Eldorado pays down debt (October 29, 2001)

Vancouver — With $15.4 million in bank debt and output continuing to slide at its Sao Bento gold mine in Brazil, Eldorado Gold (ELD-T) posted a loss of US$900,000, or US1 per share in the third quarter of 2001.

This compares with a loss of US$300,000, or nil per share tallied in the corresponding period of 2000. The junior’s Sao Bento mine produced 25,101 oz. during the three months ended Sept. 30, compared with 28,665 oz. recorded in the corresponding period of 2000. Last year, Eldorado also had its now closed La Colorada mine in Mexico contribute 11,198 oz. during the period.

Located in Brazil’s Minas Gerais state, Sao Bento averaged 9.16 grams gold per tonne in the third quarter, a significant increase from the 8.31 grams gold averaged in the third quarter of 2000. Total cash costs for the quarter came in at US$211 per oz., compared to US$201 per oz. last year. The higher costs are attributed to the adjustment in its hedge position and a 15% reduction in gold production due to government imposed energy rationing.

On June 1, the operation went on electrical power rationing, limiting the operation to 80% of its normal usage. This combined with the scheduled autoclave repair has the junior lowering its estimated gold production this year to 94,000 oz., from the expected 117,000 oz. Operating costs are also slated to rise to US$225 per oz. from US$209 per oz.

Based on the lowered forecast, Eldorado closed out its gold hedging contracts maturing after 2001, as well as all Brazilian currency hedging contracts. The proceeds, US$1.2 million, will be used to reduce debt. The company has lowered its bank debt to US$15.4 million on Sept 30, from US$27 million owed on Sept. 30, 2000.

Eldorado is currently shifting focus to Turkey, where the junior is aiming to become a low-cost gold producer through its wholly owned Kisladag and Efemcukuru advanced gold projects.