2011 Second Quarter Financial and Operating Results Record Earnings from Gold Mining Operations
NEWS RELEASE ELD No. 11-13 TSX: ELD NYSE: EGO ASX:EAU July 28, 2011
2011 Second Quarter Financial and Operating Results Record Earnings from Gold Mining Operations
Earnings per share $0.14; Cash Flow from operating activities per share $0.21 (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 financial and operational results for the second quarter ended June 30, 2011. Eldorado reported net income attributable to shareholders of the Company of $74.9 million for the period; generated $115.7 million in cash from operating activities before changes in non-cash working capital and paid down $31.8 million against outstanding debt acquired with the 2009 Sino Gold Mining Ltd. acquisition.
“During the second quarter, the Company achieved record earnings from its gold mining operations on sales of 162,164 ounces of gold at an average realized gold price of $1,510 and average cash operating costs of $397 per ounce. During the quarter we also commenced the start-up of Efemcukuru and received key permits in Turkey related to expanding Kisladag and constructing processing facilities for Efemcukuru concentrate treatment at Kisladag.” said Paul Wright, President and CEO of Eldorado Gold.
Q2 2011 Highlights
- Declared a dividend of C$0.06 to shareholders of record on August 12, 2011
- Produced 162,429 ounces of gold at an average cash operating cost of $397 per ounce (total cash cost $477 per ounce)
- Sold 162,164 ounces of gold at an average realized price of $1,510 per ounce
- Reported earnings of $0.14 per share
- Generated $115.7 million ($0.21 per share) in cash from operating activities before changes in non-cash working capital and paid $31.8 million against outstanding debt
- Commenced the start-up of Efemcukuru and received key permits in Turkey related to expanding Kisladag and constructing processing facilities for Efemcukuru concentrate at Kisladag
- Announced the results of a positive NI 43-101 compliant Technical Report for the Tocantinzinho Gold Project located in Para State of central Brazil
Outlook
The 2011 operating guidance has been revised to 700,000 – 725,000 ounces of gold at an average cash operating costs of $390–$410 per ounce due largely to the delay in completion of construction of the processing facilities at Kisladag for Efemcukuru concentrate.
Financial Results
Eldorado’s consolidated net income attributable to the shareholders of the Company for the second quarter of 2011 was $74.9 million or $0.14 per share compared to $55.7 million or $0.10 per share in the second quarter of 2010. The increase in profit for the period compared to the second quarter of 2010 was mainly the result of record earnings from the Company’s gold mining operations as a result of significantly higher gold prices. Production was slightly down from the second quarter of 2010 (162,429 ounces in 2011 versus 167,940 ounces in 2010).
During the quarter, 162,164 ounces of gold were sold at an average price of $1,510 per ounce compared to 172,826 ounces of gold at an average realized price of $1,195 per ounce in the second quarter of 2010, resulting in a company record $137.5 million in earnings from gold mining operations after deducting production costs and depreciation, depletion and amortization expense (Q2 2010 - $104.9 million).
In addition, 43,418 dry metric tonnes of iron ore were sold by Vila Nova at an average price of $149 per dry metric tonne, resulting in gross profit of $3.2 million for the second quarter.
Operating Performance
Kisladag Kisladag placed 3.2 million tonnes of ore on the leach pad during the second quarter at a grade of 0.92 grams per tonne. Tonnes were significantly higher than previous quarters, reflecting the successful commissioning of the Phase III crusher expansion to 12.5 million tonnes per year, while grade was lower than previous quarters. Kisladag produced 66,688 ounces of gold at a cash operating cost of $389 per ounce in Q2 2011 as compared to 70,451 ounces at a cash operating cost of $304 per ounce in Q2 2010. The increase in cash operating cost was mainly due to higher electricity and reagent costs.
On June 13, 2011, the Company announced the approval of the Kisladag supplementary Environmental Impact Assessment (EIA). This EIA allows for an increase in annual ore production levels to 12.5 million tonnes per annum, and also permits the construction of the Efemcukuru concentrate treatment plant at Kisladag. This treatment plant, which we expect to have completed by the end of the year, will treat the flotation concentrate from Efemcukuru.
Tanjianshan (“TJS”)
TJS processed 264,698 tonnes of ore at a grade of 4.23 grams per tonne in Q2 2011 compared to 271,749 tonnes at a grade of 4.38 in Q2 2010. The mine produced 31,977 ounces of gold at a cash operating cost of $343 per ounce in Q2 2011 as compared to 28,884 ounces at a cash operating cost of $387 per ounce in Q2 2010. Additional roaster feed provided by Qinglongtan concentrate increased gold production by 10%. Cash operating costs were lower than the second quarter of 2010 due to a lower strip ratio and lower inventory carrying cost of the Qinglongtan concentrate additional roaster feed. Total cash operating costs increased by $4.5 million due to a recently promulgated Ecological Compensation Fee, of which $2.9 million related to the period November 2010 to March 2011.
Jinfeng Jinfeng processed 397,987 tonnes of ore at a grade of 4.05 grams per tonne in Q2 2011 compared to 392,211 tonnes at a grade of 4.51 grams per tonne in Q2 2010. The mine produced 46,350 ounces of gold at a cash operating cost of $401 per ounce in Q2 2011 compared to 52,659 ounces at a cash operating cost of $381 in Q2 2010. Strip ratio fell at Jinfeng to 0.69:1 this quarter as a result of the completion of mining at the bottom of the open pit during the quarter. Land is currently being acquired to allow mining the next phase cutback of the open pit. Waste stripping of this phase is presently scheduled to commence in September.
White Mountain White Mountain processed 192,558 tonnes of ore at a grade of 3.71 grams of gold per tonne in Q2 2011 compared to 167,981 tonnes at a grade of 3.78 grams per tonne in Q2 2010. The mine produced 17,414 ounces of gold at a cash operating cost of $518 per ounce in Q2 2011 compared to 15,946 ounces at $442 per ounce in Q2 2010. Cash operating costs at White Mountain increased in Q2 2011 due to higher underground mining contractor rates and lower gold grade compared to Q2 2010.
Vila Nova During Q2 2011Vila Nova mined 174,672 wet metric tonnes, treated 153,013 wet metric tonnes and sold 43,418 dry metric tonnes of iron ore. Heavy rains affected mining operations and product transportation during the quarter. Operating costs averaged $64 per dry metric tonne. At quarter end 205,854 wet metric tonnes of processed ore were in inventory, of which 102,569 wet metric tonnes were at Santana port ready for shipment.
Development
Kisladag The majority of work required to complete the construction of the Phase III expansion was completed during the second quarter. The fine ore processing section of the expansion, which includes two new crushers and screens, is now operating at or above design capacity. Assembly and commissioning of the higher capacity overland and stacking conveyor systems will be completed in the third quarter of this year.
Work continues on the Phase IV Expansion study with the initial focus on mine fleet selection and process flowsheet development. Capital and operating cost scenarios are being developed to establish the most attractive scenario in terms of economic performance over the life of the mine.
Efemcukuru The filtration plant was commissioned during the second quarter along with the concentrator, and produced dewatered tailings for disposal on the tailings dump. The backfill plant piping and underground reticulations systems for the tailings backfill remain to be completed and commissioned in third quarter of this year. Underground development continued on schedule with the contractor having reached 97% of the contracted development meters by quarter end. A scope change was issued to carry out additional development associated with an exploration drive to the North Ore Shoot as well as other ancillary excavations. Owner crews were engaged in ore development as well as rescheduled waste development to reach additional stoping zones.
Construction activity began on the Efemcukuru Concentrate Treatment plant at the Kisladag mine site in mid-June. This followed the receipt of a supplementary EIA which covered the installation of the plant and associated infrastructure and other production changes to the Kisladag operation. Preparations for the installation of this facility were well advanced in anticipation of the final approvals. Rough grading and earthworks were started immediately. Completion of all facilities for treatment of the Efemcukuru concentrate is scheduled for the end of the fourth quarter of this year.
Eastern Dragon Construction activity at Eastern Dragon continued throughout the quarter. The mill and process buildings have now been totally enclosed allowing civil and mechanical installations to continue under cover. All mechanical equipment for the process plant has been ordered and either delivered to site or held by vendors for scheduled delivery. Efforts for the third quarter will be focused on mechanical and electrical installations in the plant, electrical infrastructure and civil works on the crushing plant.
Perama Hill Recent changes within the Greek government have resulted in an increased focus on supporting much needed capital development projects. To facilitate timely permitting of development projects the government has now initiated a fast track approach designed to expedite the approval process for those projects deemed to be “Strategic Investments.” The Perama Hill project has been qualified for this process and expects a positive decision in August from the Interministerial Committee for Strategic Investments. Pending this positive decision the Company anticipates being in receipt of all permits and licenses enabling a construction decision in Q1 2012.
Tocantinzinho (“TZ”)
Golder Associates (Brazil) completed the preparation of a positive Prefeasibility Report for the Tocantinzinho project which has been compiled into an NI 43-101 compliant Technical Report*. The project has been configured as a 4.4 million tonne per year open pit operation using flotation and concentrate leaching for gold recovery. Initial investment capital for the project is estimated at approximately $383.5 million including extensive infrastructure to service the remote site. During the operating life of 11 years the project is projected to produce an average of 159,000 ounces per year at a cash cost of $559 per ounce. Based on the positive results of the technical study, the project will be advanced to feasibility level. Field work to support this study will be initiated in the third quarter of this year with completion of the study scheduled for the second quarter of 2012. Preparation of the EIA for Tocantinzinho was also advanced during the quarter with submission now scheduled for the third quarter of this year.
Exploration
Turkey Exploration during the quarter in Turkey focused on drilling at our Kisladag and Efemcukuru mine sites, and at two of our exploration projects (Malatya-Hasancelebi and Konya-Sizma).
Seven diamond drillholes were completed at the Kisladag mine site during the second quarter, testing both conceptual exploration targets and areas being considered for infrastructure expansion. Assay results have been received from the first six drillholes in the program, and have no significant intersections.
At Efemcukuru, drilling commenced at the Northwest Extension to the Kestane Beleni vein, with twelve holes completed. All of these holes focused on relatively shallow portions of the Kestane Beleni vein, testing a 700 strike length at roughly 100m intervals. Assay results were received from the first five drillholes, all of which included notable gold intercepts.
At the Malatya-Hasancelebi iron oxide copper-gold (IOCG) prospect the final five drillholes of Phase I exploration drilling program were completed during the quarter. All were located in the Karasivri hill anomaly area, testing a silicified and carbonate altered ophiolitic sequence in the upper plate of a thrust fault. Preliminary results show only slightly elevated gold values.
Five drillholes completed during the quarter at the Konya-Sizma prospect intersected strongly-foliated, interbedded metamorphosed siltstone, sandstone, shale, and limestone. The rocks are weakly to moderately altered with sericite, silica, and fine quartz stockwork veinlets. Mineralization consists of pyrite and arsenopyrite, generally occurring as lenses along foliation. Assay results from the first three drillholes include encouraging gold values over widths of tens of metres.
China Exploration drilling in China during the quarter included programs in the Guizhou, Jilin, and Qinghai regions.
In the Guizhou region, exploration drilling was conducted on the Jindu joint venture (Qiaojiang license) and within the Jinfeng mining license. At Qiaojiang, drilling is targeting fault zones downdip from trench exposures that have produced strongly anomalous gold values, locally coinciding with IP chargeability anomalies. The best intercept to date is a 9.6 meter wide breccia zone with silica and carbonate alteration, associated with realgar, orpiment, cinnabar, and pyrite (Drillhole JDQJ-04). Assays are pending. In the Jinfeng Mine area, most of the exploration drilling during the quarter was from surface drills in the Rongban area. Work continued on the revised structural/lithologic model for the Jinfeng deposit, with drillcore relogging, updating of the pit geology map, and section interpretation. This work has resulted in the definition of several previously untested near-mine targets along the mineralized F2 and F3 faults.
In the Jilin region, exploration drilling programs commenced during the quarter at both the White Mountain Mine site and at the Xiaoshiren prospect. Two surface drillholes were completed at the White Mountain deposit, testing step-outs from the deep mineralized intersections obtained in the 2010 program. These new holes intersected silicified zones along the target horizon at near the projected depth, with variable breccia development. At Xiaoshiren, four drillholes were completed, targeting both structurallycontrolled breccia zones and intrusive contact-related zones. All of the drillholes have intersected zones of alteration and pyrite ± hematite mineralization, but no assay results have been received to date.
In Qinghai, diamond drilling commenced at Tanjianshan on both the Qinlongtan deeps target and the 323 deposit infill program, with one hole completed at each area. In addition, the pediment covered area between the 323 deposit and the Jinlonggou mine was explored through both shallow, grid-based reverse circulation drilling, and a detailed ground magnetic survey. Mapping and sampling were completed at the Palonggou prospect, located along the north side of the Jinlonggou mine.
Brazil Drilling at the Tocantinzinho project this quarter included 13 diamond drillholes, mainly consisting of systematic stepout holes along the Tocantinzinho trend southeast of the main deposit area. The strongest mineralization encountered was a zone of intercalated “salami” granite, andesite, and aplite containing a stockwork to sheeted quartz + pyrite veinlets with visible gold, identified in a hole located approximately two kilometres southeast of the deposit. Soil sampling programs completed during the quarter increased the area of coverage peripheral to the Tocantinzinho trend. In addition, grid-based auger drilling was completed within broad soil anomalies to more closely define targets for diamond drilling.
At the optioned Agua Branca project, diamond drilling commenced late in the quarter on the Serra da Abelha target, and 25 auger holes were completed in two separate target areas.
Eldorado is a gold producing, exploration and development company actively growing businesses in Turkey, China, Greece, Brazil. 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 on Friday, July 29, 2011 to discuss the 2011 Second Quarter Financial and Operating Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialling 416-340-8527 in Toronto or 1-877-440-9795 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 August 5, 2011 by dialling 905-694-9447 in Toronto or 1-800-408-3053 toll free in North America and entering the Pass code: 1412061.
- JORC Competent Person Statement
The information in this news release that relates to TZ Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Stephen Juras, Ph.D., P. Geo., and Sean Gregersen, P.Eng., who are members of the Association of Professional Engineers and Geoscientists of BC. Stephen Juras and Sean Gregersen are full-time employees of Eldorado Gold Corporation.
Stephen Juras and Sean Gregersen have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Stephen Juras and Sean Gregersen are the Qualified Person as defined in the National Instrument 43-101 (Standards of Disclosure for Mineral Projects) of the Canadian Security Regulators, responsible for preparing or supervising the preparation of the scientific or technical information contained in this document and verifying the technical data disclosed in the document relating to the TZ project.
Stephen Juras and Sean Gregersen consent to the inclusion in the news release of the matters based on his information in the form and context in which it appears.
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 applicable Canadian securities laws. Often, but not always, forward-looking statements and forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information herein include, but are not limited, to the Company’s Q2, 2011 Financial and Operating Results.
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, 2011
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 2011 | Second Quarter 2011 | Second Quarter 2010 | First Six Months 2011 | First Six Months 2010 | |
| Gold Production Ounces Sold Ounces Produced Cash Operating Cost ($/oz)1, 3, 4 Total Cash Cost ($/oz)2,3, 4 Realized Price ($/oz - sold) | 148,530 148,577 410 462 1,397 | 162,164 162,429 397 477 1,510 | 172,826 167,940 357 410 1,195 | 310,694 311,006 403 470 1,456 | 336,272 332,868 364 404 1,154 |
| Kisladag Mine, Turkey Ounces Sold Ounces Produced Tonnes to Pad Grade (grams / tonne) Cash Operating Cost ($/oz)3, 4 Total Cash Cost ($/oz)2,3, 4 | 50,832 50,833 2,341,635 1.04 386 408 | 66,392 66,688 3,194,051 0.92 389 411 | 69,197 70,451 2,686,284 1.12 304 345 | 117,224 117,521 5,535,686 0.97 387 410 | 153,171 152,691 5,584,483 1.12 304 324 |
| Tanjianshan Mine, China Ounces Sold Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)3, 4 Total Cash Cost ($/oz)2,3, 4 | 28,493 28,493 238,070 3.90 402 515 | 31,977 31,977 264,698 4.23 343 596 | 38,261 28,884 271,749 4.38 387 483 | 60,470 60,470 502,768 4.06 371 557 | 57,208 54,307 521,487 4.20 398 494 |
| Jinfeng Mine, China Ounces Sold Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)3, 4 Total Cash Cost ($/oz)2,3, 4 | 48,518 48,564 384,400 4.32 430 482 | 46,381 46,350 397,987 4.05 401 457 | 48,623 52,659 392,211 4.51 381 423 | 94,899 94,914 782,387 4.19 416 470 | 98,297 98,274 782,062 4.37 402 443 |
| White Mountain Mine, China Ounces Sold Ounces Produced Tonnes Milled Grade (grams / tonne) Cash Operating Cost ($/oz)3, 4 Total Cash Cost ($/oz)2,3, 4 | 20,687 20,687 140,211 5.71 438 475 | 17,414 17,414 192,558 3.71 518 564 | 16,745 15,946 167,981 3.78 442 474 | 38,101 38,101 332,769 4.55 475 516 | 27,596 27,596 298,624 3.91 484 519 |
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 Cash operating costs and total cash costs are non-GAAP measures. See the section "Non-GAAP Measures" of this Review. Cash operating costs and total cash costs have been recalculated for prior quarters based on ounces sold.
Unaudited Condensed Consolidated Balance Sheets
Note June 30, 2011 December 31, 2010
ASSETS Current assets
Cash and cash equivalents 305,638 314,344 Restricted cash 6 55,400 52,425 Marketable securities 1,562 8,027 Accounts receivable and other 37,341 42,437 Inventories 159,932 147,263 559,873 564,496 Long-term inventories 26,693 29,627 Investment in significantly influenced company 5 5,726 6,202 Deferred income tax assets 7,412 - Restricted assets and other 24,404 19,328 Property, plant and equipment 2,775,443 2,699,787 Goodwill 365,928 365,928 3,765,479 3,685,368
LIABILITIES & EQUITY Current liabilities
Accounts payable and accrued liabilities 146,809 145,695 Current debt 7 90,636 98,523 237,445 244,218 Debt 7 39,038 68,140 Asset retirement obligations 34,030 33,228 Pension fund obligation 12,640 12,019 Deferred tax liabilities 328,102 330,512 651,255 688,117
Equity
Share capital 10 2,825,024 2,814,679 Treasury stock 11(b) (4,432) - Contributed surplus 30,828 22,967 Accumulated other comprehensive income (3,055) (1,637)
Retained earnings (deficit) 224,818 125,221 Total equity attributable to shareholders of the Company 3,073,183 2,961,230 Attributable to non-controlling interests 41,041 36,021 3,114,224 2,997,251 3,765,479 3,685,368
Subsequent events 7(b)(e), 14
Approved on behalf of the Board of Directors
(Signed) Robert Gilmore Director (Signed) Paul N. Wright Director
See accompanying notes to unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Income Statements
(Expressed in thousands of U.S. dollars, except per share amounts)
2011 2010 2011 2010 Note
Revenue
Metal sales 251,410 206,443 469,483 387,922
Cost of sales 81,431 71,440 155,742 136,030 Production costs Depreciation and amortization 29,843 29,596 61,060 52,929 Total cost of sales 111,274 101,036 216,802 188,959 Gross profit 140,136 105,407 252,681 198,963
Exploration expenses 4,605 2,803 8,446 6,136 Mine standby costs - 607 - 1,313 General and administrative expenses 13,574 10,474 34,608 20,893 Employee benefit expenses 8 433 526 856 737 Share based payments 4,452 3,646 11,804 10,592 Asset retirement obligation costs 407 511 773 1,024 Foreign exchange loss (gain) 1,381 1,523 2,028 (37) Operating profit 115,284 85,317 194,166 158,305
(Gain) loss on disposal of assets (3,092) 21 (3,092) (1,485) (Gain) loss on marketable securities (654) 254 (1,289) (858) Other (income) expenses (1,066) (1,338) (2,463) (2,009) Interest and financing costs 1,525 1,656 3,114 4,269
Profit before income tax 118,571 84,724 197,896 158,388 Income tax expense 36,818 24,999 57,443 45,355 Profit for the period 81,753 59,725 140,453 113,033
Attributable to:
Shareholders of the Company 74,865 55,706 127,338 106,208 Non-controlling interests 6,888 4,019 13,115 6,825 81,753 59,725 140,453 113,033
Profit for the period
Weighted average number of shares outstanding Basic 548,976 539,398 548,654 538,707 Diluted 551,696 541,193 551,469 540,439
Earnings per share attributable to shareholders of the Company:
Basic earnings per share 0.14 0.10 0.23 0.20 Diluted earnings per share 0.14 0.10 0.23 0.20
See accompanying notes to the unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Statements of Comprehensive Income
2011 2010 2011 2010
Profit for the period 81,753 59,725 140,453 113,033 Other comprehensive income (loss):
Change in fair value of available-for-sale financial assets (net of income taxes of ($12) and $1,384; and ($12) and $1,490) (570) 8,705 (984) 10,164 Realized gains on disposal of available-for-sale financial (272) - (434) - assets transferred to net income (842) 8,705 (1,418) 10,164
Total other comprehensive (loss) income for the period Total comprehensive income for the period 80,911 68,430 139,035 123,197
Attributable to:
| Shareholders of the Company | 74,023 | 64,411 | 125,920 | 116,372 |
| Non-controlling interests | 6,888 | 4,019 | 13,115 | 6,825 |
| Total comprehensive income for the period | 80,911 | 68,430 | 139,035 | 123,197 |
Unaudited Condensed Consolidated Statements of Cash Flows
For the period ended June 30 Note 2011 2010
Cash flows generated from (used in):
Operating activities
Profit for the period 140,453 113,033 Items not affecting cash Provisions for asset retirement obligations 773 1,024 Depreciation and amortization 61,060 52,929 Unrealized foreign exchange loss 4,761 (5,041) Deferred tax recovery (9,705) (2,584) Gain on disposal of assets (3,092) (1,485) Loss on investment in significantly influenced company 1,794 - Gain on marketable securities (1,289) (858) Share based payments 11,804 10,592 Employee benefit expense 856 737 207,415 168,347
Changes in non-cash working capital 12 (16,322) (27,459) 191,093 140,888
Investing activities
Purchase of property, plant and equipment (125,602) (97,632) Proceeds from the sale of property, plant and equipment 17 20,348 Purchase of marketable securities (214) - Proceeds from the sale of marketable securities 6,345 692 Non-registered supplemental retirement plan investments, net (4,980) - Investment purchases (1,318) (5,375) Increase in restricted cash (2,998) (2,221) Increase in restricted asset and other - (2,483) (128,750) (86,671)
Financing activities
Issuance of common shares for cash 7,985 27,283 Dividend paid to non-controlling interests (3,622) (1,287) Dividend paid to shareholders (27,741) (26,357) Purchase of treasury stock (6,158) - Long-term and bank debt proceeds 3,203 2,484 Long-term and bank debt repayments (44,716) (14,726) (71,049) (12,603) Net (decrease) increase in cash and cash equivalents (8,706) 41,614 Cash and cash equivalents - beginning of period 314,344 265,369
305,638 306,983
Cash and cash equivalents - end of period
Notes to the unaudited condensed consolidated financial statements (Expressed in thousands of U.S. dollars, unless otherwise stated)
1. General Information
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. The Company acquired control of Sino Gold Mining Ltd. (“Sino Gold”) in December 2009, including its two producing mines, Jinfeng and White Mountain, as well as the Eastern Dragon development project. It also completed in July 2010 the acquisition of Brazauro Resources Corporation (“Brazauro”), whose main asset is the Tocantinzinho exploration and development project in Tapajós, Brazil.
Eldorado is a public company which is listed on the Toronto Stock Exchange, New York Stock Exchange and the Australian Stock Exchange and is incorporated and domiciled in Canada.
2. Basis of preparation
The Company prepares its financial statements in accordance with generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (“IFRS”), and requires publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011. Accordingly the Company commenced reporting on this basis as of January 1, 2011. In the financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of IFRS.
These condensed interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34 Interim Financial Reporting (“IAS 34”) and IFRS 1 Firsttime Adoption of International Financial Reporting Standards (“IFRS 1”). The Company has consistently applied the same accounting policies in its opening IFRS balance sheet as at January 1, 2010 and throughout all periods presented, as if these policies had always been in effect. Note 13 discloses the impact of the transition to IFRS on the Company’s reported balance sheet and comprehensive income, including the nature and effect of significant changes in accounting policies from those used in the Company’s consolidated financial statements for the year ended December 31, 2010.
These condensed consolidated interim financial statements do not include all of the information and footnotes required by International Financial Reporting Standards (“IFRS”) for complete financial statements for year-end reporting purposes. Results for the period ended June 30, 2011 are not necessarily indicative of future results. Any subsequent changes to IFRS that are reflected in the Company’s consolidated financial statements for the year ending December 31, 2011 could result in restatement of these interim consolidated financial statements, including the transition adjustments recognized on change-over to IFRS.
Upcoming changes in accounting standards
The following standards and amendments to existing standards have been published and are mandatory for Eldorado’s annual accounting periods beginning January 1, 2013, or later periods:
• IFRS 9 ‘Financial Instruments: Classification and Measurement’ – This is the first part of a new standard on classification and measurement of financial assets that will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has two measurement categories: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is recorded at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is measured at fair value with changes in fair value through profit or loss. In addition, this new standard has been updated to include guidance on financial liabilities and derecognition of financial instruments. This standard is effective for years beginning on/after January 1, 2013. The extent of the impact of adoption of IFRS 9 has not yet been determined.
• IFRS 11 ‘Joint Arrangements’ – This standard replaces the guidance in IAS 31 Interests in Joint Ventures. Under IFRS 11, joint arrangements are classified as either joint operations or joint ventures. These joint venture entities must now use the equity method.