Eldorado’s production slips as focus shifts to mine construction

Vancouver While gold production was down for Eldorado Gold (ELD-T, EGO-Q) during the third quarter ended Sept. 30, the company is constructing two new mines that should dramatically boost its production profile starting in 2006.

Eldorado produced 18,842 oz. gold at a cash cost of US$372 per oz. in the latest quarter, down from 21,399 oz. at US$295 per oz. a year earlier. The company posted a net loss of US$6.5 million for the quarter, up from US$1.34 million a year earlier.

The increased loss was attributed to higher operating costs and depreciation at the Sao Bento mine in Brazil, increased administrative costs associated with mine construction and the acquisition of Afcan Mining, and higher exploration expenditures.

The increase in cash costs was attributed to reduced production caused by challenging ground conditions at depth and lower head grades at Sao Bento, coupled with the appreciation of the Brazilian currency. The poor performance of Sao Bento has the company “reviewing alternatives regarding the mine’s future.”

On a more positive note, Eldorado is reporting good progress in its efforts to build new mines in China and Turkey. The recent acquisition of Afcan Mining gave the company an 85% controlling interest in the Tianjianshan (TJS) gold project in western China. TJS is expected to begin production in Oct. 2006. Existing resources are sufficient to produce 842,000 oz. gold over an 8-year mine life.

Construction of the Kisladag mine in Turkey is expected to be completed in February of next year. Gold production is projected at 144,000 for 2006, increasing to an annualized rate of 240,000 oz. at cash costs averaging US$181 per oz. thereafter. Reserves and resources are sufficient for about 14 years of production.

Another highlight of the third quarter was the receipt of a certificate marking the completion of the first stage of the permitting process for the Efemcukuru gold project in Turkey. The company plans to prepare a feasibility study and apply for permits to allow mining to begin in late 2007.

Eldorado is also carrying out exploration programs, mostly directed at three key properties in Brazil, Turkey, and China.