Kisladag resource base increases

A scoping study on Eldorado Gold‘s (ELD-T) Kisladag porphyry gold deposit in west-central Turkey has increased the resource in the proposed open pit to 79.1 million tonnes grading 1.33 grams gold per tonne.

The study envisions a 7-million-tonne-per-year heap-leach operation, producing 186,000 oz. gold annually. Capital costs are estimated at US$98.7 million and cash operating costs at US$155 per oz. The project has an internal rate of return of 19% at a gold price of US$300 per oz., and an 11.3-year mine life.

The geological resource, cut off at 0.3 gram, came in at 130.6 million tonnes grading 1.1 gram gold per tonne. The provisional pit outline, with a stripping ratio of 0.86, surrounds an oxide resource with 21.5 million tonnes grading 1.04 grams per tonne, and a sulphide resource with 57.6 million tonnes grading 1.44 grams.

Metallurgical tests indicate an an average gold recovery of around 62%.

Government authorities have already approved a site selection permit, which outlines the open-pit mining operations and related services. The company expects its Environmental Impact Assessment (EIA) certificate by the third quarter of 2001; a final feasibility study should follow. Construction is expected to get under way in mid-2002, with startup slated for late 2003.

Eldorado posted a profit of US$1.1 million (1 per share) in the six months ended June 30, compared with US$2.7 million in the first half of 1999. First-half revenues were US$27.8 million, down from US$31.2 million in 1999.

Lower ore grades at its Sao Bento mine in Brazil and its La Colorada mine in Mexico meant Eldorado poured 82,129 oz. gold in the period, compared with 98,553 oz. in the first six months of 1999. Total cash production costs averaged US$210 per oz, up from US$197 per oz. in 1999.

Eldorado also announced a deal with AngloGold (AU-N) under which it has the right to develop and mine ore reserves on ground held by the South African major, downdip from its own mineralization at the Sao Bento mine. In exchange, AngloGold receives a variable net smelter return royalty, tied to the gold price, on any mineralization Eldorado recovers. The NSR starts at 0.5%, for prices below US$275 per oz., and reaches its limit of 4% at US$399.

A second feature of the deal enables AngloGold to use surplus capacity at the Sao Bento mill to treat any ore it mines for its own account, and to fund and build additional milling capacity. Should AngloGold take up this option, which is valid for three years, the two parties will share the cost of operating the mill.