LONDON, England,
March 31, 2008
Trading Symbols EPM (TSX), EUM (London
AIM)
Varvarinskoye Quarterly
Update, Litigation Update, and
Financial Statements Filings
Varvarinskoye Quarterly Update
- Commissioning Progress: Steady progress; optimisation and milling issues
being resolved
- Expansion Studies Initiated: planning to assess plant capacity increase in
conjunction with resource update
Litigation
- $4.6m recovered in successful litigation to recover expropriated funds
Financial Statements
- Short delay in filing of annual financial statements, MD&A and AIF and
restatement of quarterly financial statements
Varvarinskoye Update
Commissioning Progress
European Minerals Corporation ('EMC' or the 'Company') is pleased to report
that steady progress is being made on the commissioning of the processing plant
at its Varvarinskoye gold/copper project in
Kazakhstan.
Metallurgical performance in the plant is good, with metal recoveries in the
gold leach circuit and the copper/gold flotation circuit in line with design
parameters. The gold elution, electro-winning and gold smelting systems are
working well and gold is being poured on a regular basis. Three gold shipments
have been delivered to the Metalor refinery in Switzerland.
The copper-gold flotation circuit is also operational and copper-gold
concentrate is being produced. The Company expects to sell its first
copper/gold concentrate during April 2008.
The commissioning process is however progressing slower than previously
anticipated by the Company. The ramp up to commercial production is now planned
to be achieved by the end of Q3 2008. Issues which are currently constraining a
more rapid ramp up include:
- Optimising the crusher to achieve the design crush product.
- Replacing electric motors on the mill discharge pumps. The motors appear to
have been undersized at the design stage and the supplier is co-operating with
the Company to rectify this and achieve design capacity.
- Achieving design tonnage through the high-grade copper ball mill is proving
more difficult than anticipated and the manufacturer continues to advise the
Company to attain full design throughput capacity.
- A minor fire in the high grade mill cyclone cluster, the damage to which has
been repaired.
- Unusually bad weather in late February and March disrupted operations at
site.
Bert Kennedy, President and CEO commented today:
'Despite winter temperatures which reached -38 degrees centigrade our
commissioning team are making steady progress. We were pleased to pour gold
before the end of 2007 and are now focussing on building up daily tonnage. The
commissioning of a large process plant such as Varvarinskoye, always has
unexpected challenges, such as noted above. However, three of our four grinding
mills are working well and as tonnage throughput builds, we will continue to
identify and modify design features to reach design throughput. Although
disappointed by the slower than anticipated progress, we are generally
satisfied with the winter commissioning and, if possible, intend to accelerate
the ramp up. The Company will initiate reporting of further details regarding
production and sales on a quarterly basis, commencing at end of Q2 2008, when
commissioning is more advanced.'
Expansion Studies
The Company has appointed an independent engineering
company to undertake a scoping study to engineer the expansion of the plant
throughput beyond the currently planned 4.2 million tonnes of ore per annum. The
Company will report further details in due course.
Bert Kennedy commented as follows:
'The Company is currently completing an internal update of estimated mineral
resources at Varvarinskoye, the results of which are expected to result in an
increase to resource estimates and will be announced shortly. This makes the
announcement of our expansion scoping study very timely as it gives us
confidence that the Company will be able to benefit further from the strong
prices for gold and copper'.
Litigation Success
The Company is pleased to announce that on March 28, 2008 The Supreme Court of
Appeal of South Africa issued judgment in favour of the Company in relation to
its action to recover ZAR 28 million (approximately US$ 3.5 million) of monies
advanced to a former contractor and expropriated by ABSA Bank Limited of South
Africa. In addition the Company has been awarded interest from December 2005,
of approximately ZAR 10 million (approximately US$ 1.1 million) and costs which
are yet to be determined.
Late Filing of Annual Financial Statements, MD&A and AIF
The Company also announces that, as a result of increased time needed to
complete its annual consolidated financial statements and related audit, there
will be a short delay in the filing of the annual consolidated financial
statements, management discussion and analysis ('MD&A') and annual
information form ('AIF') for the Company's financial year ended December 31,
2007 as required by Canadian National Instrument 51-102 Continuous Disclosure
Obligations ('NI 51-102').
The delay is caused by having to incorporate the financial implications of the
successful litigation resolved on March 28, 2008 referred to above, as well as
unexpected difficulties encountered in finalizing inter-group reporting from
the Company's Kazakhstan
operation. Additionally, the Company is reviewing its accounting for
derivatives to ensure compliance with CICA Handbook Sections 3855 and 3865. It
is anticipated this review will result in a restatement of the Company's
interim financial statements for Q1, Q2 and Q3 of 2007. The Company is working
with its auditors to complete the audit of its annual consolidated financial
statements for the year ended December 31, 2007 as expeditiously as possible. Management
of the Company expects this to be completed by April 14, 2008.
Pending the filing of its annual audited consolidated financial statements,
MD&A and AIF, as well as the Company's restated interim financial
statements and related MD&A for Q1, Q2 and Q3 of 2007, the Company intends
to satisfy the alternative information guidelines recommended by Ontario
Securities Commission Policy 57-603 and Canadian Securities Administrators
Staff Notice 57-301 ('CSA Staff Notice 57-301'), including the provisions of
Appendix B (Default Status Reports) of CSA Staff Notice 57-301. If the annual
audited consolidated financial statements, MD&A, AIF, restated interim
financial statements and related MD&A are not filed by May 31, 2008,
applicable securities commissions or regulators may impose a cease trade order.
A cease trade order may be imposed sooner if the Company fails to file its
Default Status Reports on time. The Company is not subject to any insolvency
proceeding and there is no other material information concerning the affairs of
the Company that has not been generally disclosed.
Forward-Looking Information
This news release contains forward-looking information which is not comprised
of historical facts. Forward-looking information involves risks, uncertainties
and other factors that could cause actual events, results, performance and
opportunities to differ materially from those expressed or implied by such
forward-looking information. Forward looking information in this news release
includes, but is not limited to, estimates and/or plans in respect of timing of
commencement of operations, development and operational plans and objectives
(including the ability to expand the plant throughput), timing of completion of
the annual audit, the filing of the Company's annual audited financial
statements, MD&A and AIF and the filing of the Company's restated interim
financial statements and related MD&A, potential additional resources, and
the Company's objectives, goals or future plans. Factors that could cause
actual results to differ materially from such forward-looking information
include, but are not limited to, delays in the development of, and the
commencement of operations at, the Company's Varvarinskoye Project caused by
unavailability of equipment, labour or supplies, climatic conditions, delays in
the delivery and installation of plant and equipment or otherwise and other
factors and those risks set out in the Company's public documents filed on
SEDAR. Although the Company believes that the assumptions and factors used in
preparing the forward-looking information are reasonable, undue reliance should
not be placed on such information, which only applies as of the date of this
news release, and no assurance can be given that such events will occur in the disclosed
time frames or at all. The Company disclaims any intention or obligation to
update or revise any forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Information: United Kingdom
European Minerals Corporation
Tony Williams
Chairman
+44 (0) 20 7529 7508
OR
European Minerals Corporation
Bert Kennedy
President & CEO
+44 (0) 20 7529 7508
OR
Nomad
Mike Jones/Robin Birchall
+44 (0) 20 7050 6500
OR
North America
Vanguard Shareholder Solutions Inc.
Keith Schaefer
1-866-448-0780
Email: ir@vanguardsolutions.ca
