Eldorado Gold Corporation: Q2, 2010 Financial and Operating Results Record Production, $0.11 Earnings Per Share
Record Production, $0.11 Earnings Per Share
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 07/29/10 -- (all figures in United States dollars, unless otherwise noted)
Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation (TSX: ELD)(NYSE: EGO)(ASX: EAU) ('Eldorado' or the'Company') is pleased to report on the Company's financial and operational results for the second quarter ended June 30, 2010. Eldorado reported net income of $60.5 million or $0.11 per share for the period and the Company generated $92.3 million in cash from operating activities before changes in non-cash working capital.
Q2 2010 Highlights
-- Produced 167,940 ounces of gold at an average cash operating cost of $
357 per ounce (total cash cost $410 per ounce)
-- Sold 172,826 ounces of gold at a realized average price of $1,195 per
ounce
-- Reported record earnings of $0.11 per share
-- Generated $92.3 million of cash or $0.17 per share from operating
activities before changes in non-cash working capital
-- Paid an initial dividend, June 18, 2010 (C$0.05/share)
-- Announced the acquisition of Brazauro Resources
'The Company continues to have a very successful year, with our mines delivering in accordance with our stated plan and contributing to six consecutive quarters of increased production. Production of 167,940 ounces of gold at a cash operating cost of $357 per ounce resulted in the increase in net income and revenue of 130% and 158% respectively over the comparable period in 2009,' commented Paul N. Wright President and CEO. 'Continued strong performance combined with our outlook for the balance of the year has resulted in a favourable adjustment in operating guidance for the year. We now plan to produce 625,000 ounces of gold at cash operating costs of $375 per ounce.'
Financial Results
Eldorado's consolidated net income for the second quarter of 2010 was $60.5 million or $0.11 per share, compared with $25.9 million or $0.07 per share in the second quarter of 2009. Increase in profit for the period resulted from significantly higher sales volumes and increased realized prices.
In the second quarter of the year we sold 172,826 ounces of gold at an average price of $1,195 per ounce resulting in a 99% increase in sales over the second quarter of 2009 when we sold 86,453 ounces of gold at an average price of $927 per ounce.
Operating Performance
Kisladag
During the quarter we placed 2,686,284 tonnes of ore on the leach pad at a grade of 1.12 grams per tonne of gold. We produced 70,451 ounces of gold at a cash operating cost of $304 per ounce, compared to 62,985 ounces of gold at a cash operating cost of $268 per ounce in the second quarter of 2009. Kisladag continued to benefit from improvements made to the processing circuit late in 2009. Management is undertaking a review of heap leach recoveries at Kisladag as a result of the strong gold production in recent quarters.
Tanjianshan
We milled 271,749 tonnes of ore at a grade of 4.38 grams per tonne of gold in Q2 2010, and produced 28,884 ounces of gold at a cash operating cost of $387 compared to 21,587 ounces at a cash operating cost of $412 per ounce in Q2 2009. Both the mine and plant are operating according to plan.
Jinfeng
We milled 392,211 tonnes of ore at a grade of 4.51 g/t and produced 52,659 ounces of gold at a cash operating cost of $381 per ounce. Mill feed at Jinfeng is being provided by both the open pit and underground mines, which are performing as expected.
White Mountain
At White Mountain we milled 167,981 tonnes of ore at a grade of 3.78 grams per tonne gold and produced 15,946 ounces of gold at a cash operating cost of $442 per ounce.
Development
Efemcukuru
Construction is proceeding in accordance with plan. Major focus areas for the quarter included final setting of process equipment with piping and mechanical installations are underway within the process plant. Concrete placement was completed at the filter and backfill plant, steel erection is underway. Truck shop and mine dry concrete and steel erection was completed; foundation work was also started on the administration building; and the water treatment plant was completed and is ready for operation. The mining contractor was mobilized at the end of June and work on the preparation of the portal was begun.
Vila Nova Iron Ore
Mining activities were initiated during the quarter, mostly directed towards waste stripping and stock piling of iron ore from the top benches. We are projecting iron ore sales to begin early in the fourth quarter.
Perama Hill Project
The Greek Ministry of Environment continued its review of the Pre Environmental Impact Assessment ('PEIA') which was submitted in October 2009. During the quarter work progressed on the full Environmental Impact Assessment which will be submitted upon approval of the PEIA.
Eastern Dragon
Permitting activities remained the focus during Q2 2010, along with regional exploration activities as the weather improved.
Exploration
Turkey
Work on our reconnaissance projects at MH, Sizma, Dolek, and AS focused on completing geological mapping, geophysical surveys, and geochemical sampling programs directed towards defining targets for drilling during Q3 and Q4. At Efemcukuru, we completed the preliminary drilling program on the Kokarpinar vein, which lies parallel to and approximately 400 m east of the Kestane Beleni vein hosting the Efemcukuru deposit. Four of the six holes drilled contained potentially economic widths and gold grades, and additional stepout and infill drilling will be completed in Q3. At the Kisladag mine, we conducted over 16,300 metres of diamond drilling in Q2, nearly completing our planned 42 drill hole program. The new drilling has further defined the zone of higher grade gold mineralization discovered in 2009 along the south-eastern margin of the deposit, and has identified continuous high-grade zones within intrusion 2a, in areas previous modeled to contain low gold grades and waste sub-zones.
Brazil
No exploration activity was completed at Tocantinzinho during Q2. At the Triguiero option property in NE Brazil, we completed a comprehensive stream sediment sampling reconnaissance sampling program.
China
At Tanjianshan, we completed 16 infill and step out drillholes on the 323 zone, and have produced a geological model for the zone. In the Jinfeng district, resource drilling was initiated at the mine proper, along with reconnaissance drilling at the nearby Lintan and Bannian prospects. Drilling at these prospects is targeting down-dip projections of high-grade mineralized fault zones exposed in surface trenches and excavations. At the White Mountain mine, drilling recently commenced targeting down-dip and along- strike extensions to the deposit. The first drill hole intersected alteration and mineralization styles identical to those characterizing the deposit, at a position several hundred metres down dip from previous drilling. Also in the White Mountain district, we completed a three-hole test program at the optioned Caijiagou property. Work at Eastern Dragon focused on completing ground magnetic surveys and prospecting, along with permitting activities.
Corporate Activities
Completion of the Acquisition of Brazauro Resources
On July 20, 2010 we completed the acquisition of all the shares of Brazauro Resources Corporation that we did not previously hold. With this acquisition, we have acquired 100% of the Tocantinzinho Gold Project and options agreements to earn 100% of the Aqua Branca and Piranhas properties.
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 Thursday, July 29, 2010 to discuss the 2010 Second Quarter Financial Results at 8:30 a.m. EDT (5:30 a.m. PDT). You may participate in the conference call by dialling 416-695-6622 in Toronto or 1-800-355-4959 toll free in North America and asking for the Eldorado Conference Call with Chairperson: Paul Wright, President and CEO of Eldorado Gold. The call will be available on Eldorado's website www.eldoradogold.com. A replay of the call will be available until August 5, 2010 by dialing 416-695-5800 in Toronto or 1-800-408-3053 toll free in North America and entering the Pass code 4748143.
Forward-looking statements and forward-looking information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. We have made certain assumptions about the forward-looking statements and information and even though our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking statement or information will prove to be accurate. Furthermore, should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. These risks, uncertainties and other factors include, among others, the following: gold price volatility; discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries; mining operational and development risk; litigation risks; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; currency fluctuations; speculative nature of gold exploration; global economic climate; dilution; share price volatility; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the sections entitled 'Forward-Looking Statements' and 'Risk Factors' in the Company's Annual Information Form & Form 40-F dated March 31, 2010.
There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on the forward-looking statements or information contained herein. Except as required by law, we do not expect to update forward- looking statements and information continually as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada and the U.S.
Eldorado Gold Corporation common shares on the Toronto Stock Exchange (TSX: ELD) and the New York Stock Exchange (NYSE: EGO). Eldorado CDI's trade on the Australian Securities Exchange (ASX: EAU).
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
2010 2010 2009 2010 2009
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Gold Production
----------------------------------------------------------------------------
Ounces Sold 163,446 172,826 86,453 336,272 143,912
Ounces Produced 164,928 167,940 84,572 332,868 145,998
Cash Operating Cost
($/oz)(1)(3)(4) 370 357 303 364 297
Total Cash Cost
($/oz)(2)(3)(4) 397 410 325 404 318
Realized Price
($/oz - sold) 1,110 1,195 927 1,154 920
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Kisladag Mine, Turkey
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Ounces Sold 83,974 69,197 65,484 153,171 110,696
Ounces Produced 82,240 70,451 62,985 152,691 109,177
Tonnes to Pad 2,898,199 2,686,284 2,428,611 5,584,483 4,513,325
Grade (grams / tonne) 1.12 1.12 1.18 1.12 1.26
Cash Operating Cost
($/oz)(3)(4) 304 304 268 304 271
Total Cash Cost
($/oz)(2)(3)(4) 307 345 270 324 273
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Tanjianshan Mine, China
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Ounces Sold 18,947 38,261 20,969 57,208 33,216
Ounces Produced 25,423 28,884 21,587 54,307 36,821
Tonnes Milled 249,738 271,749 231,874 521,487 459,940
Grade (grams / tonne) 4.01 4.38 5.63 4.20 4.81
Cash Operating Cost
($/oz)(3)(4) 420 387 412 398 383
Total Cash Cost
($/oz)(2)(3)(4) 517 483 495 494 467
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Jinfeng Mine, China
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Ounces Sold 49,674 48,623 - 98,297 -
Ounces Produced 45,615 52,659 - 98,274 -
Tonnes Milled 389,851 392,211 - 782,062 -
Grade (grams / tonne) 4.23 4.51 - 4.37 -
Cash Operating Cost
($/oz)(3)(4) 422 381 - 402 -
Total Cash Cost
($/oz)(2)(3)(4) 462 423 - 443 -
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White Mountain Mine, China
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Ounces Sold 10,851 16,745 - 27,596 -
Ounces Produced 11,650 15,946 - 27,596 -
Tonnes Milled 130,643 167,981 - 298,624 -
Grade (grams / tonne) 4.09 3.78 - 3.91 -
Cash Operating Cost
($/oz)(3)(4) 550 442 - 484 -
Total Cash Cost
($/oz)(2)(3)(4) 589 474 - 519 -
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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) Cash operating costs and total cash costs are non-GAAP measures. See the
section 'Non-GAAP Measures' of this Review.
(4) Cash operating costs and total cash costs have been recalculated for
prior quarters based on ounces sold.
Eldorado Gold Corporation
Unaudited Consolidated Balance Sheets
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(Expressed in thousands of U.S. dollars)
June 30, December 31,
2010 2009
Assets $ $
Current assets
Cash and cash equivalents 306,983 265,369
Restricted cash (note 4) 52,221 50,000
Marketable securities 26,058 13,951
Accounts receivable and other 29,598 26,434
Inventories 122,835 129,197
Future income taxes 1,495 -
-------------------------
539,190 484,951
Inventories 39,028 31,534
Investment in significantly influenced company 5,375 -
Restricted assets and other 17,325 13,872
Mining interests 2,606,437 2,580,816
Goodwill 324,935 324,935
-------------------------
3,532,290 3,436,108
-------------------------
-------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 130,476 157,250
Debt - current (note 6) 69,045 56,499
Future income taxes 3,658 4,264
-------------------------
203,179 218,013
Debt - long-term (note 6) 110,556 134,533
Asset retirement obligations 27,682 26,566
Future income taxes 383,546 390,242
-------------------------
724,963 769,354
-------------------------
Non-controlling interest 31,682 26,144
Shareholders' equity
Share capital (note 7(b)) 2,708,322 2,671,634
Contributed surplus 19,052 17,865
Accumulated other comprehensive income (loss)
(note 7(c)) 12,391 2,227
Retained earnings (deficit) 35,880 (51,116)
-------------------------
2,775,645 2,640,610
-------------------------
3,532,290 3,436,108
-------------------------
-------------------------
Subsequent events (note 6(d) and note 11)
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
For the periods ended June 30,
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars except per share amounts)
Three months ended Six months ended
------------------ ----------------
2010 2009 2010 2009
$ $ $ $
Revenue
Gold sales 206,443 80,147 387,922 132,353
Interest and other income 1,338 391 2,009 587
------------------ ----------------
207,781 80,538 389,931 132,940
------------------ ----------------
Expenses
Operating costs 72,303 28,502 139,176 46,944
Depletion, depreciation and
amortization 29,504 6,538 52,746 10,998
General and administrative 13,828 7,897 29,357 16,659
Exploration 2,950 3,374 6,552 5,436
Mine standby costs 607 936 1,313 936
Asset retirement obligation costs 511 78 1,024 131
Foreign exchange (gain) loss (1,353) 1,962 (5,033) (1,127)
------------------ ----------------
118,350 49,287 225,135 79,977
Loss (gain) on disposal of assets 21 (1,463) (1,485) (1,463)
Loss (gain) on marketable securities 254 (1,083) (858) (119)
Interest and financing costs 1,656 77 4,269 158
------------------ ----------------
120,281 46,818 227,061 78,553
------------------ ----------------
Income before income taxes and
non-controlling interest 87,500 33,720 162,870 54,387
------------------ ----------------
Income tax (expense) recovery
Current (26,808) (7,636) (47,939) (13,653)
Future 3,835 469 5,247 (758)
------------------ ----------------
(22,973) (7,167) (42,692) (14,411)
------------------ ----------------
Non-controlling interest (4,019) (653) (6,825) (1,015)
------------------ ----------------
Net income for the period 60,508 25,900 113,353 38,961
------------------ ----------------
Weighted average number of
shares outstanding
Basic 539,398 371,118 538,707 370,494
Diluted 541,193 371,964 540,439 371,868
Earnings per share
Basic income per share - US$ 0.11 0.07 0.21 0.11
Diluted income per share - US$ 0.11 0.07 0.21 0.10
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
------------------ ----------------
2010 2009 2010 2009
$ $ $ $
Cash flows generated from (used in):
Operating activities
Net income for the period 60,508 25,900 113,353 38,961
Items not affecting cash
Asset retirement obligations
costs 511 78 1,024 131
Depletion, depreciation and
amortization 29,504 6,538 52,746 10,998
Unrealized foreign exchange
(gain) loss (2,921) 2,257 (5,041) (426)
Future income taxes
(recovery) expense (3,835) (469) (5,247) 758
Loss (gain) on disposal
of assets 21 (1,463) (1,485) (1,463)
Loss (gain) on marketable
securities 254 (1,083) (858) (119)
Stock-based compensation
(note 8(b)) 3,645 2,721 10,592 5,801
Pension expense (note 5) 622 605 1,245 803
Non-controlling interest 4,019 653 6,825 1,015
------------------------------------
92,328 35,737 173,154 56,459
Bonus cash award units
payments (note 8(c)) - (484) - (2,543)
Changes in non-cash working
capital (note 9) (13,881) 1,448 (32,267) 8,658
------------------ ----------------
78,447 36,701 140,887 62,574
Investing activities
Mining interests
Capital expenditures (50,332) (19,823) (97,632) (38,852)
Sales and disposals 18,083 35 20,348 35
Marketable securities disposals - 5,931 692 36,388
Investment purchases (5,375) - (5,375) -
Pension plan contributions - (97) - (1,856)
Restricted cash (100) - (2,221) (5,500)
Restricted assets and other 29 2,520 (2,483) 2,495
------------------ ----------------
(37,695) (11,434) (86,671) (7,290)
Financing activities
Capital stock
Issuance of common shares
for cash (note 7(b)) 21,689 2,493 27,283 13,603
Dividend paid to non-controlling
interest - - (1,286) -
Dividend paid to shareholders (26,357) - (26,357) -
Long-term and current debt
Proceeds 2,484 6 2,484 4,982
Repayments (14,726) - (14,726) -
------------------ ----------------
(16,910) 2,499 (12,602) 18,585
------------------ ----------------
Net increase in cash and
cash equivalents 23,842 27,766 41,614 73,869
Cash and cash equivalents
- beginning of period 283,141 107,954 265,369 61,851
------------------ ----------------
Cash and cash equivalents
- end of period 306,983 135,720 306,983 135,720
------------------ ----------------
------------------ ----------------
Supplementary cash flow information (note 9)
See accompanying notes to the consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Shareholders' Equity
For the periods ended June 30,
---------------------------------------------------------------------------
(Expressed in thousands of U.S. dollars, unless otherwise stated)
Three months ended Six months ended
------------------- -------------------
2010 2009 2010 2009
$ $ $ $
Share capital
Balance beginning of period 2,679,209 947,736 2,671,634 931,933
Shares issued upon exercise
of share options, for cash 21,689 2,493 27,283 13,603
Estimated fair value of
share options exercised 7,424 1,026 9,405 5,719
------------------- -------------------
Balance at the end of the period 2,708,322 951,255 2,708,322 951,255
------------------- -------------------
Contributed surplus
Balance beginning of period 22,831 17,206 17,865 19,378
Non-cash stock-based
compensation 3,645 2,721 10,592 5,242
Options exercised, credited
to share capital (7,424) (1,026) (9,405) (5,719)
------------------- -------------------
Balance at the end of the period 19,052 18,901 19,052 18,901
------------------- -------------------
Retained earnings (deficit)
Balance beginning of period 1,729 (140,459) (51,116) (153,520)
Dividends paid (26,357) - (26,357) -
Net income for the period 60,508 25,900 113,353 38,961
------------------- -------------------
Balance at the end of the period 35,880 (114,559) 35,880 (114,559)
------------------- -------------------
Accumulated other
comprehensive income (loss)
Balance beginning of period 3,686 (3,658) 2,227 (5,971)
Other comprehensive income
(loss) 8,705 4,177 10,164 6,490
------------------- -------------------
Balance at the end of
the period 12,391 519 12,391 519
------------------- -------------------
Total shareholders' equity 2,775,645 856,116 2,775,645 856,116
------------------- -------------------
------------------- -------------------
See accompanying notes to consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Comprehensive Income
For the periods ended June 30,
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(Expressed in thousands of U.S. dollars, unless otherwise stated)
Three months ended Six months ended
------------------ -----------------
2010 2009 2010 2009
$ $ $ $
Net earnings for the period
ended June 30, 60,508 25,900 113,353 38,961
Other comprehensive income (loss)
Unrealized gains on
available-for-sale investments 10,089 3,246 11,654 5,559
Future income taxes on
unrealized gains on
available-for-sale investments (1,384) (269) (1,490) (269)
Realized losses on
available-for-sale investments - 1,200 - 1,200
-------------------------------------
Other comprehensive income 8,705 4,177 10,164 6,490
------------------ -----------------
Comprehensive income for the period
ended June 30, 69,213 30,077 123,517 45,451
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Click here for Unaudited Interim Consolidated Financial Statements, Management's Discussion and Analysis PDF: http://media3.marketwire.com/docs/eld729fs.pdf
See accompanying notes to the consolidated financial statements.
Contacts:
Eldorado Gold Corporation
Nancy Woo
Vice President Investor Relations
604.601-6650 or 1.888.353.8166
604.687.4026 (FAX)
nancyw@eldoradogold.com
www.eldoradogold.com