Throughout this press release we use cash operating cost per ounce, total cash costs per ounce, all-in sustaining cost per ounce, gross profit from gold mining operations, adjusted net earnings and cash flow from operating activities before changes in non -cash working capital as additional measures
Throughout this press release we use cash operating cost per ounce, total cash costs per ounce, all-in sustaining cost per ounce, gross profit from gold mining operations,
adjusted net earnings and cash flow from operating activities before changes in non -cash working capital as additional measures of Company performance. These are
non IFRS measures. Please see our MD&A for an explanation and discussion of these non IFRS meas ures. All dollar amounts in US$, unless stated otherwise.
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NEWS RELEASE
TSX: ELD NYSE: EGO February 23, 2017
Eldorado Reports 2016 Year-End and Fourth Quarter
Financial and Operational Results
VANCOUVER, BC – Eldorado Gold Corporation, ( “Eldorado” or “the Company”) today reported the
Company’s financial and operational results for the fourth quarter and year-ended December 31, 2016.
2016 Financial and Operational Highlights (including discontinued operations)
Loss of $344.2 million ($0.48 per share) , compared to a loss of $1,540.9 million or $2.15 per share in
2015. Adjusted net earnings of $47.4 million ($0.07 per share) compared to adjusted net earnings of
$13.2 million ($0.02 per share) in 2015.
Gold production of 486,025 ounces (including production from discontinued operations), slightly lower
than the revised third quarter guidance of 495,000 ounces of gold.
Gold revenues were $605.9 million on sales of 483,461 ounces of gold at an average realized gold price
of $1,253 per ounce.
All-in sustaining cash costs averaged $900 per ounce; considerably lower than original 2016 guidance
of all-in sustaining costs of $940-980 per ounce.
Closed the year with total liquidity of approximately $1.1 billion, including $888.5 million in cash, cash
equivalents and term deposits, and $250 million in undrawn lines of credit.
Completed sale of Chinese assets, which included: the White Mountain and Tanjianshan mines and the
Eastern Dragon development project to an affiliate of Yintai Resources Co. Ltd, and the Jinfeng Mine to
a wholly-owned subsidiary of China National Gold Group Corporation.
Olympias Phase II is scheduled to begin commissioning in the first quarter 2017.
Construction at Skouries continues on track for anticipated 2019 start-up.
Continued improvement to the overall safety record with a reduction in the lost time injury rate for
the fifth consecutive year.
The Company declared that it will pay a dividend of CDN$0.02 per Common Share on March 16, 2017,
to the holders of the Company’s outstanding Common Shares on the record date of March 7, 2017.
Announced the planned retirement of President and Chief Executive Officer Paul Wright and named
George Burns as his successor, in addition to changes to the Board of Directors.
“2016 was a transitional year for Eldorado with Olympias and Skouries in Greece firmly on track, and the
Chinese assets successfully sold. As we move into 2017, I strongly believe that Eldorado is now set for the
next phase of the Company’s growth. We are well positioned to focus on and build our internal pipeline of
quality assets. We have the cash balance to internally fund our capital growth plans. We have the right team
in place to execute with George Burns poised to become the next President and CEO .” said Paul Wright,
President and Chief Executive Officer.
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Reserves and Resources
The Company ended 2016 with proven and probable gold reserves of 484 million tonnes at 1.24 grams per
tonne gold containing 19.3 million ounces. A gold price of $1,200 per ounce was used in the reserve
estimates, the same as last year.
Million Ounces
Proven and probable in-situ gold ounces as of January 1, 2016 24.89
Mined ounces including mining depletion during 2016 (0.74)
Sale of China assets (3.27)
Net discovered ounces and converted resources during 2016 0.09
Net decrease due to engineering and metallurgy (1.71)
Proven and probable in-situ gold ounces as of December 31, 2016 19.26
The complete mineral reserve and mineral resource data can be found at the end of this news release and
includes the data for tonnes, grades and ounces.
The 22.6% overall reduction in reserve ounces was primarily attributable to the sale of the Chinese assets
followed by a reduction in reserve ounces at Kisladag. The adjustment in ounces at Kisladag was the result
of maximizing near -term profitability while designing a 13 million tonne per annum pit. There were also
additional downward adjustments based on recovery factors for certain ore types.
2016 Financial Results (including discontinued operations)
($ millions except as noted)
2016 Q1 Q2 Q3 Q4 2016
Revenues 164.1 171.5 174.0 140.6 650.2
Gold revenues 160.0 162.7 156.0 127.2 605.9
Gold sold (oz) 133,467 128,090 116,882 105,022 483,461
Average realized gold price ($/oz) 1,198 1,270 1,335 1,211 1,253
Cash operating costs ($/oz) 603 607 566 531 579
All-in sustaining cash cost ($/oz) 886 933 890 880 900
Gross profit from gold mining operations 41.2 55.5 64.6 42.2 203.5
Adjusted net earnings (loss) (0.7) 11.7 33.5 2.9 47.4
Net profit (loss) (1) (2.5) (329.9) 20.7 (32.5) (344.2)
Earnings (loss) per share – basic ($/share) (1) (0.00) (0.46) 0.03 (0.05) (0.48)
Earnings (loss) per share – diluted ($/share) (1) (0.00) (0.46) 0.03 (0.05) (0.48)
Cash flow from operating activities (2) 25.1 38.1 52.9 25.9 142.0
(1) Attributable to shareholders of the Company
(2) Before changes in non-cash working capital
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Review of Annual Financial Results
Loss attributable to shareholders of the Company was $344.2 million, ($0.48 per share), compared to a loss
of $1,540.9 million, ($2.15 per share) in 2015. The loss in 2016 was mainly due to the $351.2 million loss
recorded on the sale of the Company’s Chinese assets as well as $13.0 million in transaction costs, and $17.2
million in unrealized non-cash losses on foreign exchange translation of deferred income tax balances. The
loss in 2015 wa s mainly due to impairment losses, net of tax, in the amount of $1,423.0 million, and a
deferred income tax charge of $63.5 million related to a change in income tax rates in Greece.
Adjusted net earnings for the year were $47.4 million ($0.07 per share) as compared with $13.2 million
($0.02 per share) for 2015. While gross profits from gold mining operations, including discontinued
operations, were $26.5 million lower year over year, gross profit from Stratoni was $18.1 million higher.
General and adminis trative expenses, defined pension plan expense, and share based payments fell a
combined $8.9 million year over year. Tax expense fell approximately $22.0 million, excluding the impact
of the sale of the Company’s Chinese assets, due to lower withholding t axes on dividends declared by
Company subsidiaries and a decrease in the effective tax rate related to lower taxable income from our
Chinese operations which have a 25 percent income tax rate as compared to Turkey which has a 20 percent
income tax rate. Fo reign exchange loss was $2.7 million as compared with $15.0 million in 2015, as the
value of the Canadian dollar and Brazilian real in comparison to the US dollar stabilized during 2016, after
falling significantly during 2015.
Gold sales volumes decreased year over year, reflecting lower gold production at Kisladag and the sale of
the Company’s Chinese mines during the year. Gross profit from gold mining operations including
discontinued operations fell due to lower sales volumes and higher unit costs, pa rtly offset by higher gold
prices. Gross profit from continuing gold mining operations (Kisladag and Efemcukuru) increased slightly
year over year on higher realized gold prices and lower unit operating costs.
Review of Quarterly Financial Results
Loss attributable to shareholders of the Company for the quarter was $32.5 million ($0.05 per share) as
compared to a loss for the quarter ended December 31, 2015 of $1,238.0 million ($1.73 per share). Adjusted
earnings were $2.9 million as compared to 2015 adju sted loss of $19.3 million. The main factors that
impacted adjusted earnings for the fourth quarter year over year were lower sales volumes partly offset by
higher gold prices. During the fourth quarter of 2015 the Company recorded an impairment charge
attributable to shareholders of the Company, net of taxes, of $1,249.6 million mainly related to its Skouries
project.
2016 Review and 2017 Outlook
TURKEY
Kisladag
In 2016 the original guidance for Kisladag was estimated between 225,000-240,000 ounces of gold at cash
costs of $550-600 per ounce. Total production of 211,161 ounces was lower due to slower than expected
leach rates from certain ore types mined earlier in the year . While gold production improved in the final
quarter to 59,416 ounces, leach pad inventory lev els over the year increased by approximately 35 ,500
ounces. A reduction in leach pad inventory levels of approximately 6,800 ounces occurred during the fourth
quarter due to the installation of new leach trains. The average ore grade placed on the leach pad during
the year was 0.80 grams per tonne gold and the average cash operating cost was $474 per ounce. Capital
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expenditures for the year w ere $39.8 million and consisted of capitalized waste stripping, leach pad
construction, mine equipment overhauls along with various process improvements.
In 2017, Kisladag is expected to place 13.1 million tonnes of ore on the leach pad at a grade of 0.94 grams
per tonne gold with a strip ratio of 1.2:1 , producing between 230,000 – 245,000 ounces of gold . It is
anticipated that with a continued increase in gold grade to 0.94 grams per tonne, leach pad inventory levels
are expected to remain constant year over year. Mining in the pit throughout 2017 will return to areas with
expected higher metallurgical recoveries. Projected cash costs of $500-550 per ounce are based on minimal
tonnes of run of mine material being treated in 2017, in combination with reduced waste mining
requirements under the new mine plan. Sustaining capital expenditures for the year are estimated to be
$45.0 million, similar to the 2016 actual spend of $41.5 million.
Average ore grades for 2018 and 2019 are expected to be slightly over 1.00 grams per tonne with a strip
ratio averaging 1.6:1. Kisladag is expected to produce an averag e of 285,000 ounces per year with cash
operating costs between $425-475 per ounce; previous guidance was based on an expansion to a 20 million
tonne per annum mining rate.
Efemcukuru
During 2016 Efemcukuru met its original production guidance of 90,000-100,000 ounces of gold with cash
costs between $550 -600 per ounce, finishing the year with 98,3 64 ounces of gold produced at cash
operating costs of $514 per ounce. Capital spending of $ 23.5 million was primarily for underground
development, the Kestane Beleni drift and the tailings dam expansion.
In 2017, Efemcukuru is expected to mine and process over 450,000 tonnes of ore at an average grade of 7.3
grams per tonne gold, producing between 95,000-105,000 ounces of gold, at operating costs between $525-
575 per ounce. Sustaining capital expenditures for 201 7 are expected to be approximately $25.0 million
(2016: $23.3 million) , spent primarily on underground mine development, waste handling and tailings
facilities construction.
GREECE
Stratoni
Stratoni processed 19% more ore tonnes and produced 20% more concentrate in 2016 than in the previous
year due to improved mine output and higher zinc grade. Stratoni reported a profit from mining operations
of $ 5.6 million (201 5: operating loss $12.5 million). Higher lead and zinc prices resulted in improved
profitability in the second half of the year. Sustaining capital expenditures for the year included new mine
mobile equipment and upgrades to the processing plant, water treatment circuit and the analytical
laboratory.
In 2017, the Company expects to process 187,000 tonnes of ore at grades of 6.0% lead, 9.7% zinc and 155
grams per tonne silver. Sustaining and mine development capital expenditure for the year is expected to
be $12.7 million.
The Mavres Petres mine currently has a life of approximately 18 months based on the known proven and
probable reserves. Geological potential exists to extend the mine life at Mavres Petres by delineation of
additional resources and in 2016 the Company initiated a three -year mine development and drilling
program for this purpose at an anticipated total cost of $25 million. The first drilling results are expected in
mid-2017.
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Olympias
In 2016, the Olympias plant re treated 87,350 tonnes of tailings at a grade of 2.47 grams per tonne and
produced 2,774 payable ounces of gold in concentrate. Tailings retreatment ceased at the end of February
2016 to allow construction of the new Phase II plant to commence.
Underground mine development and access rehabilitation continued at Olympias during 2016 in readiness
for commencement of underground ore production scheduled for the first quarter 2017. A total of 3,680
meters of development and rehabilitation was completed during the year together with 21,400 meters of
orebody definition drilling.
Construction of the initial stage of the new Kokkinolakas tailings management facility (TMF) advanced
substantially and commissioning is expected by mid -2017. Capital costs incurred in 2016 totalled $132.1
million, consisting of mine construction, Phase II plant construction, Kokkinolakas TMF construction and
capitalized cost for tailings retreatment.
In 2017, the Olympias mine is budgeted to process 267,000 tonnes of ore at grades of 9.6 grams per tonne
gold, 3.4% lead, 3.4% zinc and 105 grams per tonne silver. Total site capital expenditure in 2017 is expected
to be $85.0 million which includes completion of the Phase II plant, general sustaining capital expenditures,
and capital associated with advancement to Phase III including the continued construct ion of the
Kokkinolakas tailings facility along with underground development and water management.
Skouries
Due to delays in the issuance of routine permits and licenses by the Greek permitting authorities , the
Company announced the decision to suspend de velopment at Skouries in early 2016. The majority of
construction works were on hold for the first half of the year while environmental protection works and
care and maintenance activities continued.
On May 9, 2016, the Company received approval of the updated revised Technical Study and the
construction team began to remobilise in late May/early June and ramped up over the next few months .
During 2016, a total of $43.5 million was spent at Skouries, excluding capitalized exploration and capitalized
interest.
Following internal reviews and engineering studies a decision was made to convert the waste management
process at the Skouries project from paste tailings to a dry stack tailings disposal concept. This decision
facilitates early mining of higher value underground ore and greatly reduces the environmental footprint.
Engineering design work was initiated for a single integrated waste management facility and associated
filtration plant in the middle of 2016; the basic engineering for the revised scope progressed during the final
quarter of 2016, with detailed engineering having commenced in early 2017.
During 2016, work was also completed on the Pre -Feasibility Study for the Skouries u nderground mine
design; feasibility level engineering will be further developed in 2017.
Capital expenditures at Skouries for 2017 are expected to be between $170.0 and $200.0 million, lower
than September 2016 guidance mainly due to the flexibility in the capital plan in combination w ith cost
initiatives that are underway. Funds will be used to continue the construction of the process plant and the
integrated waste management facility. Development of the decline is continuing, which will allow for
extraction of material from the underground soon after the open pit start -up – currently scheduled for
2019.
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Perama Hill
The project remains on care and maintenance. In 2016, a total of $1.0 million was spent on the Perama Hill
project.
CHINA
In 2016 the Company successfully completed the sales of its Chinese assets: its 82 p ercent interest in the
Jinfeng mine to a subsidiary of China National Gold Corporation; and its respective interests in the White
Mountain and Tanjianshan Mines and Eastern Dragon Development Project to an affiliate of Yintai
Resources Co. Ltd. Combined, the sales of the Company’s Chinese assets generated proceeds of $881.6
million, net of taxes. A loss of $351.2 million was recorded, net of taxes, on the sale of the assets.
Jinfeng
The sale of Jinfeng to China National Gold closed September 6, 2016. Gold production of 68,195 ounces was
lower year over year mainly as a result of an incomplete year due to business unit sale, and lower ore
tonnage due to completion of the open pit in 2015. Cash operating costs of $705 per ounce were higher
year over year main ly due to lower gold production. Capital expenditures of $6.7 million for the year
included underground development and the completion of dry stacking facilities at the flotation and carbon
in leach tailings dams.
Tanjianshan
The sale of Tanjianshan to Yintai Resources closed November 22, 2016. Gold production of 49,266 ounces
was lower year over year mainly due to lower grade and remnant mining from the nearly complete JLG pit,
an extended mill shutdown for repairs in the third quarter, and the incomplete year due to the sale. Cash
operating costs per ounce of $819 were higher than 2015 mainly due to lower production and head grade.
Capital expenditures of $2.1 million for the year included resource drilling and co ntinuing the QLT Deep
decline in order to develop the QLT resource.
White Mountain
The sale of White Mountain to Yintai Resources closed November 22, 2016 . Gold production of 56,265
ounces was lower year over year due to lower treated grade and an incomplete year due to the sale. Cash
operating costs of $731 per ounce were higher than in 2015 as a result of the lower average treated head
grade. Capit al expenditures of $ 9.9 million for the year included underground development, resource
drilling, and land acquisition to extend the tailings storage facility.
BRAZIL
Tocantinzinho
The Company applied for installation licences for the site, road, and power line and initiated basic
engineering for the Tocantinzinho project during 2016. Capital costs incurred at Tocantinzinho totalled $6.0
million for engineering, permitting, land agreements, mobile equipment, and site works including minor
camp infrastructure and access road improvements.
Completion of basic engineering for the site and detailed engineering for some infrastructure will be
completed in 2017 to prepare for a construction decision and advancement of permitting. In 2017 the
Company expects to spend up to $35.0 million in capital, primarily on engineering, early work construction
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and general site improvements . This amount could change contingent on permitti ng and a construction
decision.
ROMANIA
Certej
In 2015 the Company released the results of the Certej Feasibility Study. The study included improvements
in the mine design and further optimization of the flotation and oxidation processes for gold recovery. This
study resulted in a decrease in projected capital investment and reduced life of mine capital and operating
costs as compared with the previous Pre-Feasibility Study.
Engineering work continued during 2016 on metallurgical test work and trade off studies with a focus on
further optimizations to improve the project and increase the level of engineering confidence. Work
continued on the engineering for the permitting process to reflect the proposed changes and such work will
continue to be the focus of efforts in 2017. During 2016 a total of $11.6 million was spent on Certej, mainly
on geotechnical and metallurgical testing, site preparation and engineering studies.
During 2017, the Company expects to spend approximately $20.0 milli on at Certej, with a focus on
continuing off site infrastructure projects, advancing permitting and support engineering as defined in the
2015 Feasibility Study.
Exploration Review
A total of $26.2 million was spent on exploration programs in 2016. Explo ration drilling totaled 51,000
meters and was conducted at 16 projects including early -stage, brownfields and in -mine programs in
Turkey, China, Brazil, Greece, Serbia and Romania.
Turkey
At Efemcukuru surface drilling programs tested extensions to previo usly defined mineralized zones within
the Kokarpinar vein system. Greenfields reconnaissance exploration programs evaluated grassroots targets
in the eastern Pontide belt and associated with Cenozoic volcanic centres in western Turkey.
China
Prior to the close of the transactions, White Mountain mine exploration drilling was conducted from
underground platforms, testing extensions to the North and Far North Zones. Surface drilling programs
were completed on the Xiaoshiren license and the White Mountain l icense. At Tanjianshan exploration
drilling was limited to testing step -out targets at the Xijingou deposit and at the Dushugou, Qingshan and
Qinlongshan occurrences.
Brazil
In Brazil, option agreements were signed for the large Borborema and Nazareno license areas. Mapping
and geochemical sampling programs were conducted on both of these license areas as well as at the Mara
Rosa project. An initial drilling program was completed on the Vulture target at Borborema.
Greece
Exploration in Greece included drilling programs at the Fisoka porphyry target and at the Rian prospect near
the Skouries deposit. At Mavres Petres, an exploration crosscut was driven into the hangingwall of the
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Stratoni Fault, enabling systematic underground exploration and defi nition drilling of the untested down -
dip and along-strike extensions to the orebody beginning in early 2017.
Romania
In Romania, drilling was conducted at the Brad, Sacaramb, Certej North and Bolcana projects. At Sacaramb,
drillholes targeted along -strike extensions of historically mined high -grade vein systems. Two drillholes
tested deeper levels of the Bolcana porphyry system, and porphyry and epithermal targets peripheral to
the Bolcana system were tested on the adjacent Certej North license.
Serbia
In Serbia , the Company completed acquisition of the KMC project from Euromax Resources Ltd. and
acquired five new early-stage licenses. Drilling at KMC tested the Copper Canyon, Gravina and Shanac areas.
A large gold-rich magnetite skarn system was identified at Shanac, and will be further drilled in 2017.
2017 Outlook
In 2017 Eldorado expects to produce 365,000 -400,000 ounces of gold, including pre -commercial ounces
from Olympias Phase II. Cash costs are forecasted at $ 485-535 per ounce, with all-in sustaining cash costs
expected to range from $845-875 per ounce.
The Company’s balance sheet remains one of the strongest in its peer group , with approximately $888.5
million in cash, cash equivalents and term deposits and $250 million in undrawn credit li nes. Sustaining
capital for gold mining operations in 201 7 is e stimated to be approximately $70 million. Planned
expenditures for mining development total $345 million. Exploration expenditures in 2017 are budgeted at
$35 million (65% expensed and 35% ca pitalized), with a balanced focus on resource delineation and
brownfield drilling at existing operations, advancing early-stage projects, and project generation.
Depreciation, depletion and amortization expense is expected to be approximately $335 per ounce of gold
sold. General and administrative expense is expected to be approximately $45 million.
Financing Activities
On June 13, 2016, the Company announced that it had renewed its revolving credit facility. The amended
and restated credit agreement includes available credit of US$250 million, an accordion feature of US$100
million and an extension of the term to June 13, 2020.
Dividend
On February 23, 2017, the Company declared that it will pay a dividend of CDN$0.02 per Common Share on
March 16, 2017 to the holders of the Company’s outstanding Common Shareholders as the close of business
on the record date of March 7, 2017. The Company did not pay dividends to shareholders in 2016, as the
decision by the Board of Directors to suspend payments was done in consideration of the low gold price,
the terms and conditions of the Dividend Policy and the requirements of the Canada Business Corporations
Act.