Eldorado Gold Corporation: Q2, 2009 Financial and Operating Results
2009 Production and Cost Guidance Remains Intact - Earnings $0.07 per share
* Press Release
* Source: Eldorado Gold Corporation
* On Thursday July 30, 2009, 6:42 pm EDT
finance.yahoo.com
VANCOUVER, BRITISH COLUMBIA--(Marketwire - 07/30/09) - (all figures in United States dollars, unless otherwise noted) -
Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation, (TSX:ELD - News)(AMEX:EGO - News) ("Eldorado" or the "Company") is pleased to report on the Company's financial and operational results for the second quarter ended June 30, 2009. The Company reported net income of $25.9 million or $0.07 per share and cash flow from operations of $36.7 million or $0.10 per share for the second quarter ended June 30, 2009.
"This was a very strong quarter for us," commented Paul N. Wright, President and Chief Executive Officer of Eldorado. "We are pleased with the performance of our mines, our total production increased by close to 38% over production in the first quarter of 2009. We're also proud to have robust margins and remain one of the lowest cost pure gold producers in the industry. These results keep us on track with our forecasted 2009 total production of approximately 330,000 ounces at a cash operating cost of $300 per ounce. Other highlights of the quarter also underline our strong position: our cash balances have more than doubled since year-end, and with our recent investment in Sino Gold we will continue to focus on our strategy of regional growth."
Q2 2009 Highlights
- Produced 84,572 ounces of gold at our Tanjianshan and Kisladag mines at an average cash operating cost of $300 per ounce;
- Sold 86,453 ounces of gold at a realized average price of $927 per ounce;
- Reported earnings of $0.07 per share and cash flow of $0.10 per share;
- Reported $135.7 million cash;
- Completed the successful commissioning of the sulphide ore processing facility at Tanjianshan;
- Entered into an agreement with Gold Fields to acquire 57.9 million shares of Sino Gold Mining, which subsequently closed July 27, 2009.
Financial Results
Eldorado's consolidated net income for the second quarter of 2009 was $25.9 million or $0.07 per share, compared with $25.2 million or $0.07 per share in the second quarter of 2008. Over the quarter, we sold 86,453 ounces of gold at an average price of $927 per ounce, compared to 88,610 ounces at an average price of $904 per ounce in the second quarter of 2008. Lower sales volumes in the second quarter of 2009 as compared to 2008 were offset by higher unit prices.
Operating Performance
Kisladag
During the quarter, we placed 2,428,611 tonnes of ore on the leach pad at an average grade of 1.18 grams of gold per tonne. We produced 62,985 ounces of gold at a cash cost of $269 per ounce, up from production of 46,192 ounces of gold in the first quarter of 2009. Production improved compared to the first quarter as weather conditions returned to more normal patterns.
Tanjianshan
We produced 21,587 ounces of gold at a cash cost of $390 per ounce in the second quarter, up from 15,234 ounces in the first quarter. We declared commercial production from the roaster at the start of the quarter and gold recovery continues to increase through the flotation and roaster circuits. July production is expected to be approximately 10,500 ounces, reflecting the continued improved performance of the entire circuit. During the quarter, we invested $2.2 million in capital expenditures, primarily relating to constructing and commissioning the roaster. Production guidance for our Tanjianshan mine remains intact at 95,000-100,000 ounces in 2009.
Development
Efemcukuru
We continued infill drilling of the north ore shoot, with drilling results showing good continuity of the mineralized zone along-strike and down-dip. Drilling will continue through the 3rd quarter and will be incorporated in an updated reserve and mine plan to be completed prior to year end. Mine construction, engineering and procurement activities continues to progress satisfactorily.
Vila Nova Iron Ore
We successfully completed the construction and initial commissioning of the process circuit at Vila Nova. Given the recent weakness in global demand for iron ore we have put the project on care and maintenance status until demand for iron ore increases and prices recover.
Perama Hill
At our Perama Hill project in Greece, we held meetings with local and regional officials during the quarter to discuss the project. We continued work on the preliminary environmental impact assessment, which we will submit to Greek authorities in the third quarter 2009. Finally, we are preparing the National Instrument 43-101 report, which we also plan to file in the third quarter of the year.
Tocantinzinho
At our Tocantinzinho project in Brazil, we began scoping engineering studies to support the permitting effort and to help in the economic evaluation of the project. We also initiated an additional round of metallurgical testwork. In total, we spent $2.4 million at Tocantinzinho during the quarter.
Exploration
Turkey
We continued our reconnaissance work on the Sayacik project, which included a property-wide induced polarization geophysical survey and a drilling program. At Efemcukuru, we drilled 17 holes totalling 4,358 meters that continued to define the zone of mineralization along the northwest portion of the deposit and the area between the middle ore shoot and the north ore shoot. At Kisladag, we completed eight diamond drill holes totaling 5,568 meters designed to upgrade inferred resources lying below the design pit outline.
Brazil
Exploration in Brazil included the drilling of 20 holes totalling 6,681 meters at the Tocantinzinho project.
China
At Tanjianshan, we drilled 216 shallow holes as part of our rotary air blast drilling program designed to test for extensions of Qinlongtan mineralization. The results are outlining a zone anomalous in gold and arsenic that extends southward from Qinlongtan.
Corporate Activities
Agreement with Gold Fields to acquire Sino Gold shares
Effective June 3, 2009, we entered into an agreement with Gold Fields to acquire 57.9 million shares of Sino Gold Mining (representing 19.83% of Sino Gold's issued and outstanding shares), in exchange for 27.8 million Eldorado shares. The acquisition closed on July 27, 2009.
Disposal of interest in the Macusani East Uranium project
Effective June 1, 2009, we sold our interest in the Macusani East Uranium exploration project to Solex Resources. Following the completion of the transaction, Eldorado holds directly 13,820,487 Solex common shares representing 19.9% of the issued and outstanding Solex shares.
Eldorado is a gold producing, exploration and development company actively growing businesses in Brazil China, Greece, and Turkey and surrounding regions. We are one of the lowest cost pure gold producers. With our international expertise in mining, finance and project development, together with highly skilled and dedicated staff, we believe that Eldorado is well positioned to grow in value as we create and pursue new opportunities.
ON BEHALF OF ELDORADO GOLD CORPORATION
Paul N. Wright, President and Chief Executive Officer
Eldorado will host a conference call Friday July 31, 2009 to discuss the 2009 Second Quarter Financial Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialling 416-340-2216 in Toronto or 1-866-226-1792 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 7, 2009 by dialling 416-695-5800 in Toronto or 1-800-408-3053 toll free in North America and entering the Pass code 1164000.
Certain of the statements made herein may contain forward-looking statements or information within the meaning of the United States Private Securities Litigation Reform Act of 1995, and forward looking statements or information within the meaning of the Securities Act (Ontario). Such forward looking statements or information include, but are not limited to statements or information with respect to unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements or information are subject to a variety of risks and uncertainties, which could cause actual events, or results to differ from those reflected in the forward-looking statements or information. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward looking statements. Specific reference is made to "Forward Looking Statements and Risk Factors" in the Company's Annual Information Form and Form 40-F dated March 31, 2009. Forward-looking statements herein include statements regarding the expectations and beliefs of management. Such factors included, amongst others the following: gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves, and between actual and estimated metallurgical recoveries; mining operational risk; risks from litigation; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form and Form 40-F dated March 31, 2009. We do not expect to update forward-looking statements continually as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada and the U.S.
Eldorado Gold Corporation's common shares trade on the Toronto Stock Exchange (TSX:ELD - News) and the NYSE-Amex US (AMEX:EGO - News).
Request for information packages:laurelw@eldoradogold.com.
PRODUCTION HIGHLIGHTS
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First Second Second First First
Quarter Quarter Quarter Six Months Six Months
2009 2009 2008 2009 2008
----------------------------------------------------------------------------
Gold Production
Ounces Produced 61,426 84,572 87,380 145,998 154,614
Cash Operating Cost
($/oz)(1,4) 296 300 229 298 222
Total Cash Cost
($/oz)(2,4) 315 322 259 319 263
Total Production Cost
($/oz)(3,4) 375 387 293 382 337
Realized Price ($/oz
- sold) 909 927 904 920 917
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Kisladag Mine, Turkey
Ounces Produced 46,192 62,985 55,490 109,177 82,718
Tonnes to Pad 2,084,714 2,428,611 2,092,957 4,513,325 2,622,437
Grade (grams/tonne) 1.34 1.18 1.47 1.26 1.41
Cash Operating Cost
($/oz)(4) 274 269 230 271 225
Total Cash Cost
($/oz)(2,4) 276 271 232 273 228
Total Production Cost
($/oz)(3,4) 315 309 273 312 264
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Tanjianshan Mine,
China
Ounces Produced 15,234 21,587 31,890 36,821 71,896
Tonnes Milled 228,066 231,874 193,035 459,940 416,430
Grade (grams/tonne) 3.97 5.63 6.04 4.81 6.46
Cash Operating Cost
($/oz)(4) 362 390 229 378 219
Total Cash Cost
($/oz)(2,4) 432 470 305 454 303
Total Production Cost
($/oz)(3,4) 557 616 327 591 420
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(1) Cost figures calculated in accordance with the Gold Institute Standard.
(2) Cash Operating Costs, plus royalties and the cost of off-site
administration.
(3) Total Cash Costs, plus foreign exchange gain or loss, depreciation,
amortization and reclamation expenses.
(4) Cash operating, total cash and total production costs are non-GAAP
measures. See the section "Non-GAAP Measures" of this MD&A.
Eldorado Gold Corporation
Unaudited Consolidated Balance Sheets
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars)
June December
30, 2009 31, 2008
$ $
Assets
Current assets
Cash and cash equivalents 135,720 61,851
Restricted cash (note 4) 5,500 -
Marketable securities 14,154 43,610
Accounts receivable and other 18,210 36,109
Inventories 104,235 86,966
Future income taxes - 175
------------------------
277,819 228,711
Restricted assets and other 8,257 8,349
Mining interests 691,316 668,309
------------------------
977,392 905,369
------------------------
------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 43,972 42,659
Debt 5,121 139
Future income taxes 1,590 1,097
------------------------
50,683 43,895
Asset retirement obligations 4,957 4,812
Future income taxes 59,822 60,043
------------------------
115,462 108,750
------------------------
Non-controlling interest 5,814 4,799
Shareholders' Equity
Share capital (note 6(a)) 951,255 931,933
Contributed surplus (note 6(b)) 18,901 19,378
Accumulated other comprehensive income (loss)
(note 6(c)) 519 (5,971)
Deficit (114,559) (153,520)
------------------------
856,116 791,820
------------------------
977,392 905,369
------------------------
------------------------
Subsequent event (note 8)
Approved on behalf of the Board of Directors
(Signed) Robert Gilmore Director (Signed) Paul N. Wright Director
See accompanying notes to consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Operations and Deficit
For the periods ended June 30,
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars except per share amounts)
Three months ended Six months ended
-------------------- -------------------
2009 2008 2009 2008
$ $ $ $
Revenue
Gold sales 80,147 80,059 132,353 148,734
Interest and other income 391 2,469 587 6,313
-------------------- -------------------
80,538 82,528 132,940 155,047
-------------------- -------------------
Expenses
Operating costs 28,502 22,977 46,944 42,796
Depletion, depreciation and
amortization 6,538 3,512 10,998 12,336
General and administrative 7,897 9,937 16,659 19,731
Exploration 3,374 2,672 5,436 4,863
Mine standby costs 936 - 936 2,433
Asset retirement obligation costs 78 133 131 266
Foreign exchange (gain) loss 1,962 (1,686) (1,127) (832)
-------------------- -------------------
49,287 37,545 79,977 81,593
Gain on disposal of assets
(note 3) (1,463) - (1,463) -
Gain on marketable securities (1,083) - (119) (24)
Interest and financing costs 77 842 158 1,870
Loss on derivative contract - 739 - 1,478
-------------------- -------------------
46,818 39,126 78,553 84,917
-------------------- -------------------
Income before income taxes and
non-controlling interest 33,720 43,402 54,387 70,130
-------------------- -------------------
Income tax (expense) recovery
Current (7,636) (8,397) (13,653) (14,079)
Future 469 (4,843) (758) (5,152)
-------------------- -------------------
(7,167) (13,240) (14,411) (19,231)
-------------------- -------------------
Non-controlling interest (653) (5,007) (1,015) (5,007)
-------------------- -------------------
Net income for the period 25,900 25,155 38,961 45,892
-------------------- -------------------
Deficit, beginning of period (140,459) (296,439) (153,520) (317,176)
Deficit, end of period (114,559) (271,284) (114,559) (271,284)
-------------------- -------------------
-------------------- -------------------
Weighted average number of
shares outstanding
Basic 371,118 345,051 370,494 344,827
Diluted 371,964 346,822 371,868 346,230
Earnings per share
Basic income per share - US$ 0.07 0.07 0.11 0.13
Diluted income per share - US$ 0.07 0.07 0.10 0.13
See accompanying notes to the consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Cash Flows
For the periods ended June 30,
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars, unless otherwise stated)
Three months ended Six months ended
-------------------- -------------------
2009 2008 2009 2008
$ $ $ $
Cash flows generated from
(used in):
Operating activities
Net income for the period 25,900 25,155 38,961 45,892
Items not affecting cash
Asset retirement obligations
costs 78 133 131 266
Depletion, depreciation and
amortization 6,538 3,512 10,998 12,336
Unrealized foreign exchange
(gain) loss 2,257 - (426) 418
Future income taxes expense
(recovery) (469) 4,843 758 5,152
Gain on disposal of assets (1,463) - (1,463) -
Gain on marketable securities (1,083) - (119) (24)
Imputed interest and financing
costs - 9 - 19
Stock-based compensation 2,721 2,961 5,801 7,843
Pension expense (note 5) 605 - 803 -
Non-controlling interest 653 5,007 1,015 5,007
Loss on derivative contract - 739 - 1,478
-------------------- -------------------
35,737 42,359 56,459 78,387
Bonus cash award units payments (484) - (2,543) -
Property reclamation payments - (745) - (1,397)
Contractual severance payments - (28) - (259)
Changes in non-cash working
capital (note 9) 1,448 (2,255) 8,658 9,643
-------------------- -------------------
36,701 39,331 62,574 86,374
Investing activities
Mining interests
Capital expenditures (19,823) (27,052) (38,852) (39,766)
Sales and disposals 35 219 35 440
Marketable securities
Purchases - (651) - (2,443)
Disposals 5,931 - 36,388 263
Pension plan contributions (97) - (1,856) -
Restricted cash and other
restricted assets 2,520 11,010 (3,005) 5,710
-------------------- -------------------
(11,434) (16,474) (7,290) (35,796)
Financing activities
Capital stock
Issuance of common shares for
cash 2,493 4,050 13,603 5,263
Long-term and bank debt
Proceeds 6 - 4,982 5,000
Repayments - (10,479) - (10,479)
-------------------- -------------------
2,499 (6,429) 18,585 (216)
-------------------- -------------------
Net increase in cash and cash
equivalents 27,766 16,428 73,869 50,362
Cash and cash equivalents -
beginning of period 107,954 79,948 61,851 46,014
-------------------- -------------------
Cash and cash equivalents -
end of period 135,720 96,376 135,720 96,376
-------------------- -------------------
-------------------- -------------------
See accompanying notes to the consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Comprehensive Income
For the periods ended June 30,
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars, unless otherwise stated)
Three months ended Six months ended
-------------------- -------------------
2009 2008 2009 2008
$ $ $ $
Net earnings for the period
ended June 30, 25,900 25,155 38,961 45,892
Other comprehensive income (loss)
Unrealized gains on
available-for-sale
investment (note 6(c)) 3,246 2,083 5,559 1,623
Realized gains (losses) on
available-for-sale
investments (note 6(c)) 1,200 - 1,200 (61)
FIT on unrealized gains on
available-for-sale
investment (note 6(c)) (269) - (269) -
-------------------- -------------------
Comprehensive income for the
period ended June 30, 30,077 27,238 45,451 47,454
-------------------- -------------------
-------------------- -------------------
See accompanying notes to the consolidated financial statements.
To view the Unaudited Interim Consolidated Financial Statements and Management's Discussion and Analysis please click on the following link: media3.marketwire.com
Contact:
Contacts:
Eldorado Gold Corporation
Nancy Woo
VP Investor Relations
604.601-6650 or 1.888.353.8166
604.687.4026 (FAX)
nancyw@eldoradogold.com
www.eldoradogold.com |
