Eldorado swings to Q3 loss, lifts FY guidance

TORONTO (miningweekly.com) – Canadian miner Eldorado Gold has swung to a third-quarter loss as lower realised gold prices and lower sales weighed down the bottom line.

For the three months ended September 30, the Vancouver-based company with mining, development and exploration operations in Turkey, China, Greece, Romania and Brazil, reported a net loss attributable of $96.1-million, or $0.13 a share, compared with profit of $19.8-million, or $0.03 a share, in the comparable period a year ago.

During the quarter the Company recorded non-cash charges to income tax expense of $84.4-million, including $63.5-million related to a change in the corporate income tax rate in Greece, and $20.9-million related to the impact of foreign currency movements on the valuation of the company's tax basis of assets in Turkey, China, and Brazil.

Excluding special items, Eldorado reported a headline loss of $4-million, or $0.01 a share, compared with a $36.1-million profit, or $0.05 a share, in the third quarter of 2014. Results missed Wall street analysts’ average expected adjusted earnings of $0.01 a share for the period, on revenue of $198.3-million.

Revenues declined 20% to $211.5-million, as gold revenues fell 14.5% to $206.2-million on sales of 182 124 oz of gold, at an average realised gold price of $1 132/oz, down from 189 321 oz sold at $1 274/oz a year earlier, respectively. The decrease in sales volumes was mainly attributable to lower year-over-year output at Kisladag, also located in Turkey.

Eldorado reported gold output of 183 226 oz, down 5% year-on-year, with average cash costs of $552/oz. Cash operating costs per ounce increased year-on-year at all mines except Efemcukuru, in Turkey.

During the quarter, Eldorado temporarily suspended operating and development activities at its projects in Greece as a result of a decision by the Greek Ministry of Energy and Environment to suspend the technical studies previously approved for the company's Kassandra mining projects. However, activities resumed in October after the Council of State – Greece's Supreme Court on administrative and environmental matters – issued an injunction against enforcement of the decision of the Ministry of Energy and Environment. This was an interim injunction that would be in effect pending the final decision of the Council of State in the proceedings in which the interim injunction was granted.

“In Greece, our employees and contractors are now back at work on the Skouries and Olympias projects, and mining operations have resumed at Stratoni. The Company anticipates further positive engagement with the Greek government as we move forward with development." CEO Paul Wright stated.

As a result, Eldorado upgraded its full-year production guidance to 710 000 oz of yellow metal, at average cash costs of $565/oz and all-in sustaining costs of $870/oz. Previous mid-year guidance was production of 690,000 ounces at average cash costs of $590 per ounce and all-in sustaining cash costs of $925 per ounce.

As at the end of the quarter, the company had liquidity of about $763.8-million and access to $388.8-million in cash, cash equivalents and term deposits, and $375-million in undrawn lines of credit.

Meanwhile, Eldorado said that as a result in the low gold price, and as a part of continued cost savings, the company would implement pay cuts to senior management remunerations. Wright would take a 20% reduction in his base salary, while the executive team, including president, CFO, COO, executive VP and the administration and corporate secretary would all take a 10% pay cut. The board also took a 10% reduction in their annual retainer fees.

Eldorado also cut is new project development capital spending to $225-million, compared with previous guidance of $300-million, mainly owing to lower capital spending at Skouries, in Greece. 

Courtesy : MiningWeekly