TSX: ELD NYSE: EGO
VANCOUVER, Jan. 6, 2017 /CNW/ - Eldorado Gold Corporation,
("Eldorado" or "the Company") today announces the Company's 2016 operating results and preliminary cash costs, and provides
production and cash cost guidance for 2017.
2016 Highlights
- Gold production of 485,994 ounces (including production from discontinued Chinese operations and tailings
retreatment); slightly lower than the revised third quarter guidance of 495,000 ounces.
- 2016 cash operating costs averaged $578 per ounce; considerably lower than
original 2016 guidance of $585-620 per ounce.
- All in sustaining costs expected to be approximately $915 per ounce; also
considerably lower than original 2016 guidance of all in sustaining costs of $940-980 per
ounce.
- Closed the year with total liquidity of approximately $1.1 billion, including
$880 million in cash, cash equivalents and term deposits, and $250
million in undrawn lines of credit.
- Completed sale of Chinese assets, which included: White Mountain and Tanjianshan Mines and Eastern Dragon Development
Project to an affiliate of Yintai Resources Co. Ltd, and the Jinfeng Mine to a wholly-owned subsidiary of China National Gold
Group Corporation.
- Olympias Phase II is set for commissioning in the first quarter 2017.
- Construction at Skouries continues on track for 2019 start-up .
- Continued improvement to the overall safety record with a reduction in the lost time injury rate for the fifth
consecutive year.
- Announced the planned retirement of President and Chief Executive Officer Paul
Wright and named George Burns as his successor, in addition to changes to
the Board of Directors.
"I am very pleased to report the close of a successful 2016, a transitional year for Eldorado.
With the sale of the Chinese assets now complete, our development projects in Greece progressing
on schedule, and a capital plan that now reflects the lower gold price environment, I am confident that the next three years will
be transformational for the Company." said Paul Wright, President and Chief Executive Officer.
"Our teams continue to operate to the highest international safety standards, and I would like to take this opportunity to thank
them for their hard work and diligence in this core area."
"In response to our current gold price outlook and our priority development projects in Greece,
we have decided to reconfigure the mine plan at Kışladağ, eliminating the remaining capital expenditure associated with the
expansion and greatly reducing sustaining capital requirements over the next five years. The revised operating plan greatly
enhances free cash flow from the operation in the near and medium-term while maintaining long-term operating integrity."
Throughout this press release we use cash operating cost per ounce and all-in
sustaining cost per ounce as additional measures of Company performance. These are non IFRS measures. Please refer to the
non IFRS measurements in our Third Quarter 2016 MD&A for an explanation and discussion of these non IFRS measures. All
dollar amounts in US$ unless stated otherwise.
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2016 Operating Results Highlights (including discontinued
operations)
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Q4 2016
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YE 2016
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Total
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Realized gold price ($/oz)
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1,213
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1,254
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Gold sold (oz)
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105,021
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483,460
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Gold produced (oz) 1,2
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103,113
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485,994
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Cash operating cost ($/oz) 3,5
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525
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578
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Total cash cost ($/oz) 4
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549
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620
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Kisladag Mine
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Gold sold (oz)
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59,416
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211,284
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Gold produced (oz)
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59,591
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211,161
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Tonnes to pad
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3,918,426
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16,566,763
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Grade (g/t)
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0.74
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0.80
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Cash operating cost ($/oz) 3,5
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449
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472
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Total cash cost ($/oz) 4
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457
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486
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Efemcukuru Mine
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Gold sold (oz)
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25,265
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99,743
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Gold produced (oz)
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23,182
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98,333
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Tonnes milled
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120,347
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473,060
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Grade (g/t)
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6.62
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7.21
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Cash operating cost ($/oz) 3,5
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505
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512
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Total cash cost ($/oz) 4
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516
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529
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Jinfeng Mine 6
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Gold sold (oz)
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-
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66,902
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Gold produced (oz)
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-
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68,195
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Tonnes milled
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-
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766,697
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Grade (g/t)
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-
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3.32
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Cash operating cost ($/oz) 3,5
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-
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705
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Total cash cost ($/oz) 4
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791
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Tanjianshan Mine 7
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Gold sold (oz)
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10,912
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49,266
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Gold produced (oz)
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10,912
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49,266
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Tonnes milled
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121,237
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869,964
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Grade (g/t)
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1.70
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1.90
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Cash operating cost ($/oz) 3,5
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785
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819
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Total cash cost ($/oz) 4
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892
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970
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White Mountain Mine7
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Gold sold (oz)
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9,428
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56,265
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Gold produced (oz)
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9,428
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56,265
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Tonnes milled
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95,278
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717,145
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Grade (g/t)
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2.99
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2.78
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Cash operating cost ($/oz) 3,5
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759
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731
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Total cash cost ($/oz) 4
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813
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773
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Olympias Mine
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Gold sold (oz)
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-
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-
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Gold produced (oz) 2
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-
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2,774
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Tonnes milled
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-
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87,350
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Grade (g/t)
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-
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2.47
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Cash operating cost ($/oz) 3,5
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-
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-
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Total cash cost ($/oz) 4
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-
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1
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Gold production includes both continuing and discontinued
operations.
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2
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Ounces produced include production from tailings retreatment at
Olympias.
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3
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Cost figures calculated in accordance with the Gold Institute
Standard.
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4
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Cash operating costs, plus royalties and the cost of off-site
administration.
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5
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Cash operating costs and total cash costs are non-IFRS measures. Please
see our Q3 MD&A for an explanation and discussion of these.
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6
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Figures shown for YE 2016 reflect the sale of Jinfeng on September 6,
2016.
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7
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Figures shown for Q4 and YE 2016 reflect the sale of Tanjianshan and White
Mountain on November 22, 2016.
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2017 Guidance
- Expected gold production of 365,000-400,000 ounces, in addition to substantial by-product credits from Olympias Phase
II production.
- 2017 all-in sustaining cash costs expected to remain low at $845-875 per ounce;
and cash operating costs expected to decline significantly, averaging $485-535 per
ounce.
- Expected capital expenditures of $425 million; considerably lower than the
September 2016 guidance. Reductions were primarily at Skouries due to flexibility in the capital
deployment timeline, along with anticipated cost savings, and at Tocantinzinho in response to the current gold price environment
and permitting delays.
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Mine/Project
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Production
(Au oz)
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Cash Costs
($/oz)
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Sustaining Capital
Expenditure ($M)
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Kisladag
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230,000 - 245,000
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500-550
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45
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Efemcukuru
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95,000 - 105,000
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525-575
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25
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Olympias
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40,000 - 50,0001
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250-4502
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30
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Total
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365,000-400,000
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485-535
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100
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1
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Includes pre-commercial production of ~10k oz.
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2
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Range due to variability of by-product credits; commercial ounces
only.
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2017 Capital Expenditure
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Development Capital
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($M)
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Total Capital
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($M)
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Tocantinzinho
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35
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Total Development
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315
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Olympias
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55
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Total Capitalized Exploration
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10
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Skouries
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(170 – 200) 185
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Total Sustaining
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100
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Stratoni
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20
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Total
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425
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Certej
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20
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Total
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315
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Principal assumptions used in the preparation of guidance for 2017 include:
Gold price: $1,150/oz
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Lead price: $2,250/t
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CAD vs USD 1.30
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USD vs EUR 1.10
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Silver price: $20/oz
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Zinc price: $2,500/t
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REAL vs USD 3.50
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TRL vs USD 3.40
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2017 Financial Outlook
The Company's balance sheet remains one of the strongest in its peer group, with approximately $880
million in cash, cash equivalents and term deposits and $250 million in undrawn credit
lines. Sustaining capital for gold mining operations in 2017 is estimated to be approximately $100
million. Planned expenditures for mining development total $315 million. Exploration
expenditures in 2017 are budgeted at $35 million (65% expensed and 35% capitalized), with a balanced
focus on resource delineation and brownfield drilling at existing operations, testing known structures, and project generation.
Depreciation, depletion and amortization expense is expected to be approximately $300 per ounce of
gold sold, subject to the Company completing its year end 2016 reserve and resource calculation. General and administrative expense
is expected to be approximately $45 million.
Gold Operations Review and Future Outlook
TURKEY
Kisladag
In 2016 the original production budget for Kisladag was estimated between 225,000-240,000 ounces of gold at cash costs of
$550-600 per ounce. Total production of 211,161 ounces was due to slower than expected leach
rates from certain ore types mined earlier in the year. While gold production improved in the final quarter to 59,416 ounces,
inventory levels over the year increased by 37,000 ounces. A reduction of over 6,000 ounces occurred during the fourth quarter due
to the installation of new leach trains. The average ore grade placed on the leach pad during the year was 0.80 grams per
tonne gold and the average cash operating cost was $472 per ounce.
In 2017, Kisladag is expected to place 13.1 million tonnes of ore on the leach pad at a grade of 0.94 grams per tonne
gold. It is anticipated that with a continued increase in gold grade to 0.94 grams per tonne, the inventory levels are
expected to remain constant year over year. Mining in the pit throughout 2017 will return to areas with expected higher
metallurgical recoveries. Projected cash costs of $500-550 per ounce are based on minimal tonnes of
run of mine material being treated in 2017, in combination with reduced waste mining requirements under the new mine
plan. Sustaining capital expenditures for the year are estimated to be $45.0 million, similar to
the 2016 actual spend of $41.5 million.
Due to its long-term outlook for gold, the Company has reconfigured the pit design and decided to indefinitely defer the
completion of the Kişladağ expansion; eliminating the considerable sustaining capital that would have been required. Production is
expected to average 285,000 ounces during 2018 and 2019.
Efemcukuru
During 2016 Efemcukuru met its original production guidance of 90,000-100,000 ounces of gold with cash costs between
$550-600 per ounce, finishing the year with 98,333 ounces of gold produced at cash operating costs of
$512 per ounce.
In 2017, Efemcukuru is expected to mine and process over 450,000 tonnes of ore at an average grade of 7.3 grams per tonne gold,
producing between 95,000-105,000 ounces of gold, at operating costs between $525-575 per ounce.
Sustaining capital expenditures for 2017 are approximately $25.0 million (2016: $23.3 million), spent primarily on underground mine development, waste handling and tailings facilities
construction.
GREECE
Olympias
Olympias Phase II continues as per schedule, with commissioning of the process plant expected in the first quarter 2017. Total
capital spending for 2017 of $85.0 million includes completion of the Phase II plant, general
sustaining capital expenditures, and capital associated with advancement to Phase III including the continued construction of the
Kokkinolakas tailings facility along with underground development and water management.
Skouries
Capital expenditures at Skouries for 2017 are expected to be between $170.0 and $200.0 million,
lower than September 2016 guidance mainly due to the flexibility in the capital plan in combination
with cost initiatives that are underway. Funds will be used to continue the construction of the process plant and the
integrated waste management facility. Development of the decline is continuing, which will allow for extraction of material
from the underground soon after the open pit start-up – currently scheduled for 2019.
Stratoni
During 2017, Stratoni is expected to process 200,000 tonnes of ore at grades of 6.0% lead, 9.7% zinc and 155 grams
per tonne silver. Capital costs for the year are expected to total $20.0 million, which
includes underground equipment rebuilds and replacement, and underground development.
ROMANIA
Certej
The Company's plans for Certej are progressing on schedule. The Company will spend approximately $20.0
million in capital during 2017 with a focus on continuing infrastructure projects, advancing permitting and support
engineering as defined in the 2015 Feasibility Study. Permitting required includes an amendment to the EIA to allow for
improvements to the metallurgical process; converting the current Albion process to pressure oxidation.
BRAZIL
Tocantinzinho
Consideration of a decision to commence construction at Tocantinzinho has been deferred until all permits are in place, and in
the context of gold price outlook at that time and the progress of other priority development projects in the Company. Compared to
previous September 2016 guidance of $95.0 to $105.0 million in capital
expenditures for 2017, the Company now expects to spend $35.0 million in capital during 2017. The
focus will be primarily on completing construction of the access road to site, permitting, basic engineering and general site
costs.
2016 Fourth Quarter and Year End Financials Announcement
The 2016 Fourth Quarter and Year End Financials will be released after the market closes on February
23, 2017. A conference call to discuss the details will be held by senior management on February 24, 2017 at 8:30 AM PT (11:30 AM ET).
The call will be webcast and can be accessed at Eldorado Gold's website: www.eldoradogold.com
Conference Call Details
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Replay (available until March 10, 2017)
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Date:
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Friday February 24, 2016
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Toronto:
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416 849 0833
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Time:
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8:30 am PT (11:30 am ET)
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Toll Free:
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855 859 2056
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Dial in:
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647 427 7450
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Pass code:
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4916 2097
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Toll free:
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888 231 8191
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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 applicable Canadian securities laws. Often, but not always,
forward-looking statements and forward-looking information can be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or
variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved. Forward-looking statements or information herein include, but are not limited, to statements
or information with respect to the Company's Preliminary 2016 Operational Results and 2017 Guidance.
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, including the ability to
acquire Shares in the market through the NCIB and in compliance with regulatory requirements, the political and economic
environment that we operate in, the future price of commodities, anticipated costs and expenses and the impact of the disposition
on the Company's business. Although 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 statements 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: the ability to acquire shares through the NCIB;
political, economic, environmental and permitting risks, regulatory restrictions, gold price volatility, discrepancies between
actual and estimated production, estimated mineral reserves and resources and metallurgical recoveries; mining operational and
development risks, litigation risks, regulatory restrictions, including environmental and permitting regulatory restrictions and
liabilities, internal and external approval risks, risks of sovereign investment, and impact of the completion of the sale of our
interests in the Jinfeng, Tanjianshan and White Mountain Mines and the Eastern Dragon Development Project on the Company;
assumptions about the completion of post-closing conditions of the China National Gold and Yintai Transactions, including liability
and timing of meeting the closing conditions; changes in the use of proceeds; 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 30, 2016.
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.
All forward looking statements and information contained in this News Release are qualified by this cautionary
statement.
About Eldorado Gold
Eldorado is a leading low cost gold producer with mining, development and exploration
operations in Turkey, Greece, Romania, Serbia and Brazil. The Company's success to date is based on a low cost strategy, a highly
skilled and dedicated workforce, safe and responsible operations, and long-term partnerships with the communities where it
operates. Eldorado's common shares trade on the Toronto Stock Exchange (TSX: ELD) and the
New York Stock Exchange (NYSE: EGO).
SOURCE Eldorado Gold Corporation