Eldorado Gold Corporation
AMEX : EGO
TSX : ELD

Eldorado Gold Corporation

November 06, 2006 08:30 ET

Eldorado Gold Corporation: Q3 2006 Financial and Operational Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 6, 2006) - (all figures in United States dollars, unless otherwise noted)

Paul N. Wright, President & 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 third quarter ended September 30, 2006.

"We are extremely pleased with our first quarter of commercial production at Kisladag. Production continues to increase monthly as the solution inventory increases and our costs have quickly assumed a level at or better than plan. Despite a short term delay associated with a minor fire at our Tanjianshan project commissioning is back underway with our first production anticipated by month end. These are significant milestones for our Company and attest to the high quality of Eldorado staff in successfully building and commissioning two mines this year," said Paul Wright, President and Chief Executive Officer. "We look forward to continued growth as we acquire, explore and develop mineral properties."

Q3 2006 Highlights

- Earnings of $0.02 per share

- Produced 41,082 ounces of gold from two mines during the quarter

- Commenced commercial production at our Kisladag gold mine in Turkey and produced 27,477 ounces at a cash operating cost of $218 per ounce

- Began commissioning our Tanjianshan gold mine in China, which is scheduled to start production in November

- Commenced drilling program at Efemcukuru to support the feasibility study

Financial Results

At September 30, 2006, we held $81.1 million in cash and short-term deposits and a further $65.0 million in two reserve accounts, offsetting our debt of $61.3 million. We remain hedge free.

Our consolidated net income for Q3 2006 was $5.2 million or $0.02 per share compared with a net loss of $6.5 million or ($0.02) per share in Q3 2005. This increase in net income resulted from increased revenues from gold sales, increased interest revenues and a foreign exchange gain resulting primarily from Canadian dollars on hand, offset by increased exploration and administrative expenses.

In Q3 2006, we sold 46,238 ounces of gold at an average price of $620 per ounce, compared to 17,906 ounces at an average price of $615 per ounce in Q2 2006. The increased gold production results from the start of commercial production at our Kisladag mine in July.

Operating Performance

Kisladag

During the quarter, we produced 27,477 ounces of gold at a cash operating cost of $218 per ounce. For 2006, we estimate total production from Kisladag of approximately 70,000 ounces.



-------------------------------------------------------
Kisladag Total to
production June July August September October date
--------------------------------------------------------------------------
Gold produced (oz) 6,872 7,502 9,781 10,194 11,603 45,952
--------------------------------------------------------------------------
Cash operating not yet
cost ($/oz) 242 223 222 210 available
--------------------------------------------------------------------------


Mine production continues in accordance with plan with 2.0 million tonnes of ore mined and placed on the leach pad in the quarter. Reconciliation of the mine ore and reserve model continues to be excellent.

During the quarter crushed ore placement continues to increase in accordance with plan with 1.6 million tonnes of crushed ore transported to the leach pad.

Sao Bento

In Q3 2006, our Sao Bento mine produced 13,605 ounces of gold at a cash operating cost of $493 per ounce. We expect to complete commercial production at Sao Bento near the end of 2006 or early 2007, and we are currently considering alternatives for the sale of infrastructure.

Development

China

During Q3 the majority of the construction was completed at Tanjianshan and commissioning commenced in October. The tailings dam and lines are complete, power is hooked up to the national grid, and installation of the crushing and grinding circuit is complete.

The commissioning team has completed the assessment of the fire. The damaged cyclones have been temporarily replaced with Chinese-made units, pending delivery of the final Warman cyclones. Commissioning has restarted, and we expect to complete commissioning and testing at Tanjianshan in November, with commercial production during the first quarter of 2007.

Turkey

At Efemcukuru, we initiated a drilling program designed to convert inferred resources into measured and indicated resources. Based on results received to date, we have elected to accelerate the Efemcukuru drilling program of 13,000 meters with the objective of both increasing reserves and planned production rates. Accordingly, we expect to release the results of our feasibility study in April 2007.

Exploration

Our exploration budget for 2006 is $14 million. We continue to advance our pipeline of promising properties in Turkey, Brazil and China. To September 30, 2006, we have spent approximately $9 million in exploration.

Turkey

Third quarter activity on our Turkish properties consisted of mapping and sampling activities. We wound down our activities at Mahmur Tepe following completion of the diamond drill program. We continued reconnaissance work on our other concessions.

Brazil

During the third quarter we conducted trenching and channel sampling over the Gaivotas West and Guaxeba pit areas, and diamond drilling, completing 18 holes in the quarter. We commissioned and executed a structural geology review designed to better understand the geology and mineralization at the Vila Nova project. We continued drill testing using three contract diamond drill rigs.

China

We completed the bulk of the planned exploration work at our Tanjianshan licenses this quarter. The diamond drilling focused on infill and near deposit areas at Jinlonggou and Qinlongtan, and we drilled 58 holes. Drilling results will be incorporated in our updated reserve statement early in 2007. Mapping and surface sampling took place in the Longbaigou-Huanglvgou target region, an area that lies between the Jinlonggou and Qinlongtan deposits. We conducted induced polarization ("IP") geophysical surveys in this area, and drilled six holes.

Eldorado is a gold producing and exploration company actively growing businesses in Turkey, China, and Brazil. 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

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 latest Annual Information Form, and Form 40-F. 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 latest Annual Information Form, and Form 40F. 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)

September 30 December 31
2006 2005
(unaudited)
------------ -----------

ASSETS
Current assets
Cash and cash equivalents $ 81,051 $ 33,826
Restricted cash (note 4) 15,000 -
Accounts receivable 14,168 8,264
Prepaids 4,608 2,024
Inventories 23,345 7,597
------------ -----------
138,172 51,711

Restricted cash (note 4) 58,300 50,000
Property, plant and equipment 262,297 186,610
Mineral properties and
deferred development 27,948 23,326
Investments and advances 51 562
Other assets 8,103 6,288
Goodwill 2,238 2,238

------------ -----------
$ 497,109 $ 320,735
------------ -----------
------------ -----------

LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 20,419 $ 20,909
Current portion of capital
lease obligation 30 37
Current portion of long term debt (note 4) 10,424 309
------------ -----------
30,873 21,255

Capital lease obligation 74 90
Long term debt (note 4) 50,832 50,832
Asset retirement obligation 11,628 11,143
Contractual severance obligation 3,268 2,437
Future income taxes 11,005 10,051
------------ -----------
107,680 95,808
------------ -----------

SHAREHOLDERS' EQUITY
Share capital (note 5) 739,365 573,721
Warrants (note 5(d)) 24 902
Contributed surplus (note 5(e)) 8,852 7,074
Deficit (358,812) (356,770)
------------ -----------
389,429 224,927

------------ -----------
$ 497,109 $ 320,735
------------ -----------
------------ -----------

Commitments and contingencies (note 6)

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 Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

REVENUE
Gold sales $ 28,680 $ 9,170 $ 48,279 $ 21,532
Interest and
other income 2,043 1,352 5,137 3,026
----------- ----------- ----------- -----------
30,723 10,522 53,416 24,558
----------- ----------- ----------- -----------
EXPENSES
Operating costs 15,022 9,405 31,343 24,379
Depletion,
depreciation and
amortization 1,831 2,467 2,002 7,384
General and
administrative 4,154 3,573 10,382 8,240
Exploration
expense 3,608 2,423 9,011 5,251
Stock based
compensation
expense 625 365 2,639 1,907
Accretion of
asset retirement
obligation 162 120 485 362
Foreign exchange
gain (651) (1,897) (1,565) (189)
Gain on disposal
of assets (41) (39) (945) (39)
Interest and
financing costs 736 8 797 44
Writedown of
assets - - - 662
----------- ----------- ----------- -----------
25,446 16,425 54,149 48,001

----------- ----------- ----------- -----------
Income (loss)
before income
taxes 5,277 (5,903) (733) (23,443)
Tax recovery
(expense) -
current (287) (164) (356) (234)
Tax recovery
(expense) -
future 209 (440) (953) (2,850)
----------- ----------- ----------- -----------

NET INCOME
(LOSS) FOR THE
PERIOD $ 5,199 $ (6,507) $ (2,042) $ (26,527)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Basic income
(loss) per
share - US$ $ 0.02 $ (0.02) $ (0.01) $ (0.10)
Diluted income
(loss) per
share - US$ $ 0.02 $ (0.02) $ (0.01) $ (0.10)

Basic income
(loss) per
share - Cdn$ $ 0.02 $ (0.03) $ (0.01) $ (0.12)
Diluted income
(loss) per
share - Cdn$ $ 0.02 $ (0.03) $ (0.01) $ (0.12)

Weighted average
number of shares
outstanding 340,885,429 277,933,154 335,515,842 277,892,706
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------


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

Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

Deficit,
beginning of
period $ (364,011) $ (327,664) $ (356,770) $ (307,644)
Net income
(loss) for the
period 5,199 (6,507) (2,042) (26,527)
----------- ----------- ----------- -----------
Deficit, end of
the period $ (358,812) $ (334,171) $ (358,812) $ (334,171)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

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 Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

Cash flows from
operating
activities
Net income
(loss) for the
period $ 5,199 $ (6,507) $ (2,042) $ (26,527)
Items not
affecting cash
Accretion of
asset retirement
obligation 162 120 485 362
Contractual
severance
expense 344 106 1,032 318
Depletion,
depreciation and
amortization 1,831 2,467 2,002 7,384
Foreign exchange
(gain) loss (519) (1,963) (2,498) (434)
Future income
taxes (210) 440 953 2,850
Gain on disposal
of assets (41) (39) (945) (39)
Interest and
financing costs 720 8 709 44
Stock based
compensation 831 134 3,044 1,907
Writedown of
assets - - - 662
Changes in
non-cash working
capital
Accounts
receivable and
prepaids (4,902) (2,444) (8,488) (4,544)
Inventories (4,414) 909 (15,748) (436)
Accounts payable
and accrued
liabilities 466 608 (2,330) 4,261
----------- ----------- ----------- -----------
Cash flows used
for operating
activities (533) (6,161) (23,826) (14,192)
----------- ----------- ----------- -----------

Cash flows from
investing
activities
Acquisition of
property, plant
and equipment
for cash (29,487) (25,150) (78,421) (58,373)
Proceeds on
disposal of
property, plant
and equipment 1,904 - 1,904 -
Mineral
properties and
deferred
development (2,916) (198) (4,622) (492)
Acquisition of
Afcan, net of
cash received - 895 - 895
Proceeds from
disposal of
investments and
advances - 40 1,481 40
Restricted cash,
related to
environmental
deposit (8,300) - (8,300) -
Contractual
severance
obligation (201) - (201) -
Other assets 367 - (1,815) -
----------- ----------- ----------- -----------
Cash flows used
for investing
activities (38,633) (24,413) (89,974) (57,930)
----------- ----------- ----------- -----------

Cash flows from
financing
activities
Issuances of
long term debt 10,115 15,459 10,115 50,618
Restricted cash,
related to long
term debt (15,000) (15,332) (15,000) (50,447)
Repayment of
capital lease
obligation (15) - (23) -
Issuance of
common shares
for cash 5 4,485 163,500 4,827
----------- ----------- ----------- -----------
Cash flows
provided by
(used for)
financing
activities (4,895) 4,612 158,592 4,998
----------- ----------- ----------- -----------

Foreign exchange
gain (loss) on
cash held in
foreign currency 520 1,953 2,433 418
----------- ----------- ----------- -----------

Net increase
(decrease) in
cash and cash
equivalents (43,541) (24,009) 47,225 (66,706)
Cash and cash
equivalents at
beginning of the
period 124,592 92,693 33,826 135,390
----------- ----------- ----------- -----------

Cash and cash
equivalents at
end of the
period $ 81,051 $ 68,684 $ 81,051 $ 68,684
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Supplementary
cash flow
information
Income taxes
paid $ 21 $ 108 $ 114 $ 188
Interest paid $ 1,216 $ - $ 1,907 $ -

Non-cash
transactions
Interest
capitalized to
property, plant
and equipment $ - $ - $ 1,131 $ -

See accompanying notes to consolidated financial statements.


ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and nine months ended September 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 Turkey and Brazil. Development and construction of mines and processing facilities are underway in 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.

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

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, except 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.

Certain of the prior periods' balances have been reclassified to conform to the current period's presentation.

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



September 30 December 31
2006 2005
-----------------------------

Long term debt
Tuprag Loan (note (4(b)) $ 50,000 $ 50,000
CCB Loan (note 4(c)) 10,115 -
Sino Gold Limited (note 4(d)) 1,141 1,141
-----------------------------
61,256 51,141
less: current portion - CCB Loan (10,115) -
less: current portion - Sino Gold Limited (309) (309)
-----------------------------
$ 50,832 $ 50,832
-----------------------------
-----------------------------

Restricted cash
Current
Reserve account related to the CCB
Loan (notes 4(a) and 4(c)) $ 15,000 $ -
-----------------------------
-----------------------------

Long term
Reserve account related to the Tuprag
Loan (notes 4(a) and 4(b)) $ 50,000 $ 50,000
Environmental Guarantee Deposit (note 4(e)) 8,300 -
-----------------------------
$ 58,300 $ 50,000
-----------------------------
-----------------------------


(a) Revolving Credit Facility

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 "Revolving Credit Facility") with HSBC Bank USA, National Association ("HSBC Bank").

During the period ended September 30, 2006, the Revolving Credit Facility was split into two portions - $50 million was used as security for the Tuprag Loan (note 4(b)), and $15 million was used as security for the CCB Loan (note 4(c)).

(b) Tuprag Loan

As at September 30, 2006, the total debt outstanding by Tuprag to HSBC Bank (the "Tuprag Loan") was $50 million with 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 6.00%. Each tranche typically has a maturity of approximately 13 months. The Company expects to renew all scheduled repayments as they arise.

The Tuprag Loan is secured by $50 million deposited by the Company into a reserve account.

(c) CCB Loan

In September 2006, a subsidiary of the Company, Qinghai Dachaidan Mining Limited ("QDML"), entered into a loan agreement with the China Construction Bank (the "CCB Loan") in the amount of 80 million Chinese renminbis. The CCB Loan bears interest at a fixed rate of 5.814% per annum payable quarterly, and matures on September 20, 2007.

The CCB Loan is secured by $15 million deposited by the Company into a reserve account.

(d) Sino Gold loan

The loan payable to Sino Gold Limited is non-interest-bearing, and 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
------------
------------


(e) Environmental guarantee deposit

The Company's wholly-owned subsidiary, Tuprag, has placed $8.3 million into a restricted account, pursuant to routine environmental and pollution guarantees required by the Turkish Ministry of the Environment, related to the Company's Kisladag mine.

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



Voting common shares Number of
shares Amount
-----------------------------
Balance, December 31, 2005 302,577,378 $ 573,721
Shares issued upon exercise of
stock options, for cash 1,312,999 3,794
Shares issued upon exercise of
Afcan warrants, for cash 2,502,470 5,300
Warrants reallocated to share
capital upon exercise - 878
Financing, February 2006, net
of issue costs 34,500,000 154,406
Estimated fair value of stock
options exercised - 1,266
-----------------------------
Balance, September 30, 2006 340,892,847 $ 739,365
-----------------------------
-----------------------------


At September 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 remaining
(Canadian Number of life
dollars) options (years)
---------------------------------------
Balance, December 31, 2005 C$ 3.34 7,176,872 3.36
Granted 5.43 1,589,000
Exercised 3.33 (1,312,999)
Cancelled 3.37 (13,334)
---------------------------------------
Balance, September 30, 2006 C$ 3.80 7,439,539 4.35
---------------------------------------
---------------------------------------


At September 30, 2006, an aggregate of 4,836,869 share purchase options with a weighted average exercise price of Cdn$3.65 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 nine months ended September 30, 2006 and 2005, which have been reflected in the consolidated statements of operations, are as follows:



Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
------------------------ ------------------------
Operating costs $ 167 $ 7 $ 243 $ 104
Exploration 39 10 162 144
Administration 625 117 2,639 1,659
------------------------ ------------------------
Total compensation
cost recognized
in operations,
credited to
contributed
surplus $ 831 $ 134 $ 3,044 $ 1,907
------------------------ ------------------------
------------------------ ------------------------


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



Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
------------------------ ------------------------
Risk free
interest rate 4.5% 3.3% 4.2% 3.2%
Expected
volatility 42.0% 50.0% 47.9% 50.0%
Expected life 4.0 years 4.0 years 4.2 years 4.0 years
Expected
dividends nil nil nil nil


(d) Warrants

The continuity of warrants is:



Number of
warrants Amount
-----------------------------
Balance, December 31, 2005 2,594,778 $ 902
Reallocated to share capital upon exercise (2,502,470) (878)
-----------------------------
Balance, September 30, 2006 92,308 $ 24
-----------------------------
-----------------------------


Each warrant is exercisable into one common share at C$2.44 until November 18, 2006.

(e) Contributed surplus

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



Balance, December 31, 2005 $ 7,074
Non-cash stock-based compensation 3,044
Share purchase options exercised,
credited to share capital (1,266)
------------
Balance, September 30, 2006 $ 8,852
------------
------------


6. Commitments and contingencies

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



Remainder
of
2006 2007 2008 2009 2010 2011+
-------------------------------------------------------------
Long term
debt $ 1,217 $ 12,189 $ 360 $ 139 $ - $ -
Capital
leases 32 36 36 - - -
Operating
leases and
property
expenditures 1,258 1,057 1,057 1,057 1,057 3,286
Purchase
obligations 27,794 49,229 12,205 12,230 11,829 1,952
-------------------------------------------------------------
Totals $ 30,301 $ 62,511 $ 13,658 $ 13,426 $ 12,886 $ 5,238
-------------------------------------------------------------
-------------------------------------------------------------


The Company has long term debt of $50 million relating to the Tuprag Loan (note 4(b)). 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 $27.8 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 (totalling $1.9 million) at the Sao Bento mine, and equipment purchases and other contracts (totalling $46.7 million) 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 Nine months ended
September 30 September 30
------------------------ ------------------------
2006 2005 2006 2005
------------------------ ------------------------
Gold sales
Brazil $ 9,738 $ 9,170 $ 29,337 $ 21,532
Turkey 18,942 - 18,942 -
------------------------ ------------------------
Total $ 28,680 $ 9,170 $ 48,279 $ 21,532
------------------------ ------------------------
------------------------ ------------------------

Interest and
other revenue
Brazil $ 540 $ 57 $ 738 $ 546
Turkey 152 420 154 530
China 19 11 66 11
Canada 1,332 864 4,178 1,939
All other - - 1 -
------------------------ ------------------------
Total $ 2,043 $ 1,352 $ 5,137 $ 3,026
------------------------ ------------------------
------------------------ ------------------------

Net income (loss)
Brazil $ 115 $ (5,026) $ (915) $ (16,126)
Turkey 7,454 (801) 2,090 (3,252)
China (146) (1,077) (453) (1,077)
Canada (2,204) 609 (2,729) (6,072)
All other (20) (212) (35) -
------------------------ ------------------------
Total $ 5,199 $ (6,507) $ (2,042) $ (26,527)
------------------------ ------------------------
------------------------ ------------------------

September 30 December 31
2006 2005
-------------------------
Total assets
Brazil $ 36,118 $ 23,517
Turkey 196,053 138,737
China 91,383 97,901
Canada 173,438 60,556
All other 117 24
-------------------------
Total $ 497,109 $ 320,735
-------------------------
-------------------------



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

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