- Published: 31 October 2008
- Written by Editor
Eldorado Gold Corporation: Q3 2008 Financial and Operating Results-Revenue, Net Income, Gold Production All Increase
(all figures in United States dollars, unless otherwise noted) - Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation, ("Eldorado" "the Company" or "we") (TSX:ELD)(NYSE-A:EGO), is pleased to report on the Company's financial and operational results for the third quarter ended September 30, 2008. "This was a very solid quarter for us. Our Kisladag and Tanjianshan mines produced more than 72,000 ounces of gold at a cash operating cost of $283 per ounce. We continue to be one of the lowest cost pure gold producers with a strong balance sheet. Considerable construction progress was made at both our Efemcukuru gold mine in Turkey and our Vila Nova iron ore mine in Brazil along with continued execution of our exploration programs in Turkey, China and Brazil. The completion of the Frontier acquisition will contribute to our growth strategy and strengthens our competitive position in southeastern Europe."
Q3 2008 Highlights
- Gold revenue increased 70% to $65.0M on gold sales of 74,740 ounces from $38.1M in the third quarter of 2007;
- Produced 72,343 ounces of gold from our operations at a cash operating cost of $283 per ounce and a total cash cost of $313 per ounce;
- Reported earnings of $0.05 per share;
- Continued constructing our Efemcukuru gold mine in Turkey and our Vila Nova iron ore mine in Brazil;
- Completed our acquisition of Frontier Pacific Mining, giving us a 100% interest in the Perama Hill gold project in northeastern Greece;
- Finalized an agreement with Brazauro Resources to earn an interest in the 43,000 hectare Tocantinzinho project in Brazil; and
- Announced the sale of our Sao Bento mine to AngloGold Ashanti for $70 million.
"We are pleased with our demonstrated ability to achieve our cost and performance targets in the first 9 months of the year. Despite cost pressures detrimentally affecting the metal sector, the Company's mines have produced 226,957 ounces at cash operating costs of $242/oz. This excellent performance is consistent with our continued guidance of 2008 production of 300,000 ounces at cash operating costs of $255/oz.," commented Paul N. Wright, President and Chief Executive Officer.
Financial Results
Our consolidated net income for the third quarter of 2008 was $17.0 million or $0.05 per share, compared with net income of $5.2 million or $0.02 per share in the third quarter of 2007. In the third quarter of 2008, we sold 74,740 ounces of gold at an average price of $870 per ounce, compared to 57,230 ounces at an average price of $667 per ounce in the third quarter of 2007.
Operating Performance
Tanjianshan
We produced 25,480 ounces of gold at cash cost of $306 per ounce in the third quarter, and we sold 27,431 ounces of gold for third quarter revenue of $24.0 million. We spent $12.2 million on capital expenditures, primarily relating to construction of the sulphide ore processing project, which we expect to commission in the fourth quarter of 2008.
Kisladag
During the quarter, we placed 2,562,343 tonnes of ore on the leach pad at a grade of 1.05 grams per tonne of gold. We produced 46,863 ounces of gold at a cash operating cost of $270 per ounce and we sold 47,309 ounces of gold for third quarter revenues of $41.0 million. Gold production at Kisladag was higher than the 23,610 ounces produced in the third quarter of 2007 but lower than the second quarter 2008 production of 55,490 ounces due to lower grade mined ore transported to the leach pad and seasonally dry conditions that reduced the flow of solution to the leach pad. By quarter-end, in heap solution had increased, accompanied by higher daily plant throughput. We successfully completed the transition to owner-operated mining at the end of the quarter.
Development
Efemcukuru
We continued construction at Efemcukuru, spending $3.3 million during the quarter. Construction activities included site clearing of all major facility areas, widening the access road and preparing for drilling and blasting at the plant site.
Vila Nova Iron Ore
We are anticipating start-up of our Vila Nova iron ore project in the first quarter of 2009. In the third quarter, we spent $8.0 million on the project, with construction activities focusing on the plant site earthworks and concrete foundations for the crushing and screening equipment, as well as earthworks for the tailing dam. We finalized layouts for the train and ship-loading facilities and continued to increase staffing on the project.
Exploration
Exploration expense for the third quarter was $7.4 million (Q3 2007 - $2.8 million); exploration activities focused on our properties in Turkey, Brazil and China.
Exploration - Turkey
Our reconnaissance work during the quarter focused on Sayacik, a volcanic center adjacent to Kisladag, and properties in the Pontides. At Sayacik, our soil sampling and mapping programs identified three anomalous gold zones, where we will follow up with magnetic and induced polarization geophysical surveys and diamond drilling. At Efemcukuru, we conducted mapping and rock chip sampling of anomalous zones identified earlier in the year and initiated a 10-hole 1,900 meter drilling program. At Kisladag, we drilled 11,000 meters in 20 holes to define new areas of oxide mineralization and confirm lateral extensions to existing sulphide mineralization.
Exploration - Brazil
Exploration in Brazil consisted of support for the Vila Nova iron ore project, as well as drilling at the Tocantinzinho project, where we are conducting a 16,000 meter drilling program as part of our earn-in agreement. The objective of this drilling is to bring the inferred resource into the indicated category and to explore for extensions of the ore body.
Exploration - China
At Tanjianshan, we drilled 9,750 meters in 34 holes primarily in the Xijingou area, enabling us to define three mineralized zones. This drilling program will be completed early in the fourth quarter.
Acquisitions
On July 7, we completed our acquisition of all issued and outstanding shares of Frontier Pacific Mining Corporation. We now own a 100% interest in the Perama Hill gold project in northeastern Greece along with other exploration projects in Peru and Colombia.
During the quarter, we also finalized an agreement with Brazauro Resources Corporation to earn an interest in the 43,000 hectare Tocantinzinho Project in Brazil.
Eldorado is a gold producing and exploration company actively growing businesses in Turkey, China, Brazil and Greece. We are one of the lowest cost pure gold producers. With our international expertise in mining, finance and project development, together with highly skilled and dedicated staff, we believe that Eldorado is well positioned to grow in value as we create and pursue new opportunities.
ON BEHALF OF ELDORADO GOLD CORPORATION
Paul N. Wright, President and Chief Executive Officer
Eldorado will host a conference call Friday, October 31, 2008 to discuss the 2008 Third Quarter Financial and Operating Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialing 416-641-6127 in Toronto or 1-866-226-1799 toll free in North America and asking for the Eldorado Conference Call with Chairperson: Paul Wright, President and CEO of Eldorado Gold. The call will be available on Eldorado's website, www.eldoradogold.com. A replay of the call will be available until November 7, 2008 by dialing 416-695-5800 in Toronto or 1-800-408-3053 free in North America and entering the Pass code: 3272241.
Certain of the statements made herein may contain forward-looking statements or information within the meaning of the United States Private Securities Litigation Reform Act of 1995, and forward looking statements or information within the meaning of the Securities Act (Ontario). Such forward looking statements or information include, but are not limited to statements or information with respect to unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties, which could cause actual events, or results to differ from those reflected in the forward-looking statements or information. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward looking statements. Specific reference is made to "Forward Looking Statements and Risk Factors" in the Company's Annual Information Form and Form 40-F dated March 31, 2008. Forward-looking statements herein include statements regarding the expectations and beliefs of management. Such factors included, amongst others the following: gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves, and between actual and estimated metallurgical recoveries; mining operational risk; risks from litigation; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form and Form 40-F dated March 31, 2008. We do not expect to update forward-looking statements continually as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada and the U.S.
Eldorado Gold Corporation's shares trade on the Toronto Stock Exchange (TSX:ELD) and the American Stock Exchange (AMEX:EGO).
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PRODUCTION HIGHLIGHTS
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First First
First Second Third Third Nine Nine
Quarter Quarter Quarter Quarter Months Months
2008 2008 2008 2007 2008 2007
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Gold Production
---------------
Total Ounces
Produced 67,234 87,380 72,343 61,385 226,957 249,135
Commercial
Production 67,234 87,380 72,343 61,385 226,957 236,643
Cash Operating
Cost ($/oz)
(1),(4) 213 229 283 228 242 239
Total Cash Cost
($/oz)(2),(4) 268 259 313 264 279 263
Total Production
Cost ($/oz)
(3),(4) 393 293 386 335 352 313
Realized Price
($/oz - sold) 933 904 870 667 902 660
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Kisladag Mine, Turkey
---------------------
Commercial
Production 27,228 55,490 46,863 23,610 129,581 135,306
Tonnes to Pad 529,480 2,092,957 2,562,343 825,839 5,184,780 4,547,860
Grade (grams /
tonne) 1.18 1.47 1.05 1.52 1.24 1.33
Cash Operating
Cost ($/oz)(4) 217 230 270 191 242 189
Total Cash Cost
($/oz)(2),(4) 218 232 273 194 244 192
Total Production
Cost ($/oz)
(3),(4) 246 273 310 234 281 225
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Tanjianshan Mine, China(5)
-------------------------
Total Ounces
Produced 40,006 31,890 25,480 37,775 97,376 106,162
Commercial
Production 40,006 31,890 25,480 37,775 97,376 93,670
Tonnes Milled 223,395 193,035 226,126 202,641 642,556 583,409
Grade (grams /
tonne) 6.83 6.04 4.16 6.87 5.65 5.94
Cash Operating
Cost ($/oz)(4) 211 229 306 251 242 312
Total Cash Cost
($/oz)(2),(4) 302 305 387 307 325 369
Total Production
Cost ($/oz)
(3),(4) 493 327 525 397 447 453
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Sao Bento Mine, Brazil
----------------------
Commercial
Production - - - - - 7,667
Tonnes Milled - - - - - 20,069
Grade (grams /
tonne) - - - - - 11.71
Cash Operating
Cost ($/oz)(4) - - - - - 208
Total Cash Cost
($/oz)(2),(4) - - - - - 224
Total Production
Cost ($/oz)
(3),(4) - - - - - 152
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(1) Cost figures calculated in accordance with the Gold Institute Standard.
(2) Cash Operating Costs, plus royalties and the cost of off-site
administration.
(3) Total Cash Costs, plus foreign exchange gain or loss, depreciation,
amortization and reclamation expenses.
(4) Cash operating, total cash and total production costs are non-GAAP
measures. See the section "Non-GAAP Measures" of this MD&A.
(5) The Tanjianshan gold mine commenced commercial production on February
1, 2007.
Eldorado Gold Corporation
Unaudited Consolidated Balance Sheets
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(Expressed in thousands of US dollars)
September 30, December 31,
2008 2007
$ $
Assets
Current assets
Cash and cash equivalents 51,567 46,014
Restricted cash (note 4) 35,000 65,710
Marketable securities 13,382 1,615
Accounts receivable and other 22,081 28,720
Inventories 75,842 57,525
Derivative contract - 2,956
Future income taxes - 959
--------------------------
197,872 203,499
Restricted cash (note 4) 8,300 8,300
Mining interests (note 11) 625,133 377,705
Other 2,238 2,238
Assets held for sale (note 8) 10,531 -
--------------------------
844,074 591,742
--------------------------
--------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 42,686 39,943
Debt - current 35,390 65,422
Current portion of asset retirement
obligations - 509
Current portion of future income taxes 1,204 -
--------------------------
79,280 105,874
Debt - long-term 139 139
Contractual severance obligations - 1,479
Asset retirement obligations 4,526 8,290
Future income taxes 64,961 26,781
Liabilities held for sale (note 8) 14,820 -
--------------------------
163,726 142,563
--------------------------
Non-controlling interest 5,397 -
Shareholders' Equity
Share capital (note 5(a)) 920,737 753,058
Contributed surplus (note 5(b)) 17,279 13,083
Accumulated other comprehensive (loss) income
(note 5(c)) (8,821) 214
Deficit (254,244) (317,176)
--------------------------
674,951 449,179
--------------------------
844,074 591,742
--------------------------
--------------------------
Approved on behalf of the Board of Directors
(Signed) Robert Gilmore Director (Signed) Paul N. Wright Director
Eldorado Gold Corporation
Unaudited Consolidated Statements of Operations and Deficit
For the period ended September 30,
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(Expressed in thousands of US dollars except per share amounts)
Three months ended Nine months ended
------------------ -----------------
2008 2007 2008 2007
$ $ $ $
Revenue
Gold sales 65,013 38,186 213,747 154,610
Interest and other income 2,853 1,852 9,166 5,577
--------------------------------------
67,866 40,038 222,913 160,187
--------------------------------------
Expenses
Operating costs 23,265 16,945 66,061 63,653
Depletion, depreciation and
amortization 6,772 4,073 19,108 11,827
General and administrative 6,224 5,756 25,956 17,796
Exploration 7,443 2,823 12,306 8,484
Mine standby costs - 1,954 2,432 1,954
Asset retirement obligation costs 2,609 80 2,875 240
Foreign exchange loss (gain) 2,286 (1,691) 1,453 (4,345)
Loss (gain) on disposal of assets 1,667 100 1,643 (3,564)
Interest and financing costs 756 807 2,626 2,703
Unrealized loss on derivative
contract 739 - 2,217 -
--------------------------------------
51,761 30,847 136,677 98,748
--------------------------------------
Income before income taxes and
other items 16,105 9,191 86,236 61,439
--------------------------------------
Income tax expense
Current (8,076) (2,025) (22,155) (3,089)
Future 9,701 (1,953) 4,548 (13,824)
--------------------------------------
1,625 (3,978) (17,607) (16,913)
--------------------------------------
Non-controlling interest (690) - (5,697) -
--------------------------------------
Net income for the period 17,040 5,213 62,932 44,526
Deficit, beginning of period (271,284) (314,157) (317,176) (353,470)
--------------------------------------
Deficit, end of period (254,244) (308,944) (254,244) (308,944)
--------------------------------------
--------------------------------------
Weighted average number of shares
outstanding
Basic 363,565 343,867 351,283 342,850
Diluted 365,297 344,979 352,771 344,295
Earnings per share
Basic income per share - US$ 0.05 0.02 0.18 0.13
Diluted income per share - US$ 0.05 0.02 0.18 0.13
Basic income per share - Cdn$ 0.05 0.02 0.18 0.14
Diluted income per share - Cdn$ 0.05 0.02 0.18 0.14
Eldorado Gold Corporation
Unaudited Consolidated Statements of Cash Flows
For the period ended September 30,
--------------------------------------------------------------------------
(Expressed in thousands of US dollars, unless otherwise stated)
Three months ended Nine months ended
------------------ -----------------
2008 2007 2008 2007
$ $ $ $
Cash flows generated from (used in):
Operating activities
Net earnings for the period 17,040 5,213 62,932 44,526
Items not affecting cash
Asset retirement obligation costs 2,609 80 2,875 240
Contractual severance expense - - - 598
Depletion, depreciation and
amortization 6,772 4,073 19,108 11,827
Unrealized foreign exchange loss - 150 418 515
Future income taxes (9,701) 1,953 (4,548) 13,824
Loss (gain) on disposal of assets 1,667 100 1,643 (3,564)
Imputed interest and financing
costs 11 16 30 50
Stock-based compensation 649 1,854 8,492 6,084
Non-controlling interest 690 - 5,697 -
Unrealized loss on derivative
contract 739 - 2,217 -
--------------------------------------
20,476 13,439 98,864 74,100
Property reclamation payments 172 (1,996) (1,225) (4,638)
Contractual severance payments (544) (141) (803) (2,051)
Changes in non-cash working capital
(note 7) (18,401) (6,857) (8,759) (9,314)
--------------------------------------
1,703 4,445 88,077 58,097
Investing activities
Mining interests
Acquisition of Frontier net of
cash received 7,479 - 7,479 -
Capital expenditures (23,867) (34,692) (53,645) (68,720)
Sales proceeds 5,689 946 6,129 2,308
Marketable securities
Purchases (21,220) - (23,663) (380)
Disposals - - 263 -
Pre-production gold sales
capitalized in mining interests - - - 10,052
Non-producing properties under
development (16,056) (5,361) (26,044) (11,778)
Value added taxes recoverable on
mining interests - 413 - 3,874
Restricted cash 25,000 3,450 30,710 (603)
--------------------------------------
(22,975) (35,244) (58,771) (65,247)
Financing activities
Capital stock
Issuance of common shares for cash 1,463 1,810 6,726 9,307
Debt
Proceeds - 10,000 5,000 10,000
Repayment (25,000) - (35,479) (15,229)
--------------------------------------
(23,537) 11,810 (23,753) 4,078
--------------------------------------
Net increase (decrease) in cash and
cash equivalents (44,809) (18,989) 5,553 (3,072)
Cash and cash equivalents -
beginning of period 96,376 75,884 46,014 59,967
--------------------------------------
Cash and cash equivalents -
end of period 51,567 56,895 51,567 56,895
--------------------------------------
--------------------------------------
Supplementary cash flow information (note 7)
Eldorado Gold Corporation
Unaudited Consolidated Statements of Comprehensive Income
For the period ended September 30,
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(Expressed in thousands of US dollars, unless otherwise stated)
Three months ended Nine months ended
------------------ -----------------
2008 2007 2008 2007
$ $ $ $
Net earnings for the period ended
September 30, 17,040 5,213 62,932 44,526
Other comprehensive income
Net unrealized losses on
available-for-sale investments
(note 5(c)) (10,444) (32) (8,821) (61)
Net realized gain on sale of
available-for-sale investments
(note 5(c)) - - (61) -
Reversal on acquisition of
Frontier (note 5(c)) (153) - (153) -
------------------ -----------------
Comprehensive income for the
period ended September 30, 6,443 5,181 53,897 44,465
------------------ -----------------
------------------ -----------------
To view Consolidated Financial Statements, Management's Discussion and Analysis (pdf) please click on the following link: http://media3.marketwire.com/docs/1031ELD.pdf.
SOURCE: Eldorado Gold Corporation
Eldorado Gold Corporation Nancy E. Woo Vice President Investor Relations (604) 601-6650 or 1-888-353-8166 (604) 687-4026 (FAX) Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Website: www.eldoradogold.com
