Eldorado Gold Q1 Production Falters

VANCOUVER–News of falling revenues, gold sales and production in the first quarter of 2009 barely dented Eldorado Gold’s (ELD-T, EGO-X) share price.

Confidence in the company likely stemmed from an otherwise healthy balance sheet and a promise it would still meet a 2009 production forecast of 330,000 oz. gold. Eldorado has no debt and about US$108 million in cash on hand.

Eldorado shares shed 30¢ to close at $9.75 on news that gold production fell by 20,419 oz. to 61,426 oz. from the fourth quarter of 2008. Shares fell another 45¢ to $9.35 as the news sunk in the following day. As compared with the fourth quarter of last year, production dropped by 5,808 oz. gold.Net

income in the first quarter

2009 decreased to US$13.1 million from US$20.7 million in the year-earlier period. Total cash costs averaged US$315 per oz. gold during the latest quarter.

Eldorado blamed slowing production on heavy rains at its Kisladag mine, 180 km west of Izmir, Turkey, and on a transition to processing of sulphide ores at its Tanjianshan mine in Qinghai province, China.

Rains hampered ore screening and stacking and diluted process solutions in January and February and, in commissioning its sulphide processing facilities at Tanjianshan, Eldorado fed lower-grade transition ores to its plant.

But in a conference call with analysts, Eldorado president and CEO Paul Wright described how these forces of dilution will dissipate in coming quarters.

Wright emphasized that a steady rate of 20,000 oz. gold per month has been reached at Kisladag since the end of February and at Tanjianshan, Eldorado had already started stacking higher-grade ore.

Furthermore a roaster will come online during the second quarter, Wright said, and with that Eldorado will officially usher in commercial production in sulphides.

As well, he noted that Chinese authorities have approved Eldorado’s request to boost yearly throughput to 900,000 tonnes from 800,000 tonnes.

The combination of higher grades and tonnage, he says, will allow Eldorado to meet its 2009 targets. To hit the 2009 target of 330,000 oz. gold, Eldorado must fire out about 89,500 oz. gold in each of the year’s remaining quarters.

Also helping to bolster Eldo- rado’s share price were recent deep high-grade gold intercepts at its Efemcukuru gold project in Turkey that, in a May 6 press release, Wright said augur well for resource expansion.

Eldorado announced its deepest drill-hole results to date from the project’s North Ore Shoot (NOS).

Hole 310 hit the highest grades, returning 2.6 metres grading 51.9 grams gold per tonne, 39.4 grams silver, 3.7% lead and 4.3% zinc starting 216 metres down-hole.

Next came hole 311 with 1.8 metres grading 29.9 grams gold, 19.8 grams silver, 1.2% lead and 2.7% zinc beginning at 151 metres.

Lastly, hole 308 returned 3.1 metres grading 6.81 grams gold, 33.6 grams silver, 2.4% lead and 4.4% zinc starting 179 metres down-hole.

With a view to updating its overall resource estimate at Efemcukuru in the fourth quarter of 2009, Wright said drilling will continue in the NOS. Efemcukuru’s proven and probable reserves currently stand at 3.8 million tonnes grading 10.04 grams gold.

The NOS is one of three mineralized zones at Efemcukuru that Eldorado has drilled extensively. The other two areas are known as the Middle and South ore shoots. All three are open at depth.

The mineralized zones of the lowsulphidation epithermal vein system at Efemcukuru fall within a 1,200-metre-long northwest-trending strike that dips between 55 and 60. Altered hornfels and phyllites host gold-bearing quartz and quartz-rhodenite structures.

If all goes according to plan Efemcukuru, about 20 km away from Izmir, will become Eldorado’s second gold mine in Turkey and third mine overall.

At this stage, Eldorado plans to commission Efemcukuru in 2010 as a 1,100-tonne-per-day underground mine producing about 80,000 oz. gold a year.

Concentrate from the mine would be shipped to Kisladag for final processing.

Eldorado has 370.9 million shares outstanding.