ECONOMY

Plans for Halkidiki mines

LONDON (Reuters) – Toronto and AIM-listed European Goldfields plans to become a mid-tier producer by 2010 when all four of its projects in Southeast Europe will be up and running, a company official said yesterday. The company holds 95 percent in Hellas Gold, which brought on stream the Stratoni lead-zinc-silver mine in northern Greece in September 2005. But it will also develop the nearby Olympias and Skouries mines, also in Halkidiki in Macedonia, as well as a gold mine in Romania. When these are up and running, the firm expects to be producing about half a million ounces of gold and about 40,000 tons of copper annually. «Stratoni is important to us but it represents only 15 percent of our value,» European Goldfields CEO Dave Reading told Reuters in a telephone interview. «The key to emerging as a significant company is also about the development of our gold project pipeline. That will take the company to the next level as a mid-tier producer,» he added. When asked if the firm was looking at buying other companies Reading said, «We’ve got a lot on our plate; we’re building another three projects between now and 2010.» But he did say it was looking to expand its footprint in Southeast Europe, adding that this would probably be an organic process through exploration. Nor did he rule out possible interest in European Goldfields from other companies, citing its strong cash position and projects portfolio. «But with Aktor as a major shareholder, we’ve effectively created a structure such that if we do get an approach it will have to be sensible and constructive and to some extent we will control the process,» Reading said. Aktor, Greece’s largest construction firm, gained a 19.9 percent stake in European Goldfields after swapping it for a 30 percent interest in Hellas Gold in June. It retains a 5 percent stake in Hellas. Reading said European Goldfields ultimately would want to wholly own Hellas Gold, but said that was a longer-term consideration, adding that in any case there was a four-year lock-in agreement with Aktor. In its second-quarter results, European Goldfields said bad ground conditions had affected ore production at its Stratoni mine, but higher grades would allow it to more or less achieve this year’s metal output targets. «We’re a little late in some of the development but grades are up 18 percent,» Reading said. In the second quarter, the mine produced 5,855 tons of payable zinc and 3,636 tons of payable lead, up from 3,463 and 3,774 tons respectively in the same period last year.