Closing of Acquisition of an Additional 30% Interest in Hellas Gold
3 July 2007 - European Goldfields Limited (TSX / AIM: EGU) (the "Company" or "European Goldfields") is pleased to announce that it has completed the acquisition of an additional 30% interest in Hellas Gold S.A. ("Hellas Gold") as previously explained in the Company's press release dated 1 June 2007 (the "Acquisition"). This increases the Company's total interest in Hellas Gold to 95%.
Summary of the Acquisition
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The purchase price is funded essentially through a share swap with Aktor, providing it with a 19.9% stake in European Goldfields and reinforcing a strategic alliance between the two companies
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The transaction is accretive for all shareholders, incorporating a 15% discount to the "see-through value" of Hellas Gold
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The Acquisition provides European Goldfields' with 95% ownership of the cash flow and net income to be generated from existing and future production in Greece
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Following a recent fundraising, European Goldfields now has approximately US$215 million in cash, representing over 50% of the expected capital required to develop the Skouries and Certej projects
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European Goldfields remains on track to become the largest unhedged gold producer in Europe, with the development of Skouries and Olympias in Greece and Certej in Romania
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With a market capitalisation of over US$900 million following the recent fundraising and the Acquisition, European Goldfields has become the 5th largest mining company listed on AIM
Details of the Acquisition
On 29 June 2007, the Company completed the acquisition of an additional 30% interest in Hellas Gold, increasing its stake to 95%. The purchase price was agreed at US$178 million, which incorporates a 15% discount to the "see-through value" of Hellas Gold. The full purchase price is payable by the allotment to the vendor of 35,447,246 common shares representing 19.9% of the issued and outstanding shares of the Company on a diluted basis and the balance of US$8.4 million in cash.
This transaction is, in essence, a share swap and reinforces a strategic alliance with the vendor Aktor S.A. ("Aktor") and its parent company Elliniki Technodomiki TEB A.E. (ATHEX: ELTEX) ("El-Tech") in that approximately 95% of the purchase price is payable to Aktor in common shares of the Company. Of the cash portion, 50% will be re-invested by Aktor into Hellas Gold, as funding towards maintaining its residual 5% shareholding interest in Hellas Gold.
El-Tech is a large Greek conglomerate with a market capitalisation in excess of US$2 billion and investments in four fields: construction, concessions, energy and real estate. Aktor is Greece's largest construction company.
Furthermore, to demonstrate and confirm its long-term commitment to the Company and its projects, Aktor has agreed not to sell the European Goldfields shares it receives as consideration until the date on which the Company's Skouries gold-copper porphyry mining project commences production (or four years after the closing of the Acquisition, if earlier).
The Company also intends to appoint a representative of Aktor to its board of directors. The Company does not propose to make significant changes to Hellas Gold's operations following the Acquisition.
Concurrently with the Acquisition, the Company completed a treasury offering of 27.6 million shares, for total gross proceeds of Cdn$138 million.
Commenting on the transaction, David Reading, Chief Executive Officer of European Goldfields, said: "The fundraising and the increase to 95% ownership of Hellas Gold have transformed European Goldfields overnight. The key partnership with Aktor has been further strengthened through aligning both companies' long term interests in the rapidly developing mining industry in South East Europe. With the flexibility of US$215 million of cash on the balance sheet to develop our three major gold projects, underpinned by strong cash generative production from Stratoni in a sustainable high metal price environment, European Goldfields is on track to become a mid-tier un-hedged gold producer within the next 3 years."
About European Goldfields
European Goldfields is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and South-East Europe.
Greece - European Goldfields holds a 95% interest in Hellas Gold S.A. Hellas Gold owns three major gold and base metal deposits in Northern Greece. The deposits are the polymetallic projects of Stratoni and Olympias which contain gold, zinc, lead and silver, and the Skouries copper/gold porphyry body. Hellas Gold commenced production at Stratoni in September 2005 and selling an existing stockpile of Olympias gold concentrates in July 2006. Hellas Gold is applying for permits to develop the Skouries and Olympias projects.
Romania - European Goldfields owns 80% of the Certej gold/silver project in Romania. European Goldfields submitted in March 2007 a technical feasibility study to the Romanian gove
rnment, in support of a permit application to develop the project.
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Forward-looking statements
Certain statements and information contained in this document, including any information as to the Company's future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute forward-looking information under provisions of Canadian provincial securities laws. When used in this document, the words "anticipate", "expect", "will", "intend", "estimate", "forecast", "planned" and similar expressions are intended to identify forward-looking statements or information. Forward-looking statements include, but are not limited to, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs and timing of de
velopment of new deposits, permitting time lines and expectations regarding metal recovery rates. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Company to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: changes in the price of gold, base metals or certain other commodities (such as fuel and electricity) and currencies; un
certainty of mineral reserves, resources, grades and recovery estimates; uncertainty of future production, capital expenditures and other costs; currency fluctuations; financing and additional capital requirements; the successful and timely permitting of the Company's Skouries, Olympias and Certej projects; legislative, political, social or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold and base metals exploration and development, including the risks of diminishing quantities or grades of reserves; the risks normally involved in the exploration, development and mining business; and risks associated with internal control over financial reporting. For a more detailed discussion of such risks and material factors or assumptions underlying these forward-looking statements, see the Company's Annual Information Form for the y
ear ended 31 December 2006, filed on SEDAR at www.sedar.com. The Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
 
