Eldorado Gold Corp. (NYSE:EGO) provided an update Monday regarding its Kisladag mine in Turkey, saying it will shut down effective August 20, 2007, in compliance of a Turkish court order requesting the mine be closed pending an appeal to confirm the legality and validity of the mine's environmental impact assessment.
Eldorado, who also announced this week the decision to develop the Vila Nova Iron Ore deposit in Brazil, said a decision on the Kisladag case is not expected until early November. The company added that it anticipates the decision should be positive to Eldorado, resulting in the re-opening of the mine.
Raymond James analyst Paul O'Brien, who maintained his "market perform" rating for Eldorado and C$7 price target, told clients in a note that some gold recovery may be possible while the mine is closed, resulting in additional gold recovery in the third quarter.
"Kisladag is a heap leach operation so it's not like a switch goes off at shutdown and production drops instantly to zero," the analyst added in an interview.
On the flip side, however, he said he expects reduced recovery in the fourth quarter because a longer ramp up will be required once the mine re-opens in order to bring the mine back into full production.
As a result, Mr. O'Brien's 2007 production and cash costs estimates decreased from 289,000 ounces at US$247 per ounce to 259,000 ounces at US$246 per ounce. He also decreased his earnings per share estimate for the company from US13¢ to US11¢ and his cash flow per share estimate from US26¢ to US22¢.
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