q1, 2008 were $0.9 million compared to $0.1 million for Q1, 2007. The Company's functional currency is US dollars. The weaker South African Rand and Canadian Dollar rates against the US dollar for Q1 2008 had an adverse effect on short term cash and other current assets denominated in South African Rand and Canadian Dollars. This gave rise to the increased foreign exchange loss for the quarter.

Until the Company achieves commercial production expenditures incurred in Varvarinskoye will be capitalized, less any amounts recovered from metal sales.

Factors that cause fluctuations in the Company's quarterly results include the movements in the gold prices against the forward sales values on the Varvarinskoye Hedge (see "liquidity and Capital Resources" for further details), timing of expenditures on exploration and development activities, stock option grants and their capitalization, income taxes and the write-offs of mineral property costs previously capitalized. As the Varvarinskoye Project is not in commercial production the Company believes that its loss (and consequent loss per share) is not a useful measure of the Company's value.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2008 the Company's main source of liquidity was unrestricted cash of $6.7 million (2007-$25.2 million).

At March 31, 2008, the Company's consolidated working capital comprising free cash, inventories, accounts receivable and prepaids and less accounts payable was $20.2 million compared to $30.8 million at December 31, 2007 representing a decrease of $10.6 million. The decrease in working capital arose as a result of decreased cash resources of $18.4 million, an increase in inventories of $9 million (2007 - $18.8 million), an decrease in accounts receivable and prepaid expenses of $0.6 million and an increase in accounts payable and accrued liabilities of $0.6 million.

Factoring in the current portion of long-term debt and derivative instruments, the Company had a working capital deficit of $38.7 million at March 31, 2008 (2007, deficit of $20.8 million).The Company's spending incurred on the Varvarinskoye Project and its working capital requirements during fiscal year 2008 has been financed through cash.

As a condition of the debt facility, the Company implemented the Varvarinskoye Hedge. The Company has sold 443,000 ounces of gold at a price of $574.25 per ounce. The Varvarinskoye Hedge is un-margined with deliveries of gold into the hedge originally scheduled to commence in the first quarter of 2008. However, during the initial commissioning phase, the Company's gold production has been insufficient to meet its hedge commitments and these commitments have been settled utilizing cash totalling approximately $6.2 million to the date of this MD&A, these have been booked as derivative losses in Q1 2008. In addition the hedge was revalued on a marked to market basis at March 31, 2008 and this gave rise to a further unrealized derivative loss of $22.2 million. See "Outlook "for further details.

During Q1, 2008 the Company continued discussions with its Lenders with the objective of deferring immediate hedge and loan repayment commitments and aligning these with the establishment of commercial production at Varvarinskoye. Since the period end, the Lenders have agreed, subject to certain conditions, to defer hedge commitments due in April and May and also to defer the date of the first loan repayment of approximately $15 million from June 2008 alleviating the short-term working capital constraints of the facility.

Included within mining property and development additions for the quarter are capitalized stock compensation costs of $0.1 million (2007 - $1.9 million)which relate to employees of the Company directly involved with the Varvarinskoye Project. Interest totalling $nil million (2007 -$3.1 million) and amortized deferred finance costs of $1.7 million (2007 - $6.2 million).

The Company anticipates achievement of full commercial production at its Varvarinskoye Project by the end of Q3 2008.

As part of the potential acquisition of Lero, the Company has secured the Lero Loan of $25 million which was received on May 13, 2008. On April 18, 2008, Endeavour Mining Capital Corp. agreed to provide a US$5 million bridge loan to the Company for working capital purposes. This loan together with accrued interest was repaid from the proceeds of the Lero Loan. Further details of the Lero Loan and the Endeavour Mining Capital Corp bridging finance are given in the Company's Press Releases dated April 18, 2008 and May 13, 2008.

The Company anticipates with the potential financing secured through the acquisition of Lero (noted above), the successful conclusion of the discussions with its Lenders, together with the achievement of commercial production and subsequent sales of metals, sufficient levels of cash will be generated to repay the Company's long-term debt and its other long term obligations.

OUTLOOK

The Company continues to make good progress in increasing the tonnage through-put in the Varvarinskoye process plant. The arrival of the late spring will improve the on-site working conditions and facilitate the ramp up of commissioning. Metallurgical performance continues to be good and both process streams have been running steadily. A regular cycle of deliveries of gold dore to Metalor in Switzerland has been established and the first shipment of gold-copper concentrates is expected to be shipped for processing in May 2008.

Over the coming months management intends to complete the design modifications in the plant and continue to ramp up to commercial production. The announcement of the increase to the measured and indicated mineral resource estimates, (although situated beneath the lowest elevation of the current pit design), further enhances the value of the Varvarinskoye ore body. Management have also commissioned an independent study to investigate the possibility of increasing the total through-put at Varvarinskoye beyond the feasibility design of 4.2 million tonnes of ore per year.

The potential business combination with Lero, together with Lero's concurrent financing stabilizes the enlarged group's financial position in the period leading to commercial production at Varvarinskoye. In addition this gives the enlarged group the additional growth potential of the Lero assets and the significant experience of the Lero management team in the FSU, bringing immediate and long-term benefits to the EMC shareholders.



European Minerals Corporation
Consolidated Statements of Operations, Comprehensive Loss and Deficit
For the three months ended March 31, 2008 and 2007
(in thousands of U.S. dollars except shares and per share amounts)

----------------------------------------------------------------------

2008 2007
$ $

Income
Interest 204 231
-----------------------
Expenses
Losses on derivative instruments 28,465 9,232
Investor relations 93 58
Administration 1,221 1,143
Legal and professional fees 189 135
Stock-based compensation 138 212
Foreign exchange loss 926 90
Project and development expenditure 432 210
Interest paid 1,255 -
-----------------------

32,719 11,080
-----------------------

Net loss before income tax recovery (32,515) (10,849)

Income tax recovery - (300)
-----------------------

Net loss and comprehensive loss for the
period (32,515) (10,549)
-----------------------
-----------------------

Basic and diluted loss per common share $(0.11) $(0.04)
-----------------------
-----------------------

Weighted average number of shares (000's) 303,329 259,837
-----------------------
-----------------------

Deficit - Beginning of period (217,955) (70,274)

Transitional adjustment - (69,641)
-----------------------

Deficit - Adjusted (217,955) (140,365)

Loss for the period (32,515) (10,549)
-----------------------

Deficit - End of Period (250,470) (150,914)
-----------------------
-----------------------



European Minerals Corporation
Consolidated Balance Sheets
As at March 31, 2008 and December 31, 2007
(in thousands of U.S. dollars)

--------------------------------------------------------------------

2008 2007
$ $

Assets
Current assets
Cash and cash equivalents 6,764 25,250
Inventories 27,733 18,738
Accounts receivable and prepaid expenses 500 1,032
--------------------
34,997 45,020

Restricted cash 71 127
Property, plant and equipment 224,669 220,476
Net investment in oil and gas residual interests 1,364 1,364
Advances held by contractor's bank 3,496 4,180
--------------------
264,579 271,167
--------------------
--------------------

Liabilities
Current liabilities
Accounts payable and accrued liabilities 14,797 14,140
Current portion of-long term debt 32,475 32,475
Current portion of derivative instruments 26,643 19,185
--------------------
73,915 65,800

Long-term debt 19,225 17,645

Derivative instruments 136,192 121,436

Future income taxes 6,705 6,705

Asset retirement obligations 11,639 11,388
--------------------
247,676 222,974

Shareholders' Equity
Share capital 205,859 204,553
Share purchase warrants 46,629 46,629
Share purchase options 13,452 13,567
Share purchase units - -
Contributed surplus 1,451 1,399
Deficit (250,470) (217,955)
--------------------
16,921 48,193
--------------------
264,597 271,167
--------------------
--------------------


Approved by the Board of Directors

A J Williams Director W G Kennedy Director
A. J. Williams W. G. Kennedy



European Minerals Corporation
Consolidated Statements of Cash Flows
For the three months ended March 31, 2008 and the year ended
December 31, 2007
(in thousands of U.S. dollars except shares and per share amounts)

--------------------------------------------------------------------------

2008 2007
$ $
Cash provided from (used for)

Operating activities
Net loss for the period (32,515) (77,590)
Adjustment to reconcile net loss to cash flow from
operating activities
Unrealized loss on derivative instruments 22,214 70,980
Unrealized foreign exchange 684 (177)
Stock-based compensation 138 2,913
Future income tax recovery - (1,820)
Changes in non-cash working capital
(Increase) in inventories (8,995) (18,738)
Decrease (increase) in accounts receivable and
prepaid expenses 203 (476)
Increase in accounts payable and accrued liabilities 657 4,916
-------------------

Cash used in operating activities (17,614) (19,992)
-------------------

Investing activities
Expenditures on Varvarinskoye property, plant
and equipment (2,145) (61,222)
Restricted cash 56 16,122
Recovery of net investment in oil and gas residual
interests 329 246
-------------------

Cash used in investing activities (1,760) (44,854)
-------------------

Financing activities
Common shares issued, net of issue costs - 21,275
Proceeds from exercise of stock options 990 672
Proceeds from exercise of warrants - 1,036
Proceeds from exercise of units - 4,045
Proceeds from long-term debt 127 46,367
Debt issue costs (229) (2,853)
-------------------

Cash provided by financing activities 888 70,542
-------------------

Increase in cash and cash equivalents (18,486) 5,696

Cash and cash equivalents - Beginning of period 25,250 19,554
-------------------

Cash and cash equivalents - End of period 6,764 25,250
-------------------
-------------------


European Minerals Corporation
Notes to Consolidated Financial Statements
For the period ended March 31, 2008
---------------------------------------------------------------------------

(in thousands of US dollars unless otherwise indicated)


1. Continuing operations

European Minerals Corporation ("EMC" or the "Company") is a mining, mineral exploration and development company focused on identifying, acquiring and developing resource projects. The Company's principal asset is the Varvarinskoye Gold-Copper deposit ("Varvarinskoye") located in the Republic of Kazakhstan. During the year ended December 31, 2007, the Company completed the construction of the mine and plant facilities at Varvarinskoye and during the three months ended March 31, 2008, and has commissioned the Varvarinskoye plant. The Company expects to reach commercial production by the end of Q3, 2008.

At March 31, 2008, the Company had a working capital deficit of $38.9 million, (2007 -working capital deficit of $20.8 million) and an accumulated deficit of $250.5 million (2007 -$217.9 million).

As at March 31, 2008, the Company had capital commitments for the Varvarinskoye Project amounting to $4.6 million.

In December 2007, the Company raised a net additional $21.2 million of equity from shareholders to enable it to provide funding during the commissioning process at the Varvarinskoye Project. During 2006, in order to provide funding for the completion of the capital expenditure on the Varvarinskoye Project, the Company finalized a project debt facility. As at March 31, 2008, a total of $60.3 million had been drawn down under the facility, of which $32.5 million is due within one year.

As a condition of the debt facility, the Company implemented a hedging facility by entering into monthly US dollar flat forward gold sales (the "Varvarinskoye Hedge") over a term of 8 years. The Company has sold forward 443,000 ounces of gold at a price of $574.25 per ounce. The Varvarinskoye Hedge is unmargined with deliveries of gold into the hedge originally scheduled to commence in the first quarter of 2008. However, during the initial commissioning phase, the Company's gold production has been insufficient to meet its hedge commitments as they fall due and during the three months ended March 31, 2008, hedge commitments maturing have been settled utilizing cash totalling approximately $6.2 million.

Since the period end, the Lenders have agreed, subject to certain conditions, to defer hedge commitments due in April and May 2008 and also to defer the date of the first loan repayment of approximately $15 million from June 2008 alleviating the short-term working capital constraints of the facility.

On April 18, 2008 and May 13, 2008, the Company announced the proposed acquisition of Lero Gold Corporation ("Lero"). As part of this proposed transaction Lero has agreed to advance $25 million to the Company (the "Lero Loan") to be used for working capital purposed. On April 18, 2008, Endeavour Mining Capital Corp. agreed to provide a US$5 million bridge loan to the Company for working capital purposes to be repaid upon the completion of the Lero Loan.

2. Summary of significant accounting policies

The consolidated financial statements have been prepared using Canadian GAAP and the following significant policies:

Basis of consolidation

The principal subsidiaries and investees of the Company as at March 31, 2008 are as follows:

- Three K Mining and Exploration Limited (registered in the British Virgin Islands) ("Three K")

- JSC Varvarinskoye (registered in the Republic of Kazakhstan) ("JSCV")

- European Minerals Corporation (UK) Limited (registered in England) ("EMUK")

- Kazminco Oil Limited (registered in the British Virgin Islands) ("Kazminco")

- Lisburne Holdings Limited (registered in the British Virgin Islands) ("Lisburne")

- Althames Exploration Limited (registered in the British Virgin Islands) ("AEL")

With the exception of Lisburne, the Company owns the entire issued share capital of the above entities. The Company controls 55% of the issued and outstanding share capital of Lisburne. All intercompany balances and transactions are eliminated on consolidation.

3. Adoption of new accounting standards and recent accounting pronouncements

a) The CICA plans to transition Canadian GAAP for public companies to International Financial Reporting Standards ("IFRS"). The effective changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The impact of the transition to IFRS on the Company's financial statements is not yet determinable.

b) In February 2007, the CICA issued Section 1535 "Capital Disclosures" which is effective for fiscal years beginning on or after October 1, 2007. This standard requires disclosure of information that enables users of its financial statements to evaluate the entity's objectives, policies and processes for managing capital. The Company has adopted this standard commencing from January 1, 2008 and this has had not had a significant effect on the Company's financial statements.

c) CICA Handbook Section 3064 "Goodwill and Intangible Assets" establishes revised standards for recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the introduction of this standard, the CICA withdrew EIC-27, "Revenues and Expenses During the Pre-operating Period". As a result of the withdrawal of EIC-27, companies will no longer be able to defer costs and revenues incurred prior to commercial production at new mine operations. The changes are effective for interim and financial statements beginning January 1, 2009 and the Company is currently considering the impact this will have on its financial statements.

d) In February 2007, the CICA issued Section 3862 "Financial Instruments - Disclosure" and Section 3863 "Financial Instruments - Presentation", which are effective for fiscal years beginning on or after October 1, 2007. The objective of Section 3862 is to provide financial statement disclosure to enable users to evaluate the significance of financial instruments for the Company's financial position and performance and the nature and extent of risks arising from financial instruments that the Company is exposed to during the reporting period and the balance sheet date and how the Company is managing those risks. The purpose of Section 3863 is to enhance the financial statement user's understanding of the significance of financial instruments to the Company's financial position, performance and cash flows. The Company has adopted these standards commencing from January 1, 2008. The impact on the Financial Statements has not been significant.

e) In May 2007, the CICA issued Section 3031 "Inventories", which supersedes Handbook Section 3030 to converge Canadian standards with IAS 2 "Inventories". This standard requires that inventories be measured at the lower of cost and net realizable value; the allocation of overhead based on normal capacity; the use of the specific cost method for inventories that are not normally interchangeable or goods and services produced for specific purposes; the use of a consistent cost formula for inventory of a similar nature and use; and the reversal of previous write-downs of inventory to net realizable value, when there is a subsequent increase in the value of inventories. Disclosure requirements will include the Company's policies, carrying amounts, amounts recognized as an expense, write-downs and subsequent reversal of write-downs. The Company has adopted this standard from January 1, 2008 fiscal year and the impact on the financial statements has not been significant.



INVESTOR INFORMATION

European Minerals Corporation

Trading Symbols: EPM-TSX
EUM-LSE (AIM)


THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities of the Company in the United States. The securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains or refers to forward-looking information. All information, other than information regarding historical fact, that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future is forward-looking information. Such forward-looking information includes, without limitation, information regarding the Company's expected or planned targets with respect to its operations and projects, estimates and/or anticipated levels of future gold and/or copper production, the Company's expectations with respect to the effect of commodity prices on future cost estimates, estimates of mineral resources and reserves, estimated operating costs, the estimated mine life of Varvarinskoye, the ability of Management to enhance production levels, Management's beliefs with respect to the ability of Varvarinskoye to provide a strong foundation for the Company's further growth, potential mineralization, exploration results and the Company's future exploration plans, the Company's ability to raise sufficient working capital to complete construction of the facilities necessary to place the Varvarinskoye Project into commercial production, the total cost estimate for completion of the Varvarinskoye process plant and related infrastructure, recovery of the amounts advanced to MDM under the LSTK and any associated interest and costs, the Company's successful defense against the claims of the liquidator of MDM that the Cession of sub-contracts under the LSTK gave rise to the Company receiving a benefit in preference to other creditors, the Company's expectation of recovering its net investment in oil and gas residual interests, the Company's achievement of full commercial production at the Varvarinskoye Project and the anticipated revenue therefrom, development and operational plans and objectives (including delineating additional mineral resources), and the Company's expectations concerning enhancements to ICFR controls and procedures and the completion of the Acquisition.

The forward-looking information in this MD&A reflects the current expectations, assumptions or beliefs of the Company based on information currently available to the Company. With respect to forward looking information contained in this MD&A, the Company has made assumptions regarding, among other things, the Company's ability to generate sufficient cash flow from operations and capital markets to meet its future obligations, the regulatory framework in Kazakhstan, with respect to, among other things, permits, licenses, authorizations, royalties, taxes and environmental matters, the ability of management to establish a commercial mining operation at Varvarinskoye, and the Company's ability to continue to obtain qualified staff and equipment in a timely and cost-efficient manner to meet the Company's demand.

Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company.

Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: the grade and recovery of ore which is mined varying from estimates; capital and operating costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity prices; delays in the commencement of full scale operations at, the Varvarinskoye Project caused by unavailability of equipment, labour or supplies, climatic conditions, delays in the delivery and installation of plant and equipment or otherwise; termination or suspension of the Company's debt facility; uncertainty of the outcome of any litigation; inability to delineate additional mineral resources; delays in the Company or Lero obtaining, as applicable, all consents, waivers, Court and regulatory approvals required to complete the Acquisition and other factors including, but not limited to, those listed under "Risk Factors".

Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

The mineral resource figures referred to in this MD&A are estimates and no assurances can be given that the indicated levels of minerals will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While the Company believes that the resource estimates referred to in this MD&A are well established, by their nature resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company. Due to the uncertainty that may be attached to inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration.

Additional information about the risks and uncertainties of the Company's business is provided in its disclosure materials, including its Annual Information Form, available under the Company's profile on SEDAR at www.sedar.com.

NON-GAAP Measures

"EBITDA" is a non-GAAP measure of performance that describes earnings before interest, taxes, depletion and depreciation, non-cash foreign exchange loss or gain, stock compensation charges, fair value losses or gains on forward obligations and non-cash foreign exchange movements.

"Operating cash cost" is a non-GAAP measure calculated in accordance with the Gold Institute Production Cost Standard and includes site costs for all mining (excluding deferred stripping costs), processing and administration, royalties and production taxes, but exclusive of depletion, depreciation, reclamation, financing costs, capital costs, and exploration costs. Operating cash cost is presented as we believe it represents an industry standard of comparison.

"Operating cash cost per ounce" is a non-GAAP measure derived from the operating cash cost of ounces produced as a measure of total ounces produced.

"Sales price per ounce" is a non-GAAP measure derived by dividing the total cash amounts received on gold sales by the number of ounces sold in the period.

EBITDA, operating cash cost per ounce and sales price per ounce are not terms defined under Canadian generally accepted accounting principles, nor do they have a standard, agreed upon meaning. As such, EBITDA, operating cash cost per ounce and sales price per ounce may not be directly comparable to EBITDA, operating cash cost per ounce and sales price per ounce reported by other similar issuers.

Contact Information

  • Investor Information:
    European Minerals Corporation - United Kingdom
    Tony Williams
    Chairman
    + 44 (0) 20 7529 7508
    or
    Investor Information:
    European Minerals Corporation - United Kingdom
    Bert Kennedy
    President and CEO
    + 44 (0) 20 7529 7508
    or
    Vanguard Shareholder Solution, Inc. - North America
    Keith Schaefer
    1-866-448-0780 North America
    Email: ir@vanguardsolutions.ca
    or
    Nomad
    Grant Thornton Corporate Finance
    Gerry Beaney/Colin Aaronson
    020 7383 5100