Last Bidder Pulls Out of Rosario

Tuesday, March 9, 1999

Genel Dominicana has advised the Dominican Republic's Mines & Energy Chamber of its intention to withdraw from the sale of its Pueblo Viejo de la Rosario gold-silver mine, a senior company executive told BNA. Genel was the last remaining bidder in the process. Genel Dominica is a joint venture formed by Johannesburg-based Goldfields and Vancouver-based Eldorado Gold (TSE, VSE: ELD) specifically formed for the Rosario privatization. The company cited high operating costs in the Dominican Republic and uncertainty and discontinuity in the bidding process on the part of the government. The company claims to have spent around US$10mn in the Dominican Republic since arriving at the end of 1997. Production at the state-owned Rosario mine has been declining over the past few years, with gold output dropping to 75,537oz in 1998 from 117,629oz in 1996, while silver production was 238,193oz in 1998, down from 547,124oz in 1996. A report from the Dominican Republic's Central Bank, which used to administrate the mine, said that poor technology was the chief reason for the reduction in output. Sources at the mine report that gold and silvery recovery from processing is between 30% and 40%. The company is reportedly encountering difficulties in processing the mine's sulfide ore with its present facilities. The government of President Leonel Fernandez hired Salomon Brothers to advise the sale of 50% of Rosario mine's operator, Rosario Dominica in June 1997. Thirteen companies originally pre-qualified for the auction, which has still not taken place. Since that time, the details, regulations and timetable of the sale have all been changed. The two other remaining bidders, the US' Newmont Mining (NYSE: NEM) and Australia's MIM Holdings had earlier withdrawn from the sale process, citing similar reasons, according to Dominican press sources. The Dominican Republic government had not made any further announcements on the Rosario sale since October, prompting Genel's withdrawl. "We're still awaiting the next move from the government," the Genel executive said from the company's Santo Domingo office.

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