Eldorado Reports 2013 Year-End and Fourth Quarter Financial and Operational Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 21, 2014) - Paul N. Wright, Chief Executive Officer of Eldorado Gold Corporation ( ELD.TO )( EGO ), ("Eldorado" the "Company" or "we") is pleased to report on the Company's financial and operational results for the year ended December 31, 2013. Eldorado reported record gold production of 721,201 ounces at an average cash operating cost 1 of $494 per ounce, compared to gold production of 656,324 ounces at an average cash operating cost of $483 per ounce for the year ended December 31, 2012. Adjusted net earnings 1 for the year ended December 31, 2013 were $192.9 million, or $0.27 per share compared to adjusted net earnings of $327.4 million, or $0.48 per share for the year ended December 31, 2012, reflecting a 16% decline in gold prices year over year.

"The Company achieved record production of 721,201 ounces of gold in 2013 at $494 cash operating cost per ounce in line with our original guidance of 705,000 to 760,000 ounces of gold at cash operating costs of $515 to $530 per ounce. Steps taken by the Company mid-year, in light of a declining gold price, included rationalizing operating costs and focusing our capital resources on development projects that are expected to deliver near-term cash flows consistent with the Company's strategic plan," said Paul Wright, Chief Executive Officer of Eldorado.

2013 Overview

Key Consolidated Financial Information

  • At December 31, 2013 the Company recognized an impairment charge of $808.4 million, or $684.6 million, net of tax ($0.96 per share) related to Jinfeng and Eastern Dragon.
  • Loss attributable to shareholders of the Company was $653.3 million ($0.91 per share), compared to net profit attributable to shareholders of the Company of $305.3 million ($0.44 per share) in 2012.
  • Dividends paid were Cdn$0.12 per share (2012: Cdn$0.15 per share).
  • Liquidity was $998.9 million at year end, including $623.9 million in cash, cash equivalents, and term deposits, and $375.0 million in lines of credit (2012: $1,191.8 million of liquidity).

Key Performance Measures

  • Gold production of 721,201 ounces, including pre-commercial production from Olympias (2012: 656,324 ounces) increased 10% year over year.
  • Total cash costs averaged $551 per ounce (2012: $554 per ounce)
  • Gross profit from gold mining operations of $481.1 million fell 19% as compared to that of 2012 due to lower prices.
  • Adjusted net earnings of $192.9 million ($0.27 per share) were down 41% compared to adjusted net earnings of $327.4 million ($0.48 per share) in 2012.
  • Cash generated from operating activities before changes in non-cash working capital was $382.0 million (2012: $447.7 million).
  • Year end 2013 Proven and Probable gold reserves of 27.7 million ounces and Measured and Indicated gold resources of 36.4 million ounces.

1 Throughout this release we use cash operating cost per ounce, total cash costs per ounce, gross profit from gold mining operations, adjusted net earnings, and cash flow from operating activities before changes in non-cash working capital as additional measures of Company performance. These are non-IFRS measures. Please see page 11 of our MD&A for an explanation and discussion of these non-IFRS measures.

Impairment Charge

As a result of the impairment testing we performed at the end of December 31, 2013, the Company concluded that the carrying values of Jinfeng and Eastern Dragon were impaired and an impairment loss of $808.4 million was recorded against the property, plant and equipment, and goodwill of these properties ($283.5 million associated with Jinfeng and $524.9 million associated with Eastern Dragon). A deferred income tax recovery of $123.8 million was also recorded related to the impairment charge and reflected as a reduction in tax expense on the income statement.

The Company assumed gold metal prices of $1,200 per ounce for 2014, and $1,300 per ounce long-term. Discounted cash flows were calculated using discount rates between 10% and 12% for Eastern Dragon (3% higher than previous years' impairment calculations) reflecting increased Chinese permitting risk.

Summarized Annual Financial Results

($millions except as noted) 2013 2012 2011
Revenues 1,124.0 1,147.5 1,103.7
Gold revenues 1,020.0 1,047.1 1,042.1
Gold sold (ounces) 725,095 625,394 658,919
Average realized gold price ($/ounce) 1,407 1,674 1,581
Average London spot gold price ($/ounce) 1,411 1,669 1,572
Cash operating costs ($/ounce) 494 483 405
Total cash costs ($/ounce) 551 554 472
Gross profit from gold mining operations 481.1 595.0 610.8
Adjusted net earnings 192.9 327.3 332.5
Net profit (loss) attributable to shareholders of the Company (653.3 ) 305.3 318.7
Earnings (loss) per share attributable to shareholders of the Company
- basic ($/share) (0.91 ) 0.44 0.58
Earnings (loss) per share attributable to shareholders of the Company
- diluted ($/share) (0.91 ) 0.44 0.58
Cash flow from operating activities before changes in non-cash working capital 382.0 447.7 502.1
Capital Spending - cash basis 482.0 426.2 272.8
Dividends paid - (Cdn$/share) 0.12 0.15 0.11
Cash, cash equivalents and term deposits 623.9 816.8 393.8
Total Assets 7,235.2 7,928.1 3,960.4
Total long-term financial liabilities (1) 670.3 662.9 63.2
(1) Includes long-term debt net of deferred financing costs, defined benefit liabilities, and asset retirement obligations.

Review of Annual Financial Results

Gold sales volumes increased 16%, while total cash costs per ounce remained steady year over year. Gross profit from gold mining operations of $481.1 million fell 19% year over year as a result of a 16% drop in gold prices. Loss attributable to shareholders of the Company was $653.3 million, or $0.91 per share, compared to net profit attributable to shareholders of the Company of $305.3 million, or $0.44 per share in 2012. Adjusted net earnings were $192.9 million or $0.27 per share as compared with $327.3 million or $0.48 per share for 2012. The major items contributing to the loss attributable to shareholders of the Company were: 1) the $684.6 million impairment loss, net of tax, 2) a $125.2 million deferred income tax charge related to a change in the Greek income tax rate, 3) a $14.1 million impairment loss on investment in associates, and 4) a $13.8 million unrealized loss on foreign exchange translation of deferred income tax balances. Other factors that adversely impacted earnings year over year were an increase in interest and financing costs of $33.4 million related to senior notes issued by the Company in December 2012, and an increase in tax expense of $8.5 million related to withholding taxes on dividends paid by the Company's subsidiaries in China and Turkey to their parent companies.

Summarized Quarterly Financial Results

2013 Q1 Q2 Q3 Q4 2013
($millions except as noted)
Revenues 338.1 266.9 287.3 231.7 1,124.0
Gold revenues 307.2 243.6 266.4 202.8 1,020.0
Gold sold (ounces) 189,346 176,260 199,117 160,372 725,095
Average realized gold price ($/ounce) 1,622 1,382 1,338 1,264 1,407
Cash operating costs ($/ounce) 505 478 472 526 494
Total cash costs ($/ounce) 567 536 528 577 551
Gross profit from gold mining operations 163.8 117.2 123.2 76.9 481.1
Net profit (loss) attributable to shareholders of the Company (45.5 ) 43.3 36.4 (687.5 ) (653.3 )
Earnings (loss) per share attributable to shareholders of the Company - basic ($/share) (0.06 ) 0.06 0.05 (0.96 ) (0.91 )
Earnings (loss) per share attributable to shareholders of the Company - diluted ($/share) (0.06 ) 0.06 0.05 (0.96 ) (0.91 )
Dividends paid- (Cdn$/share) 0.07 - 0.05 - 0.12
Cash flow from operating activities before changes in non-cash working capital 139.9 84.9 104.8 52.4 382.0

Review of Quarterly Results

Loss attributable to shareholders of the Company for the quarter ended December 31, 2013 was $687.5 million, or $0.96 per share, compared to profit attributable to shareholders of the Company of $115.0 million, or $0.16 per share for the same period in 2012. The main factors that impacted earnings for the fourth quarter year over year were the impairment charge, net of taxes, of $684.6 million and lower gold revenues due to lower prices and volume.

Operations Review and Outlook

Gold Operations

2013 2012 2014 outlook (4)
Total Operating Gold Mines
Gold ounces produced (1)(2) 721,201 656,324 730,000 to 800,000
Cash operating costs ($ per ounce) 494 483 550 to 590
Total cash costs ($ per ounce) 551 554 600 to 640
All-in sustaining cash costs ($ per ounce) (5) n/a n/a 915 to 985
Sustaining capital expenditure (millions) 269.3 215.0 170.0
Ki_lada
Gold ounces produced 306,182 289,294 300,000 to 335,000
Cash operating costs ($ per ounce) 338 332 470 to 485
Total cash costs ($ per ounce) 358 361 490 to 505
Sustaining capital expenditure ($ millions) 145.3 104.9 70.0
Efemçukuru
Gold ounces produced (1) 90,818 66,870 90,000 to 100,000
Cash operating costs ($ per ounce) 580 583 575 to 590
Total cash costs ($ per ounce) 604 613 595 to 610
Sustaining capital expenditure (millions) 29.9 - 20.0
Tanjianshan
Gold ounces produced 101,451 110,611 95,000 to 100,000
Cash operating costs ($ per ounce) 415 415 450 to 465
Total cash costs ($ per ounce) 601 612 620 to 635
Sustaining capital expenditure (millions) 11.3 23.9 20.0
Jinfeng
Gold ounces produced 123,246 107,854 145,000 to 155,000
Cash operating costs ($ per ounce) 736 817 650 to 670
Total cash costs ($ per ounce) 823 901 730 to 750
Sustaining capital expenditure (millions) 54.0 59.0 35.0
White Mountain
Gold ounces produced 73,060 80,869 70,000 to 75,000
Cash operating costs ($ per ounce) 705 625 685 to 715
Total cash costs ($ per ounce) 745 671 720 to 750
Sustaining capital expenditure (millions) 28.8 27.2 25.0
Olympias
Gold ounces produced (2) 26,444 826 30,000 to 35,000
Cash operating costs ($ per ounce) n/a n/a 975 to 1050
Total cash costs ($ per ounce) n/a n/a 995 to 1070
Sustaining capital expenditure (millions) (3) - - -
(1) Gold ounces produced at Efemcukuru in 2012 include 29,824 ounces of pre-commercial production. (2) Gold ounces produced at Olympias in 2012 & 2013 are all on a pre-commercial production basis. (3) Olympias development capital expenditure planned for 2014 is $60.0 million. (4) Outlook assumes the following metal prices: gold - $1,200 per ounce, silver - $22 per ounce. (5) All-in sustaining cash cost is a non-IFRS measure. Please see page 11 of our MD&A for an explanation and discussion of this non-IFRS measure.

Annual Review - Operations

Ki_lada

Operating Data 2013 2012
Tonnes placed on pad 13,296,621 12,606,575
Average treated head grade (g/t Au) 1.12 1.20
Gold (ounces)
- Produced 306,182 289,294
- Sold 306,176 ...