Eldorado profit narrows on lower sales

VANCOUVER (miningweekly.com) – Canadian gold producer Eldorado Gold has reported lower adjusted earnings for the second quarter as lower gold sales from continuing operations weighed on the TSX- and NYSE-listed miner’s financial performance.

Excluding single items, net earnings for the three months ended June 30 were $6.3-million, or $0.01 a share, compared with adjusted net earnings of $11.7-million, or $0.01 a share, in the second quarter of 2016.

Gold output was 63 692 oz, including pre-commercial production.

Gold revenues of $72.2-million on sales of 57 206 oz of gold, at an average realised gold price of $1 262/oz, were lower year-on-year, owing to lower production and sales at Kisladag and shipping delays at Efemcukuru, in Turkey.

Kisladag reported gold output of 38 456 oz for the quarter, down 23% year-on-year. Reduced solution grades resulted from continued slow leaching of higher pad stack heights and increased cyanide requirements. More time is now required to adjust the overall pad solution chemistry and to allow solution to flow through the leach pad, the company advised. 

With the current stack height being about 80 m at the highest point, vertical flow rates are about 1 m/d.

All-in sustaining cash costs during the period averaged $846/oz, down from $933/oz in the comparable period of 2016. Cash operating costs averaged $484/oz, compared with 2017 guidance of $485/oz to $535/oz.

Eldorado reported total liquidity of about $1-billion, including $752.1-million in cash, cash equivalents and term deposits, and $250-million in undrawn lines of credit at quarter end. Cash, cash equivalents and term deposits after payment for the acquisition of Integra Gold were $609.3-million.

Meanwhile, Greece-based Olympias Phase II commissioning continued and commercial production is now expected by the end of 2017. Construction at Skouries continued, with production now targeted for 2020.

In early June, the Greek Ministry of Environment and Energy issued a press release indicating it had requested the Greek Council of State to take preparatory steps to initiate arbitration proceedings with Eldorado. However, it provided no specific or additional details. The company confirmed that it had not yet received arbitration notice, but if initiated the arbitration process could take a minimum of four months. 

Meanwhile, permits applied for remain unissued and the 2017 guidance on Skouries' capital spending and start-up has been revised accordingly. The company continues to evaluate all capital spending and development timelines at its projects in Greece.

In 2017, Eldorado expects to produce 290 000 oz to 340 000 oz of gold, including pre-commercial ounces from Olympias Phase II. Cash costs are forecast at $500/oz, with all-in sustaining cash costs expected to be about $900/oz.