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European Goldfields secures US$125 mln financing for Certej

|Includes: European Goldfields (EGFDF), EUG

European Goldfields (TSX, AIM: EGU) has secured a US$125 million debt financing facility with a group of financial institutions, to part fund the development costs of the Certej project in the Apuseni Mountains of Transylvania in Western Romania.

With funding in place, the company also announced the appointment of Alan Baker as project manager for the Certej gold-silver project in Romania. Baker has over 30 years of experience in the mining sector, and has managed on a number of projects including the construction of a heap leach operation in Eastern Turkey and the design and construction of the gold-copper open pit mine in Kazakhstan.

The newly appointed project manager will join the team at the Deva Gold unit and take responsibility for advancing the Certej project through the development process towards production, European Goldfields said.

To secure the financing, the company signed a mandate letter with the financial institutions, who are led by Caterpillar Financial SARL, ING Bank NV, Investec Bank, UniCredit Bank AG and WestLB AG. These institutions are collectively referred to as the mandated lead arrangers (MLAs). The letter sets out detailed terms and conditions of the debt financing including, among others, the scheduled eight year tenor, the security held against the facility, the terms of repayments and revolving credit tranches.

“This is an important further step in the development of the Certej project and in the company's wider relationships with the debt capital markets.  European Goldfields is very pleased to be working with such high quality financial institutions”, European Goldfields stated.

Previously in mid-2009, European Goldfields appointed SRK Consulting as the independent technical consultant to act on behalf of the MLAs.

SKR’s technical, social and environmental due diligence is complete and SRK are in the process of finalising their report. Additionally, the arranging and underwriting conditions agreed by the MLAs are subject to final due diligence, customary market conditions and obtaining final internal credit approvals. 

The Certej project is an epithermal gold-silver deposit located in the "Golden Quadrilateral" area of the Apuseni Mountains of Transylvania in Western Romania, a highly prospective region which has historically produced upwards of 30 million ounces of gold. The project lies within a brown-field site with existing infrastructure and a history of production which dates back 300 years; the open pit and plant were worked as recently as 2006.

The Certej deposit has a calculated NI43-101 mineable reserve of 32.8m tonnes of ore grading 2 grams per tonne gold (gpt) and 11.4gpt silver, representing 2.1m ounces gold and 12m ounces silver.  A further 4.1 million tonnes of ore from lower grade material and existing dumps will contribute an additional 290,000 ounces of gold and 8.8m ounces of silver in the latter years of the mine.

The ore-body comprises four distinct ore zones, which are amenable to extraction by 2 adjacent open pits that are well defined by extensive drilling. The mine will be operated using a conventional open pit method, utilizing a strip ratio of 3.1:1.

According to European Goldfields, Certej will involve the processing of 3m tonnes of ore per annum over an open pit life of 11.5 years, and an overall mine life of 16 years. Average annual production is expected to be 155,000 ounces of gold and 820,000 ounces of silver during the life of the open pit, and will subsequently be fed by lower-grade material, stockpile and dumps.

The project has an anticipated project capex of approximately US$190m which includes pre-stripping in year 1. The Technical Study, which is required to obtain the relevant construction permits, is currently underway and its completion is anticipated in Q2 2010.

The company said that the project’s upside includes numerous drill ready targets both near mine and within the wider licence area and further long term exploration potential exists within the Certej-Brad Bel

Disclosure: no position