Eldorado Gold Corporation
AMEX : EGO
TSX : ELD

Eldorado Gold Corporation

August 03, 2006 08:30 ET

Eldorado Gold Corporation: Q2 2006 Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 3, 2006) -

(all figures in United States dollars, unless otherwise noted)

Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation (TSX:ELD)(AMEX:EGO), is pleased to report on the Company's financial and operating results for the second quarter ended June 30, 2006.

Q2 2006 Highlights

- Commenced operations at the Kisladag mine and poured the first gold bar at the mine

- Produced 6,872 ounces at Kisladag to the end of June at a cash operating cost of $242 per ounce

- Continued to advance construction at the Tanjianshan mine in China, which continues on schedule to start production in October

- Announced encouraging results from our exploration at the Vila Nova gold project in Brazil

- Recorded a net income for the quarter of $0.2 million (or $0.00 per share) compared with a net loss of $11.1 million (or $0.04 per share) in Q2 2005

- Sold 17,907 ounces of gold at an average price of $615 per ounce

Financial Results

At June 30, 2006, we held $124.6 million in cash and short-term deposits and $50.0 million in a reserve account, offsetting our debt of $52.8 million. We remain hedge free.

Our consolidated net income for Q2 2006 was $0.2 million (or $0.00 per share) compared with a net loss of $11.1 million (or $0.04 per share) in Q2 2005. This increase in net income resulted from increased revenues from gold sales, increased interest income, and foreign exchange gains resulting primarily from Canadian dollars on hand, offset by increased exploration and administrative expenses.

In Q2 2006, we sold 17,907 ounces of gold at an average price of $615 per ounce, compared to 12,056 ounces at an average price of $425 per ounce in Q2 2005. The increased gold production, as compared to Q2 2005, is due to higher ore production rates at the Sao Bento mine following the completion of the shaft-deepening project in 2005.

Operating Performance

Sao Bento

In Q2 2006, Sao Bento produced 18,163 ounces of gold at a total cash cost of $441 per ounce, compared to 14,932 ounces of gold at a total cash cost of $440 per ounce in Q2 2005. The increased gold production over the comparable period from 2005 reflects higher ore production rates as a result of our completion of the shaft-deepening project in 2005.

We expect to end commercial production at the Sao Bento gold mine early in 2007. We are currently reviewing alternatives regarding the future of the assets at our mine. An agreement with a third party was reached during the quarter ended June 30, 2006, for the processing of 500 tonnes of gold concentrate, which during Q3 and Q4 will yield approximately 3,000 ounces of gold to the Company's account.

Kisladag

In April 2006, we announced the start-up of the Kisladag mine in Turkey. As a result of slower than expected commissioning of the crushing circuit and mechanical problems with a process water supply pump, we have revised our estimates of Kisladag's 2006 production from 120,000 ounces to 70,000 ounces at a cash operating cost of $219 per ounce. We have resolved the issues with the water supply pump and we expect production to increase to the anticipated 240,000 ounces of gold per year in 2007. The mine officially began commercial production on July 1, 2006. In July we sold 11,484 ounces of Kisladag production at a realized price of $627 per ounce. In July, Kisladag produced 7,502 ounces of gold.

Development

China

Construction at Tanjianshan in Q2 2006 focused on completing the mechanical and electrical works within the plant. We completed and commissioned the water and sewage treatment plants, as well as the laboratory, accommodation and canteen facilities. Other work included completing the CIL tanks, the roof structure and tank platform steel work.

During the second quarter, we announced our intent to use an owner-operated mining option at the Tanjianshan mine, which will result in approximately $23 million savings in operating costs over the life of the mine.

Turkey

At Efemcukuru, we are proceeding with the permitting process and land acquisition, as well as an infill drilling program and step-out drilling program designed to test the down-dip potential of the ore zone. We plan to complete a feasibility study in Q4 2006.

Exploration Outlook

Our exploration budget for 2006 is $14.0 million, enabling us to continue advancing our pipeline of promising properties in Turkey, Brazil and China.

Turkey

We concluded our drilling program at the AS project over the Dogrudere anomaly. Results show widespread weak copper and gold mineralization; overall, the implied mineralized zone is small. We will now concentrate on surface mapping and rock sampling in key areas to the south of the Dogrudere anomaly to guide potential sites for drilling later in the year.

We also completed the bulk of our exploration program at Mahmur Tepe. While trench results do show the presence of gold mineralized zones, the results have not identified the presence of structural zones containing economic concentrations of gold.

Brazil

At the Vila Nova gold project, our drill results at the Croado pit extended the gold mineralization along strike to over 300 meters and to over 80 meters below surface. At Gaivotas, trench sampling and initial drilling confirmed multiple zones of widespread lower grade mineralization interspersed with narrow higher grade intervals. Metallurgical testwork on both oxidized and sulphidic samples are encouraging.

Drill testing with three contract diamond drill rigs will continue at Vila Nova South and in Gaivotas, and we will conduct initial testing of the Santa Maria, Santa Maria Norte and Guaxeba pits.

We completed our data acquisition at the Vila Nova iron project. We will now update the iron project mineral resource model and revise the pit design to support a pre-feasibility study by the fourth quarter.

China

We began infill and exploration diamond drilling in the existing Jinlonggou ("JLG")and Qinlongtan ("QLT") deposits, extending the size and grade of a high grade gold mineralized zone in the southwest end of Jinlonggou. On August 1, 2006, we released additional positive drill results from infill drilling at JLG and QLT. We also started to explore on Huanglvgou ("HLG") and Longbaigou ("LBG"), two highly prospective mineralized trends which sit between QLT and JLG. In the third quarter, we will map and sample the trenches in the HLG and LBG target areas, conduct an induced polarization and magnetics survey and conclude the work activity in this area with 1,000 meters of diamond drilling.

"The pouring of the first gold bar from Kisladag on May 12 was a very significant event for our employees, our company and the local communities near Kisladag," said Paul Wright, President and Chief Executive Officer. "With construction proceeding on schedule at Tanjianshan, by the end of 2006, we will be producing gold from three locations - Sao Bento, Kisladag and Tanjianshan. Our strong cash position gives us the financial flexibility to continue to grow sustainably through the acquisition, exploration and development of mineral properties."

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 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 on Tuesday August 3, 2006 to discuss the Q2 2006 Financial and Operating Results at 11:30 a.m. EDT (8:30 a.m. PDT). You may participate in the conference call by dialing 416-695-9753 in Toronto or 1-877-888-4210 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 for one week by dialing 416-695-5275 in Toronto or 1-888-509-0081 toll free in North America and entering the Pass code: 6626230.

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, Form 40-F, dated March 23, 2006. Forward-looking statements in this release include statements regarding the expectations and beliefs of management. Such factors include, 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, Form 40F, dated March 23, 2006. 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.

Eldorado Gold Corporation's shares trade on the Toronto Stock Exchange (TSX:ELD) and the American Stock Exchange (AMEX:EGO).

Request for information packages: info@eldoradogold.com.



ELDORADO GOLD CORPORATION
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)

June 30 December 31
2006 2005
(unaudited)
---------- ----------
ASSETS
Current assets
Cash and cash equivalents $ 124,592 $ 33,826
Accounts receivable 10,191 8,264
Prepaids 3,683 2,024
Inventories 18,931 7,597
---------- ----------
157,397 51,711

Property, plant and equipment 236,504 186,610
Mineral properties and
deferred development 25,032 23,326
Deposits (note 4) 50,000 50,000
Investments and advances 51 562
Other assets 8,470 6,288
Goodwill 2,238 2,238

---------- ----------
$ 479,692 $ 320,735
---------- ----------
---------- ----------

LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $ 17,625 $ 19,730
Current portion of capital
lease obligation 36 37
Current portion of long term debt
(note 4) 1,928 1,488
---------- ----------
19,589 21,255

Capital lease obligation 72 90
Long term debt (note 4) 50,832 50,832
Asset retirement obligation 11,466 11,143
Contractual severance obligation 3,125 2,437
Future income taxes 11,214 10,051
---------- ----------
96,298 95,808
---------- ----------

SHAREHOLDERS' EQUITY
Share capital 739,340 573,721
Contributed surplus 8,065 7,976
Deficit (364,011) (356,770)
---------- ----------
383,394 224,927

$ 479,692 $ 320,735
---------- ----------
---------- ----------

Commitments and contingencies
(note 6)
Subsequent event (note 8)

See accompanying notes to consolidated financial statements.


APPROVED BY THE BOARD OF DIRECTORS

Paul N. Wright Robert R. Gilmore
Director Director


ELDORADO GOLD CORPORATION
Consolidated Statements of Operations
(Unaudited - Expressed in thousands
of U.S. dollars except per share amounts)

Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2006 2005 2006 2005
------------- ----------- ----------- -----------

REVENUE
Gold sales $ 11,007 $ 5,128 $ 19,599 $ 12,362
Interest
and other
income 2,258 1,026 3,094 1,674
------------- ----------- ----------- -----------
13,265 6,154 22,693 14,036
------------- ----------- ----------- -----------

EXPENSES
Operating
costs 8,574 6,920 16,321 14,974
Depletion,
depreciation
and
amortization 87 2,402 171 4,917
General and
administrative 3,555 2,210 6,228 4,667
Exploration
expense 3,235 1,620 5,403 2,828
Interest and
financing
costs 23 36 61 36
Stock based
compensation
expense 126 304 2,014 1,542
Accretion
of asset
retirement
obligation 161 121 323 242
Writedown
of assets - - - 662
Gain on disposal
of assets - - (904) -
Foreign exchange
loss (gain) (2,481) 1,100 (914) 1,708
------------- ----------- ----------- -----------
13,280 14,713 28,703 31,576

------------- ----------- ----------- -----------
Loss before
income taxes (15) (8,559) (6,010) (17,540)
Tax recovery
(expense) -
current (29) 2 (69) (70)
Tax recovery
(expense) -
future 259 (2,506) (1,162) (2,410)
------------- ----------- ----------- -----------

NET INCOME
(LOSS)
FOR THE
PERIOD $ 215 $ (11,063) $ (7,241) $ (20,020)
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------

Basic and
diluted
income
(loss) per
share - US$ $ 0.00 $ (0.04) $ (0.02) $ (0.07)
Basic and
diluted
income
(loss) per
share - Cdn$ $ 0.00 $ (0.05) $ (0.02) $ (0.09)

Weighted
average
number of
shares
outstanding 340,515,511 276,458,943 332,786,646 276,397,935
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------


Consolidated Statements of Deficit
(Unaudited - Expressed in thousands of U.S. dollars)

Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2006 2005 2006 2005
------------- ----------- ----------- -----------

Deficit,
beginning
of period $ (364,226) $ (316,601) $ (356,770) $ (307,644)
Net income
(loss) for
the period 215 (11,063) (7,241) (20,020)
------------- ----------- ----------- -----------
Deficit,
end of the
period $ (364,011) $ (327,664) $ (364,011) $ (327,664)
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------

See accompanying notes to consolidated financial statements.


ELDORADO GOLD CORPORATION
Consolidated Statements of Cash Flows
(Unaudited - Expressed in thousands of U.S. dollars)

Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2006 2005 2006 2005
------------- ----------- ----------- -----------

Cash flows from
operating
activities
Net income
(loss) for
the period $ 215 $ (11,063) $ (7,241) $ (20,020)
Items not
affecting cash
Depletion,
depreciation
and amortization 87 2,402 171 4,917
Future income
taxes (257) 2,506 1,163 2,410
Interest and
financing costs - 36 - 36
Writedown of
assets - - - 662
Gain on
disposal
of assets - - (904) -
Stock based
compensation 228 409 2,213 1,773
Contractual
severance
expense 344 106 688 212
Accretion
of asset
retirement
obligation 161 121 323 242
Foreign
exchange
(gain) loss (2,635) 734 (1,979) 1,529
Changes in
non-cash
working capital
Accounts
receivable
and prepaids (2,579) (2,880) (3,586) (2,100)
Inventories (8,030) (1,397) (11,334) (1,345)
Accounts payable
and accrued
liabilities 783 2,191 (2,105) 3,653
------------- ----------- ----------- -----------
Cash flows used
for operating
activities (11,683) (6,835) (22,591) (8,031)
------------- ----------- ----------- -----------

Cash flows from
investing activities
Property, plant
and equipment (27,615) (18,296) (48,934) (31,192)
Mineral properties
and deferred
development (1,032) (152) (1,706) (294)
Proceeds from
disposal of
investments
and advances - - 1,481 -
Other assets (448) (2,031) (2,182) (2,031)
------------- ----------- ----------- -----------
Cash flows used
for investing
activities (29,095) (20,479) (51,341) (33,517)
------------- ----------- ----------- -----------

Cash flows from
financing
activities
Long term debt (691) 35,159 (691) 35,159
Deposits - (35,115) - (35,115)
Issuance of
common shares
for cash 1,333 (3) 163,495 342
Interest and
financing costs (4) - (19) -
------------- ----------- ----------- -----------
Cash flows provided
by financing
activities 638 41 162,785 386
------------- ----------- ----------- -----------

Foreign exchange
gain (loss) on
cash held in
foreign currency 2,635 (737) 1,913 (1,535)
------------- ----------- ----------- -----------

Net increase
(decrease) in
cash and cash
equivalents (37,505) (28,010) 90,766 (42,697)
Cash and cash
equivalents at
beginning of
the period 162,097 120,703 33,826 135,390
------------- ----------- ----------- -----------

Cash and cash
equivalents
at end of
the period $ 124,592 $ 92,693 $ 124,592 $ 92,693
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------

Supplementary
cash flow
information
Income
taxes paid $ 73 $ - $ 93 $ -
Interest paid $ 691 $ - $ 691 $ -

See accompanying notes to consolidated financial statements.


ELDORADO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Three and six months ended June 30, 2006
(Unaudited - Expressed in thousands of US dollars,
unless otherwise stated)


1. Nature of operations

Eldorado Gold Corporation ("Eldorado", or the "Company") is engaged in gold mining and related activities, including exploration and development, extraction, processing, and reclamation. Gold, the primary product, is produced in Brazil. Development and construction of mines and processing facilities are underway in Turkey and China. Exploration activities are carried on in Brazil, Turkey and China.

The Company has not determined whether all of its development properties contain ore reserves that are economically recoverable. The recoverability of the amount shown for mineral properties and deferred development is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing, licenses and permits to complete the exploration and development of its properties, and upon future profitable production or proceeds from the disposition of the properties. The amounts shown as mineral properties and deferred development represent net costs to date, less amounts amortized and/or written off and do not necessarily represent present or future values.

2. Basis of presentation and principles of consolidation

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles following the same accounting policies and methods of application as the audited annual financial statements of the Company as at and for the year ended December 31, 2005, expect as stated in note 3. The disclosures in these interim financial statements do not conform in all respects to the requirements of generally accepted accounting principles for annual financial statements. These interim financial statements should be read in conjunction with the most recent audited annual financial statements of the Company.

All material intercompany balances and transactions have been eliminated.

3. Significant accounting policies

As a result of the commissioning of the Kisladag mine, the Company adopted an accounting policy for open pit operations, analogous to its accounting policy for underground operations:

Mineral properties and capitalized development costs, where the mine operating plan calls for production from well defined ore reserves, are amortized over the life of the mine on a units of production basis. Buildings, machinery, mobile and other equipment are amortized on a straight-line basis over their estimated useful lives, not exceeding the life of the mine.

The adoption of this policy has no effect on any prior periods presented.

4. Deposits and Long term debt



June 30 December 31
2006 2005
-----------------------------
Deposits
Reserve account $ 50,000 $ 50,000
-----------------------------
$ 50,000 $ 50,000
-----------------------------
-----------------------------

Long term debt
Corporate loan facility $ 50,000 $ 50,000
Sino Gold Limited 832 832
-----------------------------
50,832 50,832
Current portion
Corporate loan facility 1,619 1,179
Sino Gold Limited 309 309
-----------------------------
$ 52,760 $ 52,320
-----------------------------
-----------------------------


In April 2005, a wholly-owned subsidiary of the Company, Tuprag Metal Madencilik Sanayi Ve Ticaret Limited Surketi ("Tuprag"), entered into a $65 million Revolving Credit Facility (the "Facility") with HSBC Bank USA, National Association ("HSBC Bank"). The Facility is secured by cash deposits by the Company to a Reserve account, equivalent to the amounts advanced by HSBC Bank to Tuprag.

At June 30, 2006, the total debt outstanding under the Facility was $50 million and bears interest fixed at LIBOR plus 1.25% on the date of the draw. The Company has drawn this $50 million in four tranches at a weighted average interest rate of 4.90%. Each tranche typically has a maturity of approximately 13 months. The Company expects to renew all scheduled repayments in 2006 as they arise.

Pursuant to the acquisition of Afcan Mining Corporation, the Company assumed two loans payable to Sino Gold Limited, one of which was fully repaid prior to December 31, 2005. The remaining loan, which is non-interest-bearing, has been discounted at 8%. Minimum repayments required under this loan are as follows:



December 31, 2006 $ 400
December 31, 2007 400
December 31, 2008 400
December 31, 2009 150
---------
1,350
Less: imputed interest (209)
---------
$ 1,141
---------
---------


5. Share capital

(a) Authorized share capital

The Company's authorized share capital consists of an unlimited number of voting common shares without par value, and an unlimited number of non-voting common shares without par value.

(b) Issued and outstanding common shares



Number of
Voting common shares shares Amount
--------------------------------
Balance, December 31, 2005 302,577,378 $ 573,721
Shares issued upon exercise of
stock options 1,287,999 3,788
Shares issued upon exercise of
Afcan warrants 2,502,470 5,300
Financing, February 2006, net of
issue costs 34,500,000 154,407
Estimated fair value of stock
options exercised - 2,124
--------------------------------
Balance, June 30, 2006 340,867,847 $ 739,340
--------------------------------


At June 30, 2006, there were no non-voting common shares outstanding.

(c) Share option plans

The Company has share option plans approved by shareholders that allow it to grant options, subject to regulatory terms and approval, to its directors, officers, employees, and consultants.

The continuity of share purchase options is as follows:



Weighted Contractual
average weighted
exercise average
price Number remaining
(Canadian of life
dollars) options (years)
----------------------------------
Balance, December 31, 2005 C$ 3.34 7,176,872 3.36
Granted 5.47 1,414,000
Exercised 3.39 (1,287,999)
----------------------------------
Balance, June 30, 2005 C$ 3.74 7,302,873 3.27
----------------------------------


At June 30, 2006, an aggregate of 6,415,206 share purchase options with a weighted average exercise price of Cdn$3.50 had vested and were exercisable.

The exercise prices of all share purchase options granted during the period were at or above the market price at the grant date. Using an option pricing model, the estimated fair values of all options granted for the three and six months ended June 30, 2006 and 2005, which have been reflected in the consolidated statements of operations, are as follows:



Three months ended June 30 Six months ended June 30
----------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------
Operating costs $ 43 $ 25 $ 76 $ 97
Exploration 59 80 123 134
Administration 126 304 2,014 1,542
----------------------------------------------------
Total compensation
cost recognized
in operations,
credited to
contributed
surplus $ 228 $ 409 $ 2,213 $ 1,773
----------------------------------------------------
----------------------------------------------------


The weighted-average assumptions used to estimate the fair value of options granted during the three and six months ended June 30, 2006 and 2005 were as follows:



Three months ended June 30 Six months ended June 30
----------------------------------------------------
2006 2005 2006 2005
----------------------------------------------------
Risk free
interest rate 4.5% 3.3% 4.2% 3.2%
Expected
volatility 45.0% 50.0% 48.6% 50.0%
Expected life 5.0 years 4.0 years 4.3 years 4.0 years
Expected
dividends nil nil nil nil


(d) Warrants

The continuity of the number of warrants is:



Weighted
average
exercise
(Canadian
Number of price
warrants dollars)
-----------------------
Balance, December 31, 2005 2,594,778 C$ 2.44
Exercised (2,502,470) 2.44
-----------------------
Balance, June 30, 2006 92,308 C$ 2.44
-----------------------


(e) Contributed surplus

The continuity of contributed surplus on the consolidated balance sheet is as follows:



Balance, December 31, 2005 $ 7,976
Non-cash stock-based compensation 2,213
Share purchase options exercised,
credited to share capital (2,124)
-------
Balance, June 30, 2006 $ 8,065
-------


6.Commitments and contingencies

The Company's contractual obligations at June 30, 2006, comprise:



Remainder
of 2006 2007 2008 2009 2010 2011+
-------------------------------------------------------
Long term
debt $ 1,928 $ 333 $ 360 $ 139 $ - $ -
Capital leases 36 36 36 - - -
Operating
leases and
property
expenditures 1,240 1,057 1,057 1,057 1,057 3,286
Purchase
obligations 35,341 49,113 16,133 11,532 11,083 1,955
-------------------------------------------------------
Totals $ 38,545 $ 50,539 $ 17,586 $ 12,728 $ 12,140 $ 5,241
-------------------------------------------------------
-------------------------------------------------------


The Company has long term debt of $50 million relating to a Revolving Credit Facility (note 4). Repayments under this Revolving Credit Facility are not listed in the above totals as the Company expects to renew each tranche as it matures.

Purchase obligations in 2006 of $35.3 million relate to construction activities at the Kisladag and Tanjianshan mines, and include the costs of a contract mining company. Purchase obligations from 2006 through to 2008 include energy and oxygen contracts at the Sao Bento mine and to other contracts at the Kisladag mine. Property expenditures for 2006 relate to land fees and contractual exploration for the Vila Nova project iron ore project and the Tanjianshan mine.

7. Segment disclosures

The Company operates in a single reportable operating segment, the mining, exploration and development of mineral properties.



Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2006 2005 2006 2005
-------------------------- ------------------------
Gold sales
Brazil $ 11,007 $ 5,128 $ 19,599 $ 12,362
-------------------------- ------------------------
Total $ 11,007 $ 5,128 $ 19,599 $ 12,362
-------------------------- ------------------------
-------------------------- ------------------------

Interest
and other
revenue
Brazil $ 93 $ 192 $ 198 $ 489
Turkey - 153 2 110
China 28 - 47 -
Canada 2,137 681 2,846 1,075
All other - - 1 -
-------------------------- ------------------------
Total $ 2,258 $ 1,026 $ 3,094 $ 1,674
-------------------------- ------------------------
-------------------------- ------------------------

Net income (loss)
Brazil $ 653 $ (7,541) $ (1,030) $ (11,100)
Turkey (3,925) (897) (5,364) (2,451)
China (111) - (307) -
Canada 3,590 (2,854) (525) (6,681)
All other 8 229 (15) 212
-------------------------- ------------------------
Total $ 215 $ (11,063) $ (7,241) $ (20,020)
-------------------------- ------------------------
-------------------------- ------------------------


June 30 December 31
------------------------
2006 2005
------------------------

Total assets
Brazil $ 35,965 $ 23,517
Turkey 187,886 138,737
China 68,238 97,901
Canada 187,548 60,556
All other 55 24
------------------------
Total $ 479,692 $ 320,735
------------------------
------------------------


8. Subsequent event

Effective July 1, 2006, the Company commenced commercial production at its Kisladag gold mine in Turkey.


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

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