Eldorado revises estimates at Sao Bento

Vancouver — A capital expansion plan, combined with the strengthening Brazilian currency, has led Eldorado Gold (ELD-T) to revise its anticipated gold production and production costs at the Sao Bento mine in the eastern Brazilian state of Minas Gerais.

The company has revised this year’s forecast to 95,000 oz. gold at US$230 per oz. from 105,000 oz. at US$190, and the same estimate is projected for 2004. Once the shaft-deepening is completed in 2005, cash costs and production should improve to 110,000 oz. gold at US$195 per oz.

Sao Bento’s operating performance has been affected by the Brazilian currency, expanded capital outlay, and producer inflation.

The strengthening of the Brazilian currency relative to the U.S. dollar over past year from a high of 3.95 Reals per dollar in 2002 to a low of 2.86 Reals per dollar in 2003. Since 65% of Sao Bento’s operating costs are in Reals, the stronger currency has had a negative effect on the mine’s cost structure.

The new production forecast for Sao Bento is based on an exchange ratio of 3 Reals per U.S. dollar. In mid-May, the Real was trading at 2.95 Reals per U.S. dollar.

Earlier this spring, Eldorado announced plans to deepen its existing shaft at Sao Bento by 370 metres. The estimated cost of the expansion is pegged at US$12 million. This investment will extend the profitability of the mine and provide the opportunity to increase resources and mine life at depth. Preparations for shaft-deepening are under way, and the job should be completed by December 2004.

Producer inflation in Brazil is currently between 15% and 20%, and is therefore higher than the 12% planned for 2003.

Eldorado is in the midst of a 12,000-metre program of underground exploration drilling aimed at extending and upgrading the resource base.

In March, Eldorado terminated its option agreement with CVRD (rio-n) for the Brumal property, owing to problems with the continuity of mineralization. The property is 5 km from the Sao Bento mine and last year was the target of 3,069 metres of diamond drilling. Eldorado had hopes of incorporating additional resources into Sao Bento’s operating plan.