Eldorado invests in next generation of mines

Vancouver – Increased costs associated with new mine construction and reduced production from the aging Sao Bento mine pushed Eldorado Gold (ELD-T, EGO-X) into the red to the tune of US$49.1 million last year, well above the loss of US$13.9 million posted for 2004.

The 2005 net loss includes a US$18.9-million write-down of assets, and also reflects higher operating costs and depreciation at the Sao Bento mine in Brazil. The underground mine will cease operations in the first half of 2007, and will be replaced by two new mines slated to begin production this year in Turkey and China.

Eldorado produced 64,298 oz. gold last year from Sao Bento, about 21.6% less than in 2004 because of problems with ground stability, lower grades, and interruptions caused by a shaft-deepening program.

Total cash costs increased 37.8% to US$416 per oz. over the same period, because of lower grades and production, higher costs for ground support, and currency appreciation against the US dollar.

Eldorado expects to produce 120,000 oz. gold this year from the new Kisladag minein Turkey, at an average operating cost of US$215 per oz. Construction of the US$83-million mine is about 90% complete, with production scheduled to start in the second quarter of this year.

Construction of the Tanjianshan mine in China is about 60% complete. Start-up is slated for the fourth quarter. The mine is projected to produce about 40,000 oz. this year, at cash costs of US$320 per oz. Capital costs are estimated at US$63.4 million.

Eldorado recently closed a US$155-million financing to develop its next generation of mines, further advance late-stage projects in Turkey, China, and Brazil, acquire new projects if warranted, and for general corporate activities.

The company spent US$7.4 million on exploration last year, and by year-end had boosted proven and probable reserves to 7.1 million contained oz., for a 15% increase over 2004. Measured and indicated resources stood at 9.8 million oz. at year-end, with another 1.7 million oz. contained within inferred resources.