Eldorado Gold Corporation, (“Eldorado” or “the Company”) announces
that the Company will resume mining, crushing, stacking and heap
leaching at its Kisladag gold mine in Turkey. Advancement of the
previously announced mill project has been suspended. The
Company is also providing three year consolidated production
guidance, along with detailed cost guidance for 2019.
Eldorado’s President and CEO, George Burns,
stated: “The Company remains focused on shareholder value in its
capital allocation decisions taking into account the interests and
expectations of all stakeholders. The decision to restart
mining and heap leaching at Kisladag is supported by improved heap
leach recoveries and confirmed by a revised heap leaching plan
developed in early 2019. The revised heap leaching plan results in
favourable economics when compared to milling, without the risks
associated with the construction and financing of a $500 million
project.”
“At Lamaque, we are very pleased with the
performance of our project team who delivered the first gold pour
from the Sigma Mill in less than 18 months since acquisition.
The Company continues to anticipate commercial gold production
during the first quarter of 2019 and expects total output,
including pre-commercial production, in excess of 100,000 ounces
for 2019.”
“Beyond completing remaining construction at
Lamaque, Eldorado has no major capital projects underway and will
remain focused on existing operations in order to realize the full
potential from these assets. With annual gold production growing to
over 500,000 ounces in 2020, the Company expects to generate
significant free cash flow over the next three years and will
consider debt retirement starting later this year.”
Kisladag Update
On October 23, 2017, the Company provided an
update on Kisladag operations based on laboratory test work
undertaken during the third quarter, which indicated that lower
recoveries were expected from the zone of mineralization located
around the base of the open pit where mining was underway. Based on
available information, in the first quarter 2018, the Company
elected to suspend mining in order to evaluate processing options.
Following a year of engineering and testwork, in October 2018 the
Company announced that the Board of Directors had approved the
advancement of a mill project. Subsequent to that announcement,
gold recovery from the leach pad increasingly exceeded
expectations. The Company then focused testwork and analysis
on the viability of resuming mining and heap leaching at
Kisladag.
In parallel to mill engineering and analysis,
testwork to extract maximum value from material already placed on
the heap leach pad and the remaining reserves was ongoing
throughout 2018. Approximately 900,000 tonnes of ore were placed on
an inter-lift lined test pad in the first quarter of 2018.
Late in the year, results from this pad were showing recoveries of
approximately 58% from an extended leach cycle approaching 250 days
(compared to approximately 40% recoveries from the original 90 day
column tests). In early 2019, the Company analyzed the new data and
developed revised heap leaching plans, showing improved economics
for the heap leaching scenario. As a result, the Company decided to
resume mining and heap leaching.
The benefits of resuming mining and heap
leaching are expected to include:
- Improved economics of heap leaching when compared to the mill
project, demonstrates an increase in production and free cash flow
over the next three years and a significant reduction in capital
development costs;
- The flexibility to consider debt retirement and address balance
sheet leverage in 2019;
- Lower construction risks;
- Lower financing risks, as mining and heap leaching will not
require external funding;
- The potential for higher heap leach recoveries and the ability
to extend heap leach mine life by conducting further metallurgical
tests on deeper material in the pit under a longer leach cycle for
both the three year guidance and beyond.
Mining is expected to recommence by the end of
the first quarter. The three year guidance is based on mining and
stacking an initial 22 million tonnes of ore grading over 1.1 grams
per tonne gold during the next three years, as well as continuing
to leach the material currently on the pad.
While the mill project has been suspended, the
project remains viable in the short-term. The viability of
the mill project will continue to be assessed in light of the
results from ongoing heap leach metallurgical testwork on deeper
material and in view of other investment opportunities within the
portfolio.
Production and Financial Guidance
Full year gold production of 390,000-420,000
ounces in 2019 (versus 349,147 ounces in 2018) is expected from
Kisladag, Lamaque, Efemcukuru, and Olympias, with higher
consolidated production expected in the second half of the
year. The Company expects average cash operating costs to
decline from $621 per ounce of gold sold in 2018, to $550-600 per
ounce of gold sold in 2019. The Company will focus on maximizing
free cash flow, including optimizing and improving unit costs and
production at all assets and decreasing global G&A
expenses.
As mining and heap leaching at Kisladag ramps up
in 2019, consolidated gold production is expected to increase to
520,000-550,000 ounces of gold in 2020. Production is expected to
decrease to 350,000-380,000 ounces of gold in 2021. Guidance at
Kisladag will be updated later in 2019 based on results of testwork
being completed on deeper material and prevailing economics around
both heap leaching and the mill project.
2019 – 2021 Gold Production and Consolidated Cost
Guidance
Production (oz) |
2018A |
2019E |
2020E |
2021E |
Kisladag |
172,009 |
145,000 - 165,000 |
240,000 - 260,000 |
75,000 - 95,000 |
Lamaque |
35,3501 |
100,000 - 110,0002 |
125,000 - 135,000 |
125,000 - 135,000 |
Efemcukuru |
95,038 |
90,000 - 100,000 |
90,000 - 100,000 |
90,000 - 100,000 |
Olympias |
46,750 |
50,000 - 55,000 |
55,000 - 65,000 |
55,000 - 65,000 |
Total |
349,147 |
390,000 - 420,000 |
520,000 - 550,000 |
350,000 - 380,000 |
|
|
|
|
|
Consolidated Costs ($/oz sold) |
2018A |
2019E |
2020E |
2021E |
Cash Operating Cost – C1 ($/oz sold) |
621 |
550 - 600 |
500 - 600 |
600 - 700 |
Total Operating Cost – C2 ($/oz sold) |
646 |
600 - 650 |
550 - 650 |
650 - 750 |
AISC ($/oz sold) |
990 |
900 - 1,000 |
800 - 900 |
900 - 1,000 |
1 Pre-commercial production.2 Includes ~10,000
ounces of pre-commercial production.
2019 Cost and Capital Expenditure
Guidance
|
2018A |
2019E |
|
|
2018A |
2019E |
Kisladag |
|
|
|
Corporate ($ millions) |
|
|
Cash Operating Cost – C1 ($/oz sold) |
662 |
570 - 620 |
|
General and Administrative |
47 |
302 |
Total Operating Cost – C2 ($/oz sold) |
683 |
610 - 660 |
|
Exploration3 |
28 |
25 - 30 |
Non-cash Inventory Costs ($/oz sold) |
308 |
n/a |
|
|
|
|
Sustaining Capex ($ millions) |
18 |
10 - 15 |
|
Growth Capital ($ millions) |
|
|
|
|
|
|
Kisladag |
20 |
0 |
Lamaque |
|
|
|
Olympias |
24 |
10 - 15 |
Cash Operating Cost – C1 ($/oz sold) |
n/a |
550 - 6001 |
|
Lamaque4 |
142 |
30 - 35 |
Total Operating Cost – C2 ($/oz sold) |
n/a |
580 – 6301 |
|
Other Project Spending ($ millions) |
|
|
Sustaining Capex ($ millions) |
n/a |
35 - 45 |
|
Skouries |
24 |
5 - 10 |
|
|
|
|
Stratoni |
5 |
5 - 10 |
Efemcukuru |
|
|
|
Tocantinzinho |
6 |
3 - 5 |
Cash Operating Cost – C1 ($/oz sold) |
511 |
550 – 600 |
|
Certej |
6 |
3 - 5 |
Total Operating Cost – C2 ($/oz sold) |
540 |
600 - 650 |
|
|
|
|
Sustaining Capex ($ millions) |
24 |
15 – 20 |
|
|
|
|
|
|
|
|
|
|
|
Olympias |
|
|
|
|
|
|
Cash Operating Cost – C1 ($/oz sold) |
730 |
550 - 650 |
|
|
|
|
Total Operating Cost – C2 ($/oz sold) |
759 |
600 - 700 |
|
|
|
|
Sustaining Capital ($ millions) |
12 |
20 - 25 |
|
|
|
|
1 Excludes 10,000 ounces of
pre-commercial production. 2 Re-allocation of the
Company’s general and administrative costs to better align with
industry peer group practices, with the portion directly supporting
operations to be reported, going forward, as cash operating costs.
3 33% expensed and 67% capitalized.4 Includes
development costs and capitalized operating costs less proceeds
from pre-commercial sales.
2019
Commodity and Currency Price Assumptions |
|
|
|
Gold ($/oz) |
$1,275 |
|
Silver ($/oz) |
$ 17 |
|
Lead ($/mt) |
$ 2,250 |
|
Zinc ($/mt) |
$ 2,500 |
|
C$/US$ |
1.35:1 |
|
EURO$/US$ |
1:1.20 |
|
US$/TRY |
1:5.75 |
|
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2019 Operational Outlook
TURKEY
Kisladag
For 2019, the Company is forecasting production
of 145,000-165,000 ounces of gold including approximately 70,000
ounces derived from ore previously placed on the leach pad.
Approximately 9 million tonnes of new ore at an average grade of
1.1 grams per tonne is planned to be placed on the pad in 2019.
Cash costs are estimated to be $570-620 per ounce of gold sold.
Ore placed on the pad in 2019 is expected to contribute to
production commencing in the second half of 2019 and into 2020.
Sustaining capital expenditures for 2019 are
forecast to be approximately $10-15 million, spent primarily on
capitalized waste stripping, equipment overhauls, some
refurbishment work on the primary crusher and various small capital
projects.
Efemcukuru
Efemcukuru remains a steady performer for the
seventh consecutive year. In 2019, Efemcukuru is expected to mine
and process over 510,000 tonnes of ore at an average grade of 7.0
grams per tonne gold, producing 90,000-100,000 ounces of gold at
operating costs of $550-600 per ounce of gold sold.
Sustaining capital expenditures for 2019 are
forecast to be approximately $15-20 million, spent primarily on
capitalized underground mine development, equipment purchase and
rebuilds, and various small capital projects including in-stream
analysis, water management upgrades and a dry-stack tailings dam
expansion.
CANADA
Lamaque
Eldorado acquired the Lamaque project in July
2017. In the 18 months following the acquisition, Eldorado
filed a prefeasibility study (PFS) (see March 21, 2018 release),
drilled over 150,000 meters, completed 14,000 meters of underground
development and largely completed refurbishment of the existing
Sigma Mill, which began commissioning in November 2018. A
total of 42,411 ounces were produced from a series of toll milling
campaigns in 2017/2018, and in December 2018 the first gold was
poured from ore processed in the Sigma Mill.
In 2019, Lamaque is expected to declare
commercial production during the first quarter and is planning to
mine and process over 500,000 tonnes of ore at an average grade of
7.0 grams per tonne gold. Production is expected to be
100,000-110,000 ounces of gold (including pre-commercial
production), at cash operating costs of $550-600 per ounce of gold
sold.
Excluding proceeds from gold sales, total
2018/2019 capital spending is forecast to come in roughly 10 - 15%
over the PFS estimate. The increase relates primarily to the
purchase of certain pieces of mobile equipment as opposed to
leasing, additional costs associated with underground development,
further work on the existing tailings dam to increase storage
capacity, offset by the deferral of construction of the Sigma paste
plant.
Total capital expenditures for 2019 (excluding
proceeds from pre-commercial gold sales) are forecast to be below
the PFS estimate at approximately $80-90 million,
including $35-45 million of sustaining capital.
37,000 metres of exploration drilling are
planned to further expand resources in the lower part of the
Triangle Deposit, focusing on the 500 metre vertical interval
between the C5 and C9 zones, and to test additional targets in the
project area. Resource conversion drilling planned from
underground platforms (31,200 metres) will target Inferred
Resources in the lower part of the C4 Zone and the C5 Zone. The
Company expects to further evaluate and optimize the mine plan as
we progress resource conversion, particularly in the C5 ore
body.
The recent exploration success at Lamaque has
provided the opportunity to review options for increasing
throughput at the Sigma Mill. The mill has a refurbished
nameplate capacity of 2,200 tonnes per day and the potential to
expand to its former capacity of 5,000 tonnes per day with a
purchase and installation of a SAG mill. Based on planned
drilling and the potential conversion of Inferred Resources in C4,
C5 and C6, the Company expects to explore options to increase mill
feed.
GREECE
Olympias
In 2019, Olympias is expected to mine and
process 430,000 tonnes of ore at an average grade of 7.8 grams per
tonne of gold, 92 grams per tonne of silver, 3% lead and 4% zinc.
Production is expected to be 50,000-55,000 ounces of gold,
850,000-900,000 ounces of silver, 8,750-9,250 tonnes of lead and
12,000-12,500 tonnes of zinc. Cash operating costs net of
by-products are expected to be $550-650 per ounce of gold sold.
Global market conditions for gold pyrite concentrate softened in
late 2018, resulting in the Company budgeting lower payabilities
for material sold in 2019.
Sustaining capital expenditures are expected to
be $20-25 million on underground capitalized development, an infill
diamond drill program, raise bore installations, mobile machinery,
equipment rebuilds and process plant upgrades.
Development capital expenditures are expected to
be $10-15 million, including a pump station installation
underground along with various infrastructure upgrades associated
with completing Phase II as well as ongoing engineering associated
with Phase III.
Going forward, the Company expects the
variability in ore blending to stabilize at Olympias. The paste
backfill plant has been operating efficiently and is allowing for
consistent backfilling of mined voids. Mining performance is
expected to improve as a result of an enhanced ore deposit model
based on infill drilling completed in 2018. Cost reduction
initiatives in both the mining operations and the process plant are
ongoing with high-cost consumables and operational inefficiencies
being initially targeted.
As part of the Company’s 2018 financial
year-end, the valuation assumptions for Olympias are under review
and there is a likelihood that an impairment charge will be
recorded.
Skouries
Ongoing care and maintenance costs are estimated
to be $5-10 million per year for 2019, including $2-4 million of
direct site costs and its portion of country overhead costs.
Stratoni
For 2019, Stratoni is expected to process
210,000 tonnes of ore at grades of 6% lead, 9% zinc and 165 grams
per tonne silver. Sustaining capital expenditures at Stratoni are
expected to be $5-10 million including mine mobile equipment
purchases and overhauls, mine facility upgrades and upgrades to
some of the process facilities.
Through additional investment in the exploration
program at Stratoni for 2019, the Company expects to continue to
extend mine life. An additional 10,000 metres of resource
expansion drilling is planned for the year.
ROMANIA
The Company expects to spend approximately $3-5
million at Certej during 2019 with the focus on continuing to
optimize engineering along with modest site enabling works for the
main electric power and water lines to the site. An economic
assessment for the nearby Bolcana project is underway, and will
determine next steps for advancing the project.
In January 2019, the Company received notice
that the Urban Zonal Permit (PUZ), originally issued in 2010 for
the Certej project in Romania, was suspended. The Company
will appeal after the reasoning behind the ruling has been
received, which can take up to a month. This suspension is not
expected to have a significant impact on development at Certej.
BRAZIL
Work is underway to update the 43-101 compliant
PFS for the Tocantinzinho project. The PFS is expected to be
completed in the first half of 2019. Development capital spending
in 2019 is expected to be $3-5 million.
Conference Call to Discuss Path
Forward
Senior management will host a conference call to
review the information contained in this release on Thursday,
January 31st, 2019 at 7:00 AM PT (10:00 AM ET). The call and
associated slides will be webcast and can be accessed at Eldorado
Gold’s website: www.eldoradogold.com and via
http://services.choruscall.ca/links/eldoradogold20190131.html
Conference Call Details |
Replay (available until February
21st, 2019) |
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Date: |
Thursday, January 31,
2019 |
Vancouver: |
1-604-638-9010 |
Time: |
7:00 am PT (10:00 am
ET) |
Toll Free: |
1-800-319-6413 |
Dial in: |
1-604-638-5340 |
Pass code: |
2931 |
Toll free: |
1-800-319-4610 |
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About Eldorado Gold
Eldorado is a gold and base metals producer with
mining, development and exploration operations in Turkey, Canada,
Greece, Romania, Serbia, and Brazil. The Company has a highly
skilled and dedicated workforce, safe and responsible operations, a
portfolio of high-quality assets, and long-term partnerships with
local communities. Eldorado's common shares trade on the
Toronto Stock Exchange (TSX: ELD) and the New York Stock Exchange
(NYSE: EGO).
Contacts
Investor RelationsPeter Lekich,
Manager Investor Relations604.687.4018 or
1.888.353.8166 peter.lekich@eldoradogold.com
MediaLouise Burgess, Director
Communications & Government Relations604.687.4018 or
1.888.353.8166 louiseb@eldoradogold.com
Cautionary Note about Forward-looking Statements and
Information
Certain of the statements made and information
provided in this press release are forward-looking statements or
information within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws. Often, these forward-looking statements and
forward-looking information can be identified by the use of words
such as "plans", "expects", "is expected", "budget", “continue”,
“projected”, "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes" or the negatives thereof or variations
of such words and phrases or statements that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved.
Forward-looking statements or information
contained in this release include, but are not limited to,
statements or information with respect to: our guidance and
outlook, including expected production, cost guidance and
recoveries of gold, including higher heap leach recoveries at
Kisladag, favourable economics for our heap leaching plan and the
ability to extend heap leach mine life at Kisladag through further
metallurgical tests on deeper material, planned capital and
exploration expenditures; our expectation as to our future
financial and operating performance, including expectations around
generating significant free cash flow and debt retirement, expected
metallurgical recoveries, gold price outlook; and our strategy,
plans and goals, including our proposed exploration, development,
construction, permitting and operating plans and priorities and
related timelines and schedules.
Forward-looking statements and forward-looking
information by their nature are based on assumptions and involve
known and unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements or information.
We have made certain assumptions about the
forward-looking statements and information, including assumptions
about the geopolitical, economic, permitting and legal climate that
we operate in; the future price of gold and other commodities;
exchange rates; anticipated costs and expenses; production, mineral
reserves and resources and metallurgical recoveries, the impact of
acquisitions, dispositions, suspensions or delays on our business
and the ability to achieve our goals. In particular, except
where otherwise stated, we have assumed a continuation of existing
business operations on substantially the same basis as exists at
the time of this release.
Even though our management believes that the
assumptions made and the expectations represented by such
statements or information are reasonable, there can be no assurance
that the forward-looking statement or information will prove to be
accurate. Many assumptions may be difficult to predict and are
beyond our control.
Furthermore, should one or more of the risks,
uncertainties or other factors materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in forward-looking statements or
information. These risks, uncertainties and other factors
include, among others, the following: results of further testwork,
recoveries of gold and other metals; geopolitical and economic
climate (global and local), risks related to mineral tenure and
permits; gold and other commodity price volatility; risks regarding
potential and pending litigation and arbitration proceedings
relating to the Company’s, business, properties and operations;
expected impact on reserves and the carrying value; the updating of
the reserve and resource models and life of mine plans; mining
operational and development risk; financing risks, foreign country
operational risks; risks of sovereign investment; regulatory risks
and liabilities including, regulatory environment and restrictions,
and environmental regulatory restrictions and liability;
discrepancies between actual and estimated production, mineral
reserves and resources and metallurgical testing and recoveries;
additional funding requirements; currency fluctuations; community
and non-governmental organization actions; speculative nature of
gold exploration; dilution; share price volatility; competition;
loss of key employees; and defective title to mineral claims or
properties, as well as those risk factors discussed in the sections
titled “Forward-Looking Statements” and "Risk factors in our
business" in the Company's most recent Annual Information
Form & Form 40-F. The reader is directed to carefully review
the detailed risk discussion in our most recent Annual Information
Form filed on SEDAR under our Company name, which discussion is
incorporated by reference in this release, for a fuller
understanding of the risks and uncertainties that affect the
Company’s business and operations.
Forward-looking statements and information is
designed to help you understand management’s current views of our
near and longer term prospects, and it may not be appropriate for
other purposes.
There can be no assurance that forward-looking
statements or information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, you should not
place undue reliance on the forward-looking statements or
information contained herein. Except as required by law, we
do not expect to update forward-looking statements and information
continually as conditions change.
Financial Information and condensed statements
contained herein or attached hereto may not be suitable for readers
that are unfamiliar with the Company and is not a substitute for
reading the Company’s financial statements and related MD&A
available on our website and on SEDAR under our Company name.
The reader is directed to carefully review such documents for a
full understanding of the financial information summarized
herein.
Except as otherwise noted, scientific and
technical information contained in this press release was reviewed
and approved by Paul Skayman, FAusIMM, Chief Operating Officer for
Eldorado Gold Corporation, and a "qualified person" under NI
43-101.
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