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To: LoneClone who wrote (44579)	10/6/2009 6:44:30 PM
From: LoneClone	Read Replies (1) \| Respond to of 196029

UPDATE 1-Euro Goldfields gets initial nod for Greek mines Tue Oct 6, 2009 7:51am EDT reuters.com * Flagship project would boost gold output fivefold * Shares up nearly 6 pct * Analyst says bid premium warranted (Adds interview with CEO, analyst comment, share price) LONDON, Oct 6 (Reuters) - European Goldfields Ltd (EGU.TO) (EGUq.L) won preliminary approval to develop a project in Greece expected to increase its gold production fivefold, boosting its share price and earning it a mention as a possible bid target. The project focuses on two locations in northeastern Greece. The company sees its Olympias mine entering production in mid-2010 and the other site at Skouries reaching full production from the beginning of 2012. "With these approvals now we can start building these projects and exploring for more," said David Reading, chief executive officer, noting the company produces about 70,000 ounces of gold a year. "Our 420,000 ounces of gold from 2012 onwards would double current European gold production," he said. Shares in the company rose 5.86 percent to 299.5 pence by 1134 GMT, compared with a 3.9 percent increase in the UK mining index .FTNMX1770. Ambrian analyst Nick Mellor said a bid premium for the firm was justified. CEO Reading said European Goldfields was not currently involved in merger talks. Gold prices XAU= surged to an 18-month peak on Tuesday. [GOL/] HOME STRAIGHT Reading said the permit process in Greece was 80 percent complete and he expected it to be concluded in the next quarter or in January. European Goldfields, which slipped to a first half loss in August, has spent $120 million on the project and needs a further $330 million to bring everything to production by 2012. The firm has $150 million in the bank. [ID:nBNG347354] Reading said the company expects to fund the development through project finance loans from banks. European Goldfields also has a project in Romania to develop a open pit mine at a deposit estimated to contain 2.5 million ounces of gold. The company hopes the permits there will be completed in March and that 160,000 ounces of gold a year will be produced there starting in the first quarter of 2012. In the meantime, it is selling gold concentrate to China and produces lead, zinc and silver concentrate. Louise Collinge, an analyst with Evolution Securities, said that while the Greek news was positive, the company still needed to complete the approval process and to get financing for about $400 million for the projects there and Romania. She noted that the permit process in Greece has been going on for years and could take longer to complete given the change of government following weekend elections. [ID:nL5735097] Evolution is keeping its "Reduce" recommendation and 147 pence target price. Ambrian, a market maker in the company, maintained its "Buy" recommendation and raised its target price to 335 pence per share from 260 pence. "We fully expect European Goldfields to become the largest gold producer on AIM in the medium term, and thereafter move to the main board or (potentially) be taken out, so a bid premium is certainly warranted," Mellor said. (Reporting by Sharon Lindores; Editing by John Stonestreet)