Despite Turkish troubles, Eldorado plans new mine

Vancouver — Undeterred by the forced closure of its Kisladag gold mine in Turkey, Eldorado Gold (ELD-T, EGO-X) is forging ahead with plans for another Turkish gold project only 100 km away, as well as development of an iron ore deposit in Brazil.

On July 30, the company announced that the court-ordered shutdown of Kisladag would start on Aug. 20. An anti-mining group in Turkey requested the closure injunction as part of the appeal in its long-standing lawsuit against Eldorado, a suit based on charges that the Kisladag environmental impact assessment is deficient. The shutdown will last until the appeal can be heard in court, likely in October.

Despite such a significant setback in Turkey, on Aug. 1, the company announced plans to develop the nearby Efemcukuru gold project based on a positive feasibility study that assumed that the Kisladag mine facility would be available to refine ore from Efemcukuru.

Efemcukuru hosts proven and probable reserves of 3.79 million tonnes grading 10.04 grams gold per tonne, using a 4.5-gram gold cutoff grade, for a total of 1.22 million contained ounces. The deposit is an epithermal-hosted vein structure in the Menderes Massive of western Turkey. Two oreshoots, called middle and south, dip at 60 and have been traced to a depth of 350 metres. Eldorado plans to continue exploring the downdip extension as well as other structures to the north.

An underground mine with ore milled on-site is projected to operate at 1,100 tonnes per day, producing some 112,400 oz. gold annually at a cash cost of US$226 per oz. The mine has a projected life of 9.4 years.

Conventional trackless equipment will pull ore from mechanized cut-and-fill, longitudinal long-hole, and traverse long-hole stopes. Two opposing adits will intersect the workings at mid-elevation, and a twin internal ramp in the footwall will deliver ore to an underground crusher station. Crushed ore will be transported to the surface by an inclined conveyor system.

Gravity concentration and flotation will be done at Efemcukuru. The flotation concentrate will then be transported to the nearby Kisladag mine facility for regrinding and cyanidation, for roughly 86.5% gold recovery. No one at Eldorado was available to comment on how plans would change if Kisladag is closed permanently.

Eldorado anticipates an 18-month construction schedule, with initial production planned for late 2009.

Eldorado is also juggling developments on the other side of the world. The company had some good news from Brazil: an updated prefeasibility study and economic analysis for the Vila Nova iron ore deposit in Amapa state came back positive and the board decided to go ahead with construction there as well.

Initial development capital for Vila Nova, including working capital, is $32.7 million over one year. Eldorado recently renegotiated the terms of its 50-50 joint-venture agreement with DSI Consult, a private Brazilian company that controls the Vila Nova mineral rights, such that Eldorado now owns 75% of the project. In exchange for its increased ownership, Eldorado will pay US$2.8 million to DSI and finance up to US$30 million of the preproduction capital costs of the project. Above US$30 million, Eldorado will finance 75% of project costs with DSI contributing 25%.

The 2006 prefeasibility study used conservative 2005 ore prices for pit optimization and assumed contract mining. The updated version instead used 2006 level prices, averaging US$54 per tonne of finished product including costs of transportation to Santana Port, and owner-operated mining. Project payback is expected within 2.5 years, and the net product value after 5% tax is US$69.1 million.

Vila Nova holds proven and probable reserves of 9.27 million tonnes grading 61% iron. Crushing, screening, and minor gravity separation at the mine is predicted to give a total weight recovery of 88%.