Eldorado Gold Corporation Third Quarter 1999 Financial Results.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia--(BUSINESS WIRE)--Nov. 10, 1999-- All Figures in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Dollars Unless Noted Financial Results Eldorado Gold Eldorado Gold Corporation TSX: ELD is a Vancouver, British Columbia based company involved in the mining, exploration and development of gold properties in Brazil and Turkey. See also
TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). , VSE See DOS/VSE. VSE - Virtual Storage Extended :"ELD") today reported Third Quarter 1999 financial results, with revenues of $16.4 million. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses (before changes in working capital) totaled $2.8 million ($0.04 per share). Net earnings for the quarter amounted to $0.7 million. During the third quarter of 1999, the Company produced 49,649 ounces of gold, at a total cash cost of $200 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. . For the nine months ended September September: see month. 30, 1999 the Company's net earnings of $3.4 million or $0.05 per common share compared with a net loss of $115.6 million or $1.58 per common share in the comparable nine months ending September 30, 1998. In Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. currency this equates to net earnings of $5.0 million or $0.07 per common share for the period. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: have continued to improve. The Company produced 148,202 ounces of gold during the nine months ending September 30, 1999 (1998 -- 143,369 ounces) at a total cash cost of $198 per ounce (1998 -- $259) and realized a gold price of $305 (1998 -- $352) compared to a spot price of $273 (1998 -- $294). Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Programs The Company has disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). details of its gold hedging position in Note Two to the Financial Statements. This position is materially unchanged from the position disclosed in the Second Quarter Financial Statements, and consists of 540,000 ounces hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. , at an average price of $297. This hedge position represents 31% of the Company's reserves. The Company built a hedge position over the period 1997-1999, to protect itself against falling gold prices and to ensure that funds would be available to reduce the Company's bank debt. In that period, the hedge program yielded profits totalling U.S. $19 million; in addition, a total of $15 million in cash was generated by unwinding parts of the hedge, of which $10 million was used to reduce debt. Building and maintaining a hedge book was therefore essential in enabling the Company to keep advancing its projects in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Turkey, even as prices dropped to below $260 per ounce. The Company now believes there is room for optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. about future gold price movement. Maintaining a hedge position will continue to be necessary as the Company reduces its debt over the next 2-3 years, but the Company intends to take advantage of opportunities that arise to reduce and restructure the position, as well as allowing it to diminish steadily with production. Outlook The Company has successfully advanced its Efemcukuru and Kisladag projects in Turkey, while gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. improving its financial position. In 2000, the Company intends to continue along this path. Kisladag and Efemcukuru combined account for 4.5 million ounces of resources of which 784,000 ounces are reserves. These projects are 100% owned by Eldorado, and developing them will enable the Company to achieve its goal of growing to become a mid-sized gold producer, with substantially low cost production, within 5 years. Eldorado Gold Corporation is an international gold mining company with an extensive background in acquiring, discovering and developing quality gold assets. The Corporation's goal is to create and maintain a portfolio of low cost long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. mining assets with a strong financial base. ON BEHALF OF ELDORADO GOLD CORPORATION, Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. N. Wright, President & Chief Executive Officer Eldorado Gold Corporation's shares (Symbol:ELD) trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. ("TSE") and the Vancouver Stock Exchange Vancouver Stock Exchange (VSE) A securities and options exchange in Vancouver, British Columbia, (Canada), specializing in venture capital companies. Vancouver Stock Exchange See Canadian Venture Exchange (CDNX). ("VSE"). Neither the TSE nor the VSE have approved or disapproved the form or content of this release. -0-
Eldorado Gold Corporation
Consolidated Balance Sheets
Expressed in Thousands of U.S. Dollars
September 30 September 30 December 31
1999 1998 1998
(unaudited) (unaudited)
ASSETS
Current Assets
Cash $ 7,172 $ 3,620 $ 3,170
Accounts receivable 2,994 4,230 4,793
Inventories 4,822 11,363 10,261
---------------------------------------------------------------
14,988 19,213 18,224
Mine property, plant and
equipment 84,536 83,164 82,331
Mineral properties and
deferred development 27,365 25,504 26,065
Investments and advances 406 406 406
Other assets 1,965 1,723 2,789
---------------------------------------------------------------
$ 129,260 $ 130,010 $ 129,815
---------------------------------------------------------------
LIABILITIES
Current Liabilities
Accounts payable and
accrued liabilities $ 10,657 $ 12,241 $ 14,048
Current portion of long
term debt 477 1,662 485
--------------------------------------------------------------
11,134 13,903 14,533
Provision for reclamation
costs 6,097 5,332 5,533
Deferred gain 13,694 -- 9,587
Deferred taxes payable 227 -- 212
Convertible debentures 3,063 3,525 3,413
Long term debt 30,862 40,999 36,091
--------------------------------------------------------------
65,077 63,759 69,369
SHAREHOLDERS' EQUITY
Share capital 304,757 304,365 304,407
Equity portion of
convertible debentures 6,087 5,625 5,737
Deficit (246,661) (243,739) (249,698)
--------------------------------------------------------------
64,183 66,251 60,446
--------------------------------------------------------------
$ 129,260 $ 130,010 $ 129,815
--------------------------------------------------------------
Approved by the Board:
Paul N. Wright,
Director
Gary N. Nordin,
Director
Eldorado Gold Corporation
Consolidated Statements of Operations and Deficit
Expressed in Thousands of U.S. Dollars Except Per Share Amounts
Three months Three months Nine months ended
ended ended September 30
September 30 September 30
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
Gold sales $ 15,269 $ 17,460 $ 46,435 $ 50,507
Interest and
other income 1,095 183 2,782 393
-----------------------------------------------------------------
16,364 17,643 49,217 50,900
Expenses
Operating costs 9,938 11,971 29,315 36,389
Depletion,
depreciation and
amortization 3,248 3,253 9,813 9,967
General and
administrative 631 1,410 1,972 3,902
Exploration expense 56 276 228 727
Interest and
financing costs 676 928 2,182 2,729
Reclamation 53 252 834 820
-----------------------------------------------------------------
14,602 18,090 44,344 54,534
Profit (loss)
before the
undernoted items 1,762 (447) 4,873 (3,634)
-----------------------------------------------------------------
Investment losses -- (46) -- (1,419)
Reorganization
costs -- (4,568) -- (6,616)
Write down and
abandonment of
property, plant
and equipment -- (102,303) -- (102,303)
Write down of
investment and
advances -- (562) -- (562)
Write down of
inventories -- (700) -- (700)
Taxes (1,028) (44) (1,486) (362)
------------------------------------------------------------------
Net income
(loss) for the
period $ 734 $ (108,670) $ 3,387 $ (115,596)
------------------------------------------------------------------
Deficit at the
beginning of
the period (247,274) (134,949) (249,698) (127,769)
Interest on
equity portion
of convertible
debentures (121) (120) (350) (374)
------------------------------------------------------------------
Deficit at end of
the period $ (246,661) $ (243,739) $ (246,661) $ (243,739)
------------------------------------------------------------------
Income (loss)
per share $ 0.01 $ (1.48) $ 0.05 $ (1.58)
------------------------------------------------------------------
Eldorado Gold Corporation
Consolidated Statements of Cash Flows
Expressed in Thousands of U.S. Dollars
Three months Three months Nine months ended
Ended Ended September 30
September 30 September 30
1999 1998 1999 1998
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from
operating activities
Net income (loss)
for the period $ 734 $ (108,670) $ 3,387 $ (115,596)
Items not affecting
cash
Depletion,
depreciation and
amortization 3,248 3,253 9,813 9,967
Provision for
reclamation costs 53 252 834 820
Provision for
reorganization and
closure costs -- 2,650 -- 2,650
Loss on sale of
investments -- 46 -- 1,419
Write down and
abandonment of
property, plant
and equipment -- 102,303 -- 102,303
Write down of
investment and
advances -- 562 -- 562
Write down of
inventories -- 700 -- 700
Interest on equity
portion of
convertible
debentures (121) (120) (350) (374)
Liquidation of hedges -- -- 5,199 --
Amortization of hedging
gain (1,092) -- (1,092) --
Foreign exchange loss
(gain) (144) (748) 581 134
Other 85 (141) (270) (197)
-----------------------------------------------------------------
2,763 87 18,102 2,388
(Increase) decrease
in trade and other
receivables 2,472 1,892 1,799 3,815
Decrease (Increase)
in inventories 31 (1,983) 739 (2,810)
(Decrease) in trade
and other payables (1,602) 81 (3,939) (2,873)
-----------------------------------------------------------------
3,664 77 16,701 520
Cash flow from investing activities
Mine property, plant
and equipment (2,251) (2,048) (6,518) (6,543)
Mineral properties
and deferred
development (700) (883) (1,300) (2,794)
Investments and
advances -- 469 -- 4,561
Other assets 852 4 587 710
-----------------------------------------------------------------
(2,099) (2,458) (7,231) (4,066)
Cash flow from
financing activities
Long term debt (1) (15) (5,237) (337)
Issue of common shares:
Voting -- for cash 350 -- 350 13
Voting -- for non-cash
consideration -- 374 -- --
-----------------------------------------------------------------
349 359 (4,887) (324)
Foreign exchange (loss)
gain on cash held
in foreign currency 144 748 (581) (134)
-----------------------------------------------------------------
Net Increase in cash
and cash equivalents 2,058 (1,274) 4,002 (4,004)
Cash and cash
equivalents at
beginning of the
period 5,114 4,894 3,170 7,624
-----------------------------------------------------------------
Cash and cash
equivalents at the
end of period $ 7,172 $ 3,620 $ 7,172 $ 3,620
-----------------------------------------------------------------
Comparative 1998 Consolidated Statement of Cash Flows has been
restated to reflect the new reporting requirements relating to the
statements of cash flow adopted by the company in 1999 and
retroactively applied. (see Note 1)
Eldorado Gold Corporation
Notes and Comments to Financial Statements
(expressed in thousands US dollars unless otherwise indicated)
1) General
The accompanying unaudited consolidated financial statements do
not include all the disclosure required by generally accepted
accounting principles for annual statements and should be read in
conjunction with the notes to Eldorado Gold Corporation's (the
"Company") audited consolidated financial statements for the year
ended December 31, 1998.
2) Consolidated Statements of Cash Flows
The Accounting Standards Board of the Canadian Institute of
Chartered Accountants issued new guidelines on the reporting of Cash
Flows. The Company adopted the new standard for its reporting as at
January 1999. The significant changes to the Consolidated Statements
of Changes in Financial Position of the Company are the separation of
non-cash working capital into its component parts and the
identification of foreign exchange gains or losses on cash held in
foreign currencies.
3) Gold Hedging Program
Eldorado's gold hedging program is designed primarily to protect
the Company from the effects of low gold prices, and to comply with
the requirements of the Company's loan agreement with its senior
secured lender.
Third Quarter Ended Nine Months Ended
September 30 September 30
---------------------------------------------------------------
($ per ounce) 1999 1998 1999 1998
---------------------------------------------------------------
Eldorado's selling price 283 356 313 352
Average spot price 259 295 273 296
---------------------------------------------------------------
As of October 31, 1999, the Company held the following gold
hedging positions:
1999 2000 2001 2002
---------------------------------------------------------------
Forward sales/
spot deferreds
(ounces of gold) 29,437 185,271 177,692 147,640
Average price ($/oz) 293 295 300 296
Deferred gain ($/oz)(1) 23 29 17 13
---------------------------------------------------------------
Total ($/oz) 316 324 317 309
---------------------------------------------------------------
1999 2000 2001 2002 2003
---------------------------------------------------------------------
Call options sold (oz) 4,000 -- -- -- --
Average price ($/oz) 425 -- -- -- --
---------------------------------------------------------------------
These option positions expire at 2,000 ounces per month, from end
November to end December 1999.
Note 1. Gains of $14,586 were realized on the liquidation of
forward gold hedges in 1998 and 1999. An amount of $1,092 has been
recorded in the earnings of 1999 third quarter and the balance of
$13,494 will be credited to the earnings as follows: $1,093 for the
fourth quarter of 1999, $5,446 in 2000; $3,043 in 2001; $1,956 in
2002; and $1,956 in 2003.
As a result of the Company's hedging activities, the
mark-to-market value of the Company's hedge position may be positive
or negative at any time. For example, during the year the value of the
Company's hedge position was positive (that is, in excess of the spot
price of gold) and the Company was able to realize some of that
difference in cash by closing out some hedge positions. In the
converse position where the spot price of gold exceeds that of the
Company's hedge positions the mark-to-market value is negative. This
was the case at October 30, 1999 when the mark-to-market value was a
negative ($5.0) million at a spot price of $295. The $5.0 million is
an opportunity cost associated with the Company's strategy of managing
price risk, but is not a liability of the Company.
The positions held by Eldorado are in the form of "flat forward"
or "spot deferred" contracts. There are 320,000 ounces of flat forward
contracts, which are scheduled for delivery at a rate of 10,000 ounces
per month, at a price of $310.
There were 220,000 ounces of spot deferred contracts, which are
priced in the range of $260 to $300. These spot deferreds can be
rolled forward or deferred to later delivery dates, if the spot price
at the time of maturity is higher than the contract price.
If contracts were rolled forward then for accounting purposes the
profit or loss would be recorded at the time the contract was first
scheduled to be matched to production.
The Company has dealt with several counterparties. The largest of
these, NM Rothschild & Sons Limited, currently accounts for 95% of the
Company's hedge positions, and is also the Company's senior secured
lender.
The counterparties account for the following ounces, as of
October 30, 1999.
NM Rothschild & Sons 509,000 (flat forwards and spot deferreds
at $260-$310)
Counterparty B 21,000 (spot deferreds at $260-$270)
Counterparty C 10,000 (spot deferreds at $270)
Counterparty D 4,000 (call options sold at $425)
Each counterparty agreement provides for the right to make margin
calls, to the extent the negative mark-to-market value of contracts
exceeds certain limits. The Company would not face any margin calls in
the case of NM Rothschild unless the gold price rose above $330/ounce
assuming a contango of 2%. In the case of the other counterparties a
margin call would not arise unless gold price rose above $382,
(counterparty B); $470 (counterparty C); and $425 (counterparty D).
With respect to NM Rothschild, the Company's senior lender, the
Company's current view is that, provided NM Rothschild remains
confident in the Company's ability to produce and deliver gold into
the hedge contracts as they mature, NM Rothschild would be unlikely to
call for margin. However, it would be NM Rothschild's contractual
right to do so.
4) Inventories
September 30, 1999 December 31, 1998
---------------------------------------------------------------
In process inventories $ 2,079 $ 3,222
Materials and supplies 2,743 7,039
---------------------------------------------------------------
$ 4,822 $ 10,261
---------------------------------------------------------------
The Company reclassified $4,700 of capital replacement parts for
processing and mining equipment from the inventory account to mine
property, plant and equipment in the first quarter of 1999.
5) Commitments and Contingencies
A subsidiary is defending against a claim of wrongful dismissal
by a former employee of the previous owners of the subsidiary. The
claim is currently under further appeal. The initial ruling required
the Company to provide a deposit with the court for settlement of the
case prior to appeal. The Company provided $200,000 to the court for
settlement of this case and proceeded to appeal. At the present, using
the most recent court ruling, the Company may have an additional
exposure of up to $700,000.
6) Year 2000 Status
The Company has continued with its year 2000 (Y2K) implementation
program. The final stages of the plan are currently being implemented.
All computerized systems at the Company's corporate offices, mining
operations and exploration sites have been tested and replaced or
modified where necessary. Additional letters of Y2K compliance have
been received during the quarter from the Company's financing
institutions, the owners of the building where the corporate offices
are located, and the power supplier to our La Colorada mine site.
The final project, to be complete prior to December 31, 1999, is
the replacement of the process control operating systems at Sao Bento
Mine. Completion of the installation of the new hardware is planned
for October 30, 1999 with testing to be completed by December 15,
1999. Completion of this project will end the Company's Y2K program.
The Company has limited influence over its suppliers in assuring
their Y2K compliance. We have requested written confirmation from
these suppliers as to their readiness and many have responded with
compliance letters. Our suppliers have indicated that they have been
diligent in becoming Y2K compliant, but events may occur which may
render them unable to perform up to their contracts after January 1,
2000. For the remainder of 1999, the Company will be managing its
inventory levels of critical supplies to assure adequate levels of
goods are available for continued operations.
7) The segmented information is as follows:
Eldorado Gold Corporation
Segmented Information
(In Thousands of U.S. Dollars)
Nine months ended
September 30 September 30
1999 1998
------------------------------------------------------------
Gold sales
Sao Bento Mine $ 29,595 $ 30,330
La Colorada Mine 16,840 15,573
La Trinidad Mine -- 4,604
------------------------------------------------------------
46,435 50,507
------------------------------------------------------------
Operating Costs
Sao Bento Mine 18,288 21,776
La Colorada Mine 11,861 11,078
La Trinidad Mine -- 4,355
------------------------------------------------------------
30,149 37,209
------------------------------------------------------------
Depletion, Depreciation and amortization
Sao Bento Mine $ 5,384 $ 5,058
La Colorada Mine 4,139 3,133
La Trinidad Mine -- 1,150
------------------------------------------------------------
9,523 9,341
------------------------------------------------------------
Corporate expenses, net (1,662) (6,864)
Exploration expenses (228) (727)
Investment losses -- (1,419)
Write downs, provision for mines
and restructuring -- (110,181)
------------------------------------------------------------
Income (loss) before income taxes 4,873 (115,234)
------------------------------------------------------------
Taxes expense (1,486) (362)
------------------------------------------------------------
Net income (loss) for the period
$ 3,387 $(115,596)
------------------------------------------------------------
Eldorado Gold Corporation
Segmented Information
(In Thousands of U.S. Dollars)
Nine months ended
September 30 September 30
1999 1998
-------------------------------------------------------------
Segment assets
Sao Bento Mine $ 81,972 $ 80,931
La Colorada Mine 12,801 14,684
La Trinidad Mine 355 3,448
----------------------------------------------------------
Total assets for reportable segments 95,128 99,063
Mineral properties and deferred
development 27,365 25,504
Other 6,767 5,443
----------------------------------------------------------
$ 129,260 $ 130,010
----------------------------------------------------------
Revenues by geographic area
North America $ 18,228 $ 20,403
South America 30,927 30,491
Europe 61 6
Other 1 --
----------------------------------------------------------
$ 49,217 $ 50,900
----------------------------------------------------------
Net income (loss) by geographic area
North America $ (2,991) $ (31,730)
South America 6,456 (70,462)
Europe (63) (12,566)
Other (15) (838)
-----------------------------------------------------------
$ 3,387 $ (115,596)
-----------------------------------------------------------
Assets by geographic area
North America $ 18,957 $ 20,175
South America 82,435 83,901
Europe 27,865 25,926
Other 3 8
-----------------------------------------------------------
$ 129,260 $ 130,010
-----------------------------------------------------------
8) The main highlights of the Company's production from each of
its operations are as follows:
Production Highlights
First Second Third Third First First
Quarter Quarter Quarter Quarter Nine Nine
Months Months
1999 1999 1999 1998 1999 1998
----------------------------------------------------------------------
Gold Production
Ounces 46,111 52,442 49,649 49,197 148,202 143,369
Cash Operating Cost
($/oz) 180 200 197 248 193 251
Total Cash Cost
($/oz)(a) 185 206 200 254 198 259
Total Production Cost
($/oz)(b) 264 272 268 317 268 324
Realized Price ($/oz) 321 312 283 356 305 352
----------------------------------------------------------------------
Sao Bento Mine, Brazil
Ounces 29,748 32,801 32,939 30,721 95,488 84,691
Tons to Mill 120,109 144,524 139,459 126,905 404,092 371,043
Grade (grams/
ton) 8.20 8.34 7.79 7.93 8.11 7.54
Cash Operating Cost
($/oz) 180 180 191 240 184 254
Total Cash Cost
($/oz)(a) 185 186 196 246 189 262
Total Production Cost
($/oz)(b) 258 244 259 307 253 326
----------------------------------------------------------------------
La Colorada Mine,
Mexico
Ounces 16,363 19,641 16,710 15,257 52,714 43,723
Tons to Leach
Pad 488,775 722,531 714,094 683,518 1,925,400 2,080,347
Grade (grams /
ton) 1.54 0.88 0.93 0.96 1.07 0.93
Cash Operating Cost
($/oz) 180 233 209 237 209 236
Total Cash Cost
($/oz)(a)
187 241 207 245 214 246
Total Production
Cost ($/oz)(b)
273 320 287 325 295 316
----------------------------------------------------------------------
La Trinidad Mine,
Mexico (c)
Ounces -- -- -- 3,219 -- 14,955
Tons to Leach Pad -- -- -- 101,019 -- 454,155
Grade (grams /
ton) -- -- -- 1.94 -- 1.46
Cash Operating Cost
($/oz) -- -- -- 373 -- 275
Total Cash Cost
($/oz)(a) -- -- -- 377 -- 281
Total Production Cost
($/oz)(b) -- -- -- 370 -- 340
----------------------------------------------------------------------
(a) Cash Operating Costs plus royalties and the cost of off-site
administration.
(b) Total Cash Cost plus depreciation, amortization and
reclamation.
(c) La Trinidad mine was placed in a care and maintenance mode in
the third quarter of 1998 the result of low gold prices and severe
weather conditions.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion