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Eldorado Gold Corporation: Q1 2008 Financial and Operating Results VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--May 1, 2008 -- (all figures in United States dollars, unless otherwise
noted) Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation ("Eldorado" "the Company" or "we") (Toronto:ELD.TO - News)(AMEX:EGO - News), is pleased to report on the Company's financial and operational results for the first quarter ended March 31, 2008. "This was an excellent quarter for us, thanks to record sales at our Tanjianshan mine in China, a successful and smooth resumption of production from our Kisladag mine in Turkey, strong gold prices and lower production cost," said Wright. "Looking ahead, we plan to commence construction at Efemcukuru in Turkey in Q2; we're on track for commissioning the Vila Nova Iron Ore project in Brazil and our exploration work plans for 2008 are underway." 2008 Highlights - Reported earnings of $0.06 per share - Produced 67,234 ounces of gold from our operations at an average cash cost of $213 per ounce - Resumed operations on March 6, 2008 at our Kisladag gold mine and ramped up quickly to produce 27,228 ounces of gold during March - Sold 73,604 ounces of gold from our Tanjianshan and Kisladag mines at a realized average price of $933 per ounce - Signed a Memorandum of Understanding for the sale of iron ore produced from our Vila Nova Iron Ore project in Brazil to BHP Billiton - Obtained at our Efemcukuru project, the user rights for all forestry land within the project boundary - Announced our intention to make an offer to acquire all the outstanding shares of Frontier Pacific Mining Corporation. Financial Results Our consolidated net income for Q1 2008 was $20.7 million or $0.06 per share compared with net income of $12.6 million or $0.04 per share in Q1 2007. The increase in net income resulted from record sales from our Tanjianshan mine, higher gold prices, lower costs and strong production and sales in March from our restarted Kisladag mine. In Q1 2008, we sold 73,604 ounces of gold at an average price of $933 per ounce, compared to 64,177 ounces at an average price of $647 per ounce in Q1 2007. Operating Performance Kisladag We reopened the Kisladag mine on March 6, 2008 and quickly achieved full mine production. In the month of March we placed 529,480 tonnes of ore on the leach pad at an average grade of 1.18 g/t of gold. We produced 27,228 ounces of gold at a cash operating cost of $217 per ounce in Q1 2008 and sold 23,219 ounces of gold at an average price of $965 per ounce. We continue to forecast 2008 production of approximately 190,000 ounces at a cash cost of $222 per ounce. Tanjianshan We produced 40,006 ounces of gold at a cash cost of $211 per ounce in Q1 2008 and sold 50,475 ounces of gold at an average price of $919 per ounce. We spent $6.6 million on capital expenditures, primarily relating to the sulfide ore processing project to treat ore from the newly opened Jinlonggou pit. The construction has progressed with 500,000 man hours worked without a lost time accident. During the quarter, we also made the transition to contractor mining, which will lower our overall unit mining costs. We forecast 2008 production of approximately 109,000 ounces at a cash cost of $289 per ounce. Development Efemcukuru With the forestry permit approvals in place, the Company is now positioned to commence construction activities and plans to begin access road development and site clearing. We expect to acquire all the remaining privately owned land required for the project in a timely manner. Vila Nova Iron Ore We continued construction activities at the Vila Nova Iron Ore project in anticipation of shipping lump ore and sinter fines in Q1 2009. We signed a Memorandum of Understanding with BHP Billiton for the sale of all lump ore and sinter fines for the first three years of production and are negotiating the terms of the Long Term Supply Agreement with BHP Billiton. Exploration Exploration expense for Q1 2008 was $2.2 million (Q1 2007 - $2.8 million). Our exploration activities focused on our properties in Turkey, Brazil and China. Exploration - Turkey At Efemcukuru we began a soil sampling program designed to generate targets outside the main ore zone. Permits for drill roads have been obtained and we are designing a drilling program that will target the North Ore Shoot, which currently has only inferred resources and limited drilling. Best results from the North Ore Shoot in 2007 included 5.02 meters (true width) at 12.52 g/t Au. A drill program (+13,000 meters) has been planned for Kisladag and will start in Q2 2008. This program is designed to follow up on results obtained in 2007 that saw significant increases to both the resources and reserves at the mine. The focus of the 2008 program will be to convert inferred resources to measured and indicated and to explore areas in which the mineralization is still open at depth and on the flanks of the deposit. We obtained four new licenses through the auction process during the quarter and conducted additional mapping and soil sampling on the Biga Peninsula properties. Regional reconnaissance work is continuing in other parts of Turkey to identify and acquire new targets. Exploration - Brazil Exploration in Brazil consisted of support for the Vila Nova Iron Ore project and project evaluations in various prospective areas. Exploration - China During Q1 2008, our geologists from the Beijing regional exploration office evaluated projects in northern and western China. At Tanjianshan, preparation for a busy field season has begun. We commenced detailed mapping on several areas, including north and south of the current Qinlongtan pit, to identify extensions to the high grade ore zone that will be drill targets during the upcoming drilling campaign. A structural review is underway on the targets in the vicinity of the Jinlonggou pit; we drilled some of these targets in 2007 and will continue drilling in 2008. These targets are peripheral to the currently designed pit in Jinlonggou and are a high priority in the upcoming program. Acquisitions On April 21, 2008, we announced the intention to make an offer to acquire all of the outstanding shares of Frontier Pacific Mining Corporation ("FRP"). The proposed transaction is valued at approximately C$148 million (or C$157 million on a fully diluted basis). FRP shareholders will receive 0.122 common shares of Eldorado for every common share FRP. Eldorado is a gold producing and exploration company actively growing businesses in Brazil, Turkey, China and surrounding regions. 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, May 2, 2008 to discuss the 2008 First Quarter Financial Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialing 416-641-6127 in Toronto or 1-866-226-1799 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 May 9, 2008 by dialing 416-695-5800 in Toronto or 1-800-408-3053 free in North America and entering the Pass code: 3259263. 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, 2008. 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, 2008.. 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 (Toronto:ELD.TO - News) and the American Stock Exchange (AMEX:EGO - News). Request for information packages: laurelw@eldoradogold.com
PRODUCTION HIGHLIGHTS(1)
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First First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter
2008 2007 2007 2007 2007
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Gold Production
---------------
Total Ounces Produced 67,234 88,780 98,970 61,385 32,000
Commercial Production 67,234 76,288 98,970 61,385 32,000
Cash Operating Cost
($/oz)(1,4) 213 220 259 228 216
Total Cash Cost ($/oz)(2,4) 268 233 287 264 262
Total Production Cost
($/oz)(3,4) 393 270 332 335 522
Realized Price ($/oz - sold) 933 647 664 667 774
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Kisladag Mine, Turkey
---------------------
Commercial Production 27,228 43,601 68,095 23,610 -
Tonnes to Pad 529,480 1,849,330 1,872,691 825,839 -
Grade (grams / tonne) 1.18 1.27 1.32 1.52 -
Cash Operating Cost
($/oz)(4) 217 192 187 191 -
Total Cash Cost ($/oz)(2,4) 218 194 190 194 -
Total Production Cost
($/oz)(3,4) 246 225 221 234 -
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Tanjianshan Mine, China(5)
-------------------------
Total Ounces Produced 40,006 39,252 29,135 37,775 32,000
Commercial Production 40,006 26,760 29,135 37,775 32,000
Tonnes Milled 223,395 142,859 237,909 202,641 173,945
Grade (grams / tonne) 6.83 7.17 4.41 6.87 7.20
Cash Operating Cost
($/oz)(4) 211 260 440 251 216
Total Cash Cost ($/oz)(2,4) 302 291 522 307 261
Total Production Cost
($/oz)(3,4) 493 356 616 397 526
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Sao Bento Mine, Brazil
----------------------
Commercial Production - 5,927 1,740 - -
Tonnes Milled - 20,069 - - -
Grade (grams / tonne) - 8.88 - - -
Cash Operating Cost
($/oz)(4) - 245 80 - -
Total Cash Cost ($/oz)(2,4) - 252 132 - -
Total Production Cost
($/oz)(3,4) - 211 (50) - -
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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.
5 The Tanjianshan gold mine commenced commercial production on
February 1, 2007.
Eldorado Gold Corporation
Unaudited Consolidated Balance Sheets
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(Expressed in thousands of US dollars)
March 31, December 31,
2008 2007
$ $
Assets
Current assets
Cash and cash equivalents 79,948 46,014
Restricted cash (note 3) 71,010 65,710
Accounts receivable and other 31,188 30,335
Inventories 52,938 57,525
Derivative contract (note 8) 2,217 2,956
Future income taxes 957 959
----------------------------
238,258 203,499
Restricted cash (note 3) 8,300 8,300
Mining interests 381,950 377,705
Other 2,238 2,238
----------------------------
630,746 591,742
----------------------------
----------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 48,876 39,943
Debt - current 70,850 65,422
Current portion of asset retirement
obligations 1,896 509
----------------------------
121,622 105,874
Debt - long-term 139 139
Contractual severance obligations 1,248 1,479
Asset retirement obligations 6,384 8,290
Future income taxes 27,088 26,781
----------------------------
156,481 142,563
----------------------------
----------------------------
Shareholders' Equity
Share capital (note 4(a)) 754,788 753,058
Contributed surplus (note 4(b)) 16,223 13,083
Accumulated other comprehensive income
(loss) (note 4(c)) (307) 214
Deficit (296,439) (317,176)
----------------------------
474,265 449,179
----------------------------
630,746 591,742
----------------------------
----------------------------
Subsequent event (note 10)
Approved on behalf of the Board of Directors
(Signed) (Signed)
Robert Gilmore Paul N. Wright
Director Director
See accompanying notes to consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Operations and Deficit
For the three months ended March 31,
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(Expressed in thousands of US dollars except per share amounts)
2008 2007
$ $
Revenue
Gold sales 68,675 41,548
Interest and other income 3,844 1,940
----------------------------
72,519 43,488
----------------------------
Expenses
Operating costs 19,819 15,065
Depletion, depreciation and amortization 8,824 3,108
General and administrative 9,794 7,426
Exploration 2,191 2,796
Mine standby costs 2,433 -
Accretion of asset retirement obligation 133 80
Foreign exchange loss (gain) 854 (565)
Gain on disposal of assets (24) (3,477)
Interest and financing costs 1,028 775
Unrealized loss on derivative contract 739 -
----------------------------
45,791 25,208
----------------------------
Income before income taxes 26,728 18,280
----------------------------
Income tax expense
Current (5,682) (22)
Future (309) (5,676)
----------------------------
(5,991) (5,698)
----------------------------
Net income for the period 20,737 12,582
Deficit, beginning of period (317,176) (353,470)
----------------------------
Deficit, end of period (296,439) (340,888)
----------------------------
----------------------------
Weighted average number of shares outstanding
Basic 344,542 341,435
Diluted 345,902 344,161
Earnings per share
Basic income per share - US$ 0.06 0.04
Diluted income per share - US$ 0.06 0.04
Basic income per share - Cdn$ 0.06 0.04
Diluted income per share - Cdn$ 0.06 0.04
See accompanying notes to the consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Cash Flows
For the three months ended March 31,
--------------------------------------------------------------------------
(Expressed in thousands of US dollars, unless otherwise stated)
2008 2007
$ $
Cash flows generated from (used in):
Operating activities
Net earnings for the period 20,737 12,582
Items not affecting cash
Accretion of asset retirement obligation 133 80
Contractual severance expense - 598
Depletion, depreciation and amortization 8,824 3,108
Unrealized foreign exchange loss 418 148
Future income taxes 309 5,676
Gain on disposal of assets (24) (3,477)
Imputed interest and financing costs 10 16
Stock-based compensation 4,882 3,094
Unrealized loss on derivative contract 739 -
----------------------------
36,028 21,825
Property reclamation payments (652) (1,183)
Contractual severance payments (231) (1,612)
Changes in non-cash working capital (note 6) 11,898 (6,337)
----------------------------
47,043 12,693
Investing activities
Mining interests
Capital expenditures (10,296) (13,940)
Sales proceeds 221 703
Available-for-sale securities
Purchases (1,792) -
Disposals 263 -
Pre-production gold sales capitalized in
mining interests - 10,052
Non-producing properties under development (2,418) (2,959)
Value added taxes recoverable on mining
interests - 1,077
Restricted cash (5,300) (7,231)
----------------------------
(19,322) (12,298)
Financing activities
Capital stock
Issuance of common shares for cash 1,213 822
Debt
Proceeds 5,000 -
----------------------------
6,213 822
----------------------------
Net increase in cash and cash equivalents 33,934 1,217
Cash and cash equivalents - beginning
of period 46,014 59,967
----------------------------
Cash and cash equivalents - end of period 79,948 61,184
----------------------------
----------------------------
Supplementary cash flow information (note 6)
See accompanying notes to the consolidated financial statements.
Eldorado Gold Corporation
Unaudited Consolidated Statements of Comprehensive Income
For the three months ended March 31,
--------------------------------------------------------------------------
(Expressed in thousands of US dollars, unless otherwise stated)
2008 2007
$ $
Net earnings for the period ended March 31, 20,737 12,582
Other comprehensive income (loss)
Net unrealized gains (losses) on
available-for-sale investment (note 4(c)) (521) 39
----------------------------
Comprehensive income for the period ended
March 31, 20,216 12,621
----------------------------
----------------------------
See accompanying notes to the consolidated financial statements.To view Consolidated Financial Statements, Management's Discussion and Analysis (pdf) please click on the following link: http://media3.marketwire.com/docs/eld0501.pdf
Contact: Contacts:
Eldorado Gold Corporation
Nancy E. Woo
Manager Investor Relations
(604) 601-6650 or 1-888-353-8166
(604) 687-4026 (FAX)
Email: nancyw@eldoradogold.com
Website: http://www.eldoradogold.com
Source: Eldorado Gold Corporation
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