Wednesday, March 17, 2010

European Goldfields gets key Romania permit

LONDON, March 16 (Reuters) - European Goldfields Ltd won a key environmental permit for its Certej gold-silver project in Romania, which may give confidence to investors the group can become a significant gold producer.

The London shares jumped 5 percent to 501.25 pence at the open on Tuesday, outperforming a 0.6 percent rise in the UK mining index. The shares have gained 12 percent this year after doubling last year.

The permitting process for both Certej and its bigger projects in Greece has been dragging on for years, creating disappointment among investors and hitting the firm's valuation, analyst Dominic O'Kane at Liberum Capital said in a note.
"We feel this trajectory changed when the old CEO departed to be replaced by a more credible executive chairman, Martyn Konig," he said.

"With his first promise on Certej delivered today, we are hopeful that the market will begin to realise that current guidance on remaining permitting is both realistic and reassuringly close at hand."

The AIM-listed company produces a modest amount of silver, zinc and lead at its only producing mine, Stratoni, in Greece and is in the process of getting permits for its Skouries and Olympias projects. The firm also produces some gold concentrates from stockpiles at Olympias.

If the remaining permitting process goes smoothly, European Goldfields could ramp up to production of 436,000 ounces of gold by 2013, O'Kane said.

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