March 18, 2010 / 7:40 AM / 8 years ago

UPDATE 2-European Goldfields sees all permits granted in 2010

* Could move up to London’s main market once permits granted

* Expects to announce financing for Certej by end-March

* Plans to raise $125 million debt to develop Certej project

* Says Greece’s financial problems could accelerate permits

* Full-year results in line, shares flat

(Adds detail)

By Julie Crust

LONDON, March 18 (Reuters) - European Goldfields EGU.TO EGUq.L, an AIM-listed company with 10 million ounces of gold reserves, expects to receive permits for all of its projects in 2010 after years of delays.

The company plans to spend $15 million on exploration to increase its resource ounces this year and could also move up to London’s main market once the permits are granted, finance director Tim Morgan-Wynne told Reuters in an interview.

“We will have all of the permits by the end of the year and by that stage we should also have a clearer idea of some of the upside as well,” he said on Thursday.

On Tuesday, the company announced it had won a key environmental permit for its Certej gold and silver project in Romania, taking it a step closer to production in the country, and lifting its shares 7 percent on the day.

European Goldfields said construction of the Certej plant was expected to be completed by 2012 with full production starting the following year.

It expects to announce financing for the project by the end of this month once receipt of the environmental permit has been received, Morgan-Wynne said.

The company plans to use existing cash, and debt of $125 million, to finance Certej and bring the Olympias project in Greece back on its feet, he said. Certej is also eligible for about $40 million of government grants in Romania.

Financing for Certej will not include a forward contract that will cap the upside on gold but will have options to protect the downside, he said.


The company received pre-approval for the Skouries and Olympias mining projects in Greece at the end of last year, more than three years after its original submission, and plans to resubmit a final environmental impact study by the end of May.

Morgan-Wynne said Greece’s current financial problems could speed up the permitting process. “Greece has got to cut spending and generate GDP so that it is now looking around to see what projects it can bring forward and facilitate to help with that process. The desire to create jobs and promote economic growth is all the greater.” European Goldfields could create an additional 1,000 jobs in Greece and bring in large amounts of direct investment over the 20-year lifetime of these projects, Morgan-Wynne said.

On the outlook for gold XAU=, he said he did not see much that can push the price below $1,000 an ounce.

“Our projects are so robust that we could be going down to $600 an ounce and still have an extremely robust business.”

The company, which brought in new management at the end of last year and conducted a strategic review, reported pretax losses narrowed last year, helped by record high gold concentrate sales from Olympias. [ID:nLDE62H0B7]

“There is clearly a lot going on at EGU (European Goldfields) since the arrival of its new chairman,” Liberum Capital said, adding the group could deliver 736,000 ounces of gold equivalent production by 2013.

Analysts said the full-year results were in line with expectations, although Libertas Capital said the jump in administration expenses and equity based compensation was a concern.

At 1300 GMT, European Goldfields were flat at 420 pence, valuing group at about 740 million pounds ($1.13 billion). (Editing by Dan Lalor) ($1 = 0.6545 pound)

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