Eldorado’s efforts pay off

VANCOUVER — Halfway through its $35.4-million exploration program for 2010, Eldorado Gold (ELD-T) has already defined a new zone of mineralization at its Kisladag gold mine in Turkey, expanded a new zone at its Tanjianshan gold mine in China, and probed a new vein area at its Efemcukuru development project.

Eldorado operates four mines. Three of which are in China: the Jinfeng gold mine in Guizhou province reached production in late 2007, the Tanjianshan mine in Qinghai province poured its first gold in early 2007 and the White Mountain gold mine in Jilin province began production in early 2009. Eldorado also owns and operates the Kisladag mine in Usak province, Turkey, which started operations in late 2006.

The gold producer is also advancing four development projects, three of which should start producing before the end of 2011. The Efemcukuru project in Izmir, Turkey, will be an underground gold mine; underground development is about to begin and the mine should start commissioning next year.

The Easter Dragon gold-silver project in Heilongjiang province, China, should produce 70,000 to 80,000 oz. gold annually starting in 2011, at a cash cost of US$140 to US$160 per oz., net of silver credits. And mining is just getting underway at the Vila Nova iron ore project in Brazil.

With a handful of mines and development projects, Eldorado has multiple drills turning in several countries.

The company is spending $12.4 million on exploration in Turkey this year, with drills working to extend resources at Kisladag, probe new targets at Efemcukuru, and test at least six additional exploration projects.

At Kisladag, the company has already completed more than 20,000 metres of drilling this year, achieving three goals. The work has delineated new high-grade zones within Intrusion 2A, in areas of the deposit originally modeled to contain low or zero gold grades. Drills have better defined a high-grade zone on the southeast margin of the deposit, which Eldorado discovered last year.

The zone has now been traced along 300 metres strike and lies outside of the previous pit boundary. And drills probing the contact between the mineralized Intrusion 1 and the non-mineralized Intrusion 3 in the northwest portion of the deposit determined there is less Intrusion 3 than previously thought, which means an increase in the tonnage of gold-bearing Intrusion 1.

So far, some of the better intercepts from Kisladag in 2010 include 152.5 metres grading 1.7 grams gold per tonne, starting at 445 metres in hole 366. And starting from surface: 217.5 metres of 1.28 grams gold in hole 371, 320 metres of 1.49 grams gold in hole 372 and 442 metres of 0.73 gram gold in hole 379.

At Efemcukuru, drills have been focused on testing the Kokarpinar vein, which runs parallel to the Kestane Beleni vein 400 metres to the east. The Kestane Beleni vein is home to 1.5 million oz. gold in reserves grading 9.1 grams gold. Twelve drill holes completed since mid-2009 have tested the previously undrilled central portion of the vein, over a distance of 600 metres. All 12 holes intersected the vein, though only four returned potentially economic grades and thicknesses of mineralization.

Hole 346 cut 3.7 metres of 11.08 grams gold and 7.7 grams silver per tonne, including 0.7 metre of 39.1 grams gold. Hole 349 returned 1 metre of 7.23 grams gold and 5.8 grams silver. And hole 355 hit 0.6 metre grading 18.8 grams gold and 22.2 grams silver, followed by 3.1 metres of 12.02 grams gold and 10.4 grams silver.

In China, Eldorado plans to spend $13.2 million on exploration this year.

At the Jinfeng mine, the company has drills turning at the current mine area, at the Mannian prospect 20 km to the southwest, and at the Lintan prospect just 1 km north of the mine. Drilling at both prospects is targeting mineralized fault zones, where trenching has identified structurally-controlled gold zones. The drills turning at the mine area are working to complete 22,000 metres of infill drilling to upgrade inferred resources and expansion drilling to test step-out targets.

And at Tanjianshan, for the first half of the year, the company focused on infill drilling at the 323 zone, which is now defined over a 350-metre strike length. Drills have now moved to the northern end of the deposit to probe for expansion potential. Some of the better intercepts from the 323 zone include 10.1 metres of 5.95 grams gold followed by 12.5 metres of 5.31 grams gold in hole 153, 3.9 metres of 7.31 grams gold followed by 4.7 metres of 4.58 grams gold in hole 160, 15 metres of 3.81 grams gold in hole 166 and 15.5 metres of 10.41 grams gold in hole 177.

Even though four mines and four development projects are more than enough to keep a company busy, Eldorado added to its to-do list in May when it inked a friendly takeover agreement with Brazauro Resources (BZO-V). The two companies were already partners on the Tocantinzinho gold project in Brazil’s Para state.

In mid-June, Eldorado increased its options in the Tocantinzinho area by buying 120 million shares or 26.8% of Serabi Mining (SRB-L). Serabi will use the proceeds from the private placement to advance its Palito gold project, which is southeast of Tocantinzinho.

While a handful of companies saw their share prices fall in May and June, Eldorado’s share price held its ground, staying between $17.50 and $18.75. A year ago, the company’s shares were trading for $8.83. Eldorado has 538 million shares outstanding (551 million fully diluted).