Eldorado pays down debt (March 08, 2002)

Vancouver — With its debt under control Eldorado Gold (ELD-T) intends to focus its attention on actively developing its assets in Brazil and Turkey.

Since the completion of its special warrant financing worth CDN$23.5 million, Eldorado has reduced its debt by US$7.5 million and by the end of March will further reduce its debt to US$5.4 million. At the end of the month the junior miner estimates its total cash balance will be US$10.2 million.

At Sao Bento mine in Brazil, energy restrictions have been eliminated and Eldorado is confident that the mine can produce 105,000 oz. gold at a cash cost of US$185 per oz. The repair of the company’s number 2 autoclave is on schedule and is expected to by back on line by mid March. The full cost of the repair including business interruption has been covered by insurance.

Gold production at Sao Bento during the fourth quarter of 2001 was 23,001 oz compared with 27,275 oz in the comparable period last year. Total cash costs decreased to US$199 per oz. compared with US$245 per oz. last year.

Current mine grades are averaging in excess of 9 grams gold per tonne and mining operations are reported to be running smoothly. Reduced plant throughput due to the repair work on the autoclave resulted in a 30,000 tonne stockpile of ore on site. This ore is scheduled to be processed during the balance of the year.

Exploration and development at Sao Bento is ongoing with two diamond drills turning at the 23rd level. the 9,600 metre drill program is designed to extend and upgrade resources as far down as the 30th level of the mine. Following the inking of its agreement with Anglogold (AU-N), Eldorado intends to execute a 7,200 metre drill program below the 30th level of the mine. The drilling campaign will confirm the continuity of the ore body to a depth of 250 metres below this level.

At the nearby Brumal project, Eldorado is gearing up to kick off its first drill program since ratifying the option agreement with Companhia Vale do Rio doce. The 2,000-metre drill program is scheduled to commence in mid March and consist of 6 holes. These holes are designed to confirm and extend previously outlined mineralization hosted in the banded iron formation.

Previous drilling located the mineralized horizon within the Banded Iron Formation 500 metres below the surface. The deepest hole intersected 13.3 grams gold per tonne over a true width of 3.6 metres at a vertical depth of 475 metres. Eldorado reports that three ore horizons similar to Sao Bento have been recognized close to the upper and lower contacts of the main iron formation. Eldorado plans to validate the target resource in order to make a production decision based on a shallow reserve accessible by a decline form the surface. The current production target is estimated between 250,000 and 500,000 oz.

Moving to Turkey, Eldorado recently kicked off a 3,400-metre drill program that is designed to test the northern and southern flanks of the Kisladag porphyry system. The campaign will also test the validity of a target in excess of the presently defined resource. The company will drill eight holes to depths of up to 450 metres. Results will be incorporated into an updated resource estimate scheduled for release in May.

In addition, Eldorado has planned a 4,000-metre infill drilling campaign for Kisladag for completion during the third quarter of this year. All of the drilling is required to further the feasibility study scheduled for release in the first quarter next year.

On the financial front, Eldorado tabled a net loss for the year of US$3.9 million, or US4 per share compared with a net profit of US$1.1 million, or US1 per share last year. Cash flow from operating activities was US$13.0 million, or US13 per share compared with US$4.6 million or 6 per share last year.

The company’s hedge position for the year provided an average realized gold price of US$298 per oz and resulted in a contribution margin (the difference between revenues and total cash cost), of US$77 per oz, or US$7.9 million.

During the fourth quarter Eldorado posted a loss of US$1.1 million, or US1 per share, compared to a profit of US$0.3 million, or nil per share, in the comparative quarter last year.

The company produced 102,841 oz. gold during the year at a total cash cost of US$221 per oz. This compares with 152,436 oz. last year at a total cash cost US$223 per oz. Eldorado attributes the difference in production to the sale of the La Colorada mine in Mexico in November of 2000. Production at La Colorada in 2000 was 39,486 oz.