Eldorado breaks ground in Turkey (September 20, 2004)

With all required construction permits and approvals in hand, Eldorado Gold (ELD-T) plans to crank up construction at its Kisladag gold project in western Turkey later this month.

The company has already established temporary offices, and road construction will soon begin. Other early work will include water well drilling and electrical power line construction.

“With the recent approvals, Eldorado remains on schedule to commence production late in 2005,” says Eldorado President Paul Wright, adding that the exact start-up date will depend on how weather conditions this winter affect construction of the operation’s leach pads.

Wright says capital expenditures have already begun, and he expects US$13 million to be spent during the last three months of 2004; another US$24 million will follow in the first quarter of 2005, with another US$26 million to be spent over the balance of the year. The bulk of the spending comes early next year, with the focus being on the crusher, conveyor and stacking unit installations. At the end of June, Eldorado had US$86.8 million in cash, and no debt.

Earlier this summer, Kisladag was granted an exemption from Turkey’s value-added tax, which would have seen the project’s costs soar.

The open-pit, heap-leach operation is expected to produce about 164,000 oz. gold during its first year. Wright says a US$13-million plant expansion to 10 million tonnes annually in 2006 will boost production to 240,000 oz. gold per year. Over its planned 14-year lifespan the mine will churn out around 3 million oz. of gold at an estimated cash cost of US$165 per oz.

Plans at Kisladag call for contractor mining during the first two years; thereafter the company will assemble its own fleet of equipment and workers, and will take over operation in the third year. Financing for the equipment has yet to be arranged. Alternatively, the company may extend the mining contract.

At last count, Kisladag was home to a measured and indicated resource totalling 214.8 million tonnes grading 1.04 grams gold per tonne, with another 45.5 million tonnes of inferred material running 0.75 gram gold. Total reserves stand at 135 million tonnes grading 1.16 grams, or around 5 million contained ounces gold.

With Kisladag under way, Eldorado plans to advance its Efemcukuru gold project to a construction decision, and hopes to submit an environmental impact assessment (EIA) later this year. Wright says the most significant items outstanding regarding the EIA are the public meetings, which will be held during the fourth quarter, prior to the EIA being submitted to the Ministry of the Environment.

At Efemcukuru, proven and probable reserves are estimated at about 1.8 million tonnes grading 13.1 grams gold, or 784,100 oz.; another 1.8 million tonnes running 14.4 grams are classified as measured and indicated resources. The project also hosts inferred resources totalling 590,300 tonnes of 12.6 grams gold.

Gold mineralization is hosted by the 2-km-long Kestane Beleni quartz and quartz-rhodonite vein structure. Previous work indicates that the orebody extends to a depth of 300 metres; it remains open.

Eldorado envisages a 280,000-tonne-per-year underground mine producing an average 90,000 oz. of gold annually over 12 years.