MAC/20: Mines and Communities

Romania looking finished as Eurogold eyes Ukraine

Published by MAC on 2006-02-09

Romania looking finished as Eurogold eyes Ukraine

by Ben Sharples, Miningews

9th February 2006

EUROGOLD looks likely to cut its ties with Romania to concentrate on its Ukrainian assets after damage to a tailings pipeline rendered the future of the its Transgold project uncertain.

The Romanian business is operated by Eurogold's 50% owned subsidiary Transgold, which is jointly owned with the Romanian Government.

Eurogold said the current extreme weather coupled with the ongoing low production levels at the Transgold CIL processing plant caused a section of the tailings pipeline to freeze.

Consequently the entire pipeline is being dismantled and transported to the tailings dam for drainage and storage.

Eurogold said the reinstallation of the pipeline and re-start of production would only be warranted when a sustainable higher level of feed is available for the plant.

"Previously we've been operating it at 15% capacity which is what we had been able to toll treat from state mining operations and our own hard rock resources," Eurogold executive chairman Peter Gunzburg told MiningNews.net.

To make matters worse, Transgold is indebted to its Australian parent to the tune of $US2.9 million and Eurogold said it doesn't intend to provide any further funding support to Transgold.

"Given these circumstances, Eurogold believes that Transgold will not be able to continue trading without further immediate support from its bank UniCredit, the Romanian government or other third parties," Eurogold said.

The message from Gunzburg is blunt.

"We're not going to put any more money into Romania, we think we might have upward of a million ounces in our deposit in the Ukraine and we're far better concentrating on that," he said.

"It's not a question of losing patience with Romania; it's just what's best for shareholders.

"Our shareholders are better served by us concentrating on what looks to be genuinely
unheralded discovery by the marketplace."

Gunzburg said the Soviets had completed nearly 10km of underground tunnelling proving up around 578,000 ounces in the Soviet C1, C2 category.

"We've just started a drilling program, and we're using that program to put the resource into a JORC category, but also to increase the size of deposit," Gunzburg said.

"What we did last year was a few large step out drill holes which indicated the ore body extends along strike for another upwards of a kilometre, so it could be a very big system."

Eurogold expects to have the JORC compliant estimate completed by the end of the June quarter. Cannon Drilling of the UK is conducting the drill campaign.

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