Eldorado books $1.5bn impairment while headline profit slides

TORONTO (miningweekly.com) – Canadian gold producer Eldorado Gold's earnings fell 90% in 2015 on the back of lower gold output, higher unit costs and lower realised gold prices.

Excluding special items, the Vancouver-based company reported adjusted net earnings for the year of $13.2-million, or $0.02 a share, compared with $138.7-million, or $0.19 a share, for 2014. Analysts expected full-year earnings of $0.05 a share.

The NYSE- and TSX-listed miner reported a net loss attributable to shareholders of $1.54-billion, or $2.15 a share, compared with a net profit of $102.6-million, or $0.14 a share, in 2014. The loss in 2015 was mainly owing to after-tax impairment losses of $1.52-billion, a deferred income tax charge of $63.5-million related to a change in income tax rates in Greece and lower gross profits from gold mining operations.

Gold sales volumes decreased 9% year-on-year, reflecting lower gold output at Kisladag and the company's Chinese mines. Total cash costs per ounce increased 9% year-on-year, mainly owing to higher operating costs at Kisladag and Tanjianshan. Gross profit from gold mining operations of $230-million fell 40% year-on-year on the back of decreasing gross margins as a result of lower sales volumes, higher unit operating costs and lower realised gold prices.

During 2015, Eldorado recorded noncash impairment charges totalling $1.05-billion in property, plant and equipment (net of deferred income tax recovery), and $476-million in goodwill mainly related to Greece. Impairment charges comprising property, plant and equipment included $739.9-million related to Skouries, $214.1-million related to Certej, $31.2-million related to Stratoni, $35.8-million related to Tanjianshan, and $28.2-million related to Vila Nova.

In addition to ongoing permitting issues at Skouries, higher estimated capital and operating costs affected expected cash flows from Skouries and Certej, leading to fair value estimates below these projects' carrying values. Stratoni (lead and zinc) and Vila Nova (iron-ore) were both affected by the continuing slump in metals prices, Eldorado advised.