Despite Turkish troubles, Eldorado plans new mine at Efemukuru

Vancouver – Undeterred by the forced closure of its Kisladag gold mine in Turkey, Eldorado Gold (ELD-T, EGO-X) is forging ahead with plans for another Turkish gold project only 100 km away, as well as development of an iron ore deposit in Brazil.

On Monday the company announced that the court-ordered shutdown of Kisladag would start August 20th. An anti-mining group in Turkey requested the closure injunction as part of the appeal in their long-standing lawsuit against Eldorado, a suit based on charges that the Kisladag environmental impact assessment is deficient. The injunction was suddenly granted in mid-July, to Eldorados surprise, and the mine shutdown will last until the appeal can be heard in court. The court date is expected to fall in October.

Despite such a significant setback in Turkey, on Wednesday the company announced plans to develop the nearby Efemukuru gold project based on a positive feasibility study, a study that assumed that the Kisladag mine facility would be available to refine ore from Efemukuru.

Efemukuru hosts proven and probable reserves of 3.79 million tonnes grading 10.04 grams gold per tonne, using a 4.5 grams gold cut-off grade, for a total of 1.22 million contained oz. The deposit is an epithermal-hosted vein structure in the Menderes Massive of western Turkey. Two ore shoots, called middle and south, dip at 60 degrees and have been traced to a depth of 350 metres. Eldorado plans to continue exploring the downdip extension as well as other structures to the north.

An underground mine with ore milled on site is projected to operate at 1,100 tonnes per day, producing some 112,400 oz. gold annually at a cash cost of $226 per oz. The mine has a projected life of 9.4 years.

Conventional trackless equipment will pull ore from mechanized cut and fill, longitudinal long hole, and traverse long hole stopes. Two opposing adits will intersect the workings at mid elevation, and a twin internal ramp in the footwall will deliver ore to an underground crusher station. Crushed ore will be transported to the surface by an inclined conveyor system.

Gravity concentration and flotation will be done at Efemukuru. The flotation concentrate will then be transported to the nearby Kisladag mine facility for regrinding and cyanidation, for roughly 86.5% gold recovery. No one at Eldorado was available to comment on how plans would change if Kisladag is closed permanently.

Eldorado anticipates an 18-month construction schedule, with initial production planned for late 2009.

Eldorado is also juggling developments on other side of the world. On Tuesday, the company had some good news from Brazil: an updated pre-feasibility study and economic analysis for the Vila Nova iron ore deposit in Amapa State came back positive and the board decided to go ahead with construction there as well.

Initial development capital for Vila Nova, including working capital, is $32.7 million over one year. Eldorado recently renegotiated the terms of its 50-50% JV agreement with DSI Consult, a private Brazilian company that controls the Vila Nova mineral rights, such that Eldorado now owns 75% of the project. In exchange for its increased ownership Eldorado will pay US$2.8 million to DSI and finance up to US$30 million of the pre-production capex of the project. Above US$30 million, Eldorado and DSI will finance the project on a 75-25% basis.

The 2006 pre-feasibility study used conservative 2005 ore prices for pit optimization and assumed contract mining. The updated version instead used 2006 level prices, averaging $54 per tonne of finished product including costs of transportation to Santana Port, and owner operated mining. Expenditure payback is expected within 2.5 years, and the net product value after 5% tax is US$69.1 million

Vila Nova holds proven and probable reserves of 9.27 million tonnes grading 61% iron. Crushing, screening, and minor gravity separation at the mine is predicted to give a total weight recovery of 88%.

News of the Kisladag closure brought Eldorado stock down 34% over four days of trading in mid-July, to a low of $4.77 from $7.22. The price has hovered around $4.70 since then.