Eldorado writes down Sao Bento

Vancouver-based Eldorado Gold (ELD-T) posted a net loss of US$45 million for 2003, largely because of a US$39.5-million writedown of the value of the Sao Bento gold mine in Brazil. By comparison, the company earned US$1.8 million in 2002.

Eldorado also reported two other non-cash writedowns for 2003: US$4.3 million at the Kaymaz gold project in Turkey, and US$800,000 against obsolete equipment inventories. The company raised US$78.6 million last year, repaid a convertible debenture, and ended the year debt-free with working capital of US$107.1 million.

Eldorado produced 95,049 oz. gold last year from the Sao Bento mine, down from 103,533 oz. a year earlier. Cash costs were US$234 per oz., up US$50 per oz. from 2002.

The reduced production and higher costs were attributed to a shaft-deepening project at Sao Bento, which interfered with mining operations. Higher transportation costs coupled with stronger currency and rising inflation also affected production costs.

Eldorado expects to begin construction of its wholly owned Kisladag gold mine in western Turkey by mid-2004, with a view to starting production in 2005.

Initial capital costs are pegged at US$58 million for an open-pit mine with annual production of 155,000 oz. gold in the first year. A US$30.7-million expansion program would then boost production to 246,000 oz. annually for at least an additional 11 years.

Kisladaq has proven and probable reserves of 138.4 million tonnes grading 1.2 grams gold per tonne. The project also has a measured and indicated resource of 214.8 million tonnes grading 1.04 grams gold, plus an inferred resource of 45.5 million tonnes at 0.75 gram gold.

Meanwhile, Eldorado is developing its wholly owned Efemcukuru gold project, also in western Turkey. Drilling this year is expected to advance Efemcukuru to the feasibility stage by 2005.

Proven and probable reserves stand at 1.8 million tonnes grading 13.14 grams gold per tonne. The project has a measured and indicated resource of 1.8 million tonnes grading 14.4 grams gold, plus an inferred resource of 590,300 tonnes averaging 12.63 grams gold. The deposit remains open at depth.

Eldorado is also reviewing exploration projects in China. Last fall, the company signed an agreement with the China National Gold Group, giving it the exclusive right to review the Chinese agency’s portfolio of operating mines, and development and exploration projects. This review is ongoing, and has been expanded to include joint reviews of other opportunities in China.