Eldorado Gold (EGO)

Q2 2011 Earnings Call

July 29, 2011 11:30 am ET

Executives

Nancy Woo - Vice President of Investor Relations

Fabiana Chubbs - Chief Financial Officer, Treasurer and Risk Manager

Paul Wright - Chief Executive Officer, President and Director

Norm Pitcher - Chief Operating Officer

Analysts

Unknown Speaker

Josh Wolfson - Stifel, Nicolaus & Co., Inc.

Steven Butler - Canaccord Genuity

Barry Cooper - CIBC World Markets Inc.

Anita Soni - Crédit Suisse AG

Unknown Analyst -

Brian Christie - Desjardins Securities Inc.

David Haughton - BMO Capital Markets Canada

Dan Rollins - UBS Investment Bank

Presentation

Operator

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Good morning, ladies and gentlemen. Welcome to the Eldorado Gold Corporation's Second Quarter Financial and Operating Results Conference Call. Please be advised that this call is being recorded on Friday, July 29, 2011. This call is also being webcast and is available on the Eldorado Gold website at www.eldoradogold.com. I would now like to turn the meeting over to Ms. Nancy Woo. Please go ahead.

Nancy Woo

Thank you, operator. This presentation includes statements that may constitute forward-looking statements or information. Any forward-looking statements made and information provided reflect our current plans, estimates and views. Forward-looking statements are information which include all statements that are not historical facts, are based on certain material factors and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated and/or suggested by the forward-looking statement or information. Consequently, undue reliance should not be placed on these forward-looking statements and information. The information contained in our annual information form and in our annual quarterly management's discussion and analysis available on our website and on SEDAR identifies factors and assumptions upon which the forward-looking statements or information are based on and the risks, uncertainties and other factors that could cause actual results to differ. All forward-looking statements and information made or provided during the presentation are expressly qualified in their entirety by this cautionary statement and the cautionary statement contained in our press release dated July 28, 2011. I will now turn the call over to Paul Wright, President and CEO of Eldorado Gold.

Paul Wright

Thank you, Nancy. And good morning, ladies and gentlemen. Welcome to the Eldorado Gold Corporation's Second quarter Financial and Operating Results Conference Call. Joining me this morning in Vancouver are Norm Pitcher, our Chief Operating Officer; Fabiana Chubbs, our Chief Financial Officer; and Nancy Woo, our Vice President of Investor Relations. We will follow the usual format, following a brief introduction. Myself, Norm and Fabiana will take you through the quarter's operating and financial results and provide some outlook commentary for the balance of the year. And then we'll open up for questions.

I'm very pleased with the performance in the second quarter. Our 4 operating gold mines continued to perform at or better than planned in terms of both costs and production levels. With mid year production from these mines of 311,000 ounces at cash operating costs of $403 an ounce, we're slightly ahead of our plan of 297,000 ounces at $419 an ounce.

Production commenced at Efemçukuru mine and where we envisage in our commercial production starting in the fourth quarter of this year. In the quarter, we also commissioned our expanded circuit at Kisladag and now are operating at the full 12.5 million tonnes a year run rate. Our Phase 4 expansion study for Kisladag is progressing well, and we expect to be releasing details of this study in the next couple of weeks. Just to give you some broad outline in terms of where the study and the result in expansion will take Kisladag, we're now looking at expanding crusher throughput to approximately 25 million tonnes per year. We are going to be working off the reserve base stated as of the beginning of this year, and in addition to crusher throughput at the level I've described, we will be adding a modest level of run-of-mine material. We will be preferentially pushing a higher grade material through the crushing circuit and lower grade material, as I said earlier, approximately 5 million tons a year will be going out as run-of-mine. Beyond that, you're going to have to wait until we get the study out in the next couple of weeks.

We continue to make good progress with construction at Eastern Dragon and where we expect commercial production to begin in Q1 of 2012. On the development front, we are pleased with the progress being made in permitting at the Perama Hill Project in Greece, where the project now has been included in the fast-track process designed by the Greek government to expedite projects considered to be a strategic investment for the country. Our project qualified, and our expectation is that as part of the process, we will receive joint ministerial accrual for the project in August and in the first quarter of 2012, be in receipt of the necessary licenses and permits, which will allow us to make a construction decision.

In Brazil, the TZ Project activity continues on a number of fronts, exploration, feasibility, engineering and permitting. And we're all working here hard towards making a construction decision on this project in Q1 2012.

Mainly due to the delayed start and construction of our concentrate treatment plant at Kisladag for the Efemçukuru concentrate and the uncertainty as a result of the quantity of concentrate that we will be able to produce or process by year end at this facility, we have elected to ratchet back slightly our production guidance for this year to 700,000 to 725,000 ounces at an average cash cost of $390 to $410 per ounce. The company remains financially strong, and this is reflected in our quarter-end cash balance, our continued accelerated prepayment of outstanding debt in China and our recently declared dividend of $0.06 a share based on our first 6 months of production. With that, I'll hand over to Norm for his comments.

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