Market Overview

UPDATE: Eldorado Lowers FY Exploration Budget, CapEx for 2013

Share:

Paul N. Wright, Chief Executive Officer of Eldorado Gold Corporation (NYSE: EGO) ("Eldorado" the "Company" or "we") provides an update pertaining to decisions and actions affecting the Company's business.

In light of the recent significant decline in gold price the Company has and continues to critically review and make modifications to its operating plan to ensure the Company continues to remain a low cost, profitable, growing gold company.

The Company has revised its operating plan in a manner that ensures the Company's ability to further develop its business based on a gold price of $1,250/oz for the foreseeable future. As a result the following decisions and actions have been initiated in the following areas:

Exploration

Exploration budget originally planned for $98.5 million for 2013 has been reduced to $51.0 million with the emphasis on mine site and brown fields exploration. The Company presently envisages 2014 exploration expenditure to be at or below this level of spend.

Kisladag Expansion Deferred

The full Kisladag expansion as envisaged will be deferred pending improvement in metal prices. The capital programme required to replace the existing mining fleet with larger loading and haulage equipment and electrification of the mine will continue through 2014. This investment will contribute to the mines ability to maintain low unit mining costs as the open pit deepens and haulage distances increase. The Company will continue to complete the amended Environmental Impact Assessment application for the full expansion and expects to have full approval of this application by year end.

2013 Capital Expenditure Reductions

The Company planned to spend approximately $670 million in 2013 (sustaining capital $170 million, development capital $500 million). This has been revised down to a total expenditure of $430 million.

Development Project Schedule

Taking into account the Company's existing strong cash balance as well as cash flow from operations at an assumed realized gold price of $1,250 /oz. gold, we are adjusting the pace of development of our suite of projects. Table I summarizes the changes.

Table 1

---------------------------------------------------------------------------- Project Original Production Start Revised Production Start ---------------------------------------------------------------------------- Skouries 2015 2016 ---------------------------------------------------------------------------- Perama 2015 2016 ---------------------------------------------------------------------------- Certej 2015 2016 / 2017 ----------------------------------------------------------------------------

Dividend Policy

The Company's dividend policy will be reviewed by the Company's Board of Directors at the upcoming quarterly board meeting to ensure that the policy fits the Company's current development spending plans.

"With the Company's strong balance sheet and low production costs the Company remains well equipped to grow its high quality business, albeit at a slower pace than previously envisaged. The Company's mines continue to deliver in accordance with plan in terms of both production and costs underpinning Eldorado's ability to progress its development projects. The strong second quarter operating performance of our mines enables year end guidance of 745,000 ounces of gold with cash costs of $520/oz. This is in line with original guidance provided of 705,000 - 760,000 ounces at cash costs of $515-530/oz," commented Paul N. Wright, Chief Executive Officer.

 

Related Articles (EGO)

View Comments and Join the Discussion!

Posted-In: News Guidance