Eldorado losses widen in Q2 (August 29, 2005)

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

Lower quarterly gold sales of 12,056 oz. (versus 17,424 oz. last year), rising operating costs at Sao Bento in Brazil and higher costs associated with startup at Kisladag in Turkey, all contributed to the shortfall.

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

The company’s sole operating gold mine, Sao Bento in Minas Gerais state, produced 14,932 oz. at a painful cash cost of US$439 per oz. Comparative output from the prior year was 18,007 oz. at cash costs of only US$303 per oz.

Production was hit by an ongoing shaft-deepening project, completion of which is expected by late-2005. The rise in cost is also attributed to poor ground conditions at depth and an appreciating Brazilian real.

Development of the Kisladag mine in western Turkey has monopolized most of Eldorado’s resources, with a majority of initial earthmoving and mine infrastructure construction now completed.

Kisladag is expected to come on-stream in February 2006, about two months behind schedule, and at a cost US$16.7 million higher than expected.

During the quarter, Eldorado struck a deal to buy Afcan Mining (AFK-T) by issuing one share for every 6.5 Afcan shares. Acquiring Afcan will give Eldorado its first exposure to China — specifically, the Tanjianshan gold project where a recent feasibility study pegged reserves at 6 million tonnes grading 4.9 grams gold per tonne.

With development unde rway, 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.