Not too bad at all. Legman

Eldorado Gold earns $39.51-million (U.S.) in Q2 2014

2014-07-31 17:58 ET - News Release

Mr. Robert Gilmore

ELDORADO GOLD CORPORATION: 2014 SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Eldorado Gold Corp. has released its financial and operational results for the second quarter ended June 30, 2014. All figures are in U.S. dollars unless otherwise stated. Net profit attributable to shareholders of the company for the quarter was $37.6-million, or five cents per share.

"The company has finished the second quarter ahead of our expectations and the operations are now on track to deliver production at the high end of the initial full-year range our teams had established. Total gold production for the period was 200,551 ounces, and cash operating costs continue to remain in the bottom quartile of the gold industry at $489 per ounce," said Paul Wright, chief executive officer of Eldorado Gold. "We are especially pleased to report that the Kisladag EIA [environmental impact statement] was approved during the quarter by the Turkish authorities, and we plan on completing the expansion to 20 million tonnes per year by mid-2016. Reflecting the strong results year to date and our outlook for the balance of 2014, we are confidently revising our guidance for the year to production of 790,000 ounces of gold with average cash costs for commercial production of $495 per ounce and all-in sustaining cash costs of $850 per ounce."

Second quarter financial and operational highlights

Throughout this press release, the company uses 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-international financial reporting standards (IFRS) measures. Please see the management discussion and analysis for an explanation and discussion of these non-IFRS measures.

                        SUMMARIZED FINANCIAL RESULTS
             (in millions of U.S. dollars, except where noted) 

                                   Three months ended      Six months ended 
                                   June 30,   June 30,   June 30,   June 30, 
                                      2014       2013       2014       2013 

Revenues                         $   265.5  $   266.9  $   545.4  $   605.0 
Gold revenues                    $   247.6  $   243.6  $   495.2  $   550.8 
Gold sold (ounces)                 190,621    176,260    381,249    365,606 
Average realized gold price                                                 
(US$ per ounce)                  $   1,299  $   1,382  $   1,299  $   1,506 
Cash operating costs 
(US$ per ounce sold)             $     489  $     478  $     504  $     492 
Total cash cost 
(US$ per ounce sold)             $     549  $     536  $     563  $     552 
All-in sustaining cash cost                                                 
(US$ per ounce sold)             $     829        n/a  $     809        n/a 
Gross profit from gold 
mining operations                $   100.8  $   117.2  $   196.2  $   281.0 
Adjusted net earnings                                                       
(millions)                       $    35.9  $    48.2  $    73.2  $   131.5 
Net profit (loss) attributable                                              
to shareholders of the company   $    37.6  $    43.3  $    68.9  $    (2.2)
Earnings (loss) per share                                                   
attributable to shareholders                                               
of the company 
-- basic (US$/share)             $    0.05  $    0.06  $    0.10  $    0.00 
Earnings (loss) per share                                                   
attributable to shareholders                                               
of the company 
-- diluted (US$/share)           $    0.05  $    0.06  $    0.10  $    0.00 
Dividends paid (Cdn$/share)      $    0.00  $    0.00  $    0.01  $    0.07 
Cash flow from operating                                                    
activities before changes in                                               
non-cash working capital         $    92.2  $    84.9  $   186.9  $   224.8

Financial results

Net income for the quarter was $37.6-million (or five cents per share), compared with $43.3-million (or six cents per share) in the second quarter of 2013. Gold revenues of $247.6-million were 2 per cent higher year over year as higher gold sales volumes were partially offset by lower gold prices. Gross profit from gold mining operations was 14 per cent lower than that of the second quarter of 2013, reflecting higher production costs and depreciation expense as a result of higher sales volumes. Total cash cost per ounce increased 2 per cent year over year.

Exploration expenses fell $6.4-million year over year, reflecting changes in the company's exploration program in response to lower gold prices. The company reported a foreign exchange gain of $1.6-million for the quarter, as compared with a loss of $5.9-million for the second quarter of 2013, mainly as a result of changes in foreign exchange rates on the company's Canadian-dollar investments. Interest and financing costs fell $3.1-million year over year, reflecting an increase in capitalization of interest on the company's Greek development projects.

The effective tax rate for the quarter was 39 per cent as compared with a rate of 36 per cent in the second quarter of 2013. The effective tax rate for the second quarter of 2013 was lower due to a tax recovery related to recognition of investment tax credits in Turkey, partly offset by the impact of movements in the Turkish lira on deferred tax balances. The effective tax rate for the second quarter of 2014 was higher due to higher withholding tax accruals on dividends from the company's Turkish and Chinese subsidiaries.

Operations update

Kisladag

Gold production at Kisladag during the quarter was level year over year, while sales of approximately 4,600 ounces of gold were delayed into the third quarter due to the timing of dore shipments to the refinery. Leaching of run-of-mine ore placed on the pad during the first quarter of 2014 contributed to gold production during the second quarter, making up for lower tonnes and grade year over year. Cash costs in the quarter were higher than the same period of 2013 due to lower head grade and an increase in operational waste mining (4.9 million tonnes in 2014 versus 700,000 tonnes in 2013). Capital expenditures during the quarter included equipment for expansion and capitalized waste stripping.

Efemcukuru

Gold production at Efemcukuru during the quarter was lower year over year, and cash operating costs per ounce were higher, mainly due to a lower planned average treated head grade. Capital spending in the quarter included costs related to capitalized underground development and mobile equipment, surface infrastructure, and process improvements.

Tanjianshan

Gold production at Tanjianshan during the quarter was lower year over year as a result of lower average treated head grade and recovery rate. Capital spending included exploration activities and waste stripping.

Jinfeng

Gold production at Jinfeng during the quarter was higher year over year and cash operating costs per ounce were lower mainly due to higher tonnes milled, average treated head grade and recovery rate, mainly due to ore production from the open pit. The open pit had resumed full mining operations midway through the second quarter of 2013 after completion of a cutback. Capital spending during the quarter included underground mine development and tailings dam construction.

White Mountain

Gold production at White Mountain for the quarter was higher year over year mainly as a result of increased process throughput, higher head grades and improved recovery rates. Cash operating costs per ounce decreased significantly due to higher gold production and reduced operation costs. Capital spending this quarter included underground development, exploration, camp improvements and completion of the new mobile maintenance workshop.

Vila Nova

Vila Nova recorded a loss of $3-million for the quarter compared with gross profit of $1.8-million in the second quarter of 2013. A $1-million negative price adjustment related to shipments in prior quarters impacted profitability. The average realized iron ore price for the quarter, not including the price adjustment, fell from $106 per tonne to $56 per tonne year over year. The company is reviewing options to improve profitability at Vila Nova in light of the recent decline in iron ore prices.

Stratoni

Combined metal concentrate production at Stratoni for the quarter was level year over year, with lower lead concentrate production offset by higher zinc concentrate production as a result of changes in metal head grades. The average realized combined concentrate price increased year over year as zinc prices improved while lead prices weakened. Taken in conjunction with the increase in zinc concentrate production the change in metal prices contributed to Stratoni's gross profit performance year over year.

Development project update

Kisladag mine expansion

During the quarter, the company received a positive EIA decision from the Ministry of Environment and Urbanization of Turkey on the Kisladag mine expansion project. The EIA approval will allow for the expansion of the Kisladag open-pit mine production from its current 12.5 million tonnes per year to a maximum of 35 million tonnes per year. The company has decided to proceed with an expansion to an annual production rate of 20 million tonnes per year of crushed ore to the leach pad at an additional capital cost of approximately $90-million. The company is forecasting completion in mid-2016, producing an average of 325,000 ounces per year in the first five years after expansion.

Skouries

Major structural concrete placements for the SAG and ball mills commenced in the quarter. The SAG mill foundation was completed, and concrete placement in the SAG mill plinths began. The majority of the ball mill concrete piles were completed and reinforcing fabrication and formwork for other major plant foundations was continuing. Mill mechanical equipment was being preassembled in a nearby warehouse and will be mobilized to site with on-site erection scheduled to begin in the third quarter. Construction of access roads to the tailings dam progressed during the quarter. A review of the tailings dam construction materials and methodology was completed and design modifications to enhance constructability were finalized. Site earthwork continued during the quarter, and included excavation and fill for the regrind mill, the flotation area and the tailings thickening area. The site batch plant construction commenced and is scheduled to be completed in the third quarter. The open-pit surface area was cleared, and topsoil removal commenced. Progress continued on the underground decline during the quarter. Capital spending totalled $29.7-million during the quarter.

Olympias

Approximately 168,000 tonnes of tailings were reprocessed during the quarter at a grade of 2.84 grams per tonne. A total of 6,179 payable ounces of gold in concentrate were produced. Cash proceeds from the sale of concentrate generated $11.8-million during the quarter on approximately 9,300 ounces of gold in concentrate. Capital spending totalled $35.6-million during the quarter, including approximately $11-million related to tailings reprocessing, production royalties, and transportation and selling costs, $1.9-million related to capitalized interest, and the remainder on mine development, as well as phase II engineering.

Perama Hill

Preliminary engineering continued on the project during the quarter with completion expected in the third quarter this year. Metallurgical test work to optimize the process is planned to be completed during the third quarter this year, with detailed engineering expected to begin shortly thereafter. The company continues to work with Greek government authorities to facilitate approval of the environmental impact assessment. Capital spending totalled $3.1-million during the quarter.

Certej

During the quarter, studies were conducted focusing on optimization of critical elements of the project identified in the prefeasibility study, including pressure oxidation, oxygen supply, open-pit development and use of Romanian resources to build the mine. Metallurgical test work continued during the quarter in order to provide further data for optimization of the pressure oxidation circuit. The company plans to commence work on the feasibility study in the third quarter this year. Capital spending totalled $2.3-million during the quarter.

Tocantinzinho

During the quarter, work continued on optimization of the Tocantinzinho feasibility study. Additionally, preparations were begun to upgrade the access road to the site, including obtaining the necessary permits and authorizations from the municipality. Capital spending totalled $500,000 during the quarter.

Eastern Dragon

Eastern Dragon remained on care and maintenance pending resolution of permitting issues. Site management worked with the local authorities to maintain local permits and permissions in good standing. Work continued on the preparation of the revised environmental impact assessment for submission to the Ministry of Environmental Protection. This will be followed by submission of the project permit approval to the National Development and Reform Commission.

Exploration update

Greece

In the Halkidiki district, underground exploration drilling continued at the Mavres Petres mine, targeting the western extension of the orebody. Several drill holes cut massive sulphide zones outside of the existing resource, and activities are now focused on extending underground development to allow further step-out drilling. Drilling commenced late in the quarter at the Piavitsa deposit with a 6,000-metre program planned to test the continuity of mineralized zones identified in previous widely spaced drill holes. At the Olympias deposit, drilling completed in the east ramp development project encountered several significant zones of high-grade gold and silver mineralization that lie outside of the current resource model.

In the Perama district, exploration activities focused on extending geological mapping coverage in the Perama South area, conducting reconnaissance field visits to nearby prospects and evaluating historical data for the newly acquired Sappes project.

Romania

Exploration activities during the quarter near Certej focused on defining drill targets at the Magura, Bocsa and P. Avram prospect areas. Reconnaissance mapping, soil sampling and drill hole targeting commenced during the quarter at the nearby Muncel and Brad exploration licences.

Turkey

Exploration activities in Turkey focused on reconnaissance of regional target areas in western Turkey and definition of new drilling targets at the Efemcukuru mine site.

China

Underground drilling at White Mountain targeted downplunge extensions in the middle and north ore zones. Detailed geological mapping was conducted over the mine area, and surface exploration drilling programs will commence in the third quarter. At Tanjianshan, drilling programs were completed at the Xijingou deposit and Dushugou prospect, and drilling is continuing at the Qinlongtan North deposit.

Brazil

Exploration resumed at the Tapajos region projects, including soil sampling along the Tocantinzinho trend northwest of the Tocantinzinho deposit, and drill testing of geochemical anomalies at the adjacent Ruben Zilio project.

2014 outlook

Total gold production for 2014 is forecast to be 790,000 ounces of gold with average cash costs for commercial production of $495 per ounce and average all-in sustaining cash costs of $850 per ounce. Previous guidance was production of 730,000 to 800,000 ounces at average cash costs of $550 to $590 per ounce and average all-in sustaining cash costs of $915 to $985 per ounce. Capital spending is forecast to be $170-million in sustaining capital and $265-million in project development capital, compared with previous guidance of $170-million and $345-million, respectively. The forecast for project development capital is lower than original guidance mainly due to presently projected lower capital spending at Skouries.

The company is evaluating the merits of pursuing a potential overseas listing on the Hong Kong Stock Exchange in relation to its Chinese business. Eldorado is the largest foreign producer of gold in China with three operating gold mines (Jinfeng, Tanjianshan and White Mountain) and the Eastern Dragon project. The company's Chinese operations presently produce roughly 300,000 ounces of gold annually.

Conference call

Eldorado will host a conference call on Friday, Aug. 1, 2014, to discuss the 2014 second quarter financial and operating results at 8:30 a.m. PDT (11:30 a.m. EDT). You may participate in the conference call by dialling 416-340-2219 in Toronto or 1-866-225-0198 toll-free in North America and asking for the Eldorado conference call.

The call will be available on Eldorado's website. A replay of the call will be available until Aug. 8, 2014, by dialling 905-694-9451 in Toronto or 1-800-408-3053 toll-free in North America and entering the passcode 5888733.

                          
                2014 SECOND QUARTER GOLD PRODUCTION HIGHLIGHTS
                               (in U.S. dollars)

                          First     Second     Second       First       First
                        quarter    quarter    quarter  six months  six months
                           2014       2014       2013        2014        2013
Gold production
Ounces sold             190,628    190,621    176,260     381,249     365,606
Ounces produced (1)     196,523    200,551    183,971     397,074     347,739
Cash operating
cost ($/oz)(2)(4)           519        489        478         504         492
Total cash cost
($/oz)(3)(4)                577        549        536         563         552
Realized price
($/oz sold)               1,299      1,299      1,382       1,299       1,506
Kisladag mine,
Turkey
Ounces sold              66,852     72,815     76,680     139,667     146,930
Ounces produced          67,075     76,980     76,735     144,055     146,956
Tonnes to pad         3,856,882  3,127,844  3,301,333   6,984,726   6,216,841
Grade (g/t)                0.73       1.11       1.26        0.90        1.28
Cash operating
cost ($/oz)(4)              456        443        327         449         331
Total cash cost
($/oz)(3)(4)                473        466        348         470         353
Efemcukuru mine,
Turkey
Ounces sold              27,647     25,435     25,187      53,082      75,478
Ounces produced          26,969     25,034     26,289      52,003      46,145
Tonnes milled           106,501    110,706    109,349     217,207     196,228
Grade (g/t)                8.56       7.99       9.28        8.27        8.91
Cash operating
cost ($/oz)(4)              526        552        519         538         561
Total cash cost
($/oz)(3)(4)                547        576        537         561         592
Tanjianshan mine,
China
Ounces sold              28,379     25,790     27,938      54,169      54,145
Ounces produced          28,379     25,790     27,938      54,169      54,145
Tonnes milled           263,609    278,227    273,065     541,836     520,126
Grade (g/t)                3.44       3.30       3.50        3.37        3.61
Cash operating
cost ($/oz)(4)              422        391        398         407         419
Total cash cost
($/oz)(3)(4)                592        570        577         581         605
Jinfeng mine, China
Ounces sold              41,277     45,581     28,993      86,858      50,676
Ounces produced          41,295     45,568     28,889      86,863      50,631
Tonnes milled           364,987    371,971    336,707     736,958     688,608
Grade (g/t)                4.00       4.17       3.33        4.08        2.87
Cash operating
cost ($/oz)(4)              626        540        757         581         789
Total cash cost
($/oz)(3),(4)               709        622        845         664         881
White Mountain
mine, China
Ounces sold              26,473     21,000     17,462      47,473      38,377
Ounces produced          26,473     21,000     17,462      47,473      38,377
Tonnes milled           200,682    213,741    203,033     414,423     401,967
Grade (g/t)                4.13       3.56       3.25        3.84        3.52
Cash operating
cost ($/oz)(4)              607        583        742         596         683
Total cash cost
($/oz)(3)(4)                646        623        781         636         726
Olympias, Greece
Ounces sold                   -          -          -           -           -
Ounces
Produced (1)              6,332      6,179      6,658      12,511      11,485
Tonnes milled           144,522    168,013    116,972     312,535     206,084
Grade (g/t)                3.08       2.84       3.80        2.95        3.86
Cash operating
cost ($/oz)(4)                -          -          -           -           -
Total cash cost
($/oz)(3)(4)                  -          -          -           -           -

(1) Ounces produced include production from tailings retreatment 
    in Olympias.
(2) Cost figures calculated in accordance with the Gold Institute Standard.
(3) Cash operating costs, plus royalties and the cost
    of off-site administration.
(4) Cash operating costs and total cash costs are non-international
    financial reporting standards measures. Please see the company's
    management discussion and analysis for an explanation
    and discussion of these.

               CONDENSED CONSOLIDATED INCOME STATEMENTS
                    (in thousands of U.S. dollars)

                                     Three months ended    Six months ended
                                      June 30,  June 30,  June 30,  June 30,
                                         2014      2013      2014      2013
Revenue
Metal sales                          $265,497  $266,929  $545,367  $604,997
Cost of sales
Production costs                      122,524   116,133   257,309   246,501
Depreciation and amortization          44,095    35,234    89,667    72,348
                                      166,619   151,367   346,976   318,849
Gross profit                           98,878   115,562   198,391   286,148
Exploration expenses                    3,890    10,240     7,785    17,864
General and
administrative expenses                19,099    18,239    34,943    34,725
Defined benefit
pension plan expense                      413       619       816     1,248
Share-based payments                    5,281     3,291    12,275    12,168
Foreign exchange loss (gain)           (1,553)    5,920    (2,914)    5,818
Operating profit                       71,748    77,253   145,486   214,325
Loss (gain) on disposal of assets       1,819       (51)    1,825       (15)
Loss (gain) on marketable
securities and other investments          550         -     1,322       (21)
Loss on investments in associates           -       214       102     1,123
Other (income)                         (3,631)   (3,138)   (2,847)   (5,114)
Asset retirement obligation
accretion                                 581       386     1,163       725
Interest and financing costs            7,916    11,061    16,321    21,562
Profit before income tax               64,513    68,781   127,600   196,065
Income tax expense                     24,999    24,550    57,443   195,802
Profit for the period                  39,514    44,231    70,157       263
Attributable to
Shareholders of the company            37,632    43,274    68,900    (2,189)
Non-controlling interests               1,882       957     1,257     2,452
Profit for the period                  39,514    44,231    70,157       263
Earnings per share attributable 
to shareholders of the company
Basic earnings per share                 0.05      0.06      0.10      0.00
Diluted earnings per share               0.05      0.06      0.10      0.00