Eldorado to boost production

A dramatic increase in the resource base of the Colorada gold mine has prompted owner Eldorado (TSE) to project a rise in output to 100,000 oz. by 1998.

Situated in Mexico’s Sonora state, the open-pit, heap-leach operation contains proven and probable reserves estimated at 20 million tons grading 0.033 oz. per ton, plus a possible resource of an additional 20 million tons grading 0.033 oz. (The previous estimate was 12 million tons grading 0.041 oz.)

Most of the material that constitutes this resource is within the Creston deposit, which is the focus of current drilling. The Creston remains open on strike, as well as at depth, with the primary interest being the open-pit potential of the strike extent.

Drilling is expected to continue on El Creston for the remainder of the year in an effort to upgrade reserves.

Engineering consulting firm Steffen, Robertson & Kirston will oversee the completion of a US$6.5-million feasibility study for the proposed expansion. Eldorado expects to complete the study in the first quarter of 1996 and follow with a financing in the second quarter.

Production in 1995 is expected to reach 30,000 oz. at a cash cost of US$180 per oz., compared with the 20,000 oz. produced last year at US$180 per oz.

Production in 1996 is expected to reach 40,000 oz., ramping up to 75,000 oz. in 1997 and 100,000 oz. in 1998 at a cash cost of US$150 per oz. in both years.

Eldorado has US$7.5 million in working capital, 13.7 million shares outstanding and US$10 million in long-term debt.

As a result of its improving fortunes, Eldorado has adopted a shareholders’ rights protection plan, or “poison pill.” The plan will take effect if a party acquires 20% or more of the company’s shares without complying with “permitted bid” provisions or if it does not have approval of the board of directors.

President Richard Barclay says the plan is not intended to block takeover bids and was not adopted in response to any specific effort to acquire control of the company.