European Minerals Corporation: Major Milestones Achieved at Varvarinskoye Project in Kazakhstan.

LONODN, United Kingdom -- - Varvarinskoye Debt Facility signed

- Gold Hedging Programme agreed

- Turnkey Construction and copper/gold concentrate sales contracts concluded

European Minerals Corporation ("EMC" or "the Company") (TSX:EPM)(AIM:EUM) is pleased to announce that several major milestones have been reached at its Varvarinskoye gold/copper project in Kazakhstan.

Debt Facility

A debt facility of US$75.4 million has been concluded with Investec Bank (UK) Limited and Investec Bank Limited ("Investec") and Nedbank Limited ("Nedbank") to fund the debt portion of the Varvarinskoye project financing. EMC is the guarantor of the debt until project completion and its 100% owned subsidiary JSC Varvarinskoye is the borrower. The limited recourse debt facility consists of:

1) A commercial loan facility of US$28 million ("the Commercial Loan")

2) A loan facility supported by the Export Credit Insurance Corporation of South Africa ('ECIC') of US$47.4 million (the "ECIC Loan")

The Commercial Loan and the ECIC Loan was fully underwritten in equal parts by Investec and Nedbank. Investec acted as arranger of the debt facility.

Both the Commercial Loan and the ECIC Loan are for an 8 year term with a semi-annual repayment schedule commencing 24 months after first drawdown, which is expected to be before the end of January 2006.

Interest rates are Libor plus 1.25% on the ECIC Loan for the life of the loan and Libor plus 2.8% on the Commercial Loan during the construction period, falling to Libor plus 2.3% when the project has passed the standard Completion Tests stipulated by the lenders.

The project capital cost is approximately US$112 million. In addition there are capitalised financing and insurance costs which amount to US$13 million. The Company will fund the difference between the total capital cost and the US$75.4 million debt facility with US$49.6 million of equity from its existing cash resources, of which US$42.6 million has already been expended on the project.

Gold Hedging Facility

As part of the debt facility arrangements, EMC has agreed to implement a gold hedging facility for the period of the debt facility. The hedge, in the form of a monthly US dollar flat forward gold sale over the 8 year term of the debt facility, will be executed by the Company prior to first drawdown of the debt. The gold hedge will represent approximately 50% of production during the term of the debt facility, but only around 19% of the current proven and probable reserves of gold calculated at a gold price of US$375/oz. Approximately 80% of gold which will be produced at Varvarinskoye will be as dore at the mine site (see Press Release November 10, 2004).

Copper Concentrate Sales Contract

EMC has concluded a copper/gold concentrate sales contract with Trafigura Beheer BV ("Trafigura"), a major international commodity sales and trading organisation. The contract is for the full production of copper/gold concentrates for the life of mine, estimated to be 600,000 tonnes at an average grade of 17% copper and 20g/t gold (November 2004 Varvarinskoye Gold/Copper Project Bankable Feasibility Study filed on SEDAR on November 26, 2004). Trafigura will take delivery of the copper/gold concentrate at the Bataly Junction rail loading facility located 14km south of Varvarinskoye mine. An existing road between the mine and Bataly Junction is currently being upgraded, the cost of this work and the improvement of the rail junction is included in the project capital cost. Payment for copper will be made based on the LME copper Grade 'A' settlement quotation (the underlying copper price has not been hedged). Payment for gold contained in the concentrate will be based on the average of the London AM/PM quotation.

Lump sum turnkey contract

JSC Varvarinskoye has entered into a lump sum turnkey contract ("LSTK") for the supply and construction of the Varvarinskoye process plant and associated infrastructure with MDM Ferroman (Pty) Limited ("MDM") of Johannesburg, South Africa. The LSTK contains the standard mining industry undertakings associated with this type of contract, including process guarantees and completion tests. Under the LSTK, MDM will supply the equipment for and build a process plant to treat a minimum of 4.2 million tonnes of ore per annum from the Varvarinskoye deposit. The LSTK cost is US$55.7 million and the scheduled contract completion date is December 2006.

The Varvarinskoye capital cost, including the process plant, infrastructure, mine fleet purchase, pre-stripping of overburden and working capital, is approximately US$112 million, which continues to be in line with the estimate contained in the Company's Prospectus dated March 31, 2005. The capitalized financing and insurance costs are US$13 million bringing the total capital cost for the project to US$125 million.

About Varvarinskoye

EMC is developing an open pit mine at its 100% owned Varvarinskoye gold-copper deposit in Northern Kazakhstan. Independently estimated mineral resources are 2.82 million ounces of gold and 347.2 million pounds of copper in the measured category and 1.01 million ounces of gold and 84.5 million pounds of copper in the indicated category. Proven and probable mineral reserves (at metal prices of US$375/ounce for gold and US$1.00 per pound for copper) are 2.34 million ounces of gold and 269 million pounds of copper (80% in the proven mineral reserve category). The first gold pour is expected in December 2006 with production at an average annual rate of 145,000 ounces of gold and 18.4 million lbs of copper over the first 10 years of the 15 year mine life, at cash cost of US$130/oz (Copper at US$1/lb taken as a credit).

All estimates of mineral resources and reserves are contained in the technical report entitled "Varvarinskoye Gold-Copper Project Northern Kazakhstan" dated November 2004 and amended March 2005 prepared in accordance with Canadian National Instrument 43-101 and filed on SEDAR on March 31, 2005.

Tony Williams Chairman of EMC commented today

"We are delighted with the achievements outlined in this press release which mark several major steps forward for the Company. Our Varvarinskoye project is now fully financed on very competitive terms and our gold hedging programme will mean that early cash flow from Varvarinskoye will be at much higher levels than envisaged in our feasibility study.

Varvarinskoye is on schedule to become a significant gold and copper mine and to form the cornerstone for further development of EMC".

This document may contain or refer to forward looking information, including reserve and resource estimates, estimates of future production, exploration and mine development costs, unit costs, capital costs, timing of commencement of operations and estimates of market conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward looking statement include, but are not limited to, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of the project and other factors. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no responsibility to update them or revise them to reflect new events or circumstances.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

European Minerals Corporation (TSX:EPM) (AIM:EUM)