WHITEHORSE, YT, Nov. 11 /PRNewswire-FirstCall/ - European Goldfields Limited (AIM: EGU / TSX: EGU) ('European Goldfields' or the 'Company') today reports its results for the quarter to 30 September 2008. Highlights are:
Financial highlights:
- Working capital of $208.6 million as at 30 September 2008
- Stratoni operation remains cash flow positive despite significantly
lower metal prices
- Actively reducing costs and preserving cash
Operational highlights:
- Stratoni: Higher production levels sustained and costs contained
- Skouries: Ball mill shell complete and ready for shipment
- Olympias: Plans for Phase Two of the project approach completion
- Certej: New mining permit awarded
- Certej: Further drilling and pit re-evaluation indicate extension of
mine life to 15 years
- Certej: Project moves from feasibility to basic and detailed
engineering
- Exploration in Greece: EM survey highlights additional 4 target areas
Commenting on the results, David Reading, Chief Executive Officer of
European Goldfields, said:
'Our fundamental strengths remain key to our future success in the
economic downturn. We have a strong cash position, no debt and sustained
cash generation at our high grade zinc, lead and silver mine. Our
development projects remain robust even at lower metal prices. We have
the means both to deliver continued progress and develop new
opportunities in changing market conditions'.
Conference Call & Webcast - 11 November 2008 at 10am ET / 3pm BST
European Goldfields will host a conference call on Tuesday 11 November
2008 at 10:00 a.m. ET / 3:00 pm (London, UK time) to update investors and
analysts on its results.
Participants may join the call by dialing one of the three following
numbers, approximately 10 minutes before the start of the call.
From North America: (Local) 416-644-3423 or (toll free): 1-800-731-6941
From the UK, Austria, Belgium, Denmark, France, Germany, Ireland, Italy,
Netherlands, Norway, Sweden & Switzerland (toll free): 00-800-2288-3501
A live audio webcast of the call will be available on:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2462900
For those unable to join the live conference call, a replay will be
available until Tuesday November 18, 2008 at midnight by dialing (toll free)
1-877-289-8525 or 1-416-640-1917, Passcode 21287694#.
SELECTED FINANCIAL DATA
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Three months ended 30 September
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(in thousands of US dollars, 2008 2007
except per share amounts) $ $
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Statement of profit and loss
Sales 16,101 21,663
Gross profit 1,393 11,273
Profit/(loss) before income tax (4,859) 15,268
Profit/(loss) after income tax (5,310) 12,504
Non-controlling interest 267 (348)
Profit/(loss) for the period (5,043) 12,156
Earnings/(loss) per share (0.03) 0.07
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(in thousands of US dollars) 30 30
September September
2008 2007
$ $
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Balance sheet
Working capital 208,609 224,289
Total assets 775,369 744,998
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European Goldfields' unaudited consolidated financial statements and
management's discussion and analysis for the three-month periods ended 30
September 2008 and 2007 are filed on SEDAR at www.sedar.com.
Year on year revenues have decreased as a result of the fall in metal
prices, although this has been offset by the company's lead hedging programme
which became effective in 2008 and yielded additional income of $1.4 million
in Q3 2008. The company's working capital has declined slightly as a
consequence of continued capital expenditure as well as funding the
advancement of our Greek and Romanian projects.
STRATONI OPERATIONS (GREECE)
Highlights:
- Higher production levels sustained
- Unit operating costs contained
- Process plant operated at full capacity in August
Higher production levels sustained
The Company's 95% owned Stratoni lead-zinc-silver operation in Northern
Greece mined 69,847 wet tonnes of ore and processed 63,040 tonnes of ore in Q3
2008. Mining production, year to date, remains 4% over budget whilst zinc and
lead metal production has exceeded year to date target by over 7% and 1%
respectively. During Q3 Hellas Gold sold eight shipments of base metal
concentrates, five shipments of zinc and three of lead/silver.
Summary production and sales were as follows:
Q3 2008 Q3 2007
Production
Ore mined (wet tonnes) 69,847 56,075
Ore processed (dry tonnes) 63,040 54,499
Zinc concentrate 10,451 8,506
- Containing: Zinc metal (tonnes) 5,132 4,194
Lead concentrate 5,531 5,586
- Containing: Lead metal (tonnes) 3,726 3,781
Silver (ounces) 280,305 297,059
Sales
Zinc concentrate (tonnes) 14,033 5,710
- Containing payable: Zinc (tonnes)* 5,818 2,364
Lead concentrate (tonnes) 5,475 5,694
- Containing payable: Lead (tonnes)* 3,495 3,759
Silver (oz)* 263,464 297,321
Inventory (end of period)
Ore mined (wet tonnes) 6,489 4,868
Zinc concentrate (tonnes) 2,078 2,797
Lead/Silver concentrate (tonnes) 1,294 2,042
* Net of smelter payable deductions,
before deduction of smelting and refining
charges
Ore production rates underground increased to 1,150 tonnes per day with
daily production rates in Q3 peaking at 1,400. An additional lower level has
been planned for 'large stope' drifting and the access designed accordingly.
Unit operating costs contained
Unit costs of (euro)109 per tonne were maintained at just below Q1 levels.
Since quarter end, the Euro has weakened considerably against the US Dollar,
which will lower Dollar operating costs and increase the mine's operating
margin. This exchange rate shift will help offset the impact of lower Dollar
commodity prices.
In the current market environment, Hellas Gold has already taken steps to
minimise all non-essential capital expenditure, with large amounts of budgeted
capital expenditure remaining unspent and uncommitted. As part of the annual
budget process, the management team is conducting a fundamental review of all
costs with a view to reducing any costs which neither contribute to productive
capacity nor represent an obligation under our existing mining permits.
Whilst further weak prices have been experienced since the period end, the
Company is benefitting from its lead hedging programme and will continue to do
so until the end of 2009. Including the lead hedge, Stratoni remains cash flow
positive at the operating level.
Process plant operated at full capacity in August
The plant continues to operate at around 1,200 tonnes per day and again
operated at full capacity in August.
