Vancouver — As a result of a decree by the government of Brazil that limits the use of electric energy, Eldorado Gold (ELD-T) has lowered its projected gold production for 2001.
On June 1, the company’s Sao Bento mine began to ration electrical power, limiting the operation to 80% of its normal usage. This, combined with the scheduled autoclave repair, has caused the junior to lower its estimated gold production to 94,000 oz. from 117,000 oz. Operating costs are slated to rise to US$225 per oz. from US$209.
Based on the lower forecast, Eldorado plans to close out its gold-hedging contracts that mature after 2001, as well as all Brazilian currency hedging contracts. The proceeds will be used to reduce debt.
Sao Bento is located in Brazil’s Minas Gerais state. Its production fell to 28,086 oz. in the first quarter of 2001, down from 31,143 oz. in the corresponding period of last year. The mine averaged 9.25 grams gold per tonne in the quarter, a significant increase on 7.48 grams in the first quarter of 2000.
Eldorado has accepted an insurance settlement for the Sao Bento autoclave, which failed in 1998. The junior will receive US$6.4 million to repair the autoclave to full re-insurable standards. Eldorado will also receive ongoing payments for losses incurred during the repair period.
“The settlement brings closure to the open claim and gives us the opportunity to restore Sao Bento to first-class operating capacity,” says Paul Wright, Eldorado’s president.
Eldorado is shifting its focus to Turkey, where the junior is aiming to become a low-cost gold producer through its wholly owned Kisladag and Efemcukuru advanced gold projects.
Be the first to comment on "Production lowered at Sao Bento"