Vancouver — With $16.2 million in bank debt and reduced output from its Sao Bento gold mine in Brazil, Eldorado Gold (ELD-T) posted a loss of US$1.9 million, or US2 per share, in the first six months of 2001.
This compares with a gain of US$1.1 million, or US1 per share, in the first half of 2000.
Driving the reversal of fortunes was dramatically lower gold production. The junior’s Sao Bento mine produced 54,740 oz. during the six months ended June 30, compared with 57,010 oz. in the corresponding period of 2000. Last year, Eldorado’s La Colorada mine in Mexico contributed 12,924 oz during the period. That mine is now closed.
Located in Brazil’s Minas Gerais state, Sao Bento averaged 9.36 grams gold per tonne in the second quarter, a significant increase on the 6.92 grams gold averaged in the second quarter of 2000. Total cash costs for the quarter came in at US$243 per oz., compared with US$214 per oz. last year. The higher costs are attributed to the adjustment in its hedge position and a 15% reduction in gold production due to government-imposed energy rationing.
On June 1, the operation went on electrical power rationing, limiting the operation to 80% of its normal usage. This, combined with the scheduled autoclave repair, has the junior lowering its estimated gold production this year to 94,000 oz., from the expected 117,000 oz. Operating costs are also slated to rise to US$225 from US$209 per oz.
Based on the lowered forecast, Eldorado closed out its gold-hedging contracts with a maturation date of later than 2001, as well as all Brazilian currency hedging contracts. The proceeds will be used to reduce debt.
The company is shifting its focus to Turkey, where it is aiming to become a low-cost gold producer through its wholly owned Kisladag and Efemcukuru advanced gold projects.
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