Eldorado Gold reports $339m loss for Q2

JOHANNESBURG (miningweekly.com) – Canadian gold miner Eldorado Gold reported a $329.9-million loss attributable to shareholders of the company for the second quarter of 2016, compared with a loss of $198.6-million in the second quarter of 2015.

During the period under review, the company also recorded a post-tax impairment loss of $339-million in discontinued operations related to the company's Chinese assets.

The company’s second-quarter loss was attributed to an impairment loss of $214.1-million at Eldorado’s Certej mine, in Romania.

Adjusted net earnings for the quarter were $11.7-million, compared with $17-million in the second quarter of 2015.

Gross profit from continuing gold mining operations, however, increased slightly year-on-year as the impact of lower sales volumes was offset by higher gold prices and lower unit operating costs.

Gold sales volumes from continuing operations fell year-on-year owing to an expected decrease in gold production from the company’s Kisladag mine, in Turkey.

Meanwhile, the company achieved 124 110 oz in gold production, at an average cash operating cost of $607/oz, for the quarter under review.

"Quarterly production was in line with internal plans and we are expecting to produce a total of 570 000 oz of gold at all in sustaining cash costs of $930/oz and cash costs of $595/o` for the full year 2016," said CEO Paul Wright.

He noted that development work at the Skouries mine, in Greece, was ramping up following the technical study approval in early May. Wright added that the Olympias Phase II development was on schedule, with initial production expected in the first quarter 2017.

“I am also pleased to report that, during the quarter, we announced the sale of our Chinese assets, specifically the Jinfeng, White Mountain and Tanjianshan mines, as well as the Eastern Dragon project.”

Wright noted that the two transactions, expected to close in the third and fourth quarters, will result in an even stronger balance sheet.

“This balance sheet will enable us to reinvest in our high-quality internal project pipeline and provide long-term growth for Eldorado."

OUTLOOK
Eldorado’s gold production for 2016, including discontinued operations, is forecast to be 570 000 oz, with average cash costs for commercial production of $595/oz and all-in sustaining cash costs of $930/oz.

Capital spending is forecast to be $95-million in sustaining capital and $250-million in new project development capital, compared with previous guidances of $105-million and $235-million respectively.

The forecast for new project development capital is higher than the original guidance, owing to projected higher capital spending at Skouries, following the approval of the updated technical study during the quarter and the restart of construction activities on site.