Message #1 From:
Stock News Bot Date: October 28, 2005 01:15:00 AM
EGO News Eldorado Gold Corporation: Third Quarter 2005 Financial Results
VANCOUVER, British Columbia--(BUSINESS WIRE)--Oct. 28, 2005--(all figures in United States dollars)
Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation (TSX:ELD)(AMEX:EGO) ("Eldorado", the "Company" or "we") announces the Company's financial and operational results for the third quarter of the year, ended September 30, 2005.
Third Quarter Highlights
In the third quarter, we:
- Acquired all of the issued and outstanding shares of Afcan Mining Corporation ("Afcan"), a TSX listed company with an 85% interest in the Tanjianshan Gold Project ("TJS") in Western China
- Received an Environmental Positive Certificate ("EIA") for the Efemcukuru Gold Project in Western Turkey from the Turkish Ministry of the Environment and Forestry ("MOE")
- Recorded a net loss of $6.51 million or ($0.02) per share
- Produced 18,842 ounces of gold at a cash cost of $372 per ounce
- Held $68.68 million in cash and short-term deposits
- Continued construction at Kisladag Gold Project ("Kisladag") for expected start-up in February 2006
- Continued construction at TJS for expected start-up in October 2006
- Announced positive initial drill results from the AS Project in Turkey and initial results from the TJS
2005 drill program in China
Afcan Acquisition Complete
Effective as of September 13, 2005, we acquired all issued and outstanding shares of Afcan, giving us an 85% interest in TJS. A feasibility study compiled by independent consultants in April 2005 estimates that TJS has proven and probable reserves of 944,000 ounces of gold. The feasibility study projects total gold production of 842,000 ounces over an eight-year mine life, with an Internal Rate of Return of 32%. Construction at TJS is ongoing, with expected start-up in Q4 2006.
Financial Results
The consolidated net loss for Q3 2005 was $6.51 million or ($0.02) per share, compared with a net loss of $1.34 million or ($0.00) per share in Q3 2004. The increased loss results from higher operating costs and depreciation at the Sao Bento mine in Brazil, increased general and administrative costs associated with the start-up of the Kisladag mine, Afcan acquisition and higher exploration expenditures.
In Q3 2005, we sold 21,057 ounces of gold at an average realized selling price of $435 per ounce. This compares to gold sales in Q3 2004 of 21,732 ounces at an average realized price of $400 per ounce.
We continue to be in a strong financial position. At September 30, 2005, we held $68.68 million in cash and short-term deposits, and $50.45 million in a reserve account, such reserve account substantially offsetting our debt of $52.74 million.
Operating Performance
In Q3 2005, we produced 18,842 ounces of gold at a cash cost of US$372 per ounce compared to 21,399 ounces of gold at a cash cost of $295 per ounce in Q3 2004. The increase in our cash costs on a per ounce basis in 2005 results from decreased gold production caused by challenging ground conditions at depth and lower grades due to production scheduling and the appreciation of the Brazilian Real. Given the poor performance of the Sao Bento mine we are reviewing alternatives regarding the mine's future.
Development
Kisladag
Mine construction at Kisladag is on track, and we expect mechanical completion in February 2006. The majority of earthworks and foundations have been completed with the emphasis now on completing the mechanical and electrical installations. The ADR plant and ancillary buildings are expected to be complete by year end. Mechanical completion of the crushing, screening and conveying system will be early in 2006.
We estimate gold production for 2006 of 144,000 ounces, and we expect the mine will thereafter produce at an annualized average rate of 240,000 ounces. Cash operating costs are anticipated to be $181 per ounce for a planned mine life of 14 years.
Tanjianshan
Construction at TJS continues for start-up in October 2006. The SAG mill arrived at port in China and will begin the overland transport to site for a scheduled arrival late in Q4 2005. Major steel structures for the warehouse, boiler house, and mechanical and maintenance workshop have been completed. Foundations for the mill and floatation tanks are being poured. The earthworks for the tailings dam are nearing completion in preparation of laying synthetic liner in Q2 2006. New accommodation buildings will be available in November, 2005 so that construction activities can proceed throughout the winter.
Efemcukuru
Subsequent to the submission of the EIA at Efemcukuru to the MOE in Q2 2005, we received a Positive Certificate in Q3 2005, signaling the successful completion of the first stage of the permitting process at Efemcukuru. We will prepare a feasibility study and proceed with obtaining the necessary permits to enable the construction and operation of the mine. Our development schedule for Efemcukuru indicates that the mine will begin producing gold in late 2007.
Exploration
Brazil
We began diamond drilling at the Vila Nova Project ("Vila Nova") to test the extent of the iron ore deposit; this program will be completed in Q4 2005. Exploration on the gold area of Vila Nova project has resumed following the decision by the Macapa Federal Court on October 18, 2005 supporting our right of legal access to the property.
Turkey
Exploration at our 50%-owned AS Project was encouraging and indicates the potential for a significant mineralized zone in this large copper-gold system. In Q4 2005, we will further test the mineralization at depth with a diamond drilling program, and in 2006 we are planning expanded geophysics, geochemical sampling and diamond and reverse circulation drilling.
China
Our 52-hole program at Jinlonggou forming a part of the TJS 2005 drill program validated our geological model of the area and delineated numerous mineralized zones in the predicted target area. After updating the resource model in Q4 2005, we will prepare a new resource and reserve statement and a new life of mine plan in early 2006.
"Our international team has been extremely busy this last quarter," said Paul Wright, President and Chief Executive Officer. "Construction is continuing on track at Kisladag for start-up in February 2006, and at TJS, for start-up in October 2006. Efemcukuru reached an important milestone when we received the Positive Certificate from the Ministry of Environment and Forestry. And our exploration teams in China, Turkey, Brazil and Vancouver are pursuing encouraging new opportunities that have the potential to further significantly increase the value of our Company."
Eldorado is a gold producing and exploration company actively growing businesses in Brazil, Turkey and China. With our international expertise in mining, finance and project development, together with highly skilled and dedicated staff, we believe that the Company 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
Certain of the statements made may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which involve known and unknown risk, 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 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. 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 "Narrative Description of the Business - Risk Factors" in the Company's Annual Information Form and Form 40-F dated March 30, 2005. Forward-looking statements in this release 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; 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 "Business - Risk Factors" in the Company's Annual Information Form and Form 40F dated March 30 ,2005. 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 shares trade on the Toronto Stock Exchange (TSX:ELD) and the American Stock Exchange (AMEX:EGO).
Eldorado Gold Corporation
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
September 30, December 31,
2005 2004
--------------------------------------------------------------------
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(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 68,684 $ 135,390
Accounts and other receivables 15,606 8,705
Inventories 6,363 5,927
-----------------------
90,653 150,022
Property, plant and equipment 186,656 52,337
Mineral properties and deferred development 23,168 22,676
Deposits (Note 4) 50,447 -
Investments 562 1,224
-----------------------
$ 351,486 $ 226,259
-----------------------
-----------------------
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 14,755 $ 6,005
Current portion of long term debt (Note 4) 1,604 -
-----------------------
16,359 6,005
Asset retirement obligation 9,882 8,059
Contractual severance obligation 954 636
Future income taxes (Note 3) 27,691 4,598
Long term debt (Note 4) 51,141 -
-----------------------
106,027 19,298
SHAREHOLDERS' EQUITY
Share capital (Note 5) 571,156 508,373
Contributed surplus 2,330 1,094
Stock based compensation 6,144 5,138
Deficit (334,171) (307,644)
-----------------------
245,459 206,961
-----------------------
$ 351,486 $ 226,259
-----------------------
-----------------------
Commitments and Contingencies (Note 6)
Supplementary Cash Flow Information (Note 9)
Approved by the Board Approved by the Board
Paul Wright, Director Robert Gilmore, Director
Eldorado Gold Corporation
Consolidated Statements of Operations and Deficit
(Expressed in thousands of U.S. dollars except per share amounts)
Three months ended Nine months ended
September September September September
30, 30, 30, 30,
2005 2004 2005 2004
--------------------------------------------------------------------
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue
Gold sales $ 9,170 $ 8,702 $ 21,532 $ 24,569
Interest and other
income 1,352 454 3,026 1,786
-----------------------------------------------
10,522 9,156 24,558 26,355
Expenses
Operating costs 9,502 6,651 24,379 18,166
Depletion,
depreciation and
amortization 2,467 1,125 7,384 3,248
General and
administrative 3,573 1,437 8,240 3,806
Exploration expense 2,557 1,256 5,251 2,981
Interest and
financing costs 8 25 44 25
Stock based
compensation expense 134 117 1,907 3,567
Accretion of asset
retirement
obligation 120 107 362 322
Gain on disposals (39) (1) (39) (38)
Writedown of
investments - - 662 -
Foreign exchange
(gain) loss (1,897) (1,600) (189) 351
-----------------------------------------------
16,425 9,117 48,001 32,428
-----------------------------------------------
Loss before income
taxes (5,903) 39 (23,443) (6,073)
-----------------------------------------------
Tax recovery (expense)
Current (164) (324) (234) 1,579
Future (440) (1,058) (2,850) 815
-----------------------------------------------
Net loss for the
period $ (6,507) $ (1,343) $ (26,527) $ (3,679)
-----------------------------------------------
Deficit at the
beginning of the
period: (327,664) (296,038) (307,644) (293,702)
-----------------------------------------------
Deficit at the end
of the period $ (334,171) $ (297,381) $ (334,171) $ (297,381)
-----------------------------------------------
-----------------------------------------------
Weighted average
number of shares
outstanding 277,933,154 254,940,553 277,892,706 254,626,427
-----------------------------------------------
-----------------------------------------------
Basic and Diluted
loss per share -
U.S.$ $ (0.02) $ - $ (0.10) $ (0.01)
-----------------------------------------------
-----------------------------------------------
Basic and Diluted
loss per share -
CDN.$ $ (0.03) $ - $ (0.12) $ (0.02)
-----------------------------------------------
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Eldorado Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Three months ended Nine months ended
September September September September
30, 30, 30, 30,
2005 2004 2005 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from
(used in) operating
activities
Net loss for the
period $ (6,507) $ (1,343) $ (26,527) $ (3,679)
Items not affecting
cash
Depletion,
depreciation and
amortization 2,467 1,125 7,384 3,248
Future income taxes 440 1,058 2,850 (815)
Writedown of
investments - - 662 -
Gain on disposal of
property, plant and
equipment (39) - (39) -
Interest and
financing costs 8 - 44 -
Amortization of
hedging loss - - - 329
Stock based
compensation expense 134 117 1,907 3,567
Contractual
severance expense 106 80 318 239
Accretion of asset
retirement
obligation 120 107 362 322
Foreign exchange
(gain) loss (1,963) (200) (434) 985
Change in non-cash
working capital (927) (1,100) (719) (4,070)
-----------------------------------------------
(6,161) (156) (14,192) 126
Cash flow from
investing activities
Acquisition of Afcan
Mining Corporation -
net of cash acquired 895 - 895 -
Property, plant and
equipment (25,150) (4,983) (58,373) (23,094)
Proceeds from
disposals 40 - 40 34
Mineral properties
and deferred
development (198) (129) (492) (412)
-----------------------------------------------
(24,413) (5,112) (57,930) (23,472)
Cash flow from
financing activities
Long term debt 15,459 - 50,618 -
Deposits (15,332) - (50,447) -
Issue of common
shares:
Voting - for cash 4,485 878 4,827 1,448
-----------------------------------------------
4,612 878 4,998 1,448
Foreign exchange
gain (loss) on cash
held in foreign
currency 1,953 210 418 (993)
-----------------------------------------------
Net decrease in cash
and cash equivalents (24,009) (4,180) (66,706) (22,891)
Cash and cash
equivalents at
beginning of the
period 92,693 86,754 135,390 105,465
-----------------------------------------------
Cash and cash
equivalents at end
of the period $ 68,684 $ 82,574 $ 68,684 $ 82,574
-----------------------------------------------
-----------------------------------------------
Supplementary cash flow information (Note 9)
The TSX has neither approved nor disapproved the form or content o f this release.
