European Goldfields: Local commitment

Source: Stock Market Digital

Date :01/11/2008 00:00:00

With a strong presence in Greece and Romania, European Goldfields is now looking to identify new opportunities in South-East Europe.

Written by Rebecca Waters and Produced by Kiron Chavda

Formed in 2000, European Goldfields is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and South-East Europe. The company was listed on AIM in 2004 and on the TSX in 2005.

This dual listing allows the company to access investors in two important large capital markets, says Executive Vice President Mark Rachovides, who has over 15 years’ experience in financing mining projects.

Rachovides joined European Goldfields in July this year from Dundee Resource Limited where he was Vice President for Europe. He formerly spent 11 years at the European bank for Reconstruction and Development (EBRD), leaving as a Senior Banker in the Natural Resources team.

GREECE

European Goldfields currently has four major gold and base metals projects in Greece and Romania. It commenced production in Q4 2005.

In 2005, the company was awarded a mining permit to develop the Stratoni project in Greece. “Since then, the company has gone from strength to strength in acquiring 95 percent interest in Hellas Gold SA, ramping up production and defining a clear growth and development strategy,” Rachovides explains.

Through Hellas Gold, European Goldfields owns three major gold and base metal deposits in Northern Greece: the polymetallic operation at Stratoni, the Olympias project which contains gold, zinc, lead and silver and the Skouries copper/gold porphyry project. The company is currently in the final stages of obtaining permits to develop the Skouries and the Olympias projects.

European Goldfields also has interests in Romania. The company’s four mineral properties in Romania are Certej and Baita-Craciunesti, held through its 80 percent interest in Deva Gold SA, and Cainel and Voia, held through European Goldfields’s 100 percent interest in European Goldfields Deva SRL.

ONGOING DEVELOPMENT

“Our key to success in South East Europe is driven by a solid local commitment,” says Rachovides. “In Greece this means our partnership with the largest construction company in the country, Aktor, whose projects include infrastructure, quarrying, environmental rehabilitation and construction. These skills and resources together with excellent local knowledge benefit European Goldfields greatly.

“Similarly in Romania, we have an excellent Romanian team supported by expatriate specialists. The existing open pit at Certej already has a mining permit and we have recently completed a definitive feasibility study on the project proving it is a viable and robust project.

“In terms of specific projects, the Olympias project includes a large gold stockpile at surface which we are in the processing of selling,” he adds. “The cash that is generated will ultimately assist refurbishment of the existing underground infrastructure including a shaft and decline as well as the existing plant.”

He continues: “Our Greek technical feasibility studies have been approved are awaiting final Government input on the Environmental Impact Statement which we expect soon. Our Skouries flagship project is advancing well and we have secured all necessary long lead items and equipment.”

2008

So far, 2008 has been a good year for the company; it has increased production and reduced cash operating costs significantly.

“In addition, we have initiated expansion in the region and are opening new possibilities in Turkey through our recent joint venture with Ariana Resources and we now have an exploration team in place,” explains Rachovides.

Moving west slightly, in Greece the company is continuing to outline new reserves at Stratoni and in May this year, it submitted a further EIS for the re-treatment of historic tailings at Olympias. “We are advancing quickly through the permitting process and expect public hearings to commence shortly – this will permit the re-treatment of 3.4Mt of tailings to yield 350Kt gold concentrate as well as significant environmental rehabilitation of the area,” says Rachovides.

EXPLORATION AND DEVELOPMENT

Looking ahead to 2009 and further, one of the main objectives for European Goldfields is to identify drill targets in Turkey, which so far has seen encouraging results.

An integral part of European Goldfield’s growth strategy is to evolve into a mid-tier producer by the end of 2010. “We aim to become a sustainable European producer of gold and base metals and by 2011 we will have achieved mid-tier category with four profitable producing mines,” says Rachovides.

“Our phased approach enables us to develop in strategic stages, reinvest revenue back into the projects and ramp-up production at our operating mine,” he explains. “We aim to further enhance our knowledge and understanding of the area in which we operate through the application of a modern, systematic, technological approach and clear analysis of our findings.”

However, there are challenges: “Capital and commodity markets are in a turbulent period and as such uncertainty is our greatest near-term challenge,” says Rachovides. “We are fortunate to have significant cash reserves and no debt but we will need to fund our new projects and ensure that they deliver superior returns in difficult conditions. We are confident that we can do so.”

With this approach, European Goldfields looks set to expand and develop even further.