Eldorado Gold Q1 production falters; share-price holds

Vancouver – News of falling revenues, gold sales and production in the first quarter of 2009 barely dented Eldorado Gold‘s (ELD-T, EGO-X) share-price.

Confidence in the company likely stemmed from an otherwise healthy balance sheet and a promise it would still meet a 2009 production forecast of 330,000 oz. gold. Eldorado has no debt and about US$108 million in cash on hand.

Eldorado’s share-price shed 30¢ to close at $9.75 on news that gold production fell by 20,419 oz. to 61,426 oz. from the fourth quarter of 2008. As compared to the fourth quarter of last year production dropped by 5,808 oz. gold.

Net income in the first quarter 2009 decreased to US$13.1 million from US$20.7 million a year previous. Total cash costs averaged US$315-per-oz. gold during the latest quarter.

Eldorado blamed slowing production on heavy rains at its Kisladag mine 180-km west of Izmir, Turkey, and on a transition to processing of sulphide ores at its Tanjianshan mine in Qinghai province, China.

Rains hampered ore screening and stacking and diluted process solutions in January and February and, in commissioning its sulphide processing facilities at Tanjianshan, Eldorado fed lower grade transition ores to its plant.

But in a conference call with analysts Eldorado president and CEO Paul Wright described how these forces of dilution will dissipate in coming quarters.

Wright emphasized that a steady rate of 20,000 oz. gold per month has been reached at Kisladag since the end of February and at Tanjianshan Eldorado had already started stacking higher grade ore.

Furthermore a roaster will come online during the second quarter, Wright said, and with that Eldorado will officially usher in commercial production in sulphides.

As well he noted that Chinese authorities have approved Eldorado’s request to boost yearly throughput to 900,000 tonnes from 800,000 tonnes.

The combination of higher grades and tonnage, he says, will allow Eldorado to meet its 2009 targets. To hit the 2009 target of 330,000 oz. gold Eldorado must fire out about 89,500 oz. gold in each of the year’s remaining quarters.