Eldorado losses widen in Q2 (August 04, 2005)

Vancouver – Eldorado Gold (ELD-T) dipped further into the red in its latest second quarter, posting an US$11.1 million loss or about (4) per share compared to a loss of US$1.7 million in last year’s corresponding quarter.

Lower gold sales of 12,056 oz., versus 17,424 oz. in Q2-2004, rising operating costs at So Bento and increased costs associated with start-up at Kisladag, all contributed to the quarterly shortfall.

Despite the loss, Eldorado remains in strong financial health with almost US$93 million in its treasury.

The company’s sole current gold operation, So Bento in Minas Gerais State, Brazil, produced 14,932 oz. at a soaring cash cost of US$439 per oz. Comparative output from the prior year’s second quarter was 18,007 oz. at cash costs of US$303. Production was impacted by continuation of the shaft-deepening project, completion of which is expected by late-2005. Additionally, ground conditions at depth have become increasingly problematic and appreciation of the Brazilian Real contributed to the rise in costs.

Development of its Kisladag mine in western Turkey has monopolized most Eldorado’s resources. A majority of initial earthmoving and mine infrastructure construction has been completed. Global market conditions contributed to overall capital cost increases of US$16.7 million. Kisladag is now expected to come on-stream in February-2006, about two months behind schedule.

During the quarter, Eldorado entered an agreement to acquire Afcan Mining (AFK-T). The deal, scheduled to close in September, has Eldorado issuing one share for every 6.5 Afcan shares. Acquiring Afcan gives the mid-tier producer exposure to China, specifically the Tanjianshan gold project where a recent feasibility study reviewed proven and probable reserves of 6 million tonnes grading 4.9 grams gold per tonne. With development underway, gold output from Tanjianshan is anticipated in early-2007 with eight years of operations producing about 105,000 oz. annually.

With 276.5 million shares outstanding, Eldorado posts a $1-billion market capitalization at its recent trading level of $3.70 per share.