Eldorado Gold Corporation
AMEX : EGO
TSX : ELD

Eldorado Gold Corporation

August 01, 2008 07:55 ET

Eldorado Gold Corporation: Q2 2008 Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 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") (TSX:ELD)(AMEX:EGO) is pleased to report on the Company's financial and operational results for the second quarter ended June 30, 2008. "This was the first full quarter of production from our restarted Kisladag mine, and our operating and financial results reflect our strong performance. We benefitted from low cash costs, increased production levels and high selling prices as compared to the first quarter of the year. We also commenced construction at our Efemcukuru gold mine in Turkey and continued construction at the Vila Nova iron ore mine in Brazil."

Q2 2008 Highlights

- Produced 87,380 ounces of gold from our operations at an average cash cost of $229 per ounce

- Sold 88,610 ounces of gold from our Tanjianshan and Kisladag mines at a realized average price of $904 per ounce

- Reported earnings of $0.07 per share

- Commenced construction of our Efemcukuru gold mine in Turkey

- Continued construction of our Vila Nova iron ore mine in Brazil

- Released $10.8 million in restricted cash as a result of loan repayments from our Tanjianshan gold mine in China.

On July 3, we announced that we were successful in our bid to acquire all outstanding shares of Frontier Pacific Mining Corporation. On July 9 we announced an agreement with Brazauro Resources to earn an interest in the Tocantinzinho project in Brazil and on July 30 we announced we entered into a letter agreement with AngloGold Ashanti to sell the Sao Bento mine.

Financial Results

Our consolidated net income for the second quarter of 2008 was $25.2 million or $0.07 per share, compared with net income of $26.7 million or $0.08 per share in the second quarter of 2007. In the second quarter of 2008, we sold 88,610 ounces of gold at an average price of $904 per ounce, compared to 112,702 ounces at an average price of $664 per ounce in the second quarter of 2007.

Revenues increased 7% over the same period in 2007 due to increases in selling prices, partially offset by lower ounces sold. Production was higher in the second quarter of 2007 due to ounces produced during the plant decommissioning at Sao Bento as well as a one-time production increase of 12,575 ounces at Kisladag related to cleaning the electro-winning cathodes.

Operating Performance

Kisladag

Our Kisladag mine benefitted from its first full quarter of production since re-opening on March 6, 2008. During the quarter, we placed 2,092,957 tonnes of ore on the leach pad at a grade of 1.47 grams per tonne of gold. We produced 55,490 ounces of gold at a cash cost of $230 per ounce during the quarter.

In our transition to making Kisladag an owner-operated mine, we completed the assembly of two Hitachi hydraulic shovels as well as ten Caterpillar haul trucks and ancillary equipment, and commenced waste mining activities with the fleet.

Tanjianshan

We produced 31,890 ounces of gold at a cash cost of $229 per ounce in the second quarter. We spent $10.3 million on capital expenditures, primarily relating to construction of the sulphide ore processing project, which we expect to complete by the fourth quarter of 2008. Mining has now shifted to the Jinlonggou pit.

Development

Efemcukuru

We began construction work at Efemcukuru, spending $2.8 million during the quarter. Activities during the quarter focused on site clearing and preparation along with engineering work designed to finalize process flow sheets and allow orders to be placed for long lead-time items.

Vila Nova Iron Ore

We are anticipating start-up of our Vila Nova iron ore project late in the fourth quarter of 2008. Engineering work on the design and detailing of the ore processing plant is nearing completion, and we have placed orders for the major plant and mobile mining equipment and have begun staffing the project. We are continuing with stripping and earthwork preparation in the areas of the pit, process plant and tailings dam and we have begun the civil foundation installation for the crushers and screen plant.

Exploration

Exploration expense for the second quarter was $2.7 million (Q2 2007 - $2.9 million); exploration activities focused on our properties in Turkey, Brazil and China.

Exploration - Turkey

Our reconnaissance work during the quarter focused on Zonguldak in the western Pontides and Sayacik, a volcanic center adjacent to Kisladag. At Efemcukuru we are finishing a large soil sampling program and preparing for a drill program targeting the North Ore Shoot.

At Kisladag we completed 3,775 meters of diamond drilling and 2,598 meters of reverse circulation drilling. Resource drilling at Kisladag is targeting inferred mineralization discovered during last years exploration program and the continuation of known mineralization on the western edge of the deposit.

Exploration - Brazil

Exploration in Brazil consisted of support for the Vila Nova iron ore project and project evaluations in various prospective areas.

Exploration - China

We drilled 6,879 meters in 39 holes, primarily at Xijingou (south of the Jinlongou pit limit) and Qinlongtan South, where the target horizon is similar to the mineralization found at the main Qinlongtan deposit. In the third quarter, we will begin drilling in the Qinlongtan deep zone, targeting high grade ore mined at QLT and extending beneath the final pit floor.

Acquisitions

On July 3, we announced that we were successful in our bid to acquire all outstanding shares of Frontier Pacific Mining Corporation. Frontier Pacific owns the Perama Hill gold project in northeastern Greece, and the acquisition will accelerate Eldorado's growth strategy and strengthen its competitive position in southeastern Europe.

Eldorado is a gold producing and exploration company actively growing businesses in Brazil, Turkey, China, Greece 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, August 1, 2008 to discuss the 2008 Second Quarter Financial and Operating 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 August 8, 2008 by dialing 416-695-5800 in Toronto or 1-800-408-3053 free in North America and entering the Pass code: 3266194.

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 (TSX:ELD) and the American Stock Exchange (AMEX:EGO).

Request for information packages: laurelw@eldoradogold.com



PRODUCTION HIGHLIGHTS(1)

---------------------------------------------------------------------------
First Second Second First First
Quarter Quarter Quarter Six Months Six Months
2008 2008 2007 2008 2007
---------------------------------------------------------------------------

Gold Production
---------------
Total Ounces Produced 67,234 87,380 98,970 154,614 187,750
Commercial Production 67,234 87,380 98,970 154,614 175,258
Cash Operating Cost
($/oz)(1, 4) 213 229 259 222 242
Total Cash Cost
($/oz)(2, 4) 268 259 287 263 263
Total Production Cost
($/oz)(3, 4) 393 293 332 337 305
Realized Price ($/oz -
sold) 933 904 664 917 658
---------------------------------------------------------------------------

Kisladag Mine, Turkey
---------------------
Commercial Production 27,228 55,490 68,095 82,718 111,696
Tonnes to Pad 529,480 2,092,957 1,872,691 2,622,437 3,722,021
Grade (grams / tonne) 1.18 1.47 1.32 1.41 1.30
Cash Operating Cost
($/oz)(4) 217 230 187 225 189
Total Cash Cost
($/oz)(2, 4) 218 232 190 228 192
Total Production Cost
($/oz)(3, 4) 246 273 221 264 223
---------------------------------------------------------------------------

Tanjianshan Mine, China(5)
-------------------------
Total Ounces Produced 40,006 31,890 29,135 71,896 68,387
Commercial Production 40,006 31,890 29,135 71,896 55,895
Tonnes Milled 223,395 193,035 237,909 416,430 380,768
Grade (grams / tonne) 6.83 6.04 4.41 6.46 5.44
Cash Operating Cost
($/oz)(4) 211 229 440 219 353
Total Cash Cost
($/oz)(2, 4) 302 305 522 303 411
Total Production Cost
($/oz)(3, 4) 493 327 616 420 491
---------------------------------------------------------------------------

Sao Bento Mine, Brazil
----------------------
Commercial Production - - 1,740 - 7,667
Tonnes Milled - - - - 20,069
Grade (grams / tonne) - - - - 11.71
Cash Operating Cost
($/oz)(4) - - 80 - 208
Total Cash Cost
($/oz)(2, 4) - - 132 - 224
Total Production Cost
($/oz)(3, 4) - - (50) - 152
---------------------------------------------------------------------------

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
--------------------------------------------------------------------------

(Expressed in thousands of US dollars)

June 30, December 31,
2008 2007
$ $

Assets
Current assets
Cash and cash equivalents 96,376 46,014
Restricted cash (note 3) 60,000 65,710
Marketable securities 5,636 1,615
Accounts receivable and other 26,457 28,720
Inventories 61,797 57,525
Derivative contract (note 8) 1,478 2,956
Future income taxes - 959
---------------------
251,744 203,499
Restricted cash (note 3) 8,300 8,300
Mining interests 404,428 377,705
Other 2,238 2,238
---------------------
666,710 591,742
---------------------
---------------------

Liabilities
Current liabilities
Accounts payable and accrued liabilities 54,446 39,943
Debt - current 60,380 65,422
Current portion of asset retirement obligations 1,151 509
Current portion of future income taxes 494 -
---------------------
116,471 105,874
Debt - long-term 139 139
Contractual severance obligations 1,220 1,479
Asset retirement obligations 6,517 8,290
Future income taxes 30,480 26,781
---------------------
154,827 142,563
---------------------

Non-controlling interest 5,007 -

Shareholders' Equity
Share capital (note 4(a)) 760,219 753,058
Contributed surplus (note 4(b)) 16,165 13,083
Accumulated other comprehensive income (loss)
(note 4(c)) 1,776 214
Deficit (271,284) (317,176)
---------------------
506,876 449,179
---------------------
666,710 591,742
---------------------
---------------------

Subsequent events (note 10)

Approved on behalf of the Board of Directors

(Signed) Robert Gilmore Director (Signed) Paul N. Wright Director


Eldorado Gold Corporation
Unaudited Consolidated Statements of Operations and Deficit
For the period ended June 30,
--------------------------------------------------------------------------

(Expressed in thousands of US dollars except per share amounts)

Three months ended Six months ended
------------------ -----------------
2008 2007 2008 2007
$ $ $ $

Revenue
Gold sales 80,059 74,876 148,734 116,424
Interest and other income 2,469 1,786 6,313 3,725
--------------------------------------

82,528 76,662 155,047 120,149
--------------------------------------

Expenses
Operating costs 22,977 31,642 42,796 46,708
Depletion, depreciation and
amortization 3,512 4,645 12,336 7,754
General and administrative 9,937 4,618 19,731 12,040
Exploration 2,672 2,865 4,863 5,661
Mine standby costs - - 2,433 -
Accretion of asset retirement
obligation 133 80 266 160
Foreign exchange gain (1,686) (2,089) (832) (2,654)
Gain on disposal of assets - (187) (24) (3,664)
Interest and financing costs 842 1,120 1,870 1,896
Unrealized loss on derivative
contract 739 - 1,478 -
--------------------------------------

39,126 42,694 84,917 67,901
--------------------------------------
Income before income taxes and
other items 43,402 33,968 70,130 52,248
--------------------------------------

Income tax expense
Current (8,397) (1,042) (14,079) (1,064)
Future (4,843) (6,195) (5,152) (11,871)
--------------------------------------

(13,240) (7,237) (19,231) (12,935)
--------------------------------------

Non-controlling interest (5,007) - (5,007) -
--------------------------------------

Net income for the period 25,155 26,731 45,892 39,313

Deficit, beginning of period (296,439) (340,888) (317,176) (353,470)
--------------------------------------
Deficit, end of period (271,284) (314,157) (271,284) (314,157)
--------------------------------------
--------------------------------------

Weighted average number of shares
outstanding
Basic 345,051 343,220 344,827 342,294
Diluted 346,822 344,915 346,230 344,044

Earnings per share
Basic income per share - US$ 0.07 0.08 0.13 0.11
Diluted income per share - US$ 0.07 0.08 0.13 0.11

Basic income per share - Cdn$ 0.07 0.09 0.13 0.13
Diluted income per share - Cdn$ 0.07 0.09 0.13 0.13


Eldorado Gold Corporation
Unaudited Consolidated Statements of Cash Flows
For the period ended June 30,
--------------------------------------------------------------------------

(Expressed in thousands of US dollars, unless otherwise stated)

Three months ended Six months ended
------------------ -----------------
2008 2007 2008 2007
$ $ $ $

Cash flows generated from (used in):

Operating activities
Net earnings for the period 25,155 26,731 45,892 39,313
Items not affecting cash
Accretion of asset retirement
obligation 133 80 266 160
Contractual severance expense - - - 598
Depletion, depreciation and
amortization 3,512 4,646 12,336 7,754
Unrealized foreign exchange loss - 218 418 365
Future income taxes 4,843 6,195 5,152 11,871
Gain on disposal of assets - (187) (24) (3,664)
Imputed interest and financing
costs 9 17 19 34
Stock-based compensation 2,961 1,136 7,843 4,230
Non-controlling interest 5,007 - 5,007 -
Unrealized loss on derivative
contract 739 - 1,478 -
--------------------------------------
42,359 38,836 78,387 60,661
Property reclamation payments (745) (1,459) (1,397) (2,642)
Contractual severance payments (28) (298) (259) (1,910)
Changes in non-cash working capital
(note 6) (2,255) 3,880 9,643 (2,457)
--------------------------------------
39,331 40,959 86,374 53,652

Investing activities
Mining interests
Capital expenditures (19,482) (20,088) (29,778) (34,028)
Sales proceeds 219 659 440 1,362
Available-for-sale securities
Purchases (651) (380) (2,443) (380)
Disposals - - 263 -
Pre-production gold sales
capitalized in mining interests - - - 10,052
Non-producing properties under
development (7,570) (3,458) (9,988) (6,417)
Value added taxes recoverable on
mining interests - 2,384 - 3,461
Restricted cash 11,010 3,178 5,710 (4,053)
--------------------------------------
(16,474) (17,705) (35,796) (30,003)

Financing activities
Capital stock
Issuance of common shares for cash 4,050 6,675 5,263 7,497
Debt
Proceeds - - 5,000 -
Repayment (10,479) (15,229) (10,479) (15,229)
--------------------------------------

(6,429) (8,554) (216) (7,732)
--------------------------------------
Net increase in cash and cash
equivalents 16,428 14,700 50,362 15,917
Cash and cash equivalents -
beginning of period 79,948 61,184 46,014 59,967
--------------------------------------
Cash and cash equivalents - end of
period 96,376 75,884 96,376 75,884
--------------------------------------
--------------------------------------

Supplementary cash flow information (note 6)


Eldorado Gold Corporation
Unaudited Consolidated Statements of Comprehensive Income
For the period ended June 30,
--------------------------------------------------------------------------

(Expressed in thousands of US dollars, unless otherwise stated)

Three months ended Six months ended
------------------ ----------------
2008 2007 2008 2007
$ $ $ $

Net earnings for the period ended
June 30, 25,155 26,731 45,892 39,313

Other comprehensive income (loss)
Net unrealized gains (losses) on
available-for-sale Investment
(note 4(c)) 2,083 (48) 1,562 (9)
------- -------------------------

Comprehensive income for the period
ended June 30, 27,238 26,683 47,454 39,304
------- -------------------------
------- -------------------------


To view Consolidated Financial Statements, Management's Discussion and Analysis (pdf) please click on the following link: http://media3.marketwire.com/docs/0801eld.pdf

The TSX has neither approved nor disapproved the form or content of this release.

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