Vancouver — With its debt now under control,
Since the completion of its special warrant financing worth $23.5 million, Eldorado has reduced its debt by US$7.5 million and, by the end of March, will have further reduced it to US$5.4 million. At the end of the month, the junior’s total cash balance should be US$10.2 million.
At the Sao Bento mine in Brazil, energy restrictions have been eliminated, and Eldorado is confident the mine can produce 105,000 oz. gold at a cash cost of US$185 per oz. The repair of the company’s number-two autoclave is on schedule and should be operating again mid-March. The full cost of the repair, including business interruption, has been covered by insurance.
During the fourth quarter of 2001, Sao Bento produced 23,001 oz. gold, compared with 27,275 oz. in the final three months of 2000. Total cash costs between the two periods decreased to US$199 from US$245 per oz.
Current mine grades are averaging in excess of 9 grams gold per tonne, and mining operations are running smoothly. Reduced plant throughput resulting from repair work on the autoclave resulted in a 30,000-tonne stockpile of ore on site. The material will be processed this 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. Eldorado intends to carry out a 7,200-metre program below the 30th level in order to confirm the continuity of the deposit to a depth of 250 metres below this level.
At the nearby Brumal project, Eldorado is gearing up to launch its first drill program since ratifying the option agreement with Companhia Vale do Rio doce. The 6-hole, 2,000-metre program is to begin in mid-March, the objective being 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. 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 from the surface. The current production target is estimated at 250,000-500,000 oz.
In Turkey, Eldorado kicked off a 3,400-metre drill program to test the northern and southern flanks of the Kisladag porphyry system. The company will drill eight holes to depths of up to 450 metres. Results will be incorporated into an updated resource estimate, to be released in May.
In addition, Eldorado will conduct a 4,000-metre program of infill drilling for Kisladag during the third quarter. All of the drilling is part of a feasibility study, to be released in the first quarter of 2002.
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 (US1 per share) in 2000. Cash flow from operating activities was US$13.0 million (US13 per share), compared with US$4.6 million (6 per share) in 2000.
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 revenue and total cash cost) of US$77 per oz., or US$7.9 million.
During the fourth quarter, Eldorado incurred a loss of US$1.1 million (US1 per share), compared with a profit of US$0.3 million (nil per share) in the year-earlier quarter.
The company produced 102,841 oz. gold during the year at a total cash cost of US$221 per oz., compared with 152,436 oz. in 2000 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 2000. La Colorada produced 39,486 oz. in 2000.
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