European Goldfields Ltd, a company operating in Greece and Romania, swung to a pretax profit in 2006 on higher-than-targeted production at the Stratoni mine.

The AIM-listed company moved to a pretax profit of 12.0 mln usd, from a pretax loss of 13.3 mln usd in 2005, as sales jumped to 52.4 mln usd from 1.5 mln. Evolution Securities had forecast pretax profit of 15.5 mln usd on sales of 55.5 mln.

The company holds a 65 pct interest in Hellas Gold SA, owner of three major gold and base metal deposits in Northern Greece. Production at the zinc-lead-silver Stratoni plant started in the fourth quarter of 2005, while mining permits for the Olympias and Skouries projects are expected by the end of the second quarter or start of the third.

Stratoni produced a total of 179,950 wet metric tonnes in 2006, exceeding the target of 170,000 tonnes, and is expected to produce up to 400,000 tonnes a year by 2009.

Initial results from new exploration drilling at Stratoni, which is expected to increase life of mine by another two years at least, are expected in the first quarter of 2007.

The company started selling existing stockpiles of Olympias gold concentrates in July 2006 and has signed off-take agreements signed for 70 pct of the Olympias stockpile of 258,000 tonnes (or about 193,000 ounces at 23.3 grammes a tonne) and received expressions of interest for the balance.

It said a technical feasibility study has nearly been completed at the gold-copper deposit Skouries and that Hellas Gold plans to publish the results of the final feasibility study once the final Environmental Impact Study is completed in the second quarter.

Hellas Gold has started discussions with Outokumpu Oy for the purchase of mill and plant equipment and with Aktor SA, Greece's largest infrastructure construction company, for the construction of the plant and related infrastructure.

Elsewhere, a technical feasibility study on its 80 pct-owned Certej project in Romania was submitted to the government in March 2007 and European Goldfields plans to submit a final EIS to the government in the third quarter.

The group said it believes it has adequate funds available this year to meet its corporate and administrative obligations and its planned spending on its mineral properties.