Eldorado snaps up La Colorada

The exercise of a purchase option gives Eldorado (TSE) total ownership of La Colorada, an open-pit heap-leach gold mine in Mexico.

The company will pay Campbell Resources (TSE) US$5 million for its 30% interest, plus US$350,000 for a 1% net smelter return royalty interest. Eldorado is funding the purchase out of working capital, and it plans to raise additional funds through brokered private placement of US$10 million in 8.25% convertible subordinated debentures. The debentures are convertible, at any time during their 10-year term, into common shares of Eldorado at US$3.25 per share ($4.40).

Reserves are estimated at 305,000 oz. gold, including 4.7 million tons grading 0.04 oz. gold in the Creston deposit and 2.8 million tons grading 0.036 oz. gold in the Gran Central deposit.

The mine is expected to produce 22,000-24,000 oz. this year, and the life-of-mine cash production cost is estimated at US$153 per oz.