Eldorado Gold aims for 400K oz. gold production in 2010

Vancouver – Although its year end numbers and production forecasts suggest Eldorado Gold (ELD-T, EGO-X) is catching up to the Majors, Eldorado chief financial officer Earl Price says, “We actually like flying under their radars.”

 

But with record gold production of 308,000 oz. reported for 2008 and a larger strategy to reach 700,000 oz. gold by 2013 Eldorado may soon begin bleeping on some radar screens. In its year end update Eldorado outlines bold designs to pour over 325,000 oz. gold in 2009 and 400,000 oz. gold in 2010.

 

At Kisladag, Eldorado’s biggest operation in terms of both oz. gold produced and resources and reserves it holds, Eldorado says next year it expects to ramp up production to 230-240,000 oz. gold at a cash cost of around US$265 per oz. In 2008 Eldorado produced 190,000 oz. gold at a cash cost of US$254-per-oz. gold.

 

And the Kisladag open-pit mine has plenty of life left to it. Eldorado began operations in 2006 based on a 15-year mine life and last pegged its reserves there at 153 million proven and probable tonnes grading 1.12 grams gold per tonne (for about 5.5 million oz. contained gold) in 2007. Its measured and indicated resource estimate came in at 255 million tonnes grading 0.95 gram gold (for about 7.8 million measured and indicated oz. gold).

 

The planned output increase in 2009 at Kisladag will also make up for falling production at its Tanjianshan mine in China.

 

In 2008, its first full year of operation, Tanjianshan produced 118,000 oz. gold at cash costs of US$261 per oz. But as Eldorado moves into refractory ore this year at Tanjianshan it expects output will fall. In 2009 Eldorado forecasts production to range between 95,000 and 100,000 oz. gold at an increased cash cost of US$385.

 

Eldorado began production at Tanjianshan in 2007, making it the first North American gold producer in China and dispelling the notion you can only pour money into China but you can’t get it back out.

 

In 2007 it calculated a proven and probable reserve estimate of 7.3 million tonnes grading 3.96 grams gold (for 934,000 oz. gold) and a measured and indicated resource estimate of 10.9 million tonnes grading 3.44 grams gold (for 1.2 million oz. gold). Tanjianshan is an open pit mine with a 9-year mine life.

 

It is in 2010, however, when Eldorado plans the most significant bump to production. It expects its second mine in Turkey, the Efemcukuru project, will come on stream that year.

 

Eldorado estimates capital costs of the project at US$142 million and a mine life of just over nine years. In 2009 Eldorado says it will spend around US$85 million on the project and it forecasts that the mine will add 80,000 oz. to its production sheet in 2010, potentially bringing its total production that year to over 400,000 oz.

 

Efemcukuru’s has proven and probably reserves of 3.8 milion tonnes grading 10 grams gold (for 1.2 million oz.) and resources of 4.1 million measured and indicated tonnes grading 11.01 grams gold (for 1.4 million oz.)

 

The mine, which it is the midst of building, will be an underground mine with two opposing portals intersecting ore at mid-depth. Eldorado will extract ore using trackless, mechanized cut and fill and long hole stoping and relay it to surface via a conveyor. Processing will entail a traditional SAG/ball mill, gravity and flotation and then shipment to its Kisladag facilities.

 

Beyond 400,000 oz. gold in 2010 Eldorado says the plan is to nearly double production to 700,000 oz. gold a year by 2013.

 

Price says two projects are at the core of that vision, the Tocantinzinho (TZ ) project in Brazil and the Perama Hill project in Greece. Both have their challenges.

 

“We call the TZ project ‘technical’ and the Perama Hill project ‘social’,” he says.

 

The challenges at the TZ project are related to location; TZ is a 430 km2 land package in the State of Para, smack-dab in the middle of the Amazonian rain forest. So he says dealing with power and infrastructure will be the primary issues there.

 

As for the Perama Hill project Price explains that the challenge there will be to impress locals that Eldorado is a responsible mining company. Although he says the government in Greece is largely supportive of mining, as in Turkey “the rule of thumb is if you don’t have the support of locals then you don’t have a mine.”

 

To that end Price says Eldorado is taking pains to build up a good Greek staff and meet with government officials in Athens.

 

More importantly he says it is going to be critical to make sure Eldorado develops solid relationships with locals and demonstrates to them that the company is not going to come in and destroy their land.

 

“You have to show them that you’re not just a bunch of fly-by-nighters,” Price says.

 

Because the two projects are as far off on the horizon as they are, and given their “technical” and “social” challenges, Price says it is difficult to judge which one might reach a production decision first. Nonetheless Eldorado is clear on what it eventually hopes they will turn into.

 

“These projects have the potential to increase Eldorado’s production by 250,000 oz. of gold annually by 2013,” the company writes on its website.