Eldorado sees promising exploration results

Eldorado Gold (TSX: ELD; NYSE: EGO) has been keeping busy, with 106,500 metres drilled so far this year at its mine sites and exploration targets in China, Turkey, Brazil, Romania and Greece.

In China at its 90%-held Tanjianshan gold mine, the Vancouver-based firm completed more than 13,000 metres at the Jinlonggou pit and in areas around the Qinlongtan pit. Of note, it discovered two high-grade mineralized zones within the Qinlongtan mining licence, including 45-metre intercepts grading 9.04 grams gold per tonne, 22 metres of 9.80 grams gold and 10.9 metres of 17.53 grams. Eldorado is infill drilling these zones to convert the resources into measured and indicated.

“Qinlongtan may provide additional ore below the old pit for Tanjianshan if the encouraging results continue,” BMO Nesbitt Burns analyst David Haughton writes in a note. He has a $10 target price on the stock.

Tanjianshan, which began commercial production in 2007, churned out 27,983 oz. gold at total cash costs of US$577 per oz. in the quarter ended June 30, 2013. The mine could generate 90,000 to 100,000 oz. gold for the year.

Elsewhere in China, Eldorado drilled 18,500 metres at its 95%-held White Mountain gold mine and another 6,800 metres at its 82%-owned Jinfeng gold mine. At Jinfeng, the company found a high-grade zone outside of the mine’s resource model, with 12-metre hits grading 9.07 grams gold and 9 metres of 10.5 grams.

During the second quarter, Jinfeng produced 28,889 oz. at total cash costs of US$845 per oz. and is expected to contribute 105,000 to 115,000 oz. gold in 2013, whereas White Mountain generated 17,462 oz. gold at total cash costs of US$781 per oz., and is slated to bring 60,000 to 70,000 oz. gold to the table this year.

In Turkey at its flagship Kisladag gold mine, Eldorado is testing the high-grade Kokarpinar vein at its wholly owned Efemcukuru underground gold mine, with intriguing results of 4.5 metres of 19.89 grams gold, 0.9 metre of 183.60 grams and 0.9 metre of 54.60 grams. During the June quarter, Efemcukuru produced 26,289 oz. gold at total cash costs of US$537 per oz. It is expected to churn out 125,000 to 135,000 oz. gold in 2013, while Kisladag could generate 290,000 to 300,000 oz. this year.

In Greece, Eldorado has seven drill rigs turning at the Piavitsa polymetallic deposit, with an aim of wrapping up the first-pass drilling program it started in 2012. Infill drilling during the latter half of the year will focus on upgrading the deposit’s inferred resource.

Piavitsa is near the company’s producing polymetallic Stratoni mine in northern Greece, and could potentially feed ore to the Olympias-Skouries-Stratoni complex, BMO’s Haughton says.

On Sept. 9, the company updated its resource estimate for Olympias after re-logging core. The project now contains 18 million tonnes of measured and indicated resources  grading 8.1 grams gold, 125 grams silver, 4.9% lead and 6.5% zinc. It has another 3.4 million tonnes in the inferred category grading 8.34 grams gold, 118 grams silver, 3.9% lead and 4.3% zinc.

Eldorado has halted exploration drilling at its Perama Hill gold-silver project in Greece until it receives an environmental impact assessment approval for the project.  

In Romania, Eldorado wrapped up a 43,000-metre infill and stepout program at the Certej gold-silver deposit in the Apuseni Mountains of Transylvania and revised its resource estimate. Certej contains 118 million tonnes grading 1.3 grams gold and 8.9 grams silver for 4.9 million oz. gold and 33.8 million oz. silver in measured and indicated. It has another 29 million tonnes grading 1.08 grams gold and 5.7 grams silver for 1 million oz. gold and 5.3 million oz. silver in inferred.

In its second-quarter results, released in early August, Eldorado noted the full expansion at Kisladag is being deferred until metal prices improve, and that initial production from Skouries, Perama Hill and Certej would likely be delayed by one year.

It also tightened its annual gold production target to 745,000 oz. — with cash costs estimated at US$520 per oz. — and revised its exploration and capital spending to US$51 million and US$430 million, compared to US$98.5 million and US$670 million previously.

In Brazil, the miner completed small drill programs at its Vila Nova iron ore mine in Amapa and the Chapadinha project in Goias. It is defining the targets at its projects in Goias, Tocantins and Minas Gerais, and conducting a small drill campaign at its jointly held Ardala-Salinbas project in northeastern Turkey.

The company exited the June quarter with US$522 million in cash and equivalents.