For Immediate Release 30 March 2010
European Goldfields Limited
MANDATE FOR CERTEJ PROJECT FINANCE SIGNED
PROJECT MANAGER APPOINTED
30 March 2010 - European Goldfields Limited (TSX / AIM: EGU) ("European
Goldfields" or the "Company") is pleased to announce the signing of a
mandate letter with a group of financial institutions to arrange and
underwrite a US$125 million debt financing to be used to part fund the
development costs of the Certej project. The mandated lead arrangers
are Caterpillar Financial SARL, ING Bank N.V., Investec Bank plc,
UniCredit Bank AG, London Branch and WestLB AG, London Branch,
(together the "MLAs").
The mandate letter has been signed on the basis of a term sheet which
has been agreed between the Company and the MLAs, each of which has
received approval to proceed with the transaction through their
respective initial credit processes. The term sheet sets out detailed
terms and conditions of the debt financing which include:
. No hedging that limits upside exposure of the shareholders to
gold prices
. Security upon the Certej project assets
. Scheduled tenor of 8 years
. Separate term loan and revolving credit facility tranches
. Sharing of surplus future project cash flows between the Company
and the MLAs, reducing the base case tenor of the term loan to
approximately 7 years
. A guarantee from the Company of the debt payment obligations
until such time as the project achieves completion, by the
satisfaction of certain operational, legal and economic tests.
The arranging and underwriting conditions agreed by the MLAs in the
mandate letter are subject to final due diligence, customary market
conditions and obtaining final internal credit approvals. As
previously reported, the Company appointed SRK Consulting ("SRK") as
the independent technical consultant to the Certej project in mid-2009
to act on behalf of the MLAs. The technical, social and environmental
due diligence is complete and SRK are in the process of finalising
their report.
This is an important further step in the development of the Certej
project and in the Company's wider relationships with the debt capital
markets. European Goldfields is very pleased to be working with such
high quality financial institutions, all with extensive experience and
excellent credentials in global mining finance.
The Company is also pleased to announce the appointment of Alan Baker
as Project Manager for the Certej gold-silver project in Romania. Alan
will join the team at Deva Gold and take responsibility for advancing
the Certej project through the development process towards production.
Mr Nicolae Stanca, Managing Director of Deva Gold SA, welcomes Alan as
a valuable addition to his team.
Alan brings over 30 years of experience in the mining sector to his new
position in as Project Manager for Certej. He previously acted as
Project Manager for Anatolia Minerals on the Copler deposit where he
was responsible for the construction of a heap leach operation
including process plant, mine and associated infrastructure in Eastern
Turkey. Prior to this he was Project Manager at European Minerals on
the Varvarinskoye project in Kazakstan where he was responsible for
managing the design and construction of the gold-copper open pit mine,
process plant and associated infrastructure on the greenfield site with
a total capex of US$160 million.
Before this Alan acted as Construction Superintendent for Golden Star
Resources at their Bogoso mine in Ghana where he was directly
responsible for overseeing the refurbishment of the second hand Bondaye
CIL plant and other process and mining related projects. He has also
worked in Senior Management roles for Ashanti Goldfields where he
gained extensive underground experience and was responsible for project
coordination and construction with an annual budget of up to US$100
million. In his early career he worked in the UK, South Africa and
Zambia on a variety of mining projects. He has fulfilled the role of
Client's representative and also worked for various contractors
associated with the mining industry.
Certej Project Summary
The Certej project is an epithermal gold/silver deposit located in
the"Golden Quadrilateral" area of the Apuseni Mountains of Transylvania in
Western Romania, a highly prospective region which has historically
produced upwards of 30 million ounces of gold. The Certej deposit lies
within a brownfield site with excellent existing infrastructure and a
history of production which dates back 300 years; the open pit and
plant were worked as recently as 2006. The Certej orebody comprises
four distinct ore zones, amenable to extraction by 2 adjacent open pits
that are well defined by extensive drilling.
The Certej deposit has a calculated NI 43-101 compliant mineable
reserve of 32.8 million tonnes of ore grading 2.0 g/t gold and 11.4 g/t
silver, representing 2.1 million ounces gold and 12.0 million ounces
silver. A further 4.1 million tonnes of ore from lower grade material
and existing dumps will contribute an additional 290,000 ounces of gold
and 8.8 million ounces of silver in the latter years of the mine.
Reserves will be extracted using a conventional open pit method with a
strip ratio of 3.1:1. The project will involve the processing of 3
million tonnes of ore per annum over an open pit life of 11.5 years
with an overall mine life of 16 years. The ore will be processed using
flotation to produce a pyrite gold concentrate and then ultrafine
grinding and ambient pressure oxidation using the Albion Process
developed by Xstrata to produce gold and silver dore on site. Average
annual production is expected to be 155,000 ounces of gold and 820,000
ounces of silver during the life of the open pit after which the plant
will be fed by lower-grade material, stockpile and dumps. The project
will involve an anticipated project capex of approximately $190 million
which includes pre-stripping in year 1.
The Technical Study, required to obtain the relevant construction
permits, is currently underway with completion anticipated in Q2 2010,
ready for submission on approval of the Environmental Impact Study. The
project upside includes numerous drill ready targets both near mine and
within the wider licence area. Further long term exploration potential
exists within the Certej-Brad Belt.
About European Goldfields
European Goldfields is a developer-producer with globally significant
gold reserves located within the European Union. The Company generates
cash flow from its 95%-owned Stratoni operation, a high grade lead/zinc
/silver mine in North-Eastern Greece and the sale of gold concentrates
from Olympias. European Goldfields will evolve into a mid-tier producer
through responsible development of its project pipeline of gold and
base metal deposits at Skouries and Olympias in Greece and Certej in
Romania. The Company plans future growth through development of its
highly prospective exploration portfolio in Greece, Romania and Turkey.
For further information please see the Company's new website at
www.egoldfields.com
For further information please contact:
European Goldfields: Buchanan Communications:
Martyn Konig, Executive Chairman Bobby Morse / Katharine Sutton /
Sally Schofield, VP Investor James Strong
Relations e-mail: bobbym@buchanan.uk.com
e-mail: info@egoldfields.com Tel: +44 (0)20 7466 5000
Tel: +44 (0)20 7408 9534
RBC Capital Markets:
Josh Critchley
e-mail:joshua.critchley@rbccm.com
Matthew Coakes
e-mail: matthew.coakes@rbccm.com
Tel: +44 (0)20 7653 4000
Resources & reserves parameters
For additional information on the resource and reserve estimates quoted
in this news release, please refer to the Company's Resources &
Reserves Declaration at: www.egoldfields.com/egoldfields/en/
operationsprojects/state Patrick Forward, General Manager, Exploration
of the Company, was the Qualified Person under Canadian National
Instrument 43-101 responsible for reviewing the disclosure of resource
and reserve estimates quoted in this news release.
Forward-looking statements
Certain statements and information contained in this document,
including any information as to the Company's future financial or
operating performance and other statements that express management's
expectations or estimates of future performance, constitute
forward-looking information under provisions of Canadian provincial
securities laws. When used in this document, the words "anticipate",
"expect", "will", "intend", "estimate", "forecast", "planned" and
similar expressions are intended to identify forward-looking statements
or information. Forward-looking statements include, but are not limited
to, the estimation of mineral reserves and resources, the timing and
amount of estimated future production, costs and timing of development
of new deposits, permitting time lines and expectations regarding metal
recovery rates. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered reasonable
by management, are inherently subject to significant business, economic
and competitive uncertainties and contingencies.
The Company cautions the reader that such forward-looking statements
involve known and unknown risks, uncertainties and other factors that
may cause the actual financial results, performance or achievements of
the Company to be materially different from its estimated future
results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are not
guarantees of future performance. These risks, uncertainties and other
factors include, but are not limited to: changes in the price of gold,
base metals or certain other commodities (such as fuel and electricity)
and currencies; uncertainty of mineral reserves, resources, grades and
recovery estimates; uncertainty of future production, capital
expenditures and other costs; currency fluctuations; financing and
additional capital requirements; the successful and timely permitting
of the Company's Skouries, Olympias and Certej projects; legislative,
political, social or economic developments in the jurisdictions in
which the Company carries on business; operating or technical
difficulties in connection with mining or development activities; the
speculative nature of gold and base metals exploration and development,
including the risks of diminishing quantities or grades of reserves;
the risks normally involved in the exploration, development and mining
business; and risks associated with internal control over financial
reporting. For a more detailed discussion of such risks and material
factors or assumptions underlying these forward-looking statements, see
the Company's Annual Information Form for the year ended 31 December
2009, filed on SEDAR at www.sedar.com. The Company does not intend, and
does not assume any obligation, to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by law.
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