Hedging adds strength to Eldorado

Improved operating margins and a strong hedging program enabled Eldorado Gold (ELD-T) to earn US$2.7 million (or 4 cents per share) on gold sales revenue of US$31.2 million during the first six months of 1999.

By comparison, the first half of 1998 saw the company lose US$6.9 million (10 cents per share) on revenue of US$33 million.

Eldorado cranked out 98,553 oz. gold during the first half of 1999 at a cash cost of US$190 per oz., compared with year-ago production of 94,172 oz. gold at US$253 per oz. The increase is attributed to three factors: operating improvements at the Sao Bento mine in Brazil; the devaluation of the Brazilian currency; and the processing of higher-grade ore at the Colorada mine in Mexico.

Gold production in the recent second quarter totalled 52,442 oz. at a cash cost of US$199 per oz., compared with 50,647 oz. at US$251 in the corresponding period of 1998.

Since November 1998, Eldorado has reduced its debt load by US$5 million, to US$30 million, while slashing its net debt (cash minus total debt) to US$26.2 million from US$38.8 million. The junior expects to be debt-free by the end of 2003.

During the first half of 1999, the company realized an average gold price of US$316 per oz., compared with an average spot price of US$280.

Total gold hedges were valued at US$5 million during the first quarter and were put towards debt reduction. Eldorado has hedged 510,000 oz. gold at an average price of US$297 per oz., which represents all of its production over the next three years.