Q1, 2010 Financial and Operating Results
NEWS RELEASE ELD No. 10-08 TSX: ELD NYSE: EGO ASX:EAU May 6, 2010
Q1, 2010 Financial and Operating Results Record Production, up 168%, Earnings per share $0.10 up 150%
(all figures in United States dollars, unless otherwise noted)
VANCOUVER, BC – Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation, (“Eldorado” the “Company” or “we”) is pleased to report on the Company's record financial and operational results for the first quarter ended March 31, 2010. Eldorado reported net income of $52.8 million or $0.10 per share for the period and the Company generated $80.8 million in cash from operating activities before changes in non-cash working capital.
“We had record quarterly production of 164,928 ounces of gold at a cash operating cost of $371 per ounce with strong performances from all mines, whilst setting consecutive quarterly production records at Kisladag. Our revenues increased by 248% over the comparable period in 2009. Net quarterly income increased by 304% to $52.8 million. Cash generated from operating activities increased by 290% to $80.8 million. With the strong performance of the quarter we are increasing our 2010 production guidance to 575,000 to 625,000 ounces of gold and slightly reducing cost guidance to cash operating costs of $375 - $395 per ounce.” said Paul Wright, President and CEO of Eldorado Gold. “We are also extremely pleased that the development of our Company with its strong performance in 2009 and the positive outlook for 2010 and beyond has enabled at this time the adoption of a dividend policy.”
Q1 2010 Highlights
- Produced 164,928 ounces of gold at an average cash operating cost of $371 per ounce (total cash cost $398 per ounce)
- Sold 163,446 ounces of gold at a realized average price of $1,110 per ounce
- Reported earnings of $0.10 per share
- Generated $80.8 million ($0.15 per share) from operating activities before changes in non-cash working capital
- Announced the adoption of a dividend policy
Financial Results
Eldorado’s consolidated net income for the first quarter of 2010 was $52.8 million or $0.10 per share, compared with $13.1 million or $0.04 per share in the first quarter of 2009. The increase in profit for the period resulted from significantly higher sales volumes from our Kisladag mine, as well as the contribution of our two new mines in China.
In the first quarter of the year, we sold 163,446 ounces of gold at an average price of $1,110 per ounce, a 184% increase over the first quarter of 2009, when we sold 57,459 ounces at an average price of $909 per ounce. Production from Jinfeng and White Mountain added 57,265 ounces as compared to the prior year, and increased production at both Kisladag and Tanjianshan added to our record production levels.
Operating Performance
Kisladag During the quarter, we placed 2,898,199 tonnes of ore on the leach pad at an average grade of 1.12 grams of gold per tonne. We produced 82,240 ounces of gold at a cash operating cost of $305 per ounce, compared to production of 46,192 ounces of gold at a cash operating cost of $274 per ounce in the first quarter of 2009. This quarterly record for gold production at Kisladag resulted from improvements to the processing circuit with the introduction of intermediate leaching and larger carbon columns.
Tanjianshan We produced 25,423 ounces of gold at a cash operating cost of $432 per ounce in Q1 2010, as compared to 15,234 ounces at a cash operating cost of $362 per ounce in Q1 2009. Ongoing improvements to the processing circuit are continuing to increase flotation recoveries.
Jinfeng We milled 390,000 tonnes of ore at a grade of 4.23 grams of gold per tonne and produced 45,615 ounces of gold at a cash operating cost of $411 per ounce.
White Mountain At our White Mountain mine, we processed 131,000 tonnes of ore at a grade of 4.09 grams of gold per tonne and produced 11,650 ounces of gold at a cash operating cost of $545 per ounce. Gold production and cash costs for the quarter were negatively affected by poor metallurgical recoveries related to localized increased sulphide content in the ore. This effect is decreasing as additional stoping blocks are brought into production.
Development
Efemcukuru Construction is proceeding on target. Major areas of focus over the quarter included closing in the concentrator building, setting in place the ball and SAG mills, and continuing the detailed engineering for the piping and mechanical installations in the concentrator as well as the tailings filtration and backfill plants. Underground development will start in the second quarter.
Vila Nova Iron Ore We plan to start mining and processing operations at Vila Nova in the second quarter of the year, with iron ore sales, projected to begin in the third quarter.
Perama Hill The Ministry of Environment is now reviewing our Preliminary Environmental Impact Assessment which was submitted October 2009. We filed a NI 43-101 technical report on SEDAR and continue working with various levels of government and other stakeholders in regards to providing a full understanding of the project and its benefits for the local area.
Eastern Dragon Over the quarter, we focused on permitting activities as well as collecting and evaluating regional geological data. We paid $11 million as part of our agreement to consolidate the Eastern Dragon-EL53 exploration joint venture with the Lode 5 joint venture.
Exploration
Turkey We continued our reconnaissance exploration programs at the MH, AS, and Sayacik properties, engaging in geological mapping, soil sampling, and magnetic geophysical surveys. At Efemcukuru, we completed three drillholes on the Kokarpinar target, a relatively untested vein parallel to and located approximately 200 m east of the Kestane Beleni vein, which hosts the main Efemcukuru deposit. At Kisladag, we completed 11 holes of the planned 42 holes for 2010. This drilling intersected a previously unrecognized tabular zone containing higher gold grades, located along the southern margin of the known deposit, including 152.5 m grading 1.7 grams of gold per tonne.
Brazil At Tocantinzinho, we completed nine diamond drillholes and seven reverse circulation drillholes testing geochemical and geophysical targets peripheral to the main deposit. Further activities on the project will be based on a review of the Company’s long-term objectives currently under way.
China At Tanjianshan, we completed 13 infill diamond drillholes on the 323 Zone where we have now drilled a total of 45 holes on sections spaced at 50 metres over a 350-metre strike length. High grade gold intersections within the zone occur in a similar structural and stratigraphic setting to the Qinlongtan deposit, located along strike 2 km to the north. A preliminary resource estimate is planned for Q2 2010. Drilling has now shifted to testing geochemical anomalies in the ZXS prospect area, located between the 323 Zone and the Jinlonggou deposit.
Elsewhere in China, we revised the structural model for the Jinfeng deposit and are now defining drill targets based on the identification of several previously unrecognized mineralized faults. We completed two diamond drillholes on the Lintan prospect, approximately 1000 metres north of the Jinfeng deposit, and have initiated a reconnaissance drilling program at the Bannian prospect, 20 km southwest of Jinfeng. We have finalized plans for drilling in Q2 and Q3 at the White Mountain and Eastern Dragon deposits and nearby prospects, and are conducting permitting activities at Eastern Dragon.
Corporate
The Company announced today that it is initiating payment of an annual dividend. Accordingly the Board of Directors declared today that the Company will pay an eligible dividend of $0.05 CDN June 18, 2010 to the holders of the Company’s outstanding Common Shares and Chess Depository Interests as of the record date of June 4, 2010.
Eldorado is a gold producing, exploration and development company actively growing businesses in Turkey, China, Greece, Brazil and surrounding areas. With our international expertise in mining, finance and project development, together with highly skilled and dedicated staff, we believe that our company is well positioned to grow in value as we create and pursue new opportunities.
ON BEHALF OF ELDORADO GOLD CORPORATION
“Paul N. Wright”
Paul N. Wright President and Chief Executive Officer
Eldorado will host a conference call Friday, May 7, 2010 to discuss the 2010 First Quarter Financial Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialling 416-695-6622 in Toronto or 1-800-355-4959 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 May 14, 2010 by dialling 416-695-5800 in Toronto or 1-800-408-3053 toll free in North America and entering the Pass code: 8574327.
Forward-looking statements and forward-looking information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. We have made certain assumptions about the forward-looking statements and information and even though our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking statement or information will prove to be accurate. Furthermore, should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. These risks, uncertainties and other factors include, among others, the following: gold price volatility; discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries; mining operational and development risk; litigation risks; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; currency fluctuations; speculative nature of gold exploration; global economic climate; dilution; share price volatility; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the sections entitled “Forward-Looking Statements” and "Risk Factors" in the Company's Annual Information Form & Form 40-F dated March 31, 2010.
There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on the forward-looking statements or information contained herein. Except as required by law, we do not expect to update forward- looking statements and information 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 common shares trade on the Toronto Stock Exchange (TSX: ELD) and the New York Stock Exchange (NYSE: EGO). Our Chess Depositary Interests trade on the Australian Securities Exchange (ASX: EAU).
Contact:
Nancy Woo, VP Investor Relations Eldorado Gold Corporation Phone: 604.601-6650 or 1.888.353.8166 1188, 550 Burrard Street Fax: 604.687.4026 Vancouver, BC V6C 2B5 Email: [email protected] Web site: www.eldoradogold.com Request for information packages:[email protected]
PRODUCTION HIGHLIGHTS
| First Quarter 2010 | First Quarter 2009 | Second Quarter 2009 | Third Quarter 2009 | Fourth Quarter 2009 | |
|---|---|---|---|---|---|
| Gold Production Ounces Produced Cash Operating Cost ($/oz)1, 4 Total Cash Cost ($/oz)2,4 Total Production Cost ($/oz)3,4 Realized Price ($/oz - sold) | 164,928 371 398 491 1,110 | 61,426 296 315 375 909 | 84,572 300 322 387 927 | 88,918 297 326 430 957 | 128,593 329 364 486 1,103 |
| Kisladag Mine, Turkey Ounces Produced Tonnes to Pad Grade (grams / tonne) Cash Operating Cost ($/oz)4 Total Cash Cost ($/oz)2,4 Total Production Cost ($/oz)3,4 | 82,240 2,898,199 1.12 305 307 357 | 46,192 2,084,714 1.34 274 276 315 | 62,985 2,428,611 1.18 269 271 309 | 57,902 2,523,546 1.22 276 278 336 | 70,131 3,679,685 0.86 296 298 354 |
| Tanjianshan Mine, China Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)4 Total Cash Cost ($/oz)2,4 Total Production Cost ($/oz)3,4 | 25,423 249,738 4.01 432 504 659 | 15,234 228,066 3.97 362 432 557 | 21,587 231,874 5.63 390 470 616 | 31,016 257,730 5.73 338 414 604 | 37,773 256,828 5.81 330 424 670 |
| Jinfeng Mine, China5 Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)4 Total Cash Cost ($/oz)2,4 Total Production Cost ($/oz)3,4 | 45,615 389,851 4.23 411 457 579 | - - - - - - | - - - - - - | - - - - - - | 14,541 136,054 3.97 472 516 623 |
| White Mountain Mine, China5 Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)4 Total Cash Cost ($/oz)2,4 Total Production Cost ($/oz)3,4 | 11,650 130,643 4.09 545 582 733 | - - - - - - | - - - - - - | - - - - - - | 6,148 58,074 4.26 364 400 535 |
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 Review. Jinfeng and White Mountain production for the period December 4 to December 31, 2009 only.
Unaudited Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
March 31, December 31, 2010 2009 $ $ Assets
Current assets
| Cash and cash equivalents | 283,141 | 265,369 |
| Restricted cash (note 4) | 52,121 | 50,000 |
| Marketable securities | 15,559 | 13,951 |
| Accounts receivable and other | 26,174 | 26,434 |
| Inventories | 121,516 | 129,197 |
498,511 484,951
| Inventories | 38,567 | 31,534 |
| Restricted assets and other | 16,724 | 13,872 |
| Mining interests | 2,606,048 | 2,580,816 |
| Goodwill | 324,935 | 324,935 |
3,484,785 3,436,108
Liabilities
Current liabilities
| Accounts payable and accrued liabilities | 140,191 | 157,250 |
| Debt - current | 61,626 | 56,499 |
| Future income taxes | 4,437 | 4,264 |
206,254 218,013
| Debt - long-term | 129,618 | 134,533 |
| Asset retirement obligations | 27,152 | 26,566 |
| Future income taxes | 386,643 | 390,242 |
749,667 769,354
Non-controlling interest 27,663 26,144
Shareholders’ equity
| Share capital (note 6(b)) | 2,679,209 | 2,671,634 |
| Contributed surplus (note 6(c)) | 22,831 | 17,865 |
| Accumulated other comprehensive income (loss) (note 6(d)) | 3,686 | 2,227 |
| Retained earnings (deficit) | 1,729 | (51,116) |
2,707,455 2,640,610 3,484,785 3,436,108
Approved on behalf of the Board of Directors
(Signed) Robert Gilmore Director (Signed) Paul N. Wright Director
See accompanying notes to consolidated financial statements.
Unaudited Consolidated Statements of Operations and Retained Earnings (Deficit)
(Expressed in thousands of U.S. dollars except per share amounts)
$ $ Revenue
Gold sales 181,479 52,206 Interest and other income 671 196
182,150 52,402
Expenses
| Operating costs | 66,873 | 18,442 |
| Depletion, depreciation and amortization | 23,242 | 4,460 |
| General and administrative | 15,529 | 8,762 |
| Exploration | 3,602 | 2,062 |
| Mine standby costs | 706 | - |
| Asset retirement obligation costs | 513 | 53 |
| Foreign exchange gain | (3,680) | (3,089) |
106,785 30,690
| Gain on disposal of assets | (1,506) | - |
| (Gain) loss on marketable securities | (1,112) | 964 |
| Interest and financing costs | 2,613 | 81 |
106,780 31,735 Income before income taxes and non-controlling interest 75,370 20,667
Income tax (expense) recovery
Current (21,131) (6,017) Future 1,412 (1,227)
(19,719) (7,244)
| Non-controlling interest | (2,806) | (362) |
| Net income for the period | 52,845 | 13,061 |
| Deficit, beginning of period | (51,116) | (153,520) |
| Retained earnings (deficit), end of period | 1,729 | (140,459) |
Weighted average number of shares outstanding
Basic 538,009 369,862 Diluted 540,911 371,833
Earnings per share
Basic income per share - US$ 0.10 0.04 Diluted income per share - US$ 0.10 0.04
See accompanying notes to the consolidated financial statements.
Unaudited Consolidated Statements of Cash Flows
$ $ Cash flows generated from (used in):
Operating activities
Net income for the period 52,845 13,061 Items not affecting cash
| Asset retirement obligations costs | 513 | 53 |
| Depletion, depreciation and amortization | 23,242 | 4,460 |
| Unrealized foreign exchange gain | (2,121) | (2,683) |
| Future income taxes (recovery) expense | (1,412) | 1,227 |
| Gain on disposal of assets | (1,506) | - |
| (Gain) loss on marketable securities | (1,112) | 964 |
| Stock-based compensation (note 7 (b)) | 6,947 | 3,080 |
| Pension expense (note 5) | 623 | 198 |
| Non-controlling interest | 2,806 | 362 |
80,825 20,722 Bonus cash award units payments (note 7 (c)) - (2,059) Changes in non-cash working capital (note 8) (18,386) 7,210 62,439 25,873
Investing activities
Mining interests Capital expenditures (47,300) (19,029) Sales and disposals 2,266 - Marketable securities
| Disposals | 692 | 30,457 |
| Pension plan contributions | - | (1,759) |
| Restricted cash | (2,121) | (5,500) |
| Restricted assets and other | (2,512) | (25) |
(48,975) 4,144
Financing activities
Capital stock
| Issuance of common shares for cash (note 6 (b)) | 5,594 | 11,110 |
| Dividend paid to non-controlling interest | (1,286) | - |
| Long-term and bank debt proceeds | - | 4,976 |
4,308 16,086
| Net increase in cash and cash equivalents | 17,772 | 46,103 |
| Cash and cash equivalents - beginning of period | 265,369 | 61,851 |
| Cash and cash equivalents - end of period | 283,141 | 107,954 |
Supplementary cash flow information (note 8)
See accompanying notes to the consolidated financial statements.
Unaudited Consolidated Statements of Comprehensive Income
2010 2009 $ $
Net earnings for the period ended March 31, 52,845 13,061
Other comprehensive income Unrealized gains on available-for-sale investments – net of taxes of $106 (2009 - nil) (note 6(d)) 1,459 2,313
Comprehensive income for the period ended March 31, 54,304 15,374
See accompanying notes to the consolidated financial statements.
1. Nature of operations
Eldorado Gold Corporation (“Eldorado” or the “Company”) is a gold exploration, development, mining and production company. The Company has ongoing exploration and development projects in Turkey, China, Greece and Brazil. Production operations in Brazil ceased in the second quarter of 2007 and the São Bento mine (“São Bento”) was sold to AngloGold Ashanti on December 15, 2008. The Company acquired control of Sino Gold Mining Ltd. (“Sino Gold”) in December 2009, along with its two producing mines, Jinfeng and White Mountain, as well as the Eastern Dragon exploration project.
These unaudited interim consolidated financial statements were prepared by Eldorado in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) consistent with those used to prepare Eldorado’s audited consolidated financial statements for the year ended December 31, 2009. As these unaudited interim consolidated financial statements do not contain all of the disclosures required by Canadian GAAP for annual financial statements, they should be read in conjunction with the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2009.
In the opinion of management, Eldorado has made all adjustments necessary to present fairly the Company’s consolidated financial position as at March 31, 2010 and the consolidated results of operations, cash flows and comprehensive income for the three-month periods ended March 31, 2010 and 2009.
Certain comparative figures have been reclassified to conform to the current period’s presentation.
2. New accounting developments
Business Combinations (Section 1582)
In January 2009, the CICA issued Section 1582, Business Combinations, which requires that all assets and liabilities of an acquired business be recorded at fair value at acquisition. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after January 1, 2011. The Company has not yet adopted this standard.
Consolidations (Section 1601) and Non-Controlling Interest (Section 1602)
In January 2009, the CICA issued Section 1601, Consolidations, and Section 1602, Non-Controlling Interests. Section 1601 establishes standards for preparing consolidated financial statements and Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. The Company has not yet adopted these standards.
2. New accounting developments (continued)
International Financial Reporting Standards
Canadian public companies will be required to prepare their financial statements in accordance with IFRS, as issued by the International Accounting Standards Board, for financial years beginning on or after January 1, 2011. Effective January 1, 2011, the Company will adopt IFRS as the basis for preparing its consolidated financial statements. The Company will issue its financial results for the quarter ended March 31, 2011 prepared on an IFRS basis and provide comparative data on an IFRS basis as required.
3. Business acquisition
On December 15, 2009, Eldorado acquired all of the outstanding Sino Gold Securities not previously held by the Company. A preliminary allocation of the purchase price was disclosed in our December 31, 2009 Consolidated Financial Statements.
As of March 31, 2010 there have been no changes to the preliminary allocation.
4. Restricted cash
Restricted cash represents short-term interest-bearing money market securities and funds held on deposit as collateral. The Company had the following restricted cash:
March 31, December 31, 2010 2009 $ $
Collateral account against Eastern Dragon CMB Standby letter
| of credit loan | 52,121 | - |
| Collateral account against Eastern Dragon CCB loan | - | 50,000 |
| Total | 52,121 | 50,000 |
5. Defined benefit plans expense
March 31, March 31, 2010 2009 $ $
| Pension plan expense | 50 | 17 |
| SERP expense * | 573 | 181 |
| Total | 623 | 198 |
- Non-registered supplemental retirement plan
6. Shareholders’ equity
(a) Authorized share capital
The Company’s authorized share capital consists of an unlimited number of voting common shares without par value and an unlimited number of non-voting common shares without par value. At March 31, 2010 there were no non-voting common shares outstanding.
(b) Issued and outstanding share capital
Number of Voting common shares shares Amount $
| Balance, December 31, 2009 | 537,136,235 | 2,671,634 | |
| Shares issued upon exercise of share options, for cash | 1,037,166 | 5,594 | |
| Grant date fair value of share options exercised | - | 1,981 | |
| Balance, March 31, 2010 | 538,173,401 | 2,679,209 |
(c) Contributed surplus
The continuity of contributed surplus on the Consolidated Balance Sheet is as follows:
Contributed surplus attributable to:
Stock-based
| compensation | Other | Total | ||
|---|---|---|---|---|
| $ | $ | $ | ||
| Balance, December 31, 2009 | 16,771 | 1,094 | 17,865 | |
| Non-cash stock-based compensation | 6,947 | - | 6,947 | |
| Options exercised, credited to share capital | (1,981) | - | (1,981) | |
| Balance, March 31, 2010 | 21,737 | 1,094 | 22,831 |