Eldorado eyes Brumal property

Vancouver — Eldorado Gold (ELD-T) has inked a deal to acquire the Brumal property in the Brazil’s Minas Gerais state. The property is near the company’s Sao Bento operation, where infrastructure is already in place.

Under an agreement with Companhia Vale do Rio Doce (CVRD) (RIO.PR-N), Eldorado can purchase the property by spending US$1.5 million over 2.5 years and then paying US$5 million in four instalments, with the final payment due on the second anniversary of production. CVRD retains a sliding-scale net smelter return royalty of 1-4% on any output greater than 500,000 oz.

“The Brumal project provides an exciting opportunity to leverage our excellent infrastructure and operating team at Sao Bento,” says Eldorado President Paul Wright. “We have great expectations for this project.”

Brumal has been subjected to mapping, diamond drilling and metallurgical tests.

The deposit hosts replacement-style gold mineralization associated with banded iron formations similar to those found at Sao Bento. Gold mineralization has been identified in a geological setting similar to that of Sao Bento, 3.5 km to the northwest. The mineralization is associated with sulphide replacement of carbonate-banded ironstone formations in a sequence of chloritic and carbonaceous schists. Arsenopyrite is the dominant sulphide mineral, with lesser amounts of pyrhotite and pyrite. Preliminary metallurgical work indicates that the material is non-refractory.

The gold zone at Brumal has been traced for 600 metres along strike, with drilling cutting the mineralization down to depths of 475 metres below the surface. The deepest hole drilled to date returned 13.3 grams gold per tonne over 3.6 metres. Three horizons similar to those at Sao Bento have been recognized close to the upper and lower contacts of the main iron formation. Initially, El Dorado will outline the target resource necessary to make a production decision based on a shallow reserve accessible by a decline from the surface. Eldorado envisions this target to be a 250,000-to-500,000-oz. resource that could be treated at its existing mill. Early next year, Eldorado plans to launch a drill program aimed at confirming the mineral continuity. Follow-up drilling will focus on extending mineralization laterally as well as to depth.

In the third quarter, Sao Bento produced 25,101 oz. gold at a total cash cost of US$174 per oz., comapared with US$204 in the second quarter. For the fourth quarter, Eldorado focasts a total cash cost of US$175 per oz.

For the nine months ended Sept. 30, 2001, the company incurred a loss of US$2.8 million (or US3 per share), compared with a profit of US$800,000 (US1 per share) in the corresponding period of 2000.