ECONOMY

Gold-mining firm sees takeover bids

LONDON (Reuters) – Junior mining and exploration company European Goldfields Ltd said this week it could become a takeover target as its gold and base metal projects in Europe start producing profits this year. «»What you have seen in the last year is about 10 to 12 mid-tier companies disappear and anyone that has the potential to get to mid-tier is obviously going to look attractive,» Chief Executive David Reading told Reuters. «My job is not to fight that but continue to unlock the value of this company, so that if someone does have a go at us they are going to have to pay a good value.» European Goldfields earlier said it turned a profit for the first time in the three months ending September 2006, reflecting growing revenues from its Stratoni zinc mine in Greece and the sale of gold concentrates from its Olympias project. Reading said earnings would increase as its three other major gold and base metal projects start producing and the company would become a major mid-tier player, possibly attracting offers from majors seeking new resources. He said ore production was expected to be 180,000 tons for the year, exceeding its target of 170,000. This was expected to rise to more than 250,000 next year, he said. European Goldfields has three other projects, two in Greece and one in Romania. Reading said he expected the Greek Skouries mine to start production by mid-2009. The group was also eyeing new opportunities in Europe, including Turkey, Serbia and others in Greece. Reading said he expected the price of zinc to stay strong in 2007 and through to mid-2008 due to supply constraints, while gold was in a growth cycle. European Goldfields said pretax profits in the nine months ending September 2006 were $5.4 million compared to a loss of $8.7 million in 2005.