European Minerals Corporation

European Minerals Corporation

January 04, 2007 09:30 ET

European Minerals Corporation - Varvarinskoye: First Drawdown from Debt Facility and Project Update

LONDON, UNITED KINGDOM--(CCNMatthews - Jan. 4, 2007) - European Minerals Corporation ("EMC or the "Company") - (TSX:EPM)(AIM:EUM) - is pleased to announce that its 100% owned subsidiary JSC Varvarinskoye has made the first drawdown from the Varvarinskoye Project debt facility. An initial amount of US$13.8 million was drawn against project costs incurred to the end of 2006. JSC Varvarinskoye will make further draw downs from the debt facility to fund the project to completion.

The project debt facility as detailed in the Company's press release dated October 18, 2006 has been reduced by negotiation between the lenders and the Company from US$75.4 million to US$61 million whilst the lenders have released US$5 million of previously restricted cash to the Company. EMC has currently US$36 million in its Treasury of which US$15 million is restricted cash in the Varvarinskoye Project cost over-run account as required by the lenders under the terms of the debt facility.

Overall capital costs (including capitalized financing and insurance charges of US$13 million) for the Varvarinskoye Project remain at an estimated US$158 million, including working capital and pre production stripping costs (see the Company's press release dated October 18, 2006). The Company has expended approximately US$110 million on the project to the end of December 2006. A further US$48 million is required to meet the estimated Varvarinskoye project capital costs and these funds will be drawn down from the debt facility. Following the satisfaction of the lenders' conditions allowing first drawdown, the project is now fully funded through to production.

Project Update

Work on site is continuing through the winter; the structural concrete installations at the crusher station and the stockpile tunnel are complete; the 70km power line is commissioned and the 5km long 10kv distribution lines within the mine area are being energized. In addition, the structural steel framework for the mill and CIP buildings is being erected. Mine pre-stripping is on schedule in accordance with the revised development plan and construction schedule (see the Company's press release dated October 18, 2006) and the project remains on target for commissioning in October 2007.

An updated statement of the Varvarinskoye mineral resources and reserves which form part of the revised development plan will be announced shortly.

Tony Williams, EMC Chairman commented today "Achieving first drawdown represents a significant milestone for the Company. This is the first major project finance loan from foreign banks into the Kazakhstan mining industry and represents a significant achievement for all concerned. We have had to overcome a number of obstacles at Varvarinskoye over the last twelve months mostly resulting from the forced replacement of the project contractor last January. The JSC Varvarinskoye management team deserve congratulations for their diligence and hard work in keeping the project momentum going during this period. Thanks also go to our lenders, Investec and Nedbank, for their continued support and to our financial advisors, Endeavour Financial, for their contribution to a successful conclusion to our renegotiation of the debt facility.

Our project is fully funded through to production and on target for commissioning in October 2007. We believe Varvarinskoye will develop as a significant low cost gold copper producer next year and become one of Kazakhstan's flagship projects confirming the country's importance to the global mining industry."

Forward-Looking Statements

This press release contains or refers to forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding targets, estimates and/or assumptions in respect of future production and costs and timing of commencement of operations) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are 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 statements, 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 development of, and the commencement of operations at, the Company's 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; and other factors. Any forward-looking statement 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 statement, 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 statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Contact Information

  • United Kingdom
    European Minerals Corporation
    Tony Williams, Chairman
    Tel: +44 (0) 20 7529 7508
    European Minerals Corporation
    Bert Kennedy, President & CEO
    Tel: +44 (0) 20 7529 7508
    North America
    Vanguard Shareholder Solutions Inc.
    Keith Schaefer
    Tel: 1.866.448.0780