European Goldfields: Stratoni zinc-lead-silver mine exceeds production target for 2006

24 January 2007 | 05:14 Code : 12524 Geoscience events
European Goldfields Limited (TSX/AIM: EGU) announced Monday that its subsidiary....
European Goldfields Limited (TSX/AIM: EGU) announced Monday that its subsidiary Hellas Gold S.A. has milled a total of 185,000 wet metric tonnes (wmt) of ore in 2006 at its Stratoni zinc-lead-silver plant in Northern Greece, exceeding the production target of 170,000 wmt for the year.Ore production rates from underground have steadily increased from 400 to almost 900 tonnes per day during 2006. Ore production is expected to continue to increase more rapidly than expected, up to a maximum of 400,000 tonnes per year by end 2009.Hellas Gold completed seven shipments of concentrates from Stratoni in Q4 2006, and 20 shipments for the whole of 2006. Hellas Gold also completed six shipments of gold concentrates from an existing stockpile at Olympias in Q4 2006, representing half of the 12 shipments completed in 2006. This translates into the following sales of concentrates:Q4 2006 Total 2006 Zinc concentrate (tonnes) 10,425 32,351 – Containing payable: Zinc (tonnes)(x) 4,418 13,775 Lead concentrate (tonnes) 5,124 15,780 – Containing payable: Lead (tonnes)(x) 3,329 10,467 Silver (oz)(x) 254,881 818,139 Gold concentrate (wet tonnes) 9,041 17,649 (x) Net of smelter deductionsSales of contained metals increased by 38% for lead, 35% for silver and 39% for gold in Q4 2006 compared to Q3 2006, while decreasing by a marginal 6% for zinc. Also, these sales are expected to yield higher revenues per unit in Q4 2006 due to more favourable metal prices during the last quarter of the year. European Goldfields expects to publish by 31 March 2006 its financial results for the three-month period and year ended 31 December 2006.Increase in Stratoni Reserves – European Goldfields is also pleased to announce an increase in reserves at Stratoni, which can now be reported as follows under Canadian NI 43-101:

 (x) After deduction of ore extracted since the start of mining operations in Q4 2005. Total reserve tonnes have increased by 23% over the reserves published prior to the start of operations at Stratoni in Q4 2005, accounting for deduction of ore since then. The new reserve will add an extra year to Stratoni's life of mine, a 20% increase over the remaining five-year mine life under the prior reserve. A marginal reduction in grades is expected to be more than offset by greater quantities of metal to be produced over the total life of mine and the ramping-up of production going forward.The new reserve has allowed Hellas Gold to ramp-up its yearly ore production schedule as follows:- Year 2006: 170,000 tonnes – Year 2007: 250,000 tonnes – Year 2008: 350,000 tonnes – Year 2009: 400,000 tonnes – Year 2010: 400,000 tonnes – Year 2011: 400,000 tonnes – Year 2012: 400,000 tonnesThis new reserve is based on an updated measured & indicated resource estimate for the Stratoni orebody, which results from a new optimised geological model based on revised geological mapping, additional data from underground sampling, and a more reliable understanding of the orebody after a full year of mining at Stratoni.A better understanding of the orebody has also allowed Hellas Gold to define increased inferred resources comprising some 555,000 tonnes grading 7.3% lead, 10.2% zinc and 181 g/t silver.In addition, Hellas Gold recently started a new exploration drilling programme at Stratoni, which is expected to increase life of mine by another two years at least. Initial drilling results are expected in Q1 2007. An important objective of the drilling programme is to upgrade existing inferred resources to full Canadian NI 43-101 compliant reserves.Commenting on the announcement, David Reading, Chief Executive Officer of European Goldfields, said: "We are proud to have exceeded our promise to the market in 2006 for our Stratoni operations. Production of zinc, lead and silver concentrates continues to ramp-up at Stratoni in an environment of strong demand for these metals, and this new reserve will allow us to mine for an additional year after 2011. Also, we look forward to adding more value at Stratoni by converting existing inferred resources into reserves when our ongoing extension drilling programme is completed."
About European Goldfields
European Goldfields is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and South-East Europe.Greece – European Goldfields holds a 65% interest in Hellas Gold S.A. Hellas Gold owns three major gold and base metal deposits in Northern Greece. The deposits are the polymetallic projects of Stratoni and Olympias which contain gold, zinc, lead and silver, and the Skouries copper/gold porphyry body. Hellas Gold commenced production at Stratoni in September 2005 and selling an existing stockpile of Olympias gold concentrates in July 2006. Hellas Gold is applying for permits to develop the Skouries and Olympias projects.Romania – European Goldfields owns 80% of the Certej gold/silver project in Romania. European Goldfields is completing a feasibility study for submission to the Romanian government in Q1 2007, in support of a permit application to develop the project.

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