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European Goldfields Gets Traction in By Stephen Clayson 14 Jan 2005 at 10:00 AM EST Certej is estimated to contain indicated resources of 2.4moz
gold and 10.6moz silver, and European is currently in the midst of a resource
development program and pre-feasibility study expected to be complete by Q2 of
this year that will ascertain the optimum method for the exploitation of the
resource. The Cainel licence has been mined on a small scale before,
but never in a serious commercial fashion. This has left the vast majority of
the ore body intact and also left a quantity of utilisable waste material. The
company will undertake orientation work in the first part of 2005 to be
followed by a full evaluation of the deposit. European has relinquished its 80% share of an exploitation
licence for another Romanian concession, Zlatna, where it has been exploring
for five years without discovering an economically viable deposit. Exploration
efforts in European’s main interests however lie in The assets were acquired through the Greek firm Hellas Gold,
a 65% holding in which European reached in November 2004 after purchasing an
initial 30% earlier in the year. The three Greek projects all possess measured and indicated
resource estimates, while feasibility studies, metallurgical analyses, post
feasibility studies, and resource audits are also available for all three
sites. Stratoni and Olympias are both formerly operating mines currently in a state
of desuetude, while Skouries has potential for a sizable opencast operation. The Stratoni lead-zinc-silver deposit is the project from
which the firm’s first output will be derived; lead and zinc concentrate
production there will be ‘recommenced as soon as possible’ once a
permit has been granted, which is expected later this month. Sales of pre-mined concentrates from Stratoni are already
underway and the mine is expected to reach an output initially within the range
of 170-400kt ore per annum rising to a maximum plant capacity of around 600kt
from there. The project’s known ore reserves are put at 1.6Mt, grading
7.6% Pb, 10.2% Zn, and 179g/t Ag, and in addition European believes there to be
a significant exploration upside. The Olympias project is a polymetallic deposit with proven
and probable ore reserves of 14.1Mt, grading 8.6g/t Au, 120g/t Ag, 3.9% Pb and
5.2% Zn. There are some potentially onerous processing plant issues with
Olympias, but the company says that it is working on a solution. What European’s CFO David Grannell describes as its
‘jewel’ is the Skouries open pit Au-Cu project, where ore reserves
exist of 130Mt, grading 0.9g/t Au and 0.6% Cu. Grannell says that the likely
copper production alone of this deposit would be sufficient to fund the
construction of a mine. However the enormous reserves create an intrinsic
problem of sheer volume of waste rock, a technical difficulty which the company
is exercising its ingenuity in order to resolve. This has not though deterred undisclosed majors from taking
an interest in co-developing the Skouries project, although Grannell rules out
cooperation until the ‘full pre-production value’ of the deposit
has been recognised. Gold exploitation permits for any of the projects are not
expected to be granted before September 2006, and in the meantime European
intends to update the Olympias and Skouries feasibility studies, conduct a
baseline environmental study and a tailings management review, and further
explore Stratoni. The company has ample cash reserves to fund these plans, and
Grannell does not expect to come to the market for further funding until it is
time to begin serious construction work. In addition to the three established Greek projects, all of
which are still open to further expansion, European has a further fourteen
separate prospects in Greece, and 1m euros has been budgeted for exploration in
the country over the next two years. An approximate schematic of the development of
European’s output in Greece is expected to run as follows: first of all
Stratoni will recommence the production of Ag and Zn concentrates, then the
existing concentrates and tailings at Olympias will be processed to provide
150,000oz Au over three years, and following that the expansion of Olympias and
the construction of an operation at Skouries should result in an output of
300,000oz gold equivalent per annum for each. European as a firm puts a great deal of strategic emphasis
on native partnerships and on cordial relations with local communities,
according to its CFO. The company has learnt from the mistakes of the former
owner of Hellas Gold’s Greek assets, Canadian miner TVX Gold, which was
forced to cease operations at the projects due to severe local strife
engendered by a corporate ‘lack of transparency and communication’
and exacerbated by the absence of a Greek partner to smooth things over and
liaise with the authorities adroitly. This acrimony though fortuitously allowed
European to acquire the assets of TVX repackaged as Hellas Gold at a
‘government fire sale price’. European has as a partner Greece’s largest
construction group, Aktor, who reportedly wield ‘a lot of power’ in
the country and are experienced in gaining environmental permits and in the
utilisation of European Union funds, a significant amount of which may be
available to help fund up to 40% of mine construction costs when the time is
ripe. European is upbeat about the realities of operating in Nevertheless the company believes that its stock trades at a
significant discount relative to its peers that is partly due to apprehension
about European’s CFO says that it is amenable to investment
in new opportunities in the Balkans, but only where it feels that those assets
are realistically undervalued, that there is security of tenure, and that
viable local partnerships can be negotiated. While mentioning © Copyright 2005, Resource Investor http://www.resourceinvestor.com/pebble.asp?relid=7823 EuroAtlantic Club: http://www.europe.org.ro/euroatlantic_club/ *** Birou de traduceri autorizate. Oana Gheorghiu - tel/fax: 252.8681 / [EMAIL PROTECTED] Yahoo! Groups Links
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