Cost-cutting programs by
During 1998, Eldorado slashed operating costs by 9% and general expenses by 46%, while exploration spending was reduced by 94%.
The year-end net loss compares with last year’s net loss of US$111.1 million (US$1.52 per share).
In the fourth quarter, cash flow from operations amounted to US$800,000 after expenses. It was the second consecutive quarter of positive cash flow.
Gold production in the recent fourth quarter was 39,932 oz., compared with 46,073 oz. in the corresponding period of 1997. Gold production for the full year totalled 183,301 oz., or 3% less than in 1997. The reduction is attributed to the closure of the Trinidad mine in Mexico and the shutdown of an autoclave at the Sao Bento mine in Brazil.
Total cash costs during the fourth quarter were US$259 per oz., compared with US$294 per oz. during the year-ago period. Total cash costs for 1998 were US$259 per oz., compared with US$301 per oz. a year ago.
A strong hedge position provided an average gold price of US$352 per oz. for the full year. The contribution margin (the difference between revenue and total cash costs) was US$93 per oz. and works out to US$17 million over the year.
For 1999, Eldorado plans to produce 185,000 oz. gold at an average cash cost of US$215 per oz. All production for 1999 has been hedged at an average price of US$320 per oz., and an additional 165,000 oz. of future gold production between 2000 and 2001 has been hedged at an average price of US$335 per oz.
The company’s hedge book has a current pretax market value of about US$7.5 million. Eldorado believes that these measures, in combination with the recent devaluation of the Brazilian Real, will lead to an improved financial performance in 1999 and allow the company to work towards exploitation of its projects in Turkey.
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