European Goldfields ups production in Greece

European Goldfields (EGU-T) is both ramping up production and adding years to the life of its Stratoni silver-zinc-lead mine in northern Greece.

Hellas Gold, a subsidiary of European Goldfields, has exceeded its 2006 production target, milling 185,000 tonnes of ore after projecting 170,000 tonnes.

Reserves have increased by 23% over European Goldfield’s initial estimate in 2005, upping the mine life to seven years instead of six.

The company reports that ore production will increase more rapidly than expected at 250,000 tonnes this year, 350,000 tonnes in 2008 and a maximum of 400,000 tonnes of ore per year from 2009 to 2012.

Stratoni has proven and probable reserves of 2.2 million tonnes grading 172 grams silver per tonne, 6.9% lead and 9.7% zinc, compliant under National Instrument 43-101.

A marginal reduction in grades is expected to be more than offset by greater quantities of metal to be produced over the total mine life and an increase in production.

A better understanding of the orebody has also allowed Hellas Gold to increase inferred resources to 555,000 tonnes grading 7.3% lead, 10.2% zinc and 181 grams silver per tonne. The company is now upgrading its inferred resources to be N.I. 43-101 compliant.

As well, Hellas Gold started a new exploration drill program at Stratoni, which is expected in increase the mine life by another two years. Initial drill results are expected this quarter.

Hellas Gold has off-take agreements for 90% of its lead/silver and zinc concentrates produced during 2007 and 65% of lead/silver and 25% zinc production in 2008. The company will sell the rest of its production on the spot market.

The company shipped a total of 13,775 tonnes of payable zinc, 10,4667 tonnes of payable lead, 818,139 tonnes of silver and 17,649 tonnes of gold concentrate during 2006.

European Goldfields began production at the Stratoni mine in late 2005. The mine was previously producing at a rate of 450,000 tonnes per year until it shut down in 2003. With the extensive infrastructure that already existed, the company had to make little capital investment, though it refurbished the mill and flotation plant.

The mine is located just 4 km from the coastal town of Stratoni, where there’s a ship-loading facility that can accept vessels up to 8,000 tonnes.

European Goldfields has a 65% interest in Hellas Gold, which owns three major gold and base metal deposits in Northern Greece. European Goldfields also owns 80% of the Certej gold/silver project in Romania.