Kisladag sees reserves expand

Some 7,057 metres of reverse-circulation drilling by Eldorado Gold (ELD-T) have boosted reserves at the Kisladag project in western Turkey by 11% to more than 5 million contained ounces.

The holes targeted inferred resources in and around the feasibility-level pit shell, and raised reserve estimates to 135 million tonnes grading 1.16 grams gold per tonne. That’s up from 115 million tonnes grading 1.23 grams gold (or 4.5 million ounces) outlined in the project’s feasibility study, completed earlier this year. Both estimates employ a cutoff grade of 0.35 gram gold for oxides and 0.5 gram for primary material, plus a gold price of US$325 per oz.

In addition to the 521,000-oz. increase in reserves, Eldorado has boosted measured and indicated resources to 214.8 million tonnes of 1.04 grams gold, from 166.4 million tonnes running 1.13 grams gold. Another 45.5 million tonnes of material averaging 0.75 grams gold are classified as inferred resources. The estimates are based on a cutoff grade of 0.4 gram gold.

With the resource conversion and pit optimization study in hand, Eldorado has trimmed Kisladag’s projected stripping ratio by 13% to 0.8-to-1 from 0.92-to-1. The program has also pushed Kisladag’s overall tonnage 17% higher; the pit has been deepened by 20 metres and extended to the east-northeast.

A recently completed optimization study at Kisladag suggests an accelerated expansion of the proposed mine. The plan calls for a doubling of production capacity (to 10 million tonnes annually) in the first year of operations, with Eldorado taking over mining in the third year (T.N.M., Aug. 4-10/03).

Initially, annual production is pegged at 155,000 oz., gradually increasing to an average of 246,000 oz. Under the revised plan, projected life-of-mine cash costs fall US$3, to US$149 per oz., and total production costs slip US$2, to US$201 per oz. The plan sports a price tag of US$138.5 million, up from US$133.3 million under the model detailed in the feasibility study. Some US$3.6 million in extra upfront costs arise from Eldorado’s decision to drill and blast the pit early on.

Under the new plan, Kisladag’s internal rate of return climbs to 37% from 32.6% and the net present value rises by US$14 million to US$160 million, based on a gold price of US$325 per oz. and a discount rate of 5%.

To help pay for construction, Eldorado raised $74.4 million in net proceeds via the sale of 25 million units at $3.10 apiece to a group of underwriters led by Orion Securities in late August. Each unit includes one share plus half a warrant, with a full warrant good for one share at $4.10 per share for one year. The underwriters received a cash commission of $3.1 million.

Having received an “environmental positive certificate” in June, Eldorado is continuing the permitting process, and expects to have construction and operating permits in place to allow for groundbreaking by year-end.