Eldorado Gold Corp Annual Report 2009

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FY2009 Annual Report · Eldorado Gold Corp

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Eldorado Gold Corporation

Kişladağ mine

Jinfeng mine

Tanjianshan mine

White Mountain mine

2009 Annual Report

2009 Highlights

(All amounts in the annual report are expressed in U.S. dollars, unless otherwise stated)

▪

Reported earnings of $0.26 per share (2008 — $0.26 per share, excluding the gain on the sale of São
Bento of $0.20 per share),

Produced 363,509 ounces of gold at a cash operating cost of $309 per ounce and total cash cost of
$337 per ounce (2008 – 308,802 ounces at a cash operating cost of $257 per ounce and total cash
cost of $289 per ounce),

Sold 360,226 ounces of gold at a realized average price of $995 per ounce (2008 – 316,918 ounces
of gold at a realized average price of $876 per ounce),

Acquired Sino Gold Mining Limited (“Sino Gold”) through a transaction implemented on December 15,
2009. Management control was effective with court approval on December 4, 2009,

Increased proven and probable gold reserves by approximately 95% to 15.1 million ounces, with 32%
coming from increases at Kişladağ, Efemçukuru and Perama Hill and the remainder from Sino Gold,

Submitted the Preliminary Environmental Impact Assessment to the Greek Ministry of Environment for
Perama Hill,

Completed commissioning of the sulphide ore processing facility at Tanjianshan,

Generated $147.0 million in cash from operating activities before changes in non-cash working capital
(2008 — $125.9 million), and

▪

Listed on the New York Exchange (NYSE: EGO) on October 22, 2009.

Table of Contents

2009 Highlights

Letter to Shareholders

Resources and Reserves

Production Highlights

Operating Mines

Development and Exploration

Stakeholder and Community Relations

Financial Review

MD&A

Consolidated Financial Statements

Notes to the Consolidated
Financial Statements

Consolidated Financial Information

Corporate Information

Shareholder Information

Cautionary Notes

107

109

110

111

Rang the bell at the opening at the
NYSE on October 22, 2009.

Acquired Sino Gold Mining Limited,
giving us ownership of the Jinfeng
and White Mountain gold mines and
Eastern Dragon project in China.

Eldorado Gold is an international gold producer with four operating mines, two mines under construction,
one late-stage development project and an extensive exploration program with 125,000 meters of drilling
planned for 2010. We operate in China, Turkey, Brazil, Greece and surrounding regions.



Turkey exploration
projects



Perama Hill
project



Efemçukuru
project

Vancouver
head office



Nevada JV projects



Vila Nova iron ore project



Brazilian exploration project

Kişladağ mine

Operating mines




Development projects

Exploration projects

Expanding Margins

Adding Value



Eastern Dragon project

White Mountain mine



China exploration projects

Tanjianshan mine

Jinfeng mine

Return on
Share Capital:
328%
(38%
annualized)

$1,200

$1,000

$800

$600

$400

$200

$995

$876

658

587

$609

$674

279

411

330

263

289

337

2006

2007

2008

2009

$9,000

$6,000

Issued
C$2.3 billion
in shares

Increased
market
capitalization by
C$8.2 billion

$3,000

Value Added
(from Dec 31, 2000 to Dec 31, 2009)

Margins

Total
Cash Cost

Realized
Gold Price

s
n
o

i
l
l
i

m
$
C

2000

2003

2006

2009

Growing Share Price

Reserve Growth

e
c
n
a
m
r
o
f
r
e
P
e
c
i
r
P
e
r
a
h
S

400%

300%

200%

100%

C$3.35

C$14.92

345%

ELD

151%
108%

Amex
Gold Bugs
Index
(HUI)

ETF (GLD)

)
0
0
0
1
x
(

s
e
c
n
u
O
d
e
n
a
t
n
o
C

20,000

15,000

10,000

5,000

2005 2006 2007 2008 2009

31-
Dec-09

2000

2003

2006

2009

Market
Capitalization

Share Capital
Additions

P&P Reserve

Cumulative
Mined

Letter to Shareholders

Kışladağ Mine, Turkey

Jinfeng Mine, China

Tanjianshan Mine, China

White Mountain Mine, China

It is again with pleasure that I write to report on the Company’s performance. 2009 was characterized by
another strong year of performance by our mines and with the acquisition of Sino Gold Mining Limited we
have become the largest international gold mining company in China.

In the year our mines produced 363,509 ounces of gold at a total cash cost of $337 per ounce. With average
realized prices for the year of $995 per ounce, this performance enabled the company to continue to grow
its cash margins for the fifth consecutive year and secured our position as one of the lowest cost pure gold
producers.

This strong operating performance translated into a profit of $0.26 per share in the year and in turn recognition
and reward for our shareholders in the marketplace. Following an exceptionally strong performance in 2008
as top performer on the S&P/TSX Composite Index, 2009 saw our share price appreciate by another 55
percent.

In Turkey, our Kısladağ gold mine again more than met expectations, producing 237,210 ounces of gold
at an extraordinarily low cash cost of $280 per ounce. In addition, through a very successful exploration
program, proven and probable reserves grew to 6.8 million ounces at year-end. In 2010, the Company plans
to invest approximately $40 million enabling the operation to increase production of gold to approximately
300,000 ounces annually.

At the Efemçukuru gold project, good progress was made in the construction of our second mine in Turkey.
Construction at Efemçukuru will continue through 2010, with planned commissioning and production
anticipated early in 2011. Although our major emphasis has been on construction activities, ongoing
exploration continues to result in resource and reserve growth.

Together with our partners in China, the Tanjianshan mine delivered an exceptional performance on both
production and costs whilst early in the year successfully commissioning our sulphide ore processing facility.
Again exploration crews were successful in discovering a new zone of mineralization south of the QLT pit.
This new zone (the 323 zone) will experience extensive work in 2010 and we expect this will contribute to
resource growth in the year.

Good progress was made in Greece with the Perama Hill gold project through active engagement with all
stakeholders. The project concept for Perama has been redefined in a manner that we believe is supported

ELDORADO GOLD 2009 Annual Report

Efemçukuru Project, Turkey

Eastern Dragon Project, China

Perama Hill Project, Greece

Exploration programs in China, Turkey,

Brazil and surrounding regions

by the local communities and other stakeholders. In October 2009, the Company initiated its permitting
process with the submission of the Preliminary Environmental Impact Assessment (PEIA) Report to the
Greek Ministry of Environment.

In December, the Company completed the acquisition of Sino Gold Mining Limited. This transaction creates
a unique opportunity for the Company as the largest international gold producer in China with a majority
interest in three operating mines: Jinfeng, Tanjianshan and White Mountain. A fourth mine, Eastern Dragon,
is presently under construction.

China is a geologically prospective country and is also the world’s largest producer and consumer of gold
providing all of the elements necessary for Eldorado with its Chinese partners to continue to grow a quality
business in this region.

The Management and Board of Eldorado look forward to the future. With further production growth in 2010
and 2011, the Company remains committed to maintaining disciplined quality growth that will provide for
superior shareholder returns.

With two new mines, Efemçukuru and Eastern Dragon in construction and the exciting opportunities to be
realized through our $35 million exploration program, 2010 will be a demanding year for all our employees
but I am confident in another rewarding year for all shareholders. It is a great privilege to work with a team
of professionals in Brazil, Canada, China, Greece and Turkey who continue year after year to deliver superior
results and remain committed to building a very unique gold company.

Sincerely,

Paul N. Wright
President and Chief Executive Officer

March 19, 2010

ELDORADO GOLD 2009 Annual Report

Resources and Reserves

GOLD

Project

Kışladağ
Proven
Probable
Proven+Probable

Efemçukuru
Proven
Probable
Proven+Probable

Tanjianshan
Proven
Probable
Proven+Probable

Perama Hill
Proven
Probable
Proven+Probable

Jinfeng
Proven
Probable
Proven+Probable

White Mountain
Proven
Probable
Proven+Probable

Eastern Dragon
Proven
Probable
Proven+Probable

Beyinhar
Proven
Probable
Proven+Probable

Total Gold
Proven
Probable
Proven+Probable

Mineral Reserves

Tonnes
(x1000)

Grade
(Au g/t)

In–situ
gold ounces
(x1000)

Mineral Resources

Tonnes
(x1000)

Grade
(Au g/t)

In–situ
gold ounces
(x1000)

68,230
149,240
217,470

1.05
0.94
0.97

1,129
4,007
5,136

12.00
8.30
9.10

5,574
571
6,145

2,455
6,923
9,378

13,200
6,100
19,300

4,300
2,300
6,600

700
1,300
2,000

7,100
20,700
27,800

102,688
191,141
293,829

3.57
3.79
3.59

4.48
2.75
3.20

5.10
5.40
5.20

3.60
4.00
3.70

9.80
7.60
8.40

0.83
0.55
0.62

2.06
1.35
1.59

2,312
4,504
6,816

437
1,069
1,506

640
70
710

354
612
966

2,171
1,061
3,232

500
290
790

206
321
527

191
367
558

6,811
8,294
15,105

Measured
Indicated
M+I
Inferred

82,904
329,345
412,249
182,083

1,235
4,304
5,539
1,703

7,082
2,191
9,273
3,061

3,020
8,690
11,710
8,733

18,000
11,000
29,000
5,400

6,700
4,000
10,700
1,600

600
1,600
2,200
1,200

7,800
53,900
61,700
7,500

127,341
415,030
542,371
211,280

0.93
0.74
0.78
0.50

13.18
8.50
9.55
6.43

3.19
2.68
3.07
3.54

4.34
3.37
3.62
1.96

4.80
4.47
4.65
3.91

3.10
3.10
3.10
2.10

11.20
7.20
8.30
5.00

0.82
0.49
0.53
0.75

1.96
1.00
1.22
0.79

2,490
7,783
10,273
2,950

523
1,177
1,700
352

727
189
916
349

421
942
1,363
552

2,750
1,580
4,330
674

673
405
1,079
109

220
361
581
196

205
848
1,053
182

8,009
13,285
21,295
5,364

ELDORADO GOLD 2009 Annual Report

IRON ORE

Project

Vila Nova
Proven
Probable
Proven+Probable

Mineral Reserves

Tonnes
(x1000)

Grade
(Fe %)

2,285
6,987
9,272

63.5
60.2
61.0

Mineral Resources

Tonnes
(x1000)

Grade
(Fe %)

Measured
Indicated
M+I
Inferred

2,285
7,679
9,964
2,022

63.5
61.0
61.6
61.2

Notes on Mineral Resources and Reserves:
1.

Mineral reserves and mineral resources for Kışladağ, Efemçukuru, Tanjianshan and Perama Hill are as of December 31, 2009.

Mineral reserves and mineral resources for Jinfeng, White Mountain, Eastern Dragon and Beyinhar are the 2009 JORC-compliant
Sino Gold estimates which are as of December 31, 2008. Except as discussed herein, no re-estimates have yet been done by
Eldorado Gold, nor have the existing estimates been depleted to 2009 production. In 2009 Jinfeng milled 1,505 Kt at 4.11 g/t Au
and White Mountain milled 358 Kt at 3.81 g/t Au.

The existing competent or qualified persons for the 2009 JORC-compliant reserves and resources for Jinfeng, White Mountain,
Eastern Dragon and Beyinhar are referenced below.

Mineral reserves are included in the mineral resources.

The estimation of mineral reserves and mineral resources is a subjective process where the accuracy of any such estimates
are a function of the quantity and quality of available data and the assumptions made and judgments used in engineering and
geological interpretation. The assumptions and judgements used in such a process may differ between parties. As such, there is
no assurance that if the Sino Gold mineral reserve and mineral resource estimates were prepared by Eldorado that the estimates
would be the same. Eldorado intends to review the methodology used in preparing the mineral reserve and mineral resource
estimates for the Sino Gold properties and update them as appropriate. Accordingly, there is no assurance that the mineral
reserve and mineral resource estimates for the Sino Gold properties will not change.

Mineral Reserve Notes:
1.

Gold price used was $825/oz for the Kışladağ, Efemçukuru, Perama Hill and Tanjianshan reserves, $750/oz for the Jinfeng and
White Mountain reserves, and $650/oz for the Eastern Dragon and Beyinhar reserves.

Cut-off grades (gold g/t): Kışladağ: 0.35 g/t oxide, 0.50 g/t sulphide; Efemçukuru: 4.0 g/t; Perama Hill: 1.0 g/t; Tanjianshan: 1.3
g/t JLG oxide, 1.64 g/t JLG sulphide; Jinfeng: 1.5 g/t open pit, 2.9 g/t underground; White Mountain: 2.0 g/t; Eastern Dragon: 1.5
g/t open pit, 2.5 g/t underground; Beyinhar: 0.28 g/t oxide, 0.66 g/t sulphide.

Qualified Persons:
Richard Miller, P.Eng. and Manager, Mining for the Company, is responsible for the Kışladağ, Tanjianshan and Perama Hill
reserves; Scott Cowie, B.Eng., MAusIMM, Senior Mining Engineer of Wardrop Engineering, is responsible for the Efemçukuru
reserves; John Chen, Ph.D., MAusIMM, Manager, Mining for Sino Gold, is responsible for the Jinfeng underground, White Mountain
and Eastern Dragon reserves; Weifeng Li, MAusIMM, principle mining consultant for West Swan Pty Ltd, is responsible for the
Jinfeng open pit reserves. Steve Craig, MAusIMM, consultant mining engineer with Orelogy, is responsible for the Beyinhar
reserves. Roberto Costa, principal of Roberto Costa Engenharia Ltda, is responsible for the Vila Nova iron reserves.

Mineral Resource Notes:
1.

Cut-off grades (gold g/t): Kışladağ: 0.3 g/t; Efemçukuru: 3.0 g/t; Perama Hill: 1.0 g/t; Jinfeng: 1.0 g/t open pit, 2.0 g/t
underground; Tanjianshan: 1.0 g/t; White Mountain: 1.0 g/t; Eastern Dragon: 1.0 g/t; Beyinhar: 0.2 g/t oxide, 0.5 g/t sulphide.

Qualified Persons:
Stephen Juras, Ph.D., P.Geo. and Director, Technical Services for the Company, is responsible for the Kışladağ, Efemçukuru,
Perama Hill and Tanjianshan gold resources and the Vila Nova iron resources. Yumin Qiu, Ph.D., MAIG, Exploration Manager for
Sino Gold, is responsible for the Jinfeng, White Mountain, Eastern Dragon and Beyinhar resources.

ELDORADO GOLD 2009 Annual Report

Production Highlights

First
Quarter
2009

Second
Quarter
2009

Third
Quarter
2009

Fourth
Quarter
2009

Fourth
Quarter
2008

2009

2008

Gold Production
Ounces Produced
Cash Operating Cost ($/oz)1,4
Total Cash Cost ($/oz)2,4
Total Production Cost ($/oz)3,4
Realized Price ($/oz - sold)
Kışladağ Mine, Turkey5
Ounces Produced
Tonnes to Pad
Grade (grams/tonne)
Cash Operating Cost ($/oz)4
Total Cash Cost ($/oz)2,4
Total Production Cost ($/oz)3,4

61,426
296
315
375
909

84,572
300
322
387
927

88,918
297
326
430
957

128,593
329
364
486
1,103

81,845
298
319
404
800

363,509
309
337
430
995

308,802
257
289
370
876

46,192
2,084,714
1.34
274
276
315

62,985
2,428,611
1.18
269
271
309

57,902
2,523,546
1.22
276
278
336

70,131
3,679,685
0.86
296
298
354

60,753
2,371,101
1.34
279
281
314

237,210
10,716,556
1.11
280
282
330

190,334
7,555,881
1.27
254
256
291

Tanjianshan Mine, China
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4
Total Cash Cost ($/oz)2,4
Total Production Cost ($/oz)3,4
Jinfeng Mine, China6
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4
Total Cash Cost ($/oz)2,4
Total Production Cost ($/oz)3,4
White Mountain Mine, China6
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4
Total Cash Cost ($/oz)2,4
Total Production Cost ($/oz)3,4

15,234
228,066
3.97
362
432
557

-
-
-
-
-
-

21,587
231,874
5.63
390
470
616

31,016
257,730
5.73
338
414
604

-
-
-
-
-
-

37,773
256,828
5.81
330
424
670

14,541
136,054
3.97
472
516
623

6,148
58,074
4.26
364
400
535

21,092
216,273
4.33
352
429
664

-
-
-
-
-
-

105,610
974,498
5.31
349
432
623

14,541
136,054
3.97
472
516
623

6,148
58,074
4.26
364
400
535

118,468
858,829
5.31
261
343
496

-
-
-
-
-
-

1.
2.
3.
4.
5.
6.

Cost figures calculated in accordance with the Gold Institute Standard.
Cash Operating Costs, plus royalties and the cost of off-site administration.
Total Cash Costs, plus foreign exchange gain or loss, depreciation, amortization and reclamation expenses.
Cash operating, total cash and total production costs are non-GAAP measures. See the section “Non-GAAP Measures” of this Review.
The Kisladag mine temporarily ceased operations on August 18, 2007 and reopened on March 6, 2008.
Jinfeng and White Mountain production for the period December 4 to December 31, 2009 only.

ELDORADO GOLD 2009 Annual Report

Forecast Annual Gold Production

1,200

1,000

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1
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(
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800

600

400

200

2009 2010 2011 2012 2013

$500

$400

$300

$200

$100

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$
(

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Perama Hill

Eastern Dragon

Efemçukuru

White Mountain

Jinfeng

Tanjianshan

Kişladağ

Cash Operating
Cost ($/oz)

Gold pouring at White Mountain, China

ELDORADO GOLD 2009 Annual Report

Operating Mines

Kışladağ Mine (100%)
Uşak, Turkey

Jinfeng Mine (82%)
Guizhou, China

Kısladağ is an open pit, heap leach mine with more
than 15 years of remaining mine life, located 35
kilometres southwest of Uşak city. Kısladağ was
a greenfield discovery by Eldorado that began
commercial production in July 2006 and is now the
largest gold mine in Turkey, with 2009 production
of 237,210 ounces of gold at a cash operating cost
of $280 per ounce. In 2010, we forecast production
of 230,000 to 240,000 ounces of gold at a cash
operating cost of $310 to $330 per ounce. The
expansion plan, approved in 2009, will result
in increasing mine throughput from 10 million
tonnes per annum to 12 million tonnes per annum,
resulting in forecasted 2011 production of 270,000
to 280,000 ounces of gold at a cash operating cost
of $300 to $320 per ounce.

During 2009, Kısladağ’s proven and probable gold
reserves increased by 23% to 6.8 million ounces
with an average grade of 0.97 grams of gold per
tonne. Measured and indicated gold resources
also increased by 32% to 10.3 million ounces. Our
2010 exploration budget for Kısladağ is $4 million
and consists of approximately 20,000 meters of
diamond drilling to define the limits of the ore body.

Jinfeng, the second-largest gold mine in China,
is an open pit and underground gold mine using
BIOX® technology that is located 236 kilometres
southwest of the capital city of Guiyang in Guizhou
Province, southern China. Eldorado owns 82% of
the mine and our joint venture partner Guizhou
Lannigou Gold Mine Limited holds the remaining
18%. Jinfeng began commercial production in
September 2007 and currently has over 15 years
of mine life. For 2010, we forecast production of
170,000 to 190,000 ounces of gold at a cash
operating cost of $450 to $480 per ounce. In
2011, we forecast that production will increase to
200,000 to 220,000 ounces of gold, while the cash
operating cost will decrease to $370 to $390 per
ounce as a result of a decrease in the strip ratio
from 17.8:1 to 5.8:1. As 2010 will be the first year
that we will be operating Jinfeng, we will review the
pit depth optimization as well as the underground
mining methods and production rates this year.

Jinfeng has 3.2 million ounces of proven and
probable gold reserves with an average grade of 5.2
grams of gold per tonne and 4.3 million ounces of
measured and indicated gold resources. Our $2.5
million exploration program at Jinfeng consists of
minesite drilling and greenfield programs.

ELDORADO GOLD 2009 Annual Report

Tanjianshan Mine (90%)
Qinghai, China

White Mountain Mine (95%)
Jilin, China

Tanjianshan is an open pit float-roast-CIL mine in
Qinghai Province in northwest China. We own 90%
of the mine and our joint venture partners Qinghai
Number One Geological Brigade and Dachaidan Gold
Mine each hold 5%. Consisting of two separate gold
deposits (Qinlongtan (QLT) and Jinlonggou (JLG)),
Tanjianshan began commercial production in February
2007. During 2009, we successfully completed the
commissioning of the sulphide ore processing facility
and increased the mill throughput to 975,000 tonnes
per year. Gold production in 2009 was 105,610
ounces of gold at a cash operating cost of $349 per
ounce. In 2010, we expect gold production of 95,000
to 105,000 ounces at a cash operating cost of $420
to $435 per ounce. In 2011, gold production should
be within the same range as 2010, but with a reduced
cash operating cost of $400 to $420 per ounce due
to an improved strip ratio.

White Mountain is an underground mine using
sub-level and cut-and-fill stoping mining methods
located northeast of Beijing, in Jilin Province,
China. Eldorado owns 95% and our joint venture
partner Jilin Tonghua Institute of Geology and
Minerals Exploration and Development holds the
remaining 5%. White Mountain began commercial
production in January 2009, but due to a temporary
suspension only operated for eight months in its
first year. Production resumed in January 2010,
when the mine received all required approvals. Gold
production in 2010 is expected to be 55,000 to
65,000 ounces at a cash operating cost of $430
to $460 per ounce, and in 2011, we forecast gold
production of 65,000 to 75,000 ounces at a cash
operating cost of $410 to $440 per ounce. We
are reviewing options to increase underground
production to utilize excess capacity in the mill.

Tanjianshan has 710,000 ounces of proven and
probable gold reserves at a grade of 3.59 grams of
gold per tonne and 916,000 ounces of measured and
indicated gold resources. In 2009, we discovered a
new zone of mineralization (the 323 zone) south of
the QLT open pit. In 2010, we will spend $3.8 million
on exploration activities at Tanjianshan, focusing
on drilling on the 323 zone and other anomalies.
We have three drills active on the zone and we look
forward to continued expansion of the mineralization.

White Mountain has 790,000 ounces of proven
and probable gold reserves at 3.7 grams of gold
per tonne and 1.1 million ounces of measured and
indicated gold resources. Our exploration budget for
White Mountain in 2010 is $2.5 million, and we will
focus on drilling to increase resources and reserves.

ELDORADO GOLD 2009 Annual Report 11

Development and Exploration

Efemçukuru Project (100%)
Izmir, Turkey

Eastern Dragon Project (95%)
Heilongjiang, China

Efemçukuru is a high-grade epithermal gold
deposit suitable for underground mechanized
mining located in Izmir Province, western
Turkey. Construction is ongoing and we expect
commissioning and production to begin in 2011.
Total capital expenditures at the site are estimated
to be $152 million. In 2011, we forecast production
of 90,000 to 100,000 ounces of gold at a cash
operating cost of $190 to $210 per ounce.

During 2009, continued exploration increased the
project’s resources and reserves. Efemçukuru has
1.5 million ounces of proven and probable gold
reserves at 9.1 grams of gold per tonne and 1.7
million ounces of measured and indicated gold
resources. Exploration will continue on parallel
veins within the epithermal system, including the
Kokarpinar vein to the south and the northerly
extension of the main ore zone. Our 2010
exploration budget for Efemçukuru is $1.5 million.

Eastern Dragon is a high-grade, low-sulphidation,
epithermal, gold-silver vein deposit located in
Heilongjiang Province in northeastern China. Eastern
Dragon is approximately 45 kilometres southeast of
Xunke, which is adjacent to the Heilongjiang River that
forms the border with Russia. Eldorado owns 95% of
the project and the remaining 5% is held by a private
joint venture partner.

The Environmental Impact Assessment (EIA) report
for Eastern Dragon was approved in August 2009
and construction will begin in 2010. Initial production
will come from a small, high-grade open pit while the
underground access is developed. In 2011, production
is expected to be 70,000 to 80,000 ounces of gold at
a cash operating cost of $140 to $160 per ounce.

As of March 1, 2010, Eastern Dragon has 747,000
ounces of proven and probable gold reserves at
8.42 grams of gold per tonne and 852,000 ounces
of measured and indicated gold resources. Eastern
Dragon also has 6.6 million ounces of proven and
probable silver reserves at 74 grams of silver per
tonne and 8.3 million ounces of measured and
indicated silver resources. Our 2010 $2.4 million
exploration program will consist of an aggressive
drill program for the main lode 5 structure and will
explore already-identified parallel structures within the
exploration licence.

ELDORADO GOLD 2009 Annual Report

Perama Hill Project (100%)
Thrace, Greece

Perama Hill is a shallow, high sulphidation, non-
refractory oxide gold deposit with a low strip ratio
located in Thrace Province in northeastern Greece.
We submitted the PEIA in October 2009 and plan
to submit the EIA in the second half of 2010.
Construction is planned for 2011. Average gold
production at Perama Hill is forecast to be 110,000
ounces per year at a cash operating cost of $278
per ounce.

Perama Hill has 966,000 ounces of proven and
probable gold reserves at 3.2 grams of gold per
tonne and 1.4 million ounces of measured and
indicated gold resources. Perama Hill has a strip
ratio of 0:35:1.

Exploration Projects
China, Turkey, Brazil and surrounding
regions

Tanjianshan, China

In addition to the exploration initiatives at our
current mines and projects described above, in
2009 we also completed a 20,000 meter diamond
drilling program at the Tocantinzinho project in Para
State, Brazil. As part of the joint venture earn-in
agreement, we can earn up to a 75% interest in the
project through work commitments and a schedule
of payments.

Our exploration budget for 2010 is approximately
$35 million and will include 125,000 meters of
drilling on over 20 drill projects. We will conduct
drilling at all our gold mines and projects, with
the exception of Perama Hill. The focus of our
exploration program is to continue to grow and
expand our high quality resource and reserve base.

ELDORADO GOLD 2009 Annual Report 13

Stakeholder and Community Relations

Oxygen resuscitator training,
Turkey

Agriculture water well,
Greece

Charity Agreement with the
Qinghai provincial government,
China

AnguanQunwa Tibet Village
Primary School, China

All our mining and operations comply with local and international environmental standards. We implement
practices described in our Environmental Impact Assessment and feasibility studies to ensure the most
positive effects of the mine construction and operation.

We work to maintain a good safety record by investing in environmental, health and safety training in our
operations. We employ approximately 2,600 people and contractors worldwide, with the majority from
the local communities near our operations. We invest in education programs and we partner with local
communities to create new opportunities for economic development.

2009 was a busy year for our operations in Turkey, China and Greece. At our Tanjianshan mine in China
1,387 workers received safety training, including programs such as Inductions and Emergency Procedures,
Work Place Safety, Fire Training, and Hazard Identification and Regulations. In May 2009 we signed a
Charity Agreement with the Qinghai provincial government committing $200,000 annually for the next five
years. Over the year, we cooperated with Qinghai University on a Re-Vegetation Program and we equipped
three laboratories at a high school in Qinghai Province. Other initiatives included renovating and equipping
the Mahai Village Medical Clinic, providing furnishings for a Mahai village Primary School and providing
computers, uniforms, and sports facilities at the AnguanQunwa Tibet Village Primary School.

In Turkey, approximately 20,000 young tree seedlings have grown in our greenhouse facility, and during
the year we planted 1,500 trees at the Kişladağ mine and mine access road. Our vineyard project at
Efemçukuru mine project is maturing. At our Kişladağ mine we offered safety training for our employees,
which included Fire & Rescue and First Aid, Oxygen Resuscitator (under the Company’s doctor supervision)
and Emergency Preparedness training, among others. As part of our commitment to supporting
educational initiatives, we are also partnering to construct a building at Uşak University.

In Greece, we constructed a new agriculture water well to provide water for crops in the area surrounding
the Perama Village.

ELDORADO GOLD 2009 Annual Report

Financial Review

Kişladağ mine

Jinfeng mine

Tanjianshan mine

White Mountain mine

Management’s Discussion & Analysis of Financial Condition and Results of Operations...................

Management’s Responsibility for Financial Reporting...........................................................................

Independent Auditors’ Report..................................................................................................................

Consolidated Balance Sheets..................................................................................................................

Consolidated Statements of Operations and Deficit..............................................................................

Consolidated Statements of Cash Flows.................................................................................................

Consolidated Statements of Comprehensive Income............................................................................

Notes to the Consolidated Financial Statements...................................................................................

Consolidated Financial Information.........................................................................................................

107

ELDORADO GOLD 2009 Annual Report 15

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

For the years ended December 31, 2009 and 2008

This Management’s Discussion and Analysis (“MD&A”) reviews the business of Eldorado Gold Corporation (“Eldorado”,
“we” or “the Company”) and compares the Company’s financial results for 2009 with those of 2008. For a
comprehensive understanding of Eldorado’s financial condition and results of operations, you should read this MD&A
together with the consolidated financial statements and accompanying notes. Unless otherwise noted, all monetary
amounts are in United States dollars. This MD&A is prepared as of March 17, 2010.

We are engaged in gold mining and related activities, including exploration, development, extraction, processing and
reclamation. We own and operate the Kişladağ gold mine (“Kişladağ”) in Turkey; the Tanjianshan (“TJS”) (90% interest),
Jinfeng (82% interest) and White Mountain (95% interest) gold mines in China, and we are developing gold projects
in China (Eastern Dragon), Turkey (Efemçukuru) and Greece (Perama Hill). We also hold an iron ore project in Brazil
(Vila Nova). Our main subsidiaries are Tüprag Metal Madencilik Sanayi ve Ticaret Anonim Sirketi (“Tüprag”) in Turkey;
Qinghai Dachaidan Mining Ltd. (“QDML”), Sino Guizhou Jinfeng Mining Limited (“SGJML”) and Sino Gold Jilin BMZ
Mining Limited (“BMZ”) in China; Thracean Gold Mining SA (“TGM”) in Greece; Unamgen Mineracao e Metalurgia S/A
(“Unamgen”) in Brazil; and Sino Gold Mining Limited (“Sino Gold”) in Australia. Based in Vancouver, Canada, Eldorado
is listed on the Toronto Stock Exchange (“TSX”) under the symbol ELD and on the New York Stock Exchange (“NYSE”)
under the symbol EGO. ELD is on the S&P/TSX Global Gold Index and EGO is part of the AMEX Gold BUGS Index.
Eldorado CDIs trade on the Australian Securities Exchange (ASX: EAU).

2009 – Year in Review

During the year ended December 31, 2009, we:

▪

reported earnings of $0.26 per share (2008 – $0.26 per share, excluding the gain on the sale of our São Bento
gold mine in Brazil (“São Bento”) of $0.20 per share),

produced 363,509 ounces of gold at a cash operating cost of $309 per ounce (cash operating cost per ounce is a
non-GAAP measure – see Section 15) (2008 – 308,802 ounces at $257 per ounce),

sold 360,226 ounces of gold at a realized average price of $995 per ounce (2008 – 316,918 ounces, $876 per
ounce),

acquired Sino Gold Mining Limited on December 15, 2009,

increased proven and probable reserves by approximately 95%, with 32% coming from increases at Kişladağ,
Efemçukuru and Perama Hill and the remainder from Sino Gold,

submitted the Preliminary Environmental Impact Assessment to the Greek Ministry of Environment for Perama
Hill,

completed commissioning of the sulphide ore processing facility (“the roaster”) at TJS,

generated $147.0 million in cash from operating activities before changes in non-cash working capital (a non-
GAAP measure – see Section 15) (2008 — $125.9 million).

Net income for the year
In 2009, Eldorado’s consolidated net income was $102.4 million or $0.26 per share (2008 – $163.7 million or
$0.46 per share). Net income reported in 2008 included a gain on the sale of São Bento of $72.5 million or $0.20
per share. Net income reported in 2009 included a net loss of $2.2 million reported by Sino Gold for the month of
December 2009 following its acquisition by the Company, including an acquisition adjustment of $7.0 million to cost of
goods sold arising from the requirement to record inventories acquired at fair value rather than historical cost. Strong
performances at our Kişladağ and TJS mines were the main contributors to our 2009 operating results.

ELDORADO GOLD 2009 Annual Report

Net income for the fourth quarter
Our consolidated net income for Q4 2009 was $33.3 million or $0.08 per share (Q4 2008 – net income of $100.7
million or $0.27 per share). Excluding the $72.5 million gain on the sale of São Bento, our consolidated net income in
Q4 2008 was $28.2 million or $0.08 per share. Gold revenues for Q4 2009 increased 126% compared to Q4 2008
due to higher selling prices and increased ounces sold. Selling prices during Q4 2009 increased 38% and units sold of
131,068 ounces increased by 51,103 ounces, or 64%, compared to Q4 2008 units sold of 79,965 ounces. Operating
costs for Q4 2009 were $57.4 million, an increase of 121% over Q4 2008 due to higher sales volumes, and the impact
of higher Sino Gold production costs. Fair value adjustments to Sino Gold inventories in the amount of $7.0 million
were passed through to cost of sales in December.

Corporate developments

Sino Gold acquisition
On December 15, 2009, Eldorado acquired all of the outstanding Sino Gold securities not previously held by
Eldorado, pursuant to a Scheme Implementation Deed dated August 26, 2009, as amended October 27, 2009 (the
“Scheme Deed”), with Sino Gold, by way of schemes of arrangement (the “Schemes”) under the laws of Australia (the
“Transaction”).

Pursuant to the Schemes, Eldorado acquired all of the outstanding ordinary shares of Sino Gold (“the Sino Gold
Shares”) not previously held by Eldorado that, together with the Sino Gold Shares already held by Eldorado, constitute
100% of the issued and outstanding Sino Gold Securities following the implementation of the Transaction. All
outstanding options to purchase Sino Gold Shares were cancelled pursuant to the Schemes in connection with the
implementation of the Transaction.

Eldorado issued an aggregate of 131,772,777 common shares in the capital of Eldorado, either directly or indirectly
as CHESS Depository Interests, through CHESS Depository Nominees Pty Limited, to former shareholders and
option holders of Sino Gold pursuant to the Scheme Deed in connection with the implementation of the Schemes.
Consideration for the Sino Gold Shares acquired was common shares of Eldorado (“Eldorado Shares”), with the
number issued based on a share exchange ratio of 0.55 Eldorado Share for each Sino Gold Share. Consideration for
cancellation of Sino Gold Options was Eldorado Shares, with the number issued calculated with reference to the share
exchange ratio, the exercise price and time value for such Sino Gold Options whether the Sino Gold Options were “in
the money” or not.

Eldorado previously acquired 57,968,029 Sino Gold Shares on July 27, 2009, pursuant to a Share Purchase and Sale
Agreement (the “Share Purchase Agreement”) dated June 3, 2009, as amended on July 10, 2009, with Gold Fields
Australasia (BVI) Limited (“GFA”) in consideration for 27,824,654 Eldorado Shares and a purchase price adjustment
right. In connection with the implementation of the Schemes, Eldorado has issued a further 4,057,762 Eldorado
Shares to GFA pursuant to the purchase price adjustment provisions of the Share Purchase Agreement. A total of
135,830,539 Eldorado Shares (including those issued to GFA) were issued in connection with the implementation of
the Schemes.

The business combination has been accounted for as a purchase transaction, with Eldorado being identified as the
acquirer and Sino Gold as the acquiree in accordance with CICA Handbook Section 1581 “Business Combinations”.
For accounting purposes, our consolidated financial statements include 100% of Sino Gold’s operating results for the
period from December 4, 2009 to December 31, 2009.

ELDORADO GOLD 2009 Annual Report 17

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

The purchase price allocation is provisional and will be finalized in 2010. The acquisition affected our balance sheet
as explained in Note 4 of the consolidated financial statements, which is hereby incorporated by reference. We
assumed debt totalling $192.8 million as described in Note 13 of the consolidated financial statements. We recorded
a future income tax liability of $335.9 million, which results from an imputed income tax liability we incurred due to the
difference between the allocated fair values and tax values of the mineral property, plant and equipment assets we
acquired.

We recorded goodwill of $322.7 million, representing the excess cost of the purchase price over the fair value of the
acquired assets and liabilities.

White Mountain production re-commencement
On January 12, 2010, the Company announced that White Mountain had received all of the necessary approvals and
production had re-commenced. The mine had been temporarily shut down on August 11, 2009 due to blockage of
road access to the mine site by a small group of villagers residing approximately 3.5 kilometres from the mine site for
alleged pollution of the water in a nearby creek. Extensive testing of the water in the creek at the White Mountain mine
by independent experts and the relevant office of the Environmental Protection Bureau confirmed that the claims of
the small group of villagers were without foundation. During the approximately five-month shutdown period, the mine
continued to work on underground access and development, and as a result the mine was brought to full production
quickly. The mine is now able to discharge treated water under an approved change to the Environmental Impact
Assessment.

Beyinhar Sale
On February 6, 2010, the Company entered into a Share Purchase Agreement for the sale of its interest in its Beyinhar
joint venture in the Inner Mongolian Autonomous Region, China, through the sale of its wholly owned subsidiary
Golden China Nei Men Gold Exploration Corporation. The consideration of $20.0 million was to be paid by the buyer
in two instalments. The first instalment of $2.0 million was received on February 26, 2010 and the second instalment
of $18.0 million is due on or before April 30, 2010. Beyinhar was included in the acquisition of Sino Gold but is
considered to be a non-core asset by the Company.

ELDORADO GOLD 2009 Annual Report

Production

OPERATING DATA 1

2009

2008

Gold Production
Total ounces produced
Cash operating costs ($/oz)4
Total cash cost ($/oz)2,4
Total production cost ($/oz)3,4
Kışladağ, Turkey5
Ounces produced
Cash operating costs ($/oz)4
Total cash cost ($/oz)2,4
Total production cost ($/oz)3,4
Tanjianshan, China6
Ounces produced
Cash operating costs ($/oz)4
Total cash cost ($/oz)2,4
Total production cost ($/oz)3,4
Jinfeng, China8
Ounces produced
Cash operating costs ($/oz)4
Total cash cost ($/oz)2,4
Total production cost ($/oz)3,4
White Mountain, China8
Ounces produced
Cash operating costs ($/oz)4
Total cash cost ($/oz)2,4
Total production cost ($/oz)3,4

363,509
$ 309
$ 337
$ 430

237,210
$ 280
$ 282
$ 330

105,610
$ 349
$ 432
$ 623

14,541
$ 472
$ 516
$ 623

6,148
$ 364
$ 400
$ 535

308,802
$ 257
$ 289
$ 370

190,334
$ 254
$ 256
$ 291

118,468
$ 261
$ 343
$ 496

-
-
-
-

Notes
1.
2.
3.
4.
5.
6.

Cost figures calculated in accordance with the Gold Institute Standard.
Cash operating costs, plus royalties and off-site administration costs.
Total cash costs, plus foreign exchange gain or loss, depreciation, amortization and reclamation expenses.
Cash operating, total cash and total production costs are non-GAAP measures. See the section “Non-GAAP Measures” of this MD&A.
The Kişladağ mine temporarily ceased operations on August 18, 2007 and reopened on March 6, 2008.
Jinfeng and White Mountain production for the period December 4 to December 31, 2009 only.

ELDORADO GOLD 2009 Annual Report 19

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Operations

Kişladağ

Ore mined (tonnes)
Total material mined (tonnes)
Strip ratio
Ore to pad (tonnes)
Gold grade (g/t)
Gold production (ounces)

2009

Q4 2009

2008

10,550,764
24,034,645
1.28:1
10,716,556
1.11
237,210

3,334,470
7,151,212
1.14:1
3,679,685
0.86
70,131

8,048,160
12,282,413
0.53:1
7,555,881
1.27
190,334

At Kişladağ in 2009, we placed 10,716,556 tonnes of ore at a grade of 1.11 grams per tonne of gold (“g/t Au”) on
the pad (2008 – 7,555,881 tonnes at a grade of 1.27 g/t Au) and produced 237,210 ounces of gold at a cash cost
of $280 per ounce (2008 – 190,334 ounces at $254 per ounce). In 2010, we are forecasting gold production of
230,000 to 240,000 ounces at cash costs of $310 to $330 per ounce.

In 2009, we completed the expansion of the Phase II leach pad (cells 11 through 15) and we installed larger
carbon columns in the ADR plant. We also completed the engineering for the expanded crushing circuit, along with
improvements to the site’s water management system.

Drilling at Kişladağ consisted of 13 holes for 9,509 meters. The results extended both the higher grade gold zone and
the extent of known gold mineralization relative to the limits outlined in 2008. Proven and probable reserves increased
by 23% to a total of 6.8 million ounces.

We spent $16.1 million on capital projects at Kişladağ in 2009 (2008 – $27.3 million).

Tanjianshan

Ore mined (tonnes)
Total material mined (tonnes)
Strip ratio
Ore processed (tonnes)
Gold grade (g/t)
Gold production (ounces)

2009

Q4 2009

2008

1,566,379
11,847,818
6.56:1
974,498
5.31
105,610

533,708
3,830,234
6.17:1
256,828
5.81
37,773

1,435,227
13,039,958
8.09:1
858,829
5.31
118,468

During 2009, we milled 974,498 tonnes at a grade of 5.31 g/t Au (2008 – 858,829 tonnes at a grade of 5.31 g/t
Au) and produced 105,610 ounces of gold at a cash cost of $349 per ounce (2008 – 118,468 ounces at $261 per
ounce). In 2010, we are forecasting gold production of 95,000 to 105,000 ounces at cash costs of $420 to $435 per
ounce.

The roaster circuit and acid production plant were successfully commissioned during 2009, and we increased mill
throughput from 800,000 tonnes to 975,000 tonnes per annum. Recoveries in the flotation circuit increased from
approximately 65% to over 80% and we will conduct ongoing work in 2010 to further improve the plant and roaster
areas. We spent $15.0 million on capital projects at Tanjianshan in 2009 (2008 – 38.9 million).

ELDORADO GOLD 2009 Annual Report

Development

Efemçukuru (Turkey)
Construction at Efemçukuru continued during 2009. The basic engineering package for the process and infrastructure
facilities was completed and we began the detailed design for the civil, mechanical and electrical work. We procured
long lead time items and we set up the construction management team. Civil construction of major installations at
Efemçukuru continued during the year, including the access road, plant site retaining wall, concentrator building,
ore bin foundations and initial steel erection. We are currently assembling the operating team to ensure a smooth
transition from project construction to production.

Drilling in the North Ore Shoot (“NOS”) at Efemçukuru totalled 38 diamond drill holes for 9,090 meters. Based on the
results of the drilling, we recalculated the resources and reserves and the NOS was included in the life of mine plan.
Proven and probable reserves increased by 23% to a total of 1.51 million ounces. In addition, six holes for 2,253
meters were drilled in the parallel Kokarpinar vein, with ore grade intercepts encountered in two of the holes.

We spent $40.1 million on capital projects at Efemçukuru in 2009 (2008 – $14.3 million).

Vila Nova (Brazil)
After completing mine construction and commissioning in Q2 2009, the Vila Nova iron ore project was placed on care
and maintenance. As a result of the strengthening in iron ore demand and the subsequent increase in prices, we
are considering trial production in 2010 to test the plant performance and logistics systems. We expect to produce
approximately 180,000 tonnes of iron ore that will be sold on the spot market.

We spent $7.3 million on capital projects at Vila Nova in 2009 (2008 – $31.0 million).

Perama Hill (Greece)
In the fourth quarter of 2009, we submitted the Preliminary Environmental Impact Assessment (“PEIA”) to the Greek
Ministry of Environment for review and approval. This will be followed by the submission of the full Environmental
Impact Assessment (EIA) in the second half of 2010. During 2009, we focused on public relations at all levels of
government and with local stakeholders. Management is encouraged by the response to this initiative.

We spent $2.0 million on capital projects at the Perama Hill project in 2009 (2008 – $1.0 million).

Tocantinzinho (Brazil)
During 2009, in addition to our exploration program, Eldorado focused on engineering studies covering the process
plant, mine design, tailings management facilities, and other significant infrastructure, including power and access
options. We also completed significant work on environmental studies to support future permitting requirements.

Drilling consisted of 54 diamond drill holes for 15,848 meters to provide infill and stepout coverage of the main
deposit, and 12 reverse circulation holes for 595 meters testing targets on the surrounding property.

We spent $8.2 million on capital projects at the Tocantinzinho project in 2009 (2008 – $1.9 million).

ELDORADO GOLD 2009 Annual Report 21

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Exploration

Turkey

Sayacik
At the Sayacik project adjacent to the Kişladağ mine, we drilled 11 diamond drill holes for a total of 7,186 meters
and 14 reverse circulation holes for 2,078 meters. While the drilling encountered widespread alteration and weak
mineralization, the porphyry system at Sayacik appears to be deeply buried and we will only conduct limited work on
the property in 2010.

MH
The MH property is a potential iron oxide copper gold deposit in central Turkey. In 2009, we conducted geological
mapping, soil and rock chip sampling, and gravity, magnetic and induced polarization geophysical surveys. Four
copper-gold anomalies have been defined as a result of this work. In 2010, we intend to conduct detailed mapping of
these targets followed by diamond drilling.

AS
At the AS project in west central Turkey, we completed six diamond drill holes for 2,004 meters. The results were not
generally encouraging and little further work is planned on this property.

Reconnaissance
We completed geological mapping and sampling programs on the Arpali, Usak-Elence, Konya-Sizma, Dolek and Galata
projects, and we identified targets for follow-up drilling in 2010 on the Konya-Sizma project.

United States (Nevada)

AuEx JV
At both the Green Monster and Buffalo Canyon projects, our activities in 2009 focused on completing geological
mapping, soil and rock chip sampling, and permitting work in preparation for drilling programs in 2010. At the Hays
Canyon project, we completed two reverse circulation drill holes for 600 meters to test an epithermal gold target. No
significant mineralized zones were intersected and no further work is planned at Hays Canyon.

Bronco Creek JV
Geological mapping and soil and rock chip sampling were completed in 2009 on the Richmond Mountain and
Cathedral Well properties to define targets for 2010 drilling programs. Drill site permitting is underway at Cathedral
Well.

China

TJS
During 2009, the 323 zone was discovered to the south of the previously mined Qinlongtan (“QLT”) deposit. The 323
zone shares many lithologic characteristics with the QLT deposit, but is more structurally complex. During 2009, 28
diamond drill holes were completed for a total of 6,306 meters. Mineralization has currently been defined along a
strike length of approximately 300 meters. Drilling will continue on this zone in 2010. This zone was discovered as part
of a wide-spaced rotary air blast drilling program designed to look for buried mineralization between the two main ore
zones at TJS.

ELDORADO GOLD 2009 Annual Report

Also on the Tanjianshan licenses, we drilled six diamond drill holes for a total of 1,224 meters on the down dip
extension of the QLT structure below the bottom of the previously mined pit. We encountered economic widths and
grades in several holes, and further drilling will take place in 2010.

Legal

The legal status of our worldwide projects and operations remains the same as stated in our Annual Information Form
available on SEDAR at www.sedar.com except as discussed below:

Kişladağ
On February 28, 2008, the Ministry of Environment and Forestry and Tüprag (as co-defendant) filed an appeal
requesting that the Sixth Department of the High Administrative Court reconsider its February 6, 2008 decision on the
essence of the Kişladağ EIA case and rule on the merits of the case. This appeal was denied. The matter has now been
referred to the Lower Administrative Court, which named an expert panel to review the EIA Report and prepare a report
for such Court.

The experts' report has been completed and the experts’ opinions were unanimously in favour of the project. The court
is now expected to render a decision in the case. Eldorado continues to believe that ultimately this litigation will be
successfully defended. If Eldorado is unsuccessful in defending this litigation, its ability to conduct mining operations
at Kişladağ may be adversely affected, which may adversely affect production and revenue from Kişladağ.

Review of Financial Results

Net income
Our consolidated net income for 2009 was $102.4 million or $0.26 per share (2008 – $163.7 million or $0.46 per
share). Net income reported in 2008 included a gain on the sale of São Bento of $72.5 million or $0.20 per share.
Net income reported in 2009 included a net loss of $2.2 million reported by Sino Gold for the month of December
2009 following its acquisition by the Company. The main contributors to our 2009 operating results were strong
performances from Kişladağ and TJS.

Sales from Kişladağ totalled 237,363 ounces of gold (2008 – 185,425 ounces) at an average price of $982 per ounce
(2008 – $871), while cash operating costs averaged $280 per ounce (2008 – $254). Sales from TJS totalled 102,710
ounces of gold (2008 – 131,493 ounces) at an average price of $998 per ounce (2008 – $884), while cash operating
costs averaged $349 per ounce (2008 – $261). Sales from Jinfeng totalled 14,554 ounces of gold at an average price
of $1,132 per ounce while cash operating costs averaged $472 per ounce. Sales from White Mountain totalled 5,599
ounces of gold at an average price of $1,137 per ounce while cash operating costs averaged $364 per ounce. Cash
operating costs exclude inventory purchase accounting adjustments recorded on the acquisition of Sino Gold.

Gold revenues
Our gold revenues consist of gold bullion sales at spot. We sell the refined bullion either to large financial institutions
or on the Istanbul and Shanghai gold exchanges.

Gold revenues in 2009 increased 29% over 2008 due to increases in both selling prices and sales volumes. Selling
prices in 2009 increased 14% over 2008, and ounces sold in 2009 increased 14% over 2008, reflecting increased
production from Kişladağ and TJS as well as sales from Jinfeng and White Mountain in December 2009.

ELDORADO GOLD 2009 Annual Report 23

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Gold ounces sold
Kişladağ
Tanjianshan
Jinfeng
White Mountain
Total gold ounces sold
Average selling price per ounce
Gold revenues (000s)

2009

2008

237,363
102,710
14,554
5,599
360,226
$995.12
$358,467

185,425
131,493
-
-
316,918
$876.32
$277,723

Interest and other income
Interest income earned on cash, short-term money market investments and restricted cash balances held during 2009
was $1.3 million (2008 – $2.9 million). The decrease in interest income from 2008 was the result of lower interest
rates. Other income was $1.0 million in 2009 (2008 – $7.6 million). Other income in 2008 was related to the sale of
excess electricity at São Bento as well as Brazilian tax credits resulting from the spin-off of Vila Nova from São Bento
prior to the sale of São Bento to AngloGold Ashanti (“AngloGold”).

Operating costs
Operating costs of $132.5 million in 2009 increased by $40.5 million, or 44%, over 2008 operating costs ($92.0
million) due to the addition of $19.3 million in operating costs related to Jinfeng and White Mountain as well as a
28% increase in sales volumes at Kişladağ and higher costs of production at TJS and Kişladağ. Operating costs for
Jinfeng and White Mountain included a fair value inventory adjustment of $7.0 million. At Kişladağ, production costs
increased 10% on a per unit basis due to higher reagent costs related to the transition from oxide to sulphide ore,
and higher waste stripping costs related to higher strip ratios (2009 strip ratio – 1.28:1, 2008 strip ratio – 0.53:1).
Production costs at TJS increased 33% on a per unit basis due to the addition of roaster operating costs as well as
lower recoveries from Jinlonggou pit sulphide ore.

Depletion, depreciation and amortization
Depletion, depreciation and amortization (“DD&A”) expense of $38.7 million (2008 – $26.0 million) included $5.1
million from the Jinfeng and White Mountain operations, of which $2.8 million related to the impact of fair value
adjustments on the purchase price allocation. DD&A was higher at Kişladağ and TJS compared to 2008 due to higher
volumes of ore processed at both mines as well as an increase in depreciable assets at TJS related to the roaster.

General and administrative
General and administrative costs reflect the costs of our head office in Vancouver, Canada, as well as our liaison
offices in Sydney, Australia; Ankara, Turkey; and Beijing, China. General and administrative expense of $32.5 million
decreased $5.8 million compared to 2008, primarily due to lower stock-based compensation costs. Lower costs in
Brazil resulting from the sale of São Bento were offset by higher costs in Australia and Turkey. Costs in Australia reflect
one month of Sino Gold corporate office costs, while in Turkey, costs have increased due to increased government and
public relations activities associated with ongoing production, development and exploration programs.

Exploration expense
Exploration activities are discussed in the section “Exploration” of this MD&A. Exploration expenses of $12.0 million
decreased 2.4% from 2008 expenses of $12.3 million.

ELDORADO GOLD 2009 Annual Report

Mine standby costs
Mine standby costs of $2.6 million reflect the costs of maintaining the Vila Nova project on care and maintenance
pending the beginning of production. Mine standby costs in 2008 reflect the costs of maintaining Kişladağ on care and
maintenance while it was shut down in Q1 2008 ($2.4 million).

Asset retirement obligation costs
Asset retirement obligation costs in 2009 of $0.3 million decreased $2.8 million from 2008 costs of $3.1 million. In
2008 we recorded a $2.5 million revision to estimated future reclamation costs at São Bento prior to its sale.

Foreign exchange (gain) loss
We reported a foreign exchange gain of $3.0 million in 2009 (2008 – $0.2 million loss) mainly related to foreign
exchange gains on deposits of Canadian dollars at our head office. The Canadian dollar strengthened 16% against the
US dollar during 2009.

Gain on disposal of assets
We reported a $0.9 million net gain on the disposal of assets in 2009 (2008 – $70.8 million gain). The net gain
in 2008 included a $72.5 million gain on the sale of São Bento and a $1.7 million loss on the disposal of mining
equipment at TJS. The net gain in 2009 related to a $1.4 million gain on the disposal of our interest in the Macusani
East Uranium project acquired in 2008 as a result of our acquisition of Frontier Pacific Mining Corporation, net of a
$0.5 million loss on disposal of warehouse inventory at TJS.

Gain on marketable securities
In 2009 we reported a net gain on marketable securities of $1.7 million (2008 – $2.5 million). The majority of the net
gain in 2009 related to the sale of the remaining AngloGold shares we received in the divestiture of the São Bento
mine. The majority of the net gain in 2008 related to realized and unrealized gains on the AngloGold shares.

Interest and financing costs
Interest expense in 2009 was $0.8 million, compared to $2.9 million in 2008. The majority of the interest expense in
2009 related to interest on debt held by Sino Gold in December.

Unrealized gain on derivative contract
In 2007 we recorded a $3.0 million asset, reflecting the fair value of an energy contract related to São Bento, which we
concluded was a derivative financial instrument. This resulted in the recognition of an unrealized gain in 2008 of $2.1
million. In 2008 we charged $3.0 million to loss on derivative contract as the life of the contract had expired prior to
the sale of São Bento.

Income taxes
Income tax expense for 2009 was $41.9 million (2008 – $12.5 million). The effective tax rate increased to 29% in
2009 compared to 6.9% in 2008. The increase was due to changes in the Chinese tax rates applied retroactively to
2008. In 2009 the Chinese government revoked the 15% preferential tax rate approved by Qinghai Province in 2008
for TJS. The 25% national tax rate was applied retroactively to TJS for the 2008 tax filing, resulting in $5.6 million in
additional current tax expense in 2009 related to 2008. The effective tax rate for 2008 was influenced by the $72.5
million tax free gain on the sale of São Bento, as well as a $10.3 million future income tax recovery in Greece related
to the change in the tax rate from 25% to 20%.

ELDORADO GOLD 2009 Annual Report 25

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Non-controlling interest
We reported a charge of $2.6 million in 2009 related to our joint venture partners’ 10% interest in TJS (2008 – $5.1
million). TJS income decreased in 2009 as a result of the decrease in sales caused by production shortfalls during the
commissioning and start-up of the roaster.

Summary of Quarterly Results

($000s except per share amounts)

Year ended December 31, 2009

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Revenue
Net income (loss)
Earnings (loss) per share — US$:

Basic
Diluted

145,185
33,289

0.08
0.08

82,604
30,154

0.08
0.08

80,538
25,900

0.07
0.07

52,402
13,061

0.04
0.04

Year ended December 31, 2008

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

Revenue
Net income (loss)
Earnings (loss) per share — US$:

Basic
Diluted

65,148
100,724

0.27
0.27

68,238
17,040

0.05
0.05

82,462
25,155

0.07
0.07

72,383
20,737

0.06
0.06

Revenues in the first quarter of 2009 were impacted by the commissioning of the roaster at TJS. The fourth quarter
of 2009 includes $22.9 million in revenues and a $2.2 million loss from the operations of Sino Gold subsequent to
its acquisition. The first quarter of 2008 was impacted by the temporary shutdown of Kişladağ resulting from the
suspension of operations from August 18, 2007 to March 6, 2008. The fourth quarter of 2008 included a $72.5
million gain ($0.20 per share) on the sale of São Bento.

Outlook

Eldorado plans to produce 550,000 to 600,000 ounces in 2010 at a cash operating cost of approximately $385 to
$400 per ounce, estimated as follows:

▪

Kişladağ: 230,000 to 240,000 ounces of gold at a cash cost of $310 to $330 per ounce;

TJS: 95,000 to 105,000 ounces of gold at a cash cost of $420 to $435 per ounce;

Jinfeng: 170,000 to 190,000 ounces of gold at a cash cost of $450 to $480 per ounce; and

White Mountain: 55,000 to 65,000 ounces of gold at a cash cost of $430 to $460 per ounce.

ELDORADO GOLD 2009 Annual Report

Assumptions used to prepare the 2010 outlook include:

▪

gold price = $1,000 per ounce;

exchange rates of Cdn$1.10 = US$1.00, Brazilian Real 1.80 = US$1.00, Turkish Lira 1.50 = US$1.00 and
Chinese RMB 6.50 = US$1.00; and

▪

oil price = US$65 per barrel (Kişladağ only).

Capital expenditures for 2010 are forecast at $280.0 million, and include:

▪

$40.0 million for the Phase 1 expansion at Kişladağ;

$105.0 million at Efemçukuru to complete surface facilities and underground development;

$50.0 million to complete mine construction at Eastern Dragon.

Exploration expenditures in 2010 are expected to amount to $35.0 million, with efforts focused on general exploration
in Turkey, China, the United States and Brazil. General and administrative expense is forecast at $45.8 million for the
year. Depreciation and depletion expense is expected to be $106.3 million, and we anticipate an overall effective tax
rate of 42%.

10.

Financial Instruments and Related Risks

Eldorado manages its exposure to financial risks – including liquidity risk, credit risk, currency risk, interest rate
risk and price risk – through a risk management review process. On a quarterly basis, management prepares a risk
assessment report outlining the Company’s operational and financial risks. The Company’s Board of Directors reviews
this report with management to evaluate and assess the risks Eldorado is exposed to in various markets and the steps
that the Company takes to protect itself against adverse price movements. All transactions undertaken are to support
the Company’s ongoing business. Eldorado does not acquire or issue derivative financial instruments for trading or
speculative purposes.

The following section describes the types of risks that the Company is exposed to and its objectives and policies for
managing these risk exposures.

Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities. Eldorado has a rigorous planning, budgeting and forecasting process to help determine the funds required
to support its normal operating requirements on an ongoing basis and its expansion plans. The Company believes
that its anticipated cash flows from operations and its holdings of cash and cash equivalents are sufficient to meet its
obligations in 2010 and beyond.

At December 31, 2009, we held $265.4 million in cash and cash equivalents (December 31, 2008 – $61.9 million),
$50.0 million in restricted collateral accounts (December 31, 2008 – $nil), which securitize debt of $46.9 million
(December 31, 2008 – $nil), and total debt of $191.0 million (December 31, 2008 – $nil).

Credit risk
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by
failing to discharge its obligations. Credit risk is primarily associated with trade receivables; however, it also arises
on cash and cash equivalents. To mitigate exposure to credit risk on financial assets, we have established policies to

ELDORADO GOLD 2009 Annual Report 27

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

ensure counterparties demonstrate minimum acceptable creditworthiness and to ensure liquidity of available funds.
The Company also monitors its concentration of credit risk.

Eldorado closely monitors its financial assets. We sell our products exclusively to large international financial
institutions and other organizations with strong credit ratings, and payment is normally in advance or within one week
of receipt of shipment. The historical level of customer defaults is negligible, and as a result, the credit risk associated
with trade receivables at December 31, 2009 is considered to be minimal. We invest our cash and cash equivalents in
major financial institutions and in government issuances in accordance with our short-term investment policy, and the
credit risk associated with our investments is considered to be low.

As a result of current global financial conditions, numerous financial institutions have gone into bankruptcy or have
been rescued by government authorities. As such, the Company is subject to the risk of loss of its deposits with
financial institutions that hold the Company’s cash. As at December 31, 2009, approximately 43% of the Company’s
cash and cash equivalents, including restricted cash, were with one financial institution.

Market risk

a. Currency risk

Currency risk is the risk that the fair values or future cash flows of the Company’s financial instruments will
fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations may affect the costs that
Eldorado incurs in its operations. Gold is sold in US dollars and the Company’s costs are incurred principally in
US dollars, Canadian dollars, Turkish lira, Brazilian real and Chinese renminbi. The appreciation of non-US-dollar
currencies against the US dollar can increase the cost of gold production and capital expenditures in US dollar
terms. We also hold cash and cash equivalents that are denominated in non-US-dollar currencies that are subject
to currency risk. Accounts receivable and other current and long-term assets denominated in non-US dollars
relate to goods and services taxes, income taxes, value-added taxes and insurance receivables. As a result of
the acquisitions of Afcan Mining Corporation, Frontier Pacific Mining Corporation and Sino Gold Limited assets in
2005, 2008 and 2009 respectively, we recorded $392.5 million of future income tax liabilities on mining interests
that are recorded in local currencies. The future income tax liabilities are monetary items that are revalued each
period-end at current exchange rates, with the gain or loss recorded in net earnings in the period.

The Company is exposed to currency risk through the following financial assets and liabilities, value-added tax
and other taxes recoverable, and future income tax assets and liabilities denominated in currencies other than US
dollars at December 31, 2009:

ELDORADO GOLD 2009 Annual Report

Canadian
dollar

Australian
dollar

Euro

Turkish

lira

Chinese
renminbi

Brazilian real

($000s)

Cash and cash
equivalents

51,379

6,299

237

2,019

393,885

Marketable securities

5,550

1,197

169

475

13,889

92,855

809

575

Accounts receivable
and other

Future income tax
receivable

Accounts payable and
accrued liabilities

Future income tax
liabilities

Debt
Net balance

Equivalent in US
dollars

(17,715)

(3,242)

(111)

(22,915)

(596,994)

(4,214)

(26,288)

(14,981)

(2,357,511)

-
40,411

-
3,226

-
(25,687)

-
(21,988)

(1,305,433)
(3,773,198)

-
(2,830)

38,448

2,893

(36,723)

(14,604)

(552,683)

(1,626)

During the year ended December 31, 2009, Eldorado recognized a gain of $3.0 million (2008 – $0.2 million
loss) on foreign exchange. Based on the above net exposures at December 31, 2009, a 1% depreciation or
appreciation of the above currencies against the US dollar would result in a $5.6 million increase or decrease in
our pre-tax net earnings. Eldorado currently does not hedge to reduce risks associated with currency fluctuation.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to
changes in market interest rates. Current financial assets and financial liabilities are generally not exposed to
interest rate risk because of their short-term nature. Eldorado’s debt is exposed to interest rate risk as it is subject
to floating interest rates. As at December 31, 2009, the average interest rate of Eldorado’s debt was 5.45%. A
1% increase or decrease in the interest rate on debt held at December 31, 2009 would result in a $1.4 million
increase or decrease in the Company’s after-tax net earnings.

The approximate average interest rate earned by the Company in 2009 on its cash and cash equivalents was
0.83% (2008 – 2.36%). A 1% increase or decrease in the interest earned from financial institutions on deposits
and money market investments held at December 31, 2009 would result in a $2.4 million increase or decrease in
the Company’s after-tax net earnings.

We have elected not to actively manage our exposure to interest rate risk at this time.

The status of our financing arrangements and obligations is as follows:

Tuprag revolving credit facility
In April 2005, Tüprag entered into a $65.0 million term revolving credit facility (the “Revolving Credit Facility”)
with HSBC due February 28, 2010. The Revolving Credit Facility is secured by Eldorado cash deposits in restricted
accounts equivalent to the HSBC advances to Tüprag. The Revolving Credit Facility bears interest fixed at the
prevailing LIBOR on the date of the draw plus 0.50%. As at December 31, 2009, the Company has repaid all the
amounts drawn previously on the facility.

ELDORADO GOLD 2009 Annual Report 29

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

At December 31, 2009, $65.0 million remained available under the Revolving Credit Facility.

QDML revolving credit facility
In November 2007, our 90% owned subsidiary QDML entered into a $15.0 million revolving facility (“the Facility”)
with HSBC Bank (China). The Facility has a term of one year and is subject to annual review and renewal. In
November 2009, the Facility was renewed for a second year and the interest rate is fixed at 1.2 times the
prevailing lending rate stipulated by the People’s Bank of China.

At December 31, 2009, $15.0 million remained available under the Facility.

Jinfeng construction loan
In 2009, Guizhou Jinfeng Mining Ltd. (“Jinfeng”), an 82% owned subsidiary acquired as part of the Sino Gold
acquisition, entered into a RMB 680 million ($99.6 million) construction loan facility (“the construction loan”) with
China Construction Bank (“CCB”). The construction loan has a term of six years beginning from February 27, 2009
and is subject to a floating interest rate adjusted annually at the prevailing lending rate stipulated by the People’s
Bank of China for similar loans with a 5% discount. The applicable interest rate as at December 31, 2009 is
5.643% (after the 5% discount). Principal repayments of this loan are required on a quarterly basis from 2011 to
2014, with the final payment due February 26, 2015.

Jinfeng working capital loan
In 2009, Jinfeng entered into a RMB 85 million ($12.5 million) working capital loan (“the working capital loan”)
with CCB. The working capital loan has a term of 3 years and is due on August 17, 2012. This loan is subject to
a floating interest rate adjusted annually at the prevailing lending rate stipulated by the People’s Bank of China
for similar loans with a 5% discount. The applicable interest rate as at December 31, 2009 is 5.13% (after 5%
discount).

White Mountain project loan
In 2008, Sino Gold Jilin BMZ Mining Limited (“White Mountain”), a 95% owned subsidiary acquired as part of the
Sino Gold acquisition, entered into a project loan (“project loan”) with CCB. The project loan has two components:

▪

a fixed asset loan of RMB 190 million ($27.8 million) due in September 2013 and

a working capital loan of RMB 40.9 million ($6.0 million) due in November 2010.

The interest rate on the project loan is the prevailing lending rate stipulated by the People’s Bank of China,
adjusted annually for the fixed asset loan and twice a year for the working capital loan. The applicable interest
rates as at December 31, 2009 are 5.76% and 5.31% respectively. Principal repayments of the fixed assets loan
are required on an annual basis each September from 2010 to 2013.

Eastern Dragon standby letter of credit loan
In 2008, Heihe Rock Mining Industry Development Company Limited (“Eastern Dragon”), a 95% owned subsidiary
acquired as part of the Sino Gold acquisition, entered into a RMB 320 million ($46.9 million) Standby letter of
credit loan (“LC loan”) with CCB. The interest rate on this loan as at December 31, 2009 is 5.4%. Subsequent to
year-end, the LC loan was repaid and the restricted cash was released.

Eastern Dragon project-financing loan
In 2009, Eastern Dragon entered into a RMB 450 million ($65.9 million) project financing loan (“project financing
loan”) with China Merchants Bank (“CMB”). The project financing loan has three components:

▪

a five-year term, RMB 320 million ($46.9 million) long-term loan (“the long-term loan”) to replace the LC loan
with CCB;

ELDORADO GOLD 2009 Annual Report

▪

a four-year term RMB 100 million ($14.6 million) fixed asset loan (“the fixed asset loan”) and

a one-year term RMB 30 million ($4.4 million) working capital loan (“the working capital loan”).

The project financing loan is subject to a floating interest rate adjusted quarterly at the prevailing lending rate
stipulated by the People’s Bank of China for similar loans, with a 10% discount. The applicable interest rates as
at December 31, 2009 are 5.184% and 4.779% respectively. No amounts were drawn down under the project
financing loan during the year ended December 31, 2009.

Eastern Dragon standby letter of credit (replacement) loan
In January 2010, Eastern Dragon entered into a RMB 320 million ($46.9 million) standby letter of credit loan with
CMB. This loan has a one-year term and is subject to a floating interest rate adjusted quarterly at the prevailing
lending rate stipulated by the People’s Bank of China for working capital loans, with a 10% discount. This loan is
collateralized by way of a $52.2 million irrevocable letter of credit issued by Sino Gold to CMB. The amount drawn
down on this loan was used to repay the LC loan with CCB. This loan will be prepaid when Eastern Dragon obtains
the required project approval that will allow it to complete the first drawdown on the project financing loan.

c. Price risk

Price risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate
because of changes in market prices. Eldorado’s profitability depends on the price of gold, which is affected by
numerous factors, such as the sale or purchase of gold by various central banks and financial institutions, interest
rates, exchange rates, inflation or deflation, fluctuations in the value of the US dollar and foreign currencies,
global and regional supply and demand, and the political and economic conditions of the world’s major gold-
producing countries. A 10% increase or decrease in the price of gold would result in approximately a $44.0 million
increase or decrease in our after-tax net earnings based on the expectations and assumptions we used in our
2010 outlook.

At present, Eldorado does not hedge gold sales.

The costs relating to Eldorado’s production, development and exploration activities vary depending on the market
prices of certain mining consumables, including diesel fuel and electricity. A 10% increase or decrease in diesel
fuel market prices would result in approximately a $1.2 million decrease or increase in our after-tax net earnings.
We are evaluating a hedge against diesel fuel price fluctuations. Electricity is regionally priced in Turkey and China
and semi-regulated by the federal governments of those countries. The regulation of electricity reduces the risk of
price fluctuations and we therefore do not contemplate entering into contracts to hedge against such risk.

Defined benefit plans
During the year ended December 31, 2008, the company implemented a defined benefit pension program with
two components: a registered pension plan (“the Pension Plan”) and a non-registered supplementary pension plan
(“the SERP”). These plans, which are only available to certain qualifying employees, provide benefits based on
an employee’s years of service and final average earnings at retirement. Annual contributions to these plans are
actuarially determined and made at or in excess of minimum requirements prescribed by legislation. The Company is
not required to pre-fund any benefit obligation under the SERP. Total cash payments for pension benefits for 2009,
including cash contributed to the Pension Plan and the SERP, were $1.9 million. We expect to contribute $0.1 million
to the Pension Plan and $0.1 million to the SERP in 2010 based on minimum funding requirements.

Capital resources
During the year ended December 31, 2009, Eldorado invested $106.6 million in capital expenditures and mine
development. At Kişladağ, capital expenditures totalling $16.1 million including lead pad expansion, storm water

ELDORADO GOLD 2009 Annual Report 31

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

pond construction and carbon train installation. Capital expenditures at Tanjianshan totalling $15.0 million related
to completing and commissioning the sulphide ore processing construction project. At Efemçukuru, development
expenditures totalled $40.1 million, while at Vila Nova we spent $7.3 million completing the construction of the mine
facilities. We also spent $8.2 million on Tocantinzinho deferred exploration activities and $3.1 million on mineral
licenses in Turkey. In December, Sino Gold spent $13.2 million on capital projects at Jinfeng, White Mountain and
Eastern Dragon. The remaining $3.6 million of expenditures related to Perama Hill and the acquisition of fixed assets
in Vancouver, Canada and Ankara, Turkey.

During Q1 2009 we received $46.7 million on the sale of AngloGold shares received from the divestiture of São Bento,
including $16.2 million in shares sold at the end of 2008 but collected in Q1 2009.

In 2009, we received net proceeds of $25.2 million in consideration for issuing 5,203,013 common shares related to
the exercise of stock options.

At December 31, 2009, we had cash and cash equivalents of $315.4 million (including $50.0 million in restricted
cash) and working capital of $272.5 million, compared with $61.9 million of cash and cash equivalents and working
capital of $194.8 million at the beginning of the year. In the opinion of management, the working capital at December
31, 2009, together with future cash flows from operations, is sufficient to support the Company’s commitments. The
Company’s total planned capital expenditures for 2010, with a focus on bringing Efemçukuru and Eastern Dragon to
commercial production by Q1 2011, are forecasted to be $330.7 million.

Looking beyond 2009, Eldorado’s cash flows from operations are expected to significantly increase with commercial
production at Efemçukuru and Eastern Dragon and are expected to be sufficient to support our currently planned
expansions and growth.

Acquisitions of additional mineral resource properties may require additional capital. Our ability to pursue growth
through acquisitions will depend on our ability to obtain financing through joint venture projects, debt financing and
equity financing, or other means. There is no assurance that we will be successful in obtaining the required financing.

Contractual obligations and guarantees
In the normal course of business, we enter into contracts that give rise to commitments for future minimum payments.
The following table summarizes the remaining contractual maturities of our financial liabilities and operating and
capital commitments at December 31, 2009:

Debt
Capital leases
Operating leases
Purchase obligations
Totals

2010

56,499
65
3,281
90,236
150,081

2011

29,956
36
2,815
14,094
46,901

($000s)

2012

2013

42,643
23
2,157
12,504
57,327

25,591
-
2,020
-
27,611

2014
and later
38,086
-
543
-
38,629

Total

192,775
124
10,816
116,834
320,549

Purchase obligations from 2011 forward relate mainly to Kişladağ and include the estimated commitments under an
unhedged diesel fuel purchase contract. Interest on debt is not included in the table above.

11.

Off-Balance Sheet Arrangements

None.

ELDORADO GOLD 2009 Annual Report

12.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues
and expenditures during the reporting period. Management has identified the following critical accounting policies
and estimates. Note 2 of the Company’s consolidated financial statements describe all of the significant accounting
policies.

Inventories
Finished goods, work-in-process, heap leach ore and stockpiled ore are valued at the lower of average production cost
and net realizable value.

We record the cost of mining ore stacked on our leach pads and in process at our mines as work-in-process inventory,
which we value at the lower of cost and estimated net realizable value. These costs are charged to earnings and are
included in cost of sales on the basis of ounces of gold recovered. The assumptions used to value work-in-process
inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of
gold stacked that is expected to be recovered from the leach pads, the amount of gold in the mill circuits and an
assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions
prove inaccurate, we could be required to write down the recorded value of our work-in-process inventories, which
would reduce our earnings and working capital. At December 31, 2009, the average cost of inventory was significantly
below its net realizable value.

Reserves and resources
Mineral reserves and resources are calculated in accordance with National Instrument 43-101, as required by
Canadian Securities regulatory authorities, except for Jinfeng, White Mountain, Eastern Dragon and Beyinhar whose
reserves and resources are based on the 2009 JORC-compliant Sino Gold estimates which are as of December 31,
2008. No re-estimates have yet been made by Eldorado, nor have the existing estimates been depleted to 2009
production. For United States reporting purposes, Industry Guide 7 (under the Securities Exchange Act of 1934, as
interpreted by the staff of the Securities and Exchange Commission (“SEC”)) applies different standards to classify
mineralization as a reserve.

We advise our investors that while the terms “mineral resource,” “measured mineral resource,” “indicated mineral
resource” and “inferred mineral resource” are recognized and required by Canadian regulations, they are not defined
terms under standards in the United States and normally are not permitted to be used in reports and registration
statements filed with the SEC. As such, information contained in this report concerning descriptions of mineralization
and resources required under Canadian standards may not be comparable to similar information made public by US
companies in SEC filings. Investors are cautioned not to assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves.

Mining interests
A significant portion of Eldorado’s mining properties, plant and equipment is depreciated and amortized on a unit-of-
production basis. Under the unit-of-production method, the calculation of depreciation, depletion and amortization
of mining properties, plant and equipment is based on the amount of reserves expected to be recovered from each
location. If these estimates of reserves prove to be inaccurate, or if we revise our mining plan for a location due to
reductions in the metal price forecasts or otherwise, to reduce the amount of reserves expected to be recovered, we
could be required to write down the recorded value of our mining properties, plant and equipment, or to increase the
amount of future depreciation, depletion and amortization expense, both of which would reduce our earnings and net
assets.

ELDORADO GOLD 2009 Annual Report 33

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

In addition, generally accepted accounting principles require us to consider at the end of each period whether
there has been an impairment of our capitalized mining properties, plant and equipment. For producing properties,
this assessment is based on expected future net cash flows to be generated from the location. For non-producing
properties, this assessment is based on whether factors that may indicate the need for a write-down are present. If the
Company determines there has been an impairment because its prior estimates of future net cash flows have proven
to be inaccurate, due to reductions in the metal price forecasts, increases in the costs of production, reductions in the
amount of reserves expected to be recovered or otherwise, or because the Company has determined that the deferred
costs of non-producing properties may not be recovered based on current economics or permitting considerations,
the Company would be required to write down the recorded value of its mining properties, plant and equipment, which
would reduce the Company’s earnings and net assets. A review of Eldorado’s mining properties, plant and equipment
at December 31, 2009 indicated that their estimated undiscounted net cash flows are in excess of their carrying
values. In our review, we used an average projected gold price of $1,000 per ounce for the period 2010 and $900 per
ounce from 2011 onwards.

Goodwill and impairment testing
The Company’s business combinations are accounted for using the purchase method of accounting whereby assets
acquired and liabilities assumed are recorded at their fair market values as of the date of acquisition and any excess
of the purchase price over such fair value is recorded as goodwill.

On an annual basis, the Company evaluates the carrying amount of goodwill to determine whether current events and
circumstances indicate that such carrying amount may no longer be recoverable. To accomplish this, the Company
compares the fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds
its fair value, the Company compares the implied fair value of the reporting unit’s goodwill to its carrying amount, and
any excess of the carrying value over the fair value is charged to operations. Assumptions underlying the fair value
estimates are subject to significant risks and uncertainties. Goodwill totalling $324.9 million related to Sino Gold
($322.7 million) and TJS ($2.2 million) was reflected on the consolidated balance sheet at December 31, 2009. A
review of Sino Gold and TJS’s fair value indicated that there was no impairment of goodwill at December 31, 2009. We
used a discount rate of 9% to calculate the net present value of cash flows from TJS to estimate its implied fair value.
We used a discount rate of between 7% and 9% to calculate the net present value of cash flows from Sino Gold mines
in order to estimate their fair values.

Operating costs
We report our cash operating costs in accordance with the Gold Institute Standard. Future operating costs include
estimates of foreign currency exchange and inflation trends.

Stock-based compensation
We use the Black-Scholes Model to determine the fair value for awards of stock options to employees, officers and
directors. Key assumptions used in this model are share price, volatility and expected life of options.

Asset retirement obligation
When assessing the carrying value of the asset retirement obligation, we estimate, among other things, the mine
closure date, the credit-adjusted risk-free rate, the inflation rate and the timing of reclamation costs.

Income taxes
Income taxes are recorded using income tax rates expected to apply in the years in which the temporary differences
are estimated to be recovered or settled. In circumstances where the applicable tax laws and regulations are either
unclear or subject to varying interpretations, it is reasonably possible that changes in these estimates could occur that
would materially affect the amount of income tax liabilities recorded at the balance sheet date.

ELDORADO GOLD 2009 Annual Report

Financial instruments
Investments classified as held for trading or available for sale, and derivative financial instruments, are reported at
fair value with unrealized gains or losses included in earnings. Fair values are determined directly by reference to
published price quotations in an active market when available, or by using a valuation technique that uses inputs
observed from the market.

Pension plans
To measure the obligations and expenses of pension plans, we are required to set various actuarial assumptions,
including a long-term estimate of the expected rate of return on plan assets, the discount rate, the rate of salary
escalation and the average remaining service period of active employees expected to receive benefits. The following
table outlines the key assumption of our pension plans:

Expected long term-rate of return on plan assets
Discount rate beginning of year
Discount rate end of year
Rate of salary escalation

Average remaining service period of active
employees expected to receive benefits

December 31, 2009

December 31, 2008

Pension Plan

6.50%
7.50%
6.00%
4.50%

SERP

6.50%
7.50%
6.00%
4.50%

Pension Plan

6.50%
5.25%
7.50%
4.50%

SERP

6.50%
5.25%
7.50%
4.50%

5 years

13.

Recently Issued Canadian Accounting Pronouncements

Goodwill and Intangible Assets (Section 3064)
In February 2008, the Canadian Institute of Chartered Accountants (“CICA”) issued Section 3064, “Goodwill and
Intangible Assets”, which replaces Section 3062, “Goodwill and Other Intangible Assets”. This new standard provides
guidance on recognizing, measuring, presenting and disclosing goodwill and intangible assets and is effective
beginning January 1, 2009 and applies retrospectively. The adoption of this new accounting policy did not have a
material impact on Eldorado’s consolidated financial statements.

Business Combinations (Section 1582)
In January 2009, the CICA issued Section 1582, Business Combinations, which requires that all assets and liabilities
of an acquired business be recorded at fair value at acquisition. Obligations for contingent considerations and
contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-
related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the
acquisition date. The Section applies prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period on or after January 1, 2011. The Company has not yet adopted
this standard.

Consolidations (Section 1601) and Non-Controlling Interest (Section 1602)
In January 2009, the CICA issued Section 1601, Consolidations, and Section 1602, Non-Controlling Interests. Section
1601 establishes standards for preparing consolidated financial statements and Section 1602 establishes standards
for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a
business combination. These standards apply to interim and annual consolidated financial statements relating to fiscal
years beginning on or after January 1, 2011. The Company has not yet adopted these standards.

ELDORADO GOLD 2009 Annual Report 35

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Credit Risk and the Fair Value of Financial Assets and Financial Liabilities (EIC Abstract 173)
In January 2009, the CICA issued EIC Abstract 173, “Credit Risk and the Fair Value of Financial Assets and Financial
Liabilities”. The EIC requires the Company to take into account the Company’s own credit risk and the credit risk of the
counterparty in determining the fair value of financial assets and financial liabilities, including derivative instruments.
This abstract applies to interim and annual consolidated financial statements relating to fiscal years beginning on
or after January 20, 2009. The adoption of this new accounting policy did not have a material impact on Eldorado’s
consolidated financial statements.

Mining Exploration Costs (EIC Abstract 174)
In March 2009, the CICA issued EIC Abstract 174, “Mining Exploration Costs”. The EIC provides guidance on the
accounting and the impairment review of exploration costs. This abstract is effective for financial statements issued
after March 27, 2009. The adoption of this new accounting policy did not have a material impact on Eldorado’s
consolidated financial statements.

Financial Instruments – Recognition and Measurement (Section 3855) and Impaired Loans
(Section 3025)
In July 2009, the Accounting Standards Board (“AcSB”) amended Section 3855, Financial Instruments – Recognition
and Measurement, and Section 3025, Impaired Loans, to converge with International Financial Reporting Standards
(“IFRS”) for impairment of debt instruments by enabling debt securities to be included in the loans and receivables
category. The main features of the amendments are: i) to eliminate the distinction between debt securities and other
debt instruments and adopt the definition of loans and receivables from IAS 39, Financial Instruments – Recognition
and Measurement, ii) to permit reclassification of financial assets from the held-for-trading and available-for-
sale categories into the loans and receivables category and specifying the circumstances in which such transfers
can be made and the accounting for those transfers, iii) to reclassify to net income, foreign exchange gains and
losses associated with assets transferred out of the available-for-sale category that were previously recognized in
other comprehensive income, immediately upon transfer, iv) to change the impairment model for held-to-maturity
investments to the incurred credit loss model in accordance with Section 3025, and v) to require the reversal of an
impairment loss relating to an available-for-sale debt instrument when, in a subsequent period, the fair value of the
instrument increases and the increase can be objectively related to an event occurring after the loss was recognized.

The new changes are effective for annual financial statements for fiscal years beginning on or after November 1,
2008. The adoption of this new accounting policy did not have a material impact on Eldorado’s consolidated financial
statements.

Financial Instruments – Disclosures (Section 3862)
In June 2009, AcSB amended CICA Section 3862, “Financial Instruments – Disclosures”, to enhance disclosure
requirements for the fair value measurement of financial instruments and liquidity risks. The amendments require
additional disclosure for fair value measurements, including the fair value hierarchy into which the fair value
measurements are categorized in their entirety. Disclosures must be made for any significant transfers between the
level of the fair value hierarchy and the reasons for those transfers. The standard now requires the reconciliation of the
beginning balances to the ending balances for those fair value measurements that result from the use of significant
unobservable inputs in valuation techniques and separately disclosing changes during the period. It also requires
disclosures of the risk related to financial liabilities that are settled by delivering cash or other financial assets and
a maturity analysis disclosure for derivative financial liabilities based on how an entity manages liquidity risk. The
amendments to Section 3862 apply for interim and annual financial statements relating to fiscal years beginning on
or after September 30, 2009. The Company adopted this amended standard in 2009 and the required disclosures are
included in Note 22 of our consolidated financial statements.

ELDORADO GOLD 2009 Annual Report

Accounting Changes (Section 1506)
In June 2009, the CICA issued an amendment to Section 1506, “Accounting Changes”, to exclude from its scope
changes in accounting policies upon the complete replacement of an entity’s primary basis of accounting. The
amendments are effective for annual and interim financial statements relating to fiscal years beginning on or after
July 1, 2009. The adoption of IFRS is not expected to qualify as an accounting change under Section 1506. The
amendment to this standard did not have a material impact on Eldorado’s consolidated financial statements.

International Financial Reporting Standards (“IFRS”)
Canadian GAAP for publicly listed companies will be replaced with IFRS effective for fiscal years beginning on or after
January 1, 2011. Eldorado will begin reporting its financial statements in accordance with IFRS in the first quarter
of 2011 with restatement of comparative information presented. The conversion to IFRS will impact Eldorado’s
accounting policies, information technology and data systems, internal controls over financial reporting, and disclosure
controls and procedures. The transition may also impact business activities, such as foreign currency and certain
contractual arrangements, debt covenants, capital requirements and compensation arrangements.

We have started the transition process from current Canadian GAAP to IFRS. We have established a project team which
is led by finance management and have designated the appropriate resources to the project to develop an effective
plan. We will continue to assess resource and training requirements as the project progresses. The team makes
regular progress reports to the Audit Committee of the Board of Directors on the status of the IFRS implementation
project.

We have identified the following four phases to our conversion:

Phase 1 ― Scoping and Planning
The scoping and planning phase involves establishing a project management team and organizational structure
(including oversight of the process) and includes a project management plan and stakeholder analysis and
communication strategy. This phase also includes an initial assessment of the key areas where the IFRS transition
may have a significant impact and present significant challenges.

Phase 2 — Detailed Assessment
The detailed assessment phase involves in-depth technical analysis that will result in an understanding of potential
impacts, decisions on accounting policy choices and the drafting of accounting policies. In addition, this phase
will result in identifying additional resource and training requirements and the processes for preparing financial
statements, establishing IT system requirements and preparing detailed transition plans.

Phase 3 — Implementation
The implementation phase will identify and carry out the implementation requirements to effect management’s
accounting choices, develop sample financial statements, implement business and internal control requirements,
calculate the opening balance sheet at January 1, 2010 and complete other transitional reconciliations and
disclosure requirements.

Phase 4 ― Post-Implementation
The last phase of post-implementation will involve continuous monitoring of changes in IFRS throughout the
implementation process and assessing their impacts on Eldorado and our reporting.

We completed the scoping and planning phase in 2008, and we started the detailed assessment phase in 2009. As
part of this phase, Eldorado evaluated and assessed IFRS 1, “First-time Adoption of International Financial Reporting
Standards” (“IFRS 1”). IFRS 1 gives entities adopting IFRS for the first time a number of optional exemptions and
mandatory exceptions to the general requirement for full retrospective application of IFRS. Eldorado expects to apply
the following IFRS 1 optional exemptions, which may have a significant impact on Eldorado’s results:

ELDORADO GOLD 2009 Annual Report 37

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

▪

to apply the requirements of IFRS 3, “Business Combinations”, prospectively from January 1, 2010 (the "Transition
Date");

to apply the requirements of IFRS 2, “Share-Based Payments”, only to share-based payments granted after
November 7, 2002 that had not vested as of the Transition Date;

to apply the borrowing cost exemption and apply IAS 23, “Borrowing Costs”, prospectively from the Transition
Date;

to elect to recognize all cumulative actuarial gains and losses for all defined benefit plans that exist at the
Transition Date in opening retained earnings; and

to elect to apply IFRIC 1,” Changes in Existing Decommissioning, Restoration and Similar Liabilities”, for changes
in such liabilities prospectively from the Transition Date.

We have also made substantial progress on the technical analysis in each of the key areas highlighted below during
the initial assessment completed in Phase 1. As a result, a number of IFRS accounting policies have been developed,
subject to future changes or revisions that may be needed as a result of updates to the IFRS standards. These IFRS
accounting policies were presented and discussed with management and the Audit Committee of the Board of
Directors for their review.

The following areas have been identified where the accounting differences between Canadian GAAP and existing
IFRS may have an impact on the Company’s consolidated financial statements. The list and comments should not
be regarded as a complete list of changes that will result from the transition to IFRS. It is intended to highlight those
areas we believe to be most significant. The International Accounting Standards Board (“IASB”) has significant ongoing
projects that are expected to result in the issuance of new and/or revised accounting standards and, as a result,
the final impact of IFRS on Eldorado’s consolidated financial statements will only be measured once all applicable
standards at the conversion date are known. The differences described below are those based on existing Canadian
GAAP and IFRS at December 31, 2009. At this stage, Eldorado is not able to reliably quantify the expected impact on
our consolidated financial statements for these differences.

Impairment of assets

a)
Canadian GAAP generally uses a two-step approach to impairment testing: first, comparing asset carrying values with
undiscounted future cash flows to determine whether impairment exists; and if so, measuring any impairment by
comparing asset carrying values with fair values. International Accounting Standard (IAS) 36, “Impairment of Assets”,
uses a one-step approach for both testing for and measuring impairment, with asset carrying values compared directly
with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows). This may
potentially result in more write-downs where the carrying values of assets were previously supported under Canadian
GAAP on an undiscounted cash flow basis but could not be supported on a discounted cash flow basis. IFRS also has
the requirement under IAS 36 to reverse any previous impairment losses where circumstances have changed such
that the impairments have been reduced. Canadian GAAP prohibits reversal of impairment losses.

Provision for reclamation and rehabilitation

b)
The key areas of difference between IFRS and Canadian GAAP include the discount rate used, the re-measurement
requirements and the constructive obligation concept. Under IFRS, a liability must be recognized at the time when
the entity becomes legally or constructively obliged to rehabilitate disturbance resulting from mining activities, while
under Canadian GAAP, a liability is only recognized when the entity is legally bound. Discount rates used should reflect
the risks specific to the decommissioning provision. Unlike IFRS, discount rates for asset retirement obligations under
Canadian GAAP are based on the entity’s credit-adjusted risk-free rate. IFRS requires re-measurement of the liability
at each reporting date, whereas Canadian GAAP requires re-measurement of the liability in the event of changes
in the amount or timing of cash flows required to settle the obligation. The use of the current discount rate for all
changes in estimates combined with the requirement to re-measure the liability at each reporting date under IFRS,
will significantly simplify the process required to measure any restoration liabilities because there will no longer be a
need to record separate layers for the original liability and each subsequent upward revision in estimated cash flows.

ELDORADO GOLD 2009 Annual Report

Under IFRS, accretion is required to be presented as an interest expense and included in ‘Interest and financing costs’
on the statement of earnings under IFRS, whereas under Canadian GAAP there is no prescribed presentation for asset
retirement obligation accretion.

Business combinations

c)
Certain differences have been identified between IFRS and Canadian GAAP in accounting for business combinations.
Canadian GAAP requires share-based consideration to be valued based on the announcement date share price
whereas under IFRS, share-based consideration is required to be valued based on its fair value at the acquisition date.
Under IFRS, restructuring costs and other transactions costs are expensed on acquisition whereas under Canadian
GAAP they are included in the purchase consideration. Under Canadian GAAP, after a business combination a non-
controlling interest is reflected at the historical carrying value of the assets and liabilities of the acquired entity. In
contrast under IFRS, after a business combination, a non-controlling interest is recorded based on its share of the fair
value of the assets and liabilities of the acquired entity.

Income taxes

d)
Existing IFRS requires the recognition of deferred taxes in situations not required under Canadian GAAP. Specifically,
a deferred tax liability (asset) is recognized for exchange gains and losses relating to foreign non-monetary assets and
liabilities that are re-measured into the functional currency using historical exchange rates. Similar timing differences
are also recognized for the difference in tax bases between jurisdictions as a result of intra-group transfer of assets.
Future tax liabilities for temporary tax differences on asset acquisitions are not recognized.

Property, plant and equipment

e)
Separate accounting for components of property, plant and equipment is more rigorously applied and broader under
IFRS. Costs are allocated to significant parts of an asset if the useful lives differ, and each part is then separately
depreciated.

Internal Controls over Financial Reporting
Given the requirement for management to perform an annual assessment of the effectiveness of Eldorado’s internal
control over financial reporting, all entity level, information technology, disclosure and business process controls will
need to be reviewed and updated as appropriate to reflect the necessary changes arising from the IFRS transition.
Where material changes are identified, these changes will need to be mapped and tested to ensure that no material
deficiencies exist as a result of the transition to IFRS.

14.

Other Risks and Uncertainties

Exploration and development
The costs and results of our exploration and development programs affect our profitability and value. Since mines
have finite lives based on proven reserves, we actively seek to replace and expand our reserves, primarily through
recognizance exploration and acquiring, exploring and developing our existing operations. Exploration for minerals
involves many risks and may not result in any new economically viable mining operations or yield new reserves to
replace and expand current reserves. Determination of reserves is a process of estimation and, as such, reserve
calculations are subject to the assumptions and limitations of the estimation process.

Acquiring title to mineral properties is a detailed and time-consuming process. We take steps, in accordance with
industry standards, to verify and secure legal title to mineral properties in which we have or are seeking an interest.
Although we take every precaution to ensure that legal title to our properties is properly recorded in the name of
Eldorado, there can be no assurance that such title will ultimately be secured on every property. The legal title to our
properties depends on the appropriate and consistent application of the laws in the countries in which we operate.

ELDORADO GOLD 2009 Annual Report 39

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

Operations
The business of gold mining involves many operational risks and hazards. We work to reduce the risks associated with
our projects through high operational standards, an emphasis on hiring and training appropriately skilled personnel,
and operational improvements. We also maintain adequate insurance to cover normal business risk.

We also rely on a number of key employees. Our success depends on attracting and retaining qualified personnel in a
competitive labour environment.

Environment
Our activities are subject to extensive federal, provincial, state and local laws and regulations governing environmental
protection and employee health and safety. We must obtain governmental permits and provide associated financial
assurance to carry on certain activities. We are also subject to various reclamation-related conditions imposed under
federal, state or provincial air, water quality and mine reclamation rules and permits.
While we have budgeted for future capital and operating expenditures to maintain compliance with environmental laws
and permits, any future changes to these laws could adversely affect Eldorado’s financial condition, liquidity or results
of operations.

Laws and regulations
Eldorado’s mining operations and exploration activities are subject to extensive federal, provincial, state and local
laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational
health and safety, mine safety and other matters. These laws and regulations are subject to change, which may restrict
our ability to operate. We draw on the expertise and commitment of our management team, advisors, employees and
contractors to ensure compliance with current laws, and we foster a climate of open communication and co-operation
with regulatory bodies.

Litigation
All industries, including the mining industry, are subject to legal claims, with and without merit. In addition to the
litigation in Turkey as described under Item 6 – Legal of this MD&A and under the heading "Development Projects
– Turkey Projects" in the Company’s Annual Information Form and the litigation risks discussed therein, we are also
involved in various legal proceedings. Defence and settlement costs can be substantial, even with respect to claims
that have no merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the
resolution of any particular legal proceeding will not have a material adverse effect on our future cash flow, results of
operations or financial condition.

Political risk
Eldorado conducts operations in a number of countries outside of North America, namely Turkey, China, Brazil and
Greece. These operations are potentially subject to a number of political, economic and other risks that may affect our
future operations and financial position.

15.

Non-GAAP Measures

Throughout this document, we have provided measures prepared according to Canadian generally accepted
accounting principles (GAAP), as well as some non-GAAP performance measures. Because the non-GAAP performance
measures do not have any standardized meaning prescribed by GAAP, they may not be comparable to similar
measures presented by other companies. We provide these non-GAAP measures as they are used by some investors to
evaluate Eldorado’s performance. Accordingly, they are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP.
We have defined the non-GAAP measures below and reconciled them to reported GAAP measures.

ELDORADO GOLD 2009 Annual Report

Unit costs
A reconciliation of cash operating costs calculated in accordance with the Gold Institute Standard to the cost of sales
is included below:

Cash operating cost
($000s, except cash operating cost per ounce)

Gold ounces sold
Operating costs
Royalty expense and production taxes
Effects of inventory adjustments
Fair value of stock option grants
Sino Gold inventory fair value adjustment
Expense of certain development costs
Cash operating cost
Cash operating cost per ounce

2009

360,227
$132,464
(10,025)
(2,342)
(1,830)
(6,957)
-
$111,310
$ 309

2008

316,918
$92,004
(10,117)
625
(1,526)
-
-
$80,986
$ 257

Cash operating costs are calculated in accordance with the Gold Institute Standard. Cash costs are derived from
amounts included in the Consolidated Statements of Operations. Amortization and inventory purchase accounting
adjustments are excluded from both total cash costs and cost of sales.

Cash flow from operations before changes in non-cash working capital
The Company uses the financial measure “cash flow from operations before changes in non-cash working capital”
or “cash flow from operating activities before changes in non-cash working capital” to supplement its consolidated
financial statements. The presentation of cash flow from operations before changes in non-cash working capital is not
meant to be a substitute for cash flow from operations or cash flow from operating activities presented in accordance
with Canadian GAAP, but rather should be evaluated in conjunction with such Canadian GAAP measures. Cash flow
from operations before changes in non-cash working capital excludes the non-cash movement from period to period
in working capital items, including accounts receivable, advances and deposits, inventory, accounts payable and
accrued liabilities. The terms “cash flow from operations before changes in non-cash working capital” or “cash flow
from operating activities before changes in non-cash working capital” do not have a standardized meaning prescribed
by Canadian GAAP, and therefore the Company’s definitions are unlikely to be comparable to similar measures
presented by other companies. The Company’s management believes that the presentation of cash flow from
operations before changes in non-cash working capital provides useful information to investors because it excludes
the non-cash movement in working capital items and is a better indication of the Company’s cash flow from operations
and considered to be meaningful in evaluating the Company’s past financial performance or future prospects. The
Company believes that the conventional measure of performance prepared in accordance with Canadian GAAP does
not fully illustrate the ability of its operating mines to generate cash flow.

16.

Other MD&A Requirements

Additional information relating to the Company, including the Company’s Annual Information Form, is available on
SEDAR at www.sedar.com.

ELDORADO GOLD 2009 Annual Report 41

MANAGEMENT’S DISCUSSION & ANALYSIS
of Financial Condition and Results of Operations

17.

Disclosure of Outstanding Share Data

The following table describes Eldorado’s share capital structure as at March 17, 2010, the date of this MD&A. These
figures may be subject to minor accounting adjustments prior to presentations in future consolidated financial
statements.

Equity Type

Common shares
Share purchase options

18.

Controls and Procedures

Weighted average
exercise price per
share
Cdn$

Total number of
common shares

12.78

538,142,401
12,891,901

Disclosure controls and procedures
Disclosure controls and procedures are designed to provide reasonable assurance that material information is
gathered and reported to senior management, including the Chief Executive Officer and Chief Financial Officer, as
appropriate to permit timely decisions regarding public disclosure.

Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of
the design and operation of the Company's disclosure controls and procedures, as defined in the rules of the U.S.
Securities and Exchange Commission and Canadian Securities Administration, as at December 31, 2009. Based on
this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures were effective in providing reasonable assurance that information required to be disclosed
in reports filed or submitted by the Company under United States and Canadian securities legislation is recorded,
processed, summarized and reported within the time periods specified in those rules.

For accounting purposes, we acquired control of Sino Gold on December 4, 2009. As permitted by applicable rules of
certification, we excluded, solely to the extent it overlaps with internal control, Sino Gold’s operations from our annual
assessment of disclosure controls and procedures for the year ended December 31, 2009.

Management’s report on internal control over financial reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.

Management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework
to evaluate the effectiveness of the Company's internal control over financial reporting. Based on this assessment,
management, including the CEO and CFO, has concluded that as at December 31, 2009, the Company's internal
control over financial reporting was effective to provide a reasonable assurance regarding the reliability of the financial
reporting and preparation of the financial statements.

For accounting purposes, we acquired control of Sino Gold on December 4, 2009. As permitted by the Sarbanes-
Oxley Act and applicable rules related to business acquisitions, we excluded Sino Gold’s operations from our annual
assessment of internal controls over financial reporting for the year ended December 31, 2009. We are in the process

ELDORADO GOLD 2009 Annual Report

of integrating the Sino Gold operations and will be expanding our internal control over financial reporting compliance
program to include Sino Gold over the next year. The Sino Gold operations represent $1,733.0 million of net assets,
$23.0 million of consolidated revenues and $2.2 million of net loss as at and for the year ended December 31, 2009.

KPMG LLP, an independent registered public accounting firm, has audited management’s assessment of the
effectiveness of internal control over financial reporting, and have expressed their opinion in their report included with
the Company’s annual consolidated financial statements in Form 40-F.

Changes in internal control over financial reporting
There have been no changes in the Company’s internal control over financial reporting during the year ended
December 31, 2009 that have materially affected, or are reasonably likely to materially affect, its internal control over
financial reporting.

19.

Cautionary Statement on Forward-Looking Information

Certain statements and information in this MD&A, including all statements that are not historical facts, contain
forward-looking statements and forward-looking information within the meaning of applicable US and Canadian
securities laws. Such forward-looking statements or information include, but are not limited to, statements or
information with respect to financial disclosure, the future price of gold, estimation of mineral reserves and exploration
and development capital requirements, and our goals and strategies. Often, these statements include words such
as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates” or “does not anticipate” or “believes” 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.

With respect to forward-looking statements and the information included in this MD&A, we have made numerous
assumptions, including, among other things, assumptions about the price of gold, anticipated costs and expenditures
and our ability to achieve our goals, even though our management believes that the assumptions made and the
expectations represented by such statements or information will prove to be accurate. By their nature, forward-looking
statements and information are based on assumptions and involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements, or industry results, to be materially different
from future results, performance or achievements expressed or implied by such forward-looking information. Such
risks, uncertainties and other factors include among other things the following: gold price volatility; discrepancies
between actual and estimated production and mineral reserves and resources; the speculative nature of gold
exploration; mining operational and development risk; and regulatory risks.

See our Annual Information Form for additional information on risks, uncertainties and other factors relating to the
forward-looking statements and information. Although we have attempted to identify factors that would cause actual
actions, events or results to differ materially from those disclosed in the forward-looking statements or information,
there may be other factors that cause actual results, performances, achievements or events not to be anticipated,
estimated or intended. Also, many of the factors are beyond our control. Accordingly, readers should not place undue
reliance on forward-looking statements or information. We undertake no obligation to reissue or update forward-
looking statements or information as a result of new information or events after the date of this MD&A except as
may be required by law. All forward-looking statements and information made in this document are qualified by this
cautionary statement.

Eldorado’s consolidated financial statements are prepared in accordance with Canadian GAAP and are filed with
appropriate regulatory authorities in Canada and the United States.

ELDORADO GOLD 2009 Annual Report 43

Management’s Responsibility for Financial Reporting

The management of Eldorado Gold Corporation is responsible for the integrity and fair presentation of the financial
information contained in this annual report. Where appropriate, the financial information, including financial
statements, reflects amounts based on management’s best estimates and judgments. The financial statements
have been prepared in accordance with accounting principles generally accepted in Canada. Financial information
presented elsewhere in the annual report is consistent with that disclosed in the financial statements.

Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Management has established and maintains a system of internal accounting control designed to provide reasonable
assurance that assets are safeguarded from loss or unauthorized use, financial information is reliable and accurate
and transactions are properly recorded and executed in accordance with management’s authorization. This system
includes established policies and procedures, the selection and training of qualified personnel and an organization
providing for appropriate delegation of authority and segregation of responsibilities. Any system of internal control
over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation.

Management has a process in place to evaluate internal control over financial reporting based on the criteria
established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control
– Integrated Framework. Based on this assessment, management has concluded that as at December 31, 2009, the
Company’s internal control over financial reporting was effective.

The Board of Directors oversees management’s responsibility for financial reporting and internal control systems
through an Audit Committee, which is composed entirely of independent directors. The Audit Committee meets
periodically with management, the Company’s outside advisors and the independent auditors to review the scope and
results of the annual audit and to review the financial statements and related financial reporting and internal control
matters before the financial statements are approved by the Board of Directors and submitted to the Company’s
shareholders.

KPMG, an independent registered public accounting firm, appointed by the shareholders, has audited the Company’s
financial statements in accordance with Canadian generally accepted auditing standards and the standards of the
Public Company Accounting Oversight Board (United States) and has expressed its opinion in the auditors’ report.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2009 has also been
audited by KPMG, and their opinion is included in their report.

Paul N. Wright
President and Chief Executive Officer

Edward Miu

Chief Financial Officer

March 18, 2010
Vancouver, British Columbia, Canada

ELDORADO GOLD 2009 Annual Report

Independent Auditors' Report

To the Shareholders and Board of Directors of Eldorado Gold Corporation

We have audited the accompanying consolidated balance sheets of Eldorado Gold Corporation ("the Company") as of
December 31, 2009 and the related consolidated statements of operations, deficit, comprehensive income and cash
flows for the year ended December 31, 2009. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these consolidated financial statements based
on our audit.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2009 and the results of its operations and its cash flows for
the year ended December 31, 2009 in conformity with Canadian generally accepted accounting principles. Canadian
generally accepted accounting principles vary in certain significant respects from US generally accepted accounting
principles. Information relating to the nature and effect of such differences is presented in Note 24 to the consolidated
financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company's internal control over financial reporting as of December 31, 2009, based on the criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO), and our report dated March 17, 2010 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.

The consolidated financial statements as at December 31, 2008 and for the year then ended were audited by other
auditors, who expressed an opinion without reservation on those statements in their report, dated March 18, 2009.

KPMG LLP

Chartered Accountants
Vancouver, Canada
March 17, 2010

ELDORADO GOLD 2009 Annual Report 45

Independent Auditors' Report

To the Board of Directors of Eldorado Gold Corporation

We have audited Eldorado Gold Corporation’s (the Company) internal control over financial reporting as of December
31, 2009, based on the criteria established in Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management’s Report on Controls and Procedures. Our
responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting
based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2009, based on the criteria established in Internal Control ― Integrated Framework issued by COSO.

The Company acquired Sino Gold Mining Limited during the year ended December 31, 2009, and management
excluded from its assessment of the effectiveness of the Company’s internal controls over financial reporting as of
December 31, 2009, Sino Gold Mining Limited’s internal controls over financial reporting associated with $1,733.0
million of net assets, $2.2 million of net loss, and $23.0 million of revenues included in the consolidated financial
statements of the Company as of and for the year ended December 31, 2009. Our audit of internal control over
financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Sino
Gold Mining Limited.

ELDORADO GOLD 2009 Annual Report

We also have conducted our audits on the consolidated financial statements in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Our
report dated March 17, 2010 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP
Chartered Accountants
Vancouver, Canada
March 17, 2010

ELDORADO GOLD 2009 Annual Report 47

Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars)

December 31,
2009
$

December 31,
2008
$

Assets
Current assets

Cash and cash equivalents
Restricted cash (note 5 and 13(g))
Marketable securities (note 6)
Accounts receivable and other (note 7)
Inventories (note 8)
Future income taxes (note 16)

Inventories (note 8)
Restricted assets and other (note 10)
Mining interests (note 11)
Goodwill (note 12)

Liabilities
Current liabilities

Accounts payable and accrued liabilities
Debt - current (note 13)
Future income taxes (note 16)

Debt - long-term (note 13)
Asset retirement obligations (note 14)
Future income taxes (note 16)

Non-controlling interest

Shareholders’ Equity
Share capital (note 17(b))
Contributed surplus (note 17(c))
Accumulated other comprehensive income (note 17(d))
Deficit

Subsequent events (note 13(g) and note 25)
Commitments and contingencies (note 20)

Approved on behalf of the Board of Directors

265,369
50,000
13,951
32,041
129,197
-
490,558
31,534
8,265
2,580,816
324,935
3,436,108

157,250
56,499
4,264
218,013
134,533
26,566
390,242
769,354

26,144

2,671,634
17,865
2,227
(51,116)
2,640,610
3,436,108

61,851
-
43,610
36,109
86,966
175
228,711
-
6,111
668,309
2,238
905,369

42,659
139
1,097
43,895
-
4,812
60,043
108,750

4,799

931,933
19,378
(5,971)
(153,520)
791,820
905,369

Paul N. Wright
Director

Robert Gilmore
Director

See accompanying notes to the consolidated financial statements.

ELDORADO GOLD 2009 Annual Report

Consolidated Statements of Operations and Deficit

For the years ended December 31 (expressed in thousands of U.S. dollars, except per share amounts)

Revenue
Gold sales
Interest and other income

Expenses
Operating costs
Depletion, depreciation and amortization
General and administrative
Exploration
Mine standby costs
Asset retirement obligation costs (note 14)
Foreign exchange (gain) loss

Gain on disposal of assets
Gain on marketable securities
Interest and financing costs
Loss on derivative contract (note 9)

Income before income taxes and non-controlling interests

Income tax (expense) recovery (note 16)

Current
Future

Non-controlling interests
Net income for the year

Deficit, beginning of year
Deficit, end of year

Weighted average number of shares outstanding

Basic
Diluted

Earnings per share

Basic income per share ― US$
Diluted income per share ― US$

2009
$

358,467
2,262
360,729

132,464
38,658
32,530
11,970
2,580
291
(2,966)
215,527

(854)
(1,689)
824
-
213,808
146,921

(44,862)
2,972
(41,890)

(2,627)
102,404

2008
$

277,723
10,508
288,231

92,004
25,995
38,299
12,316
2,432
3,108
176
174,330

(70,774)
(2,475)
2,940
2,956
106,977
181,254

(25,403)
12,904
(12,499)

(5,099)
163,656

(153,520)
(51,116)

(317,176)
(153,520)

389,384
391,707

355,132
356,308

0.26
0.26

0.46
0.46

See accompanying notes to the consolidated financial statements.

ELDORADO GOLD 2009 Annual Report 49

Consolidated Statements of Cash Flows

For the years ended December 31 (expressed in thousands of U.S. dollars, unless otherwise stated)

Cash flows generated from (used in):

Operating activities
Net earnings for the year
Items not affecting cash

Asset retirement obligation costs
Depletion, depreciation and amortization
Unrealized foreign exchange loss (gain)
Future income taxes expense (recovery)
Gain on marketable securities
Gain on disposal of assets
Imputed interest and financing costs
Stock-based compensation
Fair value of bonus cash award units
Pension expense
Non-controlling interest
Loss (gain) on derivative contract

Property reclamation payments
Contractual severance payments
Changes in non-cash working capital (note 19)

Investing activities
Mining interests

Acquisition of subsidiary net of cash received (note 4)
Capital expenditures
Sales and disposals
Marketable securities

Purchases
Proceeds on disposals

Pension plan contributions (note 15)
Restricted cash

Financing activities

Capital stock
Issuance of common shares for cash
Dividend paid to non-controlling interest
Long-term and bank debt

Proceeds
Repayments

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents ― beginning of year
Cash and cash equivalents ― end of year

Supplementary cash flow information (note 19)

2009
$

2008
$

102,404

163,656

291
38,658
281
(2,972)
(1,689)
(854)
-
9,091
(2,543)
1,689
2,627
-
146,983
-
-
45,059
192,042

54,179
(106,614)
35

(3,967)
42,770
(1,856)
1,877
(13,576)

25,201
(149)

4,983
(4,983)
25,052
203,518
61,851
265,369

3,108
25,995
(3,950)
(12,904)
(2,475)
(70,774)
39
11,866
1,815
1,478
5,099
2,956
125,909
(1,225)
(953)
(18,187)
105,544

7,479
(123,950)
5,214

(20,462)
25,737
(3,791)
71,515
(38,258)

14,730
(300)

5,000
(70,879)
(51,449)
15,837
46,014
61,851

See accompanying notes to the consolidated financial statements.

ELDORADO GOLD 2009 Annual Report

Consolidated Statements of Comprehensive Income

For the years ended December 31 (expressed in thousands of U.S. dollars, unless otherwise stated)

2009
$

2008
$

Net earnings for the year ended December 31,

102,404

163,656

Other comprehensive income (loss)

Unrealized gains (losses) on available-for-sale investments – net of taxes
of $320 (2008 – nil) (note 17(d))

129,098

(6,431)

Reversal on acquisition of subsidiary (note 4(a))
Realized losses (gains) on available-for-sale investments (note 17(d))
Other than temporary impairment charges

(122,617)
1,717
-

(153)
(61)
460

Comprehensive income for the year ended December 31,

110,602

157,471

See accompanying notes to the consolidated financial statements.

ELDORADO GOLD 2009 Annual Report 51

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

Nature of operations

Eldorado Gold Corporation (“Eldorado” or “the Company”) is a gold exploration, development,
mining and production company. The Company has ongoing exploration and development projects
in Brazil, China, Turkey and Greece. Production operations in Brazil ceased in the second quarter
of 2007 and the São Bento mine (“São Bento”) was sold to AngloGold Ashanti in December 2008.
The Company acquired control of Sino Gold Mining Ltd. (“Sino Gold”) in December 2009, along with
its two producing mines, Jinfeng and White Mountain, as well as the Eastern Dragon exploration
project.

02 Significant accounting policies

Basis of presentation and principles of consolidation
These consolidated financial statements are prepared in accordance with Canadian generally
accepted accounting principles (“Canadian GAAP”) and presented in United States dollars.
As disclosed in note 24, Canadian GAAP differs in certain material respects from accounting
principles generally accepted in the United States (“US GAAP”). The consolidated financial
statements include the wholly owned and partially owned subsidiaries of the Company, the
most significant of which are presented below:

Subsidiary

Location

Ownership
interest

Status

Operations and development
projects owned

Qinghai Dachaidan
Mining Ltd. (QDML)

China

90%

Consolidated

TJS Gold Mine

Tüprag Metal Madencilik
Sanayi ve Ticaret AS

Turkey

100% Consolidated Kişladağ Gold Mine
Efemçukuru Project

Unamgen Mineração e
Metalurgia S/A

Brazil

100% Consolidated

Vila Nova Iron Ore Mine

Thracean Gold Mining SA Greece

100% Consolidated

Perama Hill Project

Sino Gold Mining Ltd.

China

100% Consolidated

Jinfeng (82% owned)
White Mountain (95% owned)
Eastern Dragon (95% owned)

All material inter-company balances and transactions have been eliminated.

Use of estimates
The preparation of financial statements in accordance with Canadian GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Significant areas requiring the use of management estimates include assumptions and
estimates relating to determining defined ore bodies, value beyond proven and probable
reserves, fair values for purposes of purchase price allocations for business acquisitions,
impairment analysis and valuation of derivative contracts, determination of recoverable metal

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

02continued

on leach pads, reclamation obligations, non-cash stock-based compensation and warrants,
pension benefits, valuation allowances for future income tax assets and the provision for
income tax liabilities and assessing and evaluating contingencies. Actual results could differ
from these estimates.

Cash and cash equivalents
Cash and cash equivalents consist of cash and highly liquid investments having maturity dates
of three months or less from the date of acquisition that are readily convertible to cash. Cash
and cash equivalents and restricted cash are designated as held-for-trading and measured at
fair value.

Inventories
i.

Product inventory consists of stockpiled ore, ore on leach pads, crushed ore, in-circuit
material at properties with milling or processing operations, doré awaiting refinement
and unsold bullion, all of which are valued at the lower of average cost and net realizable
value. Product inventory costs consist of direct production costs including mining,
crushing and processing; site administration costs; and allocated indirect costs, including
depreciation, depletion and amortization of mining interests.

Inventory costs are charged to operations on the basis of ounces of gold sold. The
Company regularly evaluates and refines estimates used in determining the costs charged
to operations and costs absorbed into inventory carrying values based upon actual gold
recoveries and operating plans.

Inventories for which processing and sale is not expected to complete within one year is
classified as non-current.

ii.

Materials and supplies inventory consists of consumables used in operations, such as
fuel, chemicals, reagents and spare parts, which are valued at the lower of average cost
and replacement cost and, where appropriate, less a provision for obsolescence.

Investments
Investments classified as available-for-sale are reported at fair value with unrealized gains
or losses excluded from earnings and reported as other comprehensive income or loss until
such gains or losses are realized or an other than temporary decline in fair value has been
determined to have occurred. Factors that contribute to an other than temporary decline
include a significant and prolonged decline in fair value below its cost, and the existence of
factors such as significant adverse changes in the market and economic environments in
which the Company operates, which indicate the prospects for recovery in the fair value of the
investment are compromised in the near term.

Investments classified as held-for-trading are reported at fair value with unrealized gains or
losses included in earnings in “Gain/loss on marketable securities”. Marketable securities
and investments in equity securities held for the purpose of trading are classified as held-for-
trading and those that are not held for the purpose of trading are classified as available-for-
sale.

ELDORADO GOLD 2009 Annual Report 53

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

02continued

Deposits
Deposits, such as those required by governmental authorities for possible environmental
liabilities, are classified as held-for-trading.

Financial instruments
Fair value estimates are made at the balance sheet date, based on relevant market
information and other information about the financial instruments.

Derivative financial instruments are reported at fair value with unrealized gains or losses
included in earnings in “Gain/loss on derivative contract”. Fair values are determined directly
by reference to published price quotations in an active market, when available, or by using a
valuation technique that uses inputs observed from the markets.

Mining interests
Mining interests include development expenditures and property, plant and equipment
recorded at cost. Cost includes expenditures incurred on properties under development and
the estimated fair value of any related asset retirement obligation at the time the obligation is
originally recorded. Significant payments related to the acquisition of land and mineral rights
are capitalized as incurred.

Mineral properties, buildings, plant and equipment, and other assets whose estimated useful
life is the same as the remaining life of the mine are depreciated, depleted and amortized
over a mine’s estimated life using the units of production method calculated based on proven
and probable reserves. Capitalized development costs related to a multi-pit operation are
amortized on a pit-by-pit basis over the pit’s estimated life using the unit of production method
calculated based on proven and probable reserves related to each pit. Furniture and fixtures,
vehicles, computers and other plant and equipment whose estimated useful lives are less
than the remaining life of the mine are depreciated on a straight-line basis over the estimated
useful life of the assets.

When events or changes in circumstances suggest impairment of long-lived assets, estimated
undiscounted future net cash flows are calculated using estimated future gold prices, proven
and probable reserves, value beyond proven and probable reserves, and estimated net
proceeds from the disposition of assets on retirement less operating, sustaining capital and
reclamation costs.

If projected undiscounted future cash flows are less than the carrying value, the estimated
fair value is calculated using discounted future net cash flows and the asset is written down
to fair value with an impairment charge to operations. Management assesses the asset for
impairment by comparing its fair value, determined using best estimates of fair value based on
the information available.

Goodwill
Goodwill is the excess of the cost of an acquired business over the net amounts assigned to
assets acquired and liabilities assumed. Goodwill is not amortized. It is tested for impairment
annually or more frequently if events or changes in circumstances indicate that it is impaired.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

02continued

Goodwill is allocated to a reporting unit and any potential goodwill impairment is identified
by comparing the carrying amount of the reporting unit with its fair value. If any potential
impairment is identified, the impairment loss is quantified by comparing the carrying amount
to its fair value and is recognized in earnings.

Exploration and development
Exploration costs are charged against operations as incurred until a mineral resource having
economic potential is identified on a property, from which time a property is considered to be
a development project and such expenditures are capitalized as development costs. Costs
incurred after the property is placed into production that increase production volume or
extends the life of the mine are capitalized.

A mineral resource is considered to have economic potential when it is expected that proven
and probable reserves can be economically developed considering long-term metal prices.
Therefore, prior to capitalizing such costs, management determines that the following
conditions have been met:

There is a probable future benefit that will contribute to future cash inflows;
i.
ii.
The Company can obtain the benefit and control access to it, and;
iii. The transaction or event giving rise to the benefit has already occurred.

Deferred financing charges
Deferred financing costs represent the issuance costs of the Company’s long-term debt.
Deferred costs are netted against the carrying value of long-term debt on the consolidated
balance sheet and amortized using the effective interest rate method over the expected life of
the related liability.

Foreign currency translation
Monetary assets and liabilities denominated in currencies other than the United States dollar
are translated into United States dollars using rates of exchange in effect at the balance sheet
date. Revenue and expense items denominated in foreign currencies are translated at average
rates. Non-monetary items are translated at historical rates. Any gains and losses are reflected
in earnings.

Capital lease obligations
Leases that transfer substantially all of the benefits and risks of ownership to the Company
are accounted for as capital leases. Assets recorded under capital leases are amortized on a
straight-line basis over the lesser of the term of the lease and the life of the asset. Obligations
recorded under capital leases are reduced by lease payments net of imputed interest.

Asset retirement obligations
Asset retirement obligations (“AROs”) represent the estimated net present value of statutory,
contractual or other legal obligations relating to site reclamation and restoration costs that
the Company will incur on the retirement of assets and abandonment of mine and exploration
sites.

ELDORADO GOLD 2009 Annual Report 55

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

02continued

The carrying value of property, plant, equipment and mining interests are increased by the
same amount as the ARO liability recognized, as such obligations are incurred and amortized
against income over the useful life of the related asset. AROs are determined in compliance
with recognized standards for site closure and mine reclamation established by government
regulation.

Over the life of the asset, imputed interest on the ARO liability is charged to operations as
“accretion of asset retirement obligations” using the discount rate used to establish the ARO.
The offset of accretion expense is added to the balance of the ARO.

Where information becomes available that indicates a recorded ARO is not sufficient to
meet, or exceeds, anticipated obligations, the ARO obligation is adjusted accordingly and the
adjustment is added to, or deducted from, the carrying value of property, plant and equipment
and mining interest. In the event that the adjustment occurs after the mine in question has
closed, the adjustment is added to or deducted from earnings.

Stock-based compensation
Stock-based compensation is measured at the estimated fair value of the consideration
received or the estimated fair value of the equity instruments issued or liabilities incurred,
whichever estimate is more reliable. Compensation expense is recognized on the graded
method over the stock option vesting period. The fair values attributable to unvested stock
options that are forfeited are credited to earnings as they occur.

Bonus cash award units are considered liability awards and are measured at the amount by
which the quoted market value of the shares covered by the grant exceeds the option price.

Income taxes
Future income taxes are recognized for the future income tax consequences attributable to
differences between the carrying values of assets and liabilities and their respective income
tax bases. Future income tax assets and liabilities are measured using income tax rates
expected to apply in the years in which temporary differences are expected to be recovered
or settled. The effect on future tax assets and liabilities of a change in rates is included in
operations. A future income tax asset is recorded when the probability of realization is more
likely than not.

Revenue recognition
Revenue from the sale of bullion is recognized when persuasive evidence of an arrangement
exists, the bullion has been shipped, title has passed to the purchaser, the price is fixed or
determinable, and collection is reasonably assured.

Earnings (loss) per share
Basic earnings per share is computed by dividing net income or loss by the weighted average
number of outstanding common shares for the year. The computation of diluted earnings per
share reflects the dilutive effect of the exercise of stock options and warrants outstanding as at
year-end using the treasury stock method.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

02continued

Capitalization of interest
Where the Company has secured debt financing to finance the cost of specific capital projects,
interest is capitalized on the related construction and development project until the project
begins commercial operation or the development ceases.

Stripping costs
Stripping costs incurred during the production phase of a mine are considered production
costs and are included in the cost of inventory produced during the period in which stripping
costs are incurred, unless the stripping activity can be shown to be a betterment of the
mineral property, in which case the stripping costs are capitalized. Betterment occurs when
stripping activity increases future output of the mine by providing access to additional
reserves. Stripping costs incurred to prepare the ore body for extraction are capitalized as
mine development costs (pre-stripping). Capitalized stripping costs are amortized on a unit-of
production basis over the economically recoverable proven and probable reserves tonnes
to which they relate. Production is deemed to have commenced when saleable minerals are
extracted from an ore body.

Mine standby and restructuring costs
Mine standby costs and costs related to restructuring a mining operation are charged directly
to expense in the period incurred. Examples of mine standby costs are labour, maintenance
and mine support costs during temporary shutdowns of a mine. Examples of restructuring
costs are severance payments to employees laid off as a result of outsourcing the mining
function.

Defined benefit pension plan
Defined benefit pension plan obligations and expense are based on actuarial determinations.
The projected benefit method prorated on service is used to determine the accrued benefit
obligation and expense. Actuarial assumptions used to determine defined benefit pension plan
liabilities are based upon best estimates of expected plan investment performance, salary
escalation rates and retirement dates of employees. The expected return on plan assets is
estimated based on the fair value of plan assets, asset allocation and expected long-term
returns on these components.

Past service costs are amortized on a straight-line basis over the expected average remaining
service period of active members at the time of the past service event.

Differences between the actuarial liabilities and the amounts recorded in the financial
statements will arise from changes in plan assumptions, changes in benefits or through
experience as results differ from actuarial assumptions. Cumulative differences that are
greater than 10% of either the fair value of the plan assets or the accrued benefit obligation,
whichever is greater, are amortized over the expected average remaining service period of
active members.

Certain comparative figures have been reclassified to conform to the current year’s presentation.

ELDORADO GOLD 2009 Annual Report 57

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

03 Changes in accounting policies and new accounting developments

Goodwill and Intangible Assets (Section 3064)

In February 2008, the CICA issued Section 3064, Goodwill and Intangible Assets, which replaces
Section 3062, Goodwill and Other Intangible Assets. This new standard provides guidance on
recognizing, measuring, presenting and disclosing goodwill and intangible assets and is effective
beginning January 1, 2009 and applies retrospectively.

The adoption of this new accounting policy did not have a material impact on Eldorado’s
consolidated financial statements.

Business Combinations (Section 1582)

In January 2009, the CICA issued Section 1582, Business Combinations, which requires that all
assets and liabilities of an acquired business be recorded at fair value at acquisition. Obligations
for contingent considerations and contingencies will also be recorded at fair value at the acquisition
date. The standard also states that acquisition-related costs will be expensed as incurred and that
restructuring charges will be expensed in the periods after the acquisition date. The Section applies
prospectively to business combinations for which the acquisition date is on or after the beginning of
the first annual reporting period on or after January 1, 2011. The Company has not yet adopted this
standard.

Consolidations (Section 1601) and Non-Controlling Interest (Section 1602)

In January 2009, the CICA issued Section 1601, Consolidations, and Section 1602, Non-Controlling
Interests. Section 1601 establishes standards for preparing consolidated financial statements and
Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in
consolidated financial statements subsequent to a business combination. These standards apply to
interim and annual consolidated financial statements relating to fiscal years beginning on or after
January 1, 2011. The Company has not yet adopted these standards.

Credit Risk and the Fair Value of Financial Assets and Financial Liabilities (EIC
Abstract 173)

In January 2009, the CICA issued EIC Abstract 173, Credit Risk and the Fair Value of Financial
Assets and Financial Liabilities. The EIC requires the Company to take into account the Company’s
own credit risk and the credit risk of the counterparty in determining the fair value of financial
assets and financial liabilities, including derivative instruments. This abstract applies to interim
and annual consolidated financial statements relating to fiscal years beginning on or after January
20, 2009. The adoption of this new accounting policy did not have a material impact on Eldorado’s
consolidated financial statements.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

03continued

Mining Exploration Costs (EIC Abstract 174)

In March 2009, the CICA issued EIC Abstract 174, Mining Exploration Costs. The EIC provides
guidance on the accounting and the impairment review of exploration costs. This abstract is
effective for financial statements issued after March 27, 2009. The adoption of this new accounting
policy did not have a material impact on Eldorado’s consolidated financial statements.

Financial Instruments – Disclosures (Section 3862)

In June 2009, the Accounting Standards Board (“AcSB”) amended CICA Section 3862, Financial
Instruments – Disclosures, to enhance disclosure requirements for fair value measurement of
financial instruments and liquidity risks. The amendments require additional disclosure for fair
value measurements including the fair value hierarchy into which the fair value measurements are
categorized in their entirety. Disclosures must be made for any significant transfers between the
level of the fair value hierarchy and the reasons for those transfers.

The standard now requires reconciliation of the beginning balances to the ending balances for
those fair value measurements that result from the use of significant unobservable inputs in
valuation techniques, disclosing separately changes during the period. It also requires disclosures
of the risk related to financial liabilities that are settled by delivering cash or other financial assets
and a maturity analysis disclosure for derivative financial liabilities based on how an entity manages
liquidity risk. The amendments to Section 3862 apply for interim and annual financial statements
relating to fiscal years beginning on or after September 30, 2009. The Company adopted this
amended standard in 2009 and the required disclosures are included in note 22.

Accounting Changes (Section 1506)

In June 2009, the CICA issued an amendment to CICA 1506, Accounting Changes, to exclude from
its scope changes in accounting policies upon the complete replacement of an entity’s primary
basis of accounting. The amendment is effective for annual and interim financial statements
relating to fiscal years beginning on or after July 1, 2009. The adoption of the International
Financial Reporting Standards (“IFRS”) is not expected to qualify as an accounting change under
CICA 1506. The amendment to this standard did not have a material impact on Eldorado’s
consolidated financial statements.

Financial Instruments – Recognition and Measurement (Section 3855) and Impaired
Loans (Section 3025)

In July 2009, the AcSB amended Section 3855, Financial Instruments – Recognition and
Measurement, and Section 3025, Impaired Loans, to converge with IFRS for impairment of debt
instruments by enabling debt securities to be included in the loans and receivables category. The
main features of the amendments are: i) to eliminate the distinction between debt securities and
other debt instruments and adopt the definition of loans and receivables from IAS 39, Financial
Instruments – Recognition and Measurement, ii) to permit reclassification of financial assets
from the held-for-trading and available-for-sale categories into the loans and receivables category
and specifying the circumstances in which such transfers can be made and the accounting for

ELDORADO GOLD 2009 Annual Report 59

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

03continued

those transfers, iii) to reclassify to net income, foreign exchange gains and losses associated with
assets transferred out of the available-for-sale category, that were previously recognized in other
comprehensive income, immediately upon transfer, iv) to change the impairment model for held-to-
maturity investments to the incurred credit loss model in accordance with Section 3025, and v) to
require the reversal of an impairment loss relating to an available-for-sale debt instrument when, in
a subsequent period, the fair value of the instrument increases and the increase can be objectively
related to an event occurring after the loss was recognized.

The new changes are effective for annual financial statements for fiscal years beginning on or after
November 1, 2008. The adoption of this new accounting policy did not have a material impact on
Eldorado’s consolidated financial statements.

International Financial Reporting Standards

Canadian public companies will be required to prepare their financial statements in accordance
with IFRS, as issued by the International Accounting Standards Board, for financial years beginning
on or after January 1, 2011. Effective January 1, 2011, the Company will adopt IFRS as the basis
for preparing its consolidated financial statements. The Company will issue its financial results for
the quarter ended March 31, 2011 prepared on an IFRS basis and provide comparative data on an
IFRS basis as required.

04 Acquisitions and divestitures

Sino Gold
Eldorado acquired all of the outstanding Sino Gold Securities not previously held by Eldorado
on December 15, 2009, pursuant to a Scheme Implementation Deed dated August 26, 2009,
as amended October 27, 2009 (the “Scheme Deed”), with Sino Gold, by way of schemes of
arrangement (the “Schemes”) under the laws of Australia (the “Transaction”).

Pursuant to the Schemes, Eldorado acquired all of the outstanding ordinary shares of Sino
Gold (“the Sino Gold Shares”) not previously held by Eldorado that, together with the Sino
Gold Shares already held by Eldorado, constituted 100% of the issued and outstanding Sino
Gold Securities following the implementation of the Transaction. All outstanding options to
purchase Sino Gold Shares were cancelled pursuant to the Schemes in connection with the
implementation of the Transaction.

Consideration for the Sino Gold Shares acquired was common shares of Eldorado (“Eldorado
Shares”), with the number issued based on a share exchange ratio of 0.55 Eldorado Share
for each Sino Gold Share. Consideration for cancellation of Sino Gold Options was Eldorado
Shares, with the number issued calculated with reference to the share exchange ratio, the
exercise price and time value for such Sino Gold Options and whether the Sino Gold Options
were “in the money” or not.

Eldorado issued an aggregate of 131,772,777 common shares in the capital of Eldorado,
either directly or indirectly as CHESS Depository Interests (“CDIs”), through CHESS Depository
Nominees Pty Limited, to former shareholders and option holders of Sino Gold pursuant to the
Scheme Deed in connection with the implementation of the Schemes.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

04continued

Eldorado previously acquired 57,968,029 Sino Gold Shares (19.8%) on July 27, 2009,
pursuant to a Share Purchase and Sale Agreement (the “Share Purchase Agreement”) dated
June 3, 2009, as amended on July 10, 2009, with Gold Fields Australasia (BVI) Limited (“GFA”)
in consideration for 27,824,654 Eldorado Shares and a purchase price adjustment right. In
connection with the implementation of the Schemes, Eldorado has issued a further 4,057,762
Eldorado Shares to GFA pursuant to the purchase price adjustment provisions of the Share
Purchase Agreement. A total of 135,830,539 Eldorado Shares (including those issued to GFA)
were issued in connection with the implementation of the Schemes.

The business combination has been accounted for as a purchase transaction, with Eldorado
being identified as the acquirer and Sino Gold as the acquiree. For accounting purposes,
Eldorado acquired control of Sino Gold on December 4, 2009 and these consolidated financial
statements include the results of Sino Gold from December 4, 2009.

The cost of acquisition comprises the fair value of Eldorado shares issued, based on the
issuance of 135,830,539 Eldorado shares at $10.61 per share based on the share price
around the announcement date of the Transaction, for a total of $1,441,162, the original cost
of the Sino Gold common shares previously acquired of $263,293 based on the share price at
their acquisition date of July 27, 2009, which amount is net of the reversal of the unrealized
gain of $122,617 included in other comprehensive income, plus Eldorado’s estimated
transaction costs of $23,602, for a total consideration of $1,728,057.

Eldorado received net cash proceeds from the Sino Gold Transaction of $54,179. Net cash
proceeds result from the cash balance acquired of $77,781 less acquisition costs incurred of
$23,602.

A preliminary allocation of the purchase price, which is subject to final adjustments, is as
follows:

Preliminary purchase price

131,772,777 common shares of Eldorado issued as CDIs
4,057,762 common shares of Eldorado issued to GFA

27,824,654 common shares of Eldorado issued to GFA, being the
cost of 57,968,029 Sino Gold shares previously acquired

Transaction costs

$
1,398,109
43,053

263,293

23,602
1,728,057

ELDORADO GOLD 2009 Annual Report 61

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

04continued

The above preliminary purchase price has been allocated as follows:

Fair value of net assets acquired

Cash
Restricted cash
Accounts receivable and other
Inventory

Mining interests and property, plant and equipment, including value
beyond proven and probable reserves

Goodwill
Accounts payable and accrued liabilities
Asset retirement obligations
Debt
Future income taxes
Non-controlling interests

$
77,781
50,000
21,171
38,791

1,857,900

322,697
(76,201)
(19,249)
(191,121)
(335,860)
(17,852)
1,728,057

For the purposes of these consolidated financial statements, the purchase consideration
has been allocated on a preliminary basis to the fair value of assets acquired and liabilities
assumed, with goodwill assigned to a specific reporting unit, based on management’s best
estimates and taking into account all available information at the time of acquisition as well
as applicable information at the time these consolidated financial statements were prepared.
Eldorado will continue to review information and perform further analysis with respect to these
assets, prior to finalizing the allocation of the purchase price in 2010. Although the results of
this review are presently unknown, it is anticipated that it may result in a change to the amount
assigned to goodwill and a change to the value attributable to tangible assets and future
income tax liabilities.

The acquired goodwill of $322,697 relates to the Chinese reporting segment (note 23) and
none of it is expected to be deductible for tax purposes.

Sino Gold is a gold exploration and mining company in China. The Company operates the
Jinfeng and White Mountain gold mines in Guizhou Province and Jilin Province. The Company
also has a major development project, Eastern Dragon, which is planned to commence
commercial production in 2011.

Vila Nova Iron Ore project
On August 5, 2009, the Company announced the acquisition of the remaining 25% interest in
its Vila Nova Iron Ore Project (the "Project") from Mineração Amapari SA (“Amapari”), a Brazilian
private company, in exchange for a Net Profits Interest royalty of 10% plus a sliding scale royalty
based on the operating margin of the Project. The transaction took place between Amapari
and Unamgen Mineração ― a wholly owned subsidiary of Eldorado in Brazil. Under the terms
of the agreement, Eldorado has to pay $750 on start of commercial production plus variable
payments tied to total production or sales of assets.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

04continued

Frontier Pacific Mining Corporation
Eldorado completed the acquisition of all of the issued and outstanding common shares of
Frontier Pacific Mining Corporation (“Frontier”) on July 7, 2008. As a result, Eldorado acquired
a 100% interest in the Perama Hill gold project in Greece and other exploration projects in Peru
and Colombia.

Under the terms of the offer, each Frontier common share was exchanged for 0.122 common
shares of Eldorado, C$0.0001 in cash and one Exchange Receipt. Each Exchange Receipt
entitled the holder to receive an additional 0.008 Eldorado common shares if, prior to July
1, 2009, a Joint Ministerial Resolution was issued in Greece by the Joint Ministerial Council
(comprised of the ministries of the Environment, Agriculture, Development and Health),
accepting the Environmental Terms of Reference drafted by the Ministry of Environment
regarding the Perama Hill project.

The Company issued 20,339,334 common shares and paid $16 in cash in connection with
this transaction. No value was assigned to the Exchange Receipts as the Company considered
it highly unlikely that the condition for their exchange into Eldorado shares would be met. As
the joint Ministerial Resolution was not issued by July 1, 2009, the entitlement to receive
additional Eldorado shares has expired. Eldorado incurred acquisition costs of $3,935.

As at the date of the transaction, Eldorado held 4,871,300 common shares of Frontier with
a total cost of $3,412, net of the reversal of the unrealized gain of $153 included in other
comprehensive income.

This transaction has been accounted for as an asset acquisition because Frontier was in the
development stage. These consolidated financial statements include 100% of Frontier results
from July 7, 2008 to present.

The allocation of the purchase price of the shares of Frontier was as follows:

Purchase price:

Share consideration
Cash consideration
Cost of shares previously acquired
Transaction costs
Total purchase price

158,574
16
3,412
3,935
165,937

ELDORADO GOLD 2009 Annual Report 63

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

04continued

Fair value of net assets acquired:

Cash
Accounts receivable and other
Other assets
Mining interests
Liabilities
Due to Eldorado
Future income taxes payable

11,947
1,135
154
207,091
(2,434)
(517)
(51,439)
165,937

As at July 6, 2008, Frontier had borrowed $517 from the Company to fund ongoing
administration costs. Amounts owing are eliminated on consolidation from July 7, 2008
forward.

Eldorado received net cash proceeds from the Frontier transaction of $7,479, made up of an
acquired cash balance of $11,947 less cash consideration of $16, transaction costs of $3,935
and intercompany debt outstanding of $517.

Sale of São Bento Gold Ltd. and São Bento Mineração S.A.
Effective December 15, 2008, Eldorado sold its wholly owned Bermudian subsidiary, São
Bento Gold Ltd. and its wholly owned Brazilian subsidiary São Bento Mineração S.A. to
AngloGold Ashanti. The Company received $70,000 payable by the issuance of 2,701,660
common shares of AngloGold Ashanti.

Costs of disposition totalled $426. There were no taxes payable as a result of the transaction.
The gain on sale is calculated as follows:

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

04continued

Assets
Current assets
Cash
Accounts receivable
Inventories
Tax receivable

Mining interest
Total Assets

Liabilities
Current liabilities
Accounts payable
Contractual severance obligations
Current portion of asset retirement obligations

Asset retirement obligations
Future income taxes
Total Liabilities

Consideration received ― shares
Costs of disposition

Gain on disposition of subsidiary

104
341
733
1,653
2,831

6,611
9,442

4,453
526
1,603
6,582

4,489
1,252
12,323

(2,881)

70,000
(426)

72,455

05 Restricted cash

Restricted cash represents short-term interest-bearing money market securities and funds held on
deposit as collateral:

Collateral account against Eastern Dragon CCB loan
– (note 13(g))

December 31,
2009
$

December 31,
2008
$

50,000

ELDORADO GOLD 2009 Annual Report 65

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

06 Marketable securities

Marketable securities – available-for-sale
Marketable securities – held-for-trading
Warrants – held-for-trading

07 Accounts receivable and other

Value added and other taxes recoverable
Other receivables and advances
Prepaid expenses and deposits

08 Inventories

Current:
Ore stockpiles
In-process inventory including doré
Materials and supplies

Long-term: (1)
Ore stockpiles
In-process inventory

December 31,
2009
$

December 31,
2008
$

13,470
399
82
13,951

12,084
31,514
12
43,610

December 31,
2009
$

December 31,
2008
$

5,956
11,288
14,797
32,041

8,454
20,535
7,120
36,109

December 31,
2009
$

December 31,
2008
$

37,503
56,098
35,596
129,197

15,987
15,547
31,534

24,199
43,825
18,942
86,966

-
-
-

(1) Long-term inventories represent material not scheduled for processing within the next twelve
months at the Company’s TJS mine.

09 Derivative contract

In December 2004, São Bento Mineração SA entered into an energy supply contract with
Companhia Energetica de Minas Gerais (“CEMIG”). With the closure of São Bento in 2007, the
energy contracted for 2007 and 2008 exceeded the estimated consumption for that period and,

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

09continued

accordingly, this contract was accounted for as a derivative financial instrument, which is measured
at fair value with unrealized gains or losses reported in earnings.

The fair value as at December 31, 2007 was calculated based on a capital asset pricing model
(“CAPM”) to estimate the forward price of Brazilian electricity for 2008, adjusted by the Brazilian
real and US dollar forward exchange rates and then discounted for time value.

CAPM estimates the risk-adjustment applied to spot electricity prices as a means to deriving a
forward price.

Assumptions used to calculate the fair value of this contract as at December 31, 2007 was as
follows:

Quantity of energy to purchase
Set price per contract
Spot price in Brazilian reals
Forward price of energy (range)
US treasury yield (range)

78,880.20 MWh
$24.50/MWh
R$502.45/MWh
$111.78/MWh – $54.75/MWh
2.90% – 3.31%

As a result of the sale of the mine on December 15, 2008, the balance of the derivative contract
at December 31, 2008 was nil and a loss on derivative contract was recognized that year in the
amount of $2,956.

Restricted assets and other

Restricted long-term asset – SERP (note 15)
Restricted credit card deposits
Restricted marketable securities long-term
Accounts receivable long-term
Environmental guarantee deposit
Accrued pension benefit asset (note 15)

December 31,
2009
$

December 31,
2008
$

7,066
618
156
311
-
113
8,265

3,505
-
-
-
2,495
111
6,111

ELDORADO GOLD 2009 Annual Report 67

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

11 Mining interests

Producing properties (1)
Properties under development
Iron ore property

Other mineral interests

Producing properties (1)
Properties under development
Iron ore property

Other mineral interests

December 31, 2009

Accumulated
depreciation,
depletion and
amortization
$

159,361
516
252
160,129

2,790

162,919

December 31, 2008

Accumulated
depreciation,
depletion and
amortization
$

58,201
288
206
58,695

1,885

60,580

Cost
$

1,616,794
306,199
47,464
1,970,457

773,278

2,743,735

Cost
$

412,239
262,073
39,192
713,504

15,385

728,889

Net book
value
$

1,457,433
305,683
47,212
1,810,328

770,488

2,580,816

Net book
value
$

354,038
261,785
38,986
654,809

13,500

668,309

(1) Included in producing properties and other mineral interest is $805,494 (2008 – $55,269)
and $767,945 (2008 – $12,010) respectively, related to assets that are not being depreciated,
including value beyond proven and probable, and construction in progress.

12 Goodwill

Balance at beginning of year
Current year acquisitions (note 4(a))
Balance at end of year

ELDORADO GOLD 2009 Annual Report

December 31,
2009
$

December 31,
2008
$

2,238
322,697
324,935

2,238
-
2,238

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

13 Debt

Current:
White Mountain working capital project loan (f)
Eastern Dragon CCB loan (g)
White Mountain fixed asset project loan (f)
Sino Gold loan (c)

Long-term:
White Mountain fixed asset project loan (f)
Jinfeng construction loan (d)
Jinfeng working capital loan (e)

December 31,
2009
$

December 31,
2008
$

5,991
46,875
3,633
-
56,499

24,214
97,867
12,452
134,533

-
-
-
139
139

-
-
-
-

HSBC term revolving credit facility
HSBC has authorized advances of up to $65,000 to Tüprag Metal Madencilik Sanayi Ve Ticaret
Limited Surketi (“Tüprag”), a wholly owned subsidiary of the Company, under the terms of a
term revolving credit facility due February 28, 2010 (the “Credit Facility”). As at December 31,
2008, the Company repaid all amounts previously drawn on the facility, and no amounts were
drawn during 2009.

HSBC revolving credit facility
In November 2007, Qinghai Dachaidan Mining Limited (“QDML”), our 90% owned subsidiary,
entered into a $15,000 revolving facility (“the Facility) with HSBC Bank (China). As at
December 31, 2008, the Company repaid all amounts previously drawn on the Facility. The
Facility can be drawn down in minimum tranches of $100 or in integral multiples of $10. Each
drawdown bears interest fixed at the prevailing lending rate stipulated by the People’s Bank
of China with a 10% markdown. The Facility has a term of one year and is subject to annual
review and renewal. In November 2009, the Facility was renewed for a third year and the
interest rate was fixed at 1.2 times the prevailing lending rate stipulated by the People’s Bank
of China.

The facility is collateralized by way of irrevocable letter of credit drawn on HSBC Bank USA,
National Association (“HSBC”). Eldorado must maintain at all times a security coverage ratio of
110% of the amounts drawn down.

As at December 31, 2009 no amounts were drawn under the Facility.

ELDORADO GOLD 2009 Annual Report 69

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

13continued

Sino Gold loan
The consideration paid for the Tanjianshan property in 2003 included a non-interest-bearing
loan from Sino Gold (the “Loan”). Imputed interest has been calculated using a discount rate of
8%.

The Loan was repayable in equal annual instalments of $400 on December 31 of each year
until 2008, with a final instalment of $150 due on December 31, 2009. This balance was
eliminated upon acquisition of Sino Gold.

Fair value of loan outstanding
Less: imputed interest

December 31,
2009
$

December 31,
2008
$

-
-
-

150
11
139

Jinfeng construction loan
In 2009, Guizhou Jinfeng Mining Ltd. (“Jinfeng”), our 82% owned subsidiary acquired as part
of the Sino Gold acquisition, entered into a RMB 680.0 million ($99,610) construction loan
facility (“the construction loan”) with China Construction Bank (“CCB”).

The construction loan has a term of 6 years commencing on February 27, 2009 and is subject
to a floating interest rate adjusted annually at the prevailing lending rate stipulated by the
People’s Bank of China for similar loans with a 5% discount. The applicable interest rate as at
December 31, 2009 is 5.64% (after 5% discount). The construction loan is secured against the
following:

Sino Gold corporate guarantee;

i.
ii. pledge of 82% shares held by Sino Gold in Jinfeng;
iii. mortgage on all fixed assets of Jinfeng with a value above $100;
iv. mortgage on Jinfeng mining license and exploration license; and
v. mortgage on land use right.

While the construction loan is outstanding, Jinfeng is required to obtain written consent from
CCB before transferring funds to Sino Gold or any of its subsidiaries and must have a leverage
ratio of 64% or lower in order to distribute dividends to its shareholders.

Principal repayment of this loan is as follows: for the years 2011, 2012 and 2013 – quarterly
payments of RMB 35.0 million ($5,127); for the year 2014 – quarterly payments of RMB 32.5
million ($4,761); and for the year 2015 a final payment of RMB 130.0 million ($19,043).

Deferred financing costs in the amount of $1,743 have been included as an offset in the
balance of the loan in the financial statements and are being amortized using the effective
interest method.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

13continued

Jinfeng working capital loan
In 2009, Jinfeng entered into a RMB 85.0 million ($12,452) working capital loan (“the working
capital loan”) with CCB.

The working capital loan has a term of 3 years and is due on August 17, 2012. This loan is
subject to a floating interest rate adjusted annually at the prevailing lending rate stipulated by
the People’s Bank of China for similar loans with a 5% discount. The applicable interest rate as
at December 31, 2009 is 5.13% (after 5% discount).

While the working capital loan is outstanding, Jinfeng is required to obtain written consent from
CCB before transferring funds to Sino Gold or any of its subsidiaries and must have a leverage
ratio of 64% or lower in order to distribute dividends to its shareholders.

White Mountain project loan
In 2008, Sino Gold Jilin BMZ Mining Limited (White Mountain”), our 95% owned subsidiary
acquired as part of the Sino Gold acquisition, entered into a project loan (“project loan”) with
CCB. The project loan has two components:

A fixed asset loan of RMB 190.1 million ($27,847) with final payment due on September
2013; and

ii.

a working capital loan of RMB 40.9 million ($5,991) due in November 2010.

The interest rate on the project loan is the prevailing lending rate stipulated by the People’s
Bank of China, adjusted annually for the fixed asset loan and twice a year for the working
capital loan. The applicable interest rates as at December 31, 2009 are 5.76% and 5.31%
respectively.

The project loan is secured by a Sino Gold corporate guarantee and the project’s fixed assets
with a value above $100.

Principal repayment of the fixed asset loan is as follows: September 2010 – RMB 24.8 million
($3,633); September 2011 – RMB 64.5 million ($9,448); September 2012 – RMB 66.1 million
($9,683); September 2013 – RMB 34.7 million ($5,083).

Eastern Dragon facilities

CCB loan
In 2008, Heihe Rock Mining Industry Development Company Limited (“Eastern Dragon”), our
95% owned subsidiary acquired as part of the Sino Gold acquisition, entered into a RMB 320.0
million ($46,875) standby letter of credit loan (“LC loan”) with CCB. The interest rate on this
loan as at December 31, 2009 is 5.4%.

The LC loan is collateralized by way of irrevocable letter of credit drawn on CCB. The letter of
credit is collateralized by Sino Gold’s funds held by Bank of China Sydney Branch as restricted
cash.

ELDORADO GOLD 2009 Annual Report 71

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

13continued

Subsequent to year-end the LC loan was repaid and the restricted cash was released.

China Merchants Bank – project-financing loan
In 2009, Eastern Dragon entered into a RMB 450.0 million ($65,919) project-financing loan
(“project-financing loan”) with China Merchants Bank (“CMB”). The project-financing loan has
three components:

ii.

A five-year term RMB 320.0 million ($46,875) long-term loan (“the long-term loan”) to
replace the LC loan with CCB;

a four-year term RMB 100.0 million ($14,649) fixed asset loan (“the fixed asset loan”);
and

iii.

a one-year term RMB 30.0 million ($4,395) working capital loan (“the working capital
loan”).

The project-financing loan is subject to a floating interest rate adjusted quarterly at the
prevailing lending rate stipulated by the People’s Bank of China for similar loans with a 10%
discount. The applicable interest rates as at December 31, 2009 are 5.18% and 4.78% after
discount respectively if a drawdown had been made.

The project-financing loan is secured by an irrevocable letter of guarantee issued by Sino Gold.
Under the terms of the agreement, the following conditions shall be fulfilled before the first
drawdown:

Obtain project approval from the Heilongjiang Provincial Development and Reform
Commission;
Sino Gold to open an offshore banking business bank account with CMB and deposit
$40,000;
The aggregate of the amount deposited in the offshore account, Eastern Dragon
registered capital and shareholder loan shall not be less than $84,660 (this threshold has
been reached as at December 31, 2009).

In addition, before the second drawdown, Eastern Dragon should obtain the gold operation
permit.

The working capital loan can be drawn down once the following conditions are satisfied:

The project obtains the mining license;

ii.

the project has been developed and in production;

iii.

the gold operation permit has been granted; and

iv.

the safety production permit and environmental protection permit have been granted.

The project-financing loan requires Eastern Dragon to maintain a liability asset ratio of 70%
or lower, excluding shareholder loan, and total banking debt should not exceed RMB 550.0
million ($80,567).

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

13continued

The project-financing loan is subject to an annual management fee of 10% of the annual
interest on the drawn down amount.

No amounts were drawn down under the project facility loan as at December 31, 2009.

CMB Standby letter of Credit loan
In January 2010, Eastern Dragon entered into a RMB 320.0 million ($46,875) standby letter
of credit loan with CMB. This loan has a one-year term and is subject to a floating interest
rate adjusted quarterly at the prevailing lending rate stipulated by the People’s Bank of China
for working capital loans with 10% discount. This loan is collateralized by way of a $52,200
irrevocable letter of credit issued by Sino Gold to CMB.

On February 5, 2010, Easter Dragon made a drawdown on this loan which was used to repay
the LC loan with CCB.

This loan is to be prepaid when Eastern Dragon obtains the required project approval that will
allow it to complete the first drawdown on the project-financing loan. This loan is subject to an
annual management fee of 10% of the interest accrued on the drawn down and outstanding
amount. This management fee is paid in advance quarterly.

14 Asset retirement obligations

Balance at beginning of year

Additions resulting from acquisition
(note 4(a))

Accretion during the year
Revisions to estimate of final obligation
Balance at end of year
Estimated undiscounted amount

December 31, 2009

China
$

1,286

19,249
71

(46)
20,560
77,758

Turkey
$

2,773

-
169

2,002
4,944
14,687

Brazil
$

753

51
258
1,062
1,730

Total
$

4,812

19,249
291

2,214
26,566
94,175

ELDORADO GOLD 2009 Annual Report 73

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

14continued

Balance at beginning of year
Accretion during the year
Revisions to estimate of final obligation
Payments
Disposal (note 4(d))
Balance at end of year
Estimated undiscounted amount

December 31, 2008

China
$

1,218
68
-
-

-
1,286
1,775

Turkey
$

3,118
187
(532)
-

-
2,773
6,823

Brazil
$

4,463
377
3,229
(1,225)

(6,091)
753
1,350

Total
$

8,799
632
2,697
(1,225)

(6,091)
4,812
9,948

The net present values contemplate credit-adjusted risk-free interest rates of between 5% and 7%.
Revisions to the estimate of final obligations in 2009 include $258 related to the Vila Nova project
(“Vila Nova”), ($80) related to TJS, $34 related to Sino Gold, $1,972 related to Kişladağ and $30
related to Efemcukuru. Revisions for 2008 include $2,476 related to São Bento and $753 related to
Vila Nova. ARO costs included in the Statements of Operations and Deficit for 2008 include the São
Bento revision of $2,476 and accretion during the year of $632.

15 Defined benefit plans

During the year ended December 31, 2008, the company implemented a defined benefit pension
program with two components: a registered pension plan (“the Pension Plan”) and a non-registered
supplementary pension plan (“the SERP”). These plans, which are only available to certain
qualifying employees, provide benefits based on an employee’s years of service and final average
earnings at retirement. There are no indexation features. Annual contributions to these plans
are actuarially determined and made at or in excess of minimum requirements prescribed by
legislation.

The Company’s plans are actuarially evaluated for funding purposes on a three-year cycle. The
Pension Plan and the SERP were last actuarially evaluated on January 1, 2008 and January 1,
2009 respectively for funding purposes and the next required valuation will be as of January 1,
2011 for the Pension Plan and January 1, 2012 for the SERP. The measurement date used to
determine all of the accrued benefit obligation and plan assets for accounting information was
December 31, 2009.

The SERP is designed to provide supplementary pension benefits to qualifying employees affected
by the maximum pension limits under the Income Tax Act and the Company is not required to pre-
fund any benefit obligation under the SERP.

Total cash payments
Total cash payments for pension benefits for 2009, including cash contributed to the Pension
Plan and the SERP were $1,856 (2008 – $3,791). No cash payments were made directly to
beneficiaries during the year. The Company expects to contribute $113 to the Pension Plan and
$93 to the SERP in 2010 based on minimum funding requirements.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

15continued

The estimated future pension payments for the next five years and five years thereafter are as
follows:

2010
$

2011
$

2012
$

2013
$

2014
$

2014
and later
$

123

148

642

3,599

Estimated future
pension payments

The details of the Company’s benefit plans are as follows:

December 31, 2009

December 31, 2008

Accrued benefit obligation
Balance at beginning of year
Current service cost

Past service costs (net of
qualifying transfer)

Qualifying transfer
Interest cost
Actuarial losses (gains)
Foreign exchange
Balance at end of year

Pension Plan
$

753
102

-
69
219
120
1,263

SERP
$

4,037
484

-
369
2,121
641
7,652

Pension Plan
$

SERP
$

-
104

326

561
49
(287)
-
753

-
378

3,570

-
197
(108)
-
4,037

ELDORADO GOLD 2009 Annual Report 75

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

15continued

Plan assets
Fair value at beginning of year
Actual return on plan assets
Employer's contribution (1)
Qualifying transfer
Foreign exchange
Fair value at end of year

Funded status
Fair value of plan assets
Accrued benefit obligation
Plan (deficit) surplus

Unamortized actuarial losses
(gains)

Unamortized past service cost

Net accrued benefit asset
(liability)

December 31, 2009

December 31, 2008

Pension Plan
$

SERP
$

Pension Plan
$

SERP
$

848
48
-
107
134
1,137

1,137
1,263
(126)

222

-
-
-
-
-
-

-
7,652
(7,652)

1,995

2,418

-
17
270
561
-
848

-
-
-
-
-
-

848
753
95

-
4,037
(4,037)

(243)

(108)

259

2,828

113

(3,239)

111

(1,317)

(1) The Company has $7,066 in an investment account to fund its SERP obligation. The breakdown
of the investment is provided in note 24(g). This amount is included in restricted assets and other
(note 10).

The accrued benefit asset (liability) is included in the Company’s balance sheet as follows:

December 31, 2009

December 31, 2008

Pension Plan
$

SERP
$

Pension Plan
$

SERP
$

113

111

(3,239)

(1,317)

Restricted assets and other
(note 10)

Accounts payable and accrued
liabilities

Total

113

(3,239)

111

(1,317)

The net expense recognized for the Company’s defined benefit plans is as follows:

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

15continued

December 31, 2009

December 31, 2008

Current service cost
Interest cost
Expected gains on plan assets

Amortization of net actuarial
gains

Amortization of past service
costs

Net pension expense

Pension Plan
$

94
63
(62)

(54)

113

SERP
$

445
340
-

791

1,576

Pension Plan
$

104
49
(45)

SERP
$

378
194
-

174

732

1,304

Plan Assets
The assets of the Pension Plan and the amounts deposited in the SERP account are managed by a
major investment management company and are invested only in conformity with the investment
requirements of applicable pension laws.

The following table summarizes the defined benefit plans’ weighted average asset allocation
percentages by asset category at December 31:

Cash and equivalents
Fixed income
Equity
Total

December 31, 2009

December 31, 2008

Pension Plan

1%
99%
0%
100%

SERP

3%
49%
48%
100%

Pension Plan

6%
94%
0%
100%

SERP

5%
52%
43%
100%

Significant assumptions
The significant assumptions used are as follows:

Expected long term rate of
return on plan assets

Discount rate beginning of year
Discount rate end of year

Rate of salary escalation

Average remaining service
period of active employees
expected to receive benefits

December 31, 2009

December 31, 2008

Pension Plan
$

6.50%

7.50%
6.00%

4.50%

SERP
$

6.50%

7.50%
6.00%

4.50%

Pension Plan
$

SERP
$

6.50%

5.25%
7.50%

6.50%

5.25%
7.50%

4.50%

5 years

ELDORADO GOLD 2009 Annual Report 77

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

The assumptions for the expected long-term rate of return on plan assets for the purposes of the
actuarial valuation are based on the asset mix of the portfolio, historical data from similar plans
and the review of projected returns by asset class.

15continued
16 Income taxes

The significant components within the Company’s future tax liability are as follows:

Future income tax assets
Mining interests
Loss carry forwards
Other
Liabilities

Valuation allowance

Future income tax liabilities
Mining interests

Unrealized gains on foreign exchange translation
and other

Net future income tax liabilities

This is represented on the balance sheet as:

Current future income tax assets
Current future income tax liabilities
Long-term future income tax liabilities

December 31,
2009
$

December 31,
2008
$

10,800
46,240
3,156
9,394
69,590
(54,885)
14,705

397,076

12,135

409,211
394,506

3,824
30,655
2,367
1,897
38,743
(35,946)
2,797

61,149

2,613

63,762
60,965

December 31,
2009
$

December 31,
2008
$

-
4,264
390,242
394,506

(175)
1,097
60,043
60,965

Income tax expense differs from the amount that would result from applying the statutory Canadian
federal and provincial tax rates to income before income taxes. These differences result from the
following items:

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

16continued

Net income before taxes
Statutory tax rate
Tax expense at the statutory income tax rate

Tax effect of:

Losses not recognized
Difference in foreign tax rates
Foreign exchange
Sale of São Bento
Change in Greek tax rate
Adjustment due to change in tax rates
Non-deductible expense and other items

Income tax expense

2009
$

146,921
30.00%
44,076

8,455
(16,135)
(3,895)
-
-
5,638
3,751
41,890

2008
$

181,254
31.00%
56,189

4,249
(17,792)
(3,364)
(22,462)
(10,287)
-
5,966
12,499

At December 31, 2009, the Company had available losses for income tax purposes of approximately
$83,185 in Canada and Greece expiring in various years from 2010 to 2030.

In addition, the Company’s Brazilian subsidiaries have losses of $41,702 (December 31, 2008
– $24,000) that can be used to offset taxable income, and $41,600 (December 31, 2008 –
$24,000) that can be used to offset income for social contribution tax. These losses have no expiry
date and can be used to offset 30% of taxable income in any one year.

The Company acquired Australian tax losses on the acquisition of Sino Gold. The amount of these
tax losses is uncertain due to various tax filing options available in Australia on an acquisition.
Due to this uncertainty, we have not disclosed a potential future income tax asset related to these
losses. This would not affect the net income or assets recorded as these losses would be offset by a
full valuation allowance.

17 Shareholders’ equity

Authorized share capital
The Company’s authorized share capital consists of an unlimited number of voting common
shares without par value and an unlimited number of non-voting common shares without par
value. At December 31, 2009 there were no non-voting common shares outstanding.

ELDORADO GOLD 2009 Annual Report 79

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

17continued

Issued and outstanding share capital

Voting common shares

Number of
shares

Amount
$

Balance, January 1, 2008

344,208,540

753,058

Shares issued upon exercise of share options,
for cash

Estimated fair value of share options exercised
Shares issued for acquisition of Frontier

3,730,155

-
20,339,334

14,730

5,571
158,574

Balance, December 31, 2008

368,278,029

931,933

Shares issued upon exercise of share options,
for cash

Estimated fair value of share options exercised
Shares issued for acquisition of Sino Gold

5,203,013

-
163,655,193

25,201

10,045
1,704,455

Balance, December 31, 2009

537,136,235

2,671,634

Contributed surplus
The continuity of contributed surplus on the Consolidated Balance Sheet is as follows:

Contributed surplus attributable to:

Balance, January 1, 2008

Non-cash stock-based compensation

Options exercised, credited to share
capital

Balance, December 31, 2008

Non-cash stock-based compensation

Options exercised, credited to share
capital

Stock-based
compensation
$

11,989
11,866

(5,571)

18,284

8,532

(10,045)

Other
$

1,094
-

Total
$

13,083
11,866

(5,571)

1,094

19,378

8,532

(10,045)

Balance, December 31, 2009

16,771

1,094

17,865

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

17continued

Accumulated other comprehensive income (loss)
Accumulated other comprehensive income includes the following:

Balance, beginning of year

Unrealized gains (losses) on available-for-sale
investment – net of taxes of $320 (2008 – nil)

Reversal on acquisition of subsidiary (note 4(a) and
(c))

Realized losses (gains) on sale of available-for-sale
investment transferred to net income

Other than temporary impairment charges
Balance, end of year

2009
$

(5,971)

2008
$

214

129,098

(6,431)

(122,617)

(153)

1,717

-
2,227

(61)

460
(5,971)

18 Stock-based compensation

Share option plans
The Company has two share option plans (“Plans”) approved by the shareholders under which
share purchase options (“Options”) can be granted to directors, officers, employees and
consultants.

The Company’s Employee Plan, as amended from time to time, was established in 1994.
Subject to a 10-year maximum, Employee Plan Options generally have a five-year term.
Employee Plan Options vest at the discretion of the Board of Directors at the time an Option is
granted, typically in three separate tranches over two years. As at December 31, 2009, a total
of 4,810,000 Options (December 31, 2008 – 662,701) were available to grant to employees,
consultants or advisors under the Employee Plan.

The Company’s Directors and Officers Plan (“D&O Plan”) was established in 2003 and
amended in 2005. Subject to a 10-year maximum, D&O Plan Options generally have a five-year
term. D&O Options vest at the discretion of the Board of Directors at the time an Option is
granted, typically in three separate tranches over two years. As at December 31, 2009, a total
of 4,760,000 Options (December 31, 2008 – 1,138,041) were available to grant to directors
and officers under the D&O Plan.

The continuity of share purchase options outstanding is as follows:

ELDORADO GOLD 2009 Annual Report 81

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

18continued

Weighted
average exercise
price
Cdn$
5.36
5.50
3.95

6.55

5.71
9.80
5.59
6.46

6.11

Contractual
weighted average
remaining life
(years)
3.1

3.9

Number of
options
8,224,279
8,960,000
(3,730,155)

(15,210)

13,438,914
748,000
(5,203,013)
(55,000)

8,928,901

3.3

Balance, December 31, 2007

Granted
Exercised

Forfeited

Balance, December 31, 2008

Granted
Exercised
Forfeited

Balance, December 31, 2009

At December 31, 2009, 5,528,557 share purchase options (December 31, 2008 – 6,119,729)
with a weighted average exercise price of Cdn$6.16 (December 31, 2008 – Cdn$5.69) had
vested and were exercisable.

Options outstanding at December 31, 2009 are as follows:

December 31, 2009

Total options outstanding

Exercisable options

Range of
exercise price
Cdn$

25,000
$3.00 to $3.99
$4.00 to $4.99 4,081,458
275,143
$5.00 to $5.99

$6.00 to $6.99 1,787,800
$7.00 to $7.99 2,075,500
594,000
$9.00 to $9.99

$11.00 to $11.99

90,000

8,928,901

Weighted
average
remaining
contractual
life
(years)

Weighted
average
exercise
price
Cdn$

0.2
3.8
2.6

3.1
2.3
4.2

4.6

3.3

3.76
4.88
5.20

6.44
7.18
9.54

11.83

6.11

Weighted
average
exercise
price
Cdn$

3.76
4.88
5.20

6.44
7.14
9.66

11.83

6.16

25,000
2,181,124
270,143

838,458
1,961,833
221,999

30,000

5,528,557

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

18continued

Stock-based compensation expense
The exercise prices of all Options granted during the period were at or above the market price
at the grant date. Stock-based compensation expense is calculated using a Black-Scholes
option pricing model to determine the estimated fair values of all Options granted. The value
determined on the date an Option is granted is recorded over the vesting period of each
respective option.

This expense has been included in the undernoted expenses in the Consolidated Statements
of Operations as follows:

Operating costs
Exploration
Administrative
Total

2009
$

1,830
958
5,744
8,532

2008
$

1,526
1,401
8,939
11,866

The assumptions used to estimate the fair value of Options granted during the years ended
December 31, 2009 and 2008 were:

2009

2008

Risk-free interest rate (range)
Expected volatility (range)
Expected life (range)
Expected dividends
Weighted average fair value per stock option (CAD$)

1.40% – 2.11%
64% – 76%
1.5 ― 3.8 years
Nil
$ 4.80

2.39% – 3.48%
40% – 53%
3.4 years
Nil
$2.03

Bonus Cash Award Units plan
In August 2007, the directors adopted a Bonus Cash Award Units (“BCAU”) plan with an
effective date of August 2, 2007. The plan provides for the Board of Directors (the “Directors”)
to grant BCAUs to officers, employees and consultants subject to vesting and other conditions
as determined by the Directors; however, the vesting period may not exceed five years from the
grant date, but may be accelerated at the discretion of the Directors. The settlement of BCAUs
must be made in cash and is calculated as the excess of the trading price of Eldorado shares
traded on the Toronto Stock Exchange (“TSX”) on the trading day on which the designated
participant elects to exercise their BCAU over the trading price of Eldorado shares traded on
the TSX on the grant day.

As of December 31, 2009, all Bonus Cash Award Units (“BCAUs”) awarded by the Company
were exercised (December 31, 2008 – 587,500 BCAUs outstanding). The Company paid
$2,543 in bonus cash award units in the 2009 year (2008 – $1,658). The related expense
in the amount of $559 (2008 – $2,059) is included in general and administrative expense
in the Consolidated Statements of Operations and Deficit. The carrying value of the BCAUs at
December 31, 2008 was $2,059, and is reflected in accrued liabilities on the balance sheet.

ELDORADO GOLD 2009 Annual Report 83

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

19 Supplementary cash flow information

2009

2008

Changes in non-cash working capital
Accounts receivable and prepaids
Inventories
Accounts payable and accrued liabilities

Supplementary cash flow information

Income taxes paid
Interest paid

Non-cash investing and financing activities

25,386
(19,799)
39,472
45,059

46,317
839

Shares issued on acquisition of Sino Gold/Frontier
Shares received on sale of São Bento

1,704,455
-

7,504
(26,057)
366
(18,187)

3,952
24,971

158,574
70,000

20 Commitments and contingencies

Commitments
The Company’s contractual obligations, not disclosed on the balance sheet, at December 31,
2009, include:

2010
$

2011
$

2012
$

2013
$

Operating leases and
property expenditures

Purchase obligations
Totals

3,281

2,815

2,157

2,020

90,236
93,517

14,094
16,909

12,504
14,661

-
2,020

2014
and later
$

543

-
543

Purchase obligations from 2011 forward relate solely to Kişladağ operations, including the
estimated payments under unhedged diesel fuel purchase commitments for 2011 through
2012.

Contingencies
Due in part to the size, complexity and nature of the Company’s operations, various social,
political, environmental, land title, legal, permitting and tax matters are outstanding from time
to time. In the opinion of management, these matters are not expected to have an adverse
effect on the Company’s consolidated financial position or operations.

In December 2008, the Jinfeng mine received a notice from the Ministry of Land and
Resources (“Ministry”) advising that the Ministry concluded that the mine should not receive
an exemption from payment of the Resource Compensation Fee (“RCF”). An exemption from
the RCF had been part of the conditions for the mine being approved as an “encouraged”

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

20continued

project in January 2005. The mine has received legal advice that its qualification for the
exemption is strong and has sought a formal review of the Ministry’s notice. The Ministry’s
review process has been underway over the past few months. The mine has received a notice
from the Ministry advising that the review process has been adjourned in order to allow the
Ministry additional time to investigate the issues. During the adjournment, the mine does not
anticipate any change in the status quo, although the ultimate outcome of the review process
remains uncertain.

21 Capital disclosure

Eldorado’s objectives when managing capital are to:

safeguard our ability to continue as a going concern,

a)
b) have sufficient capital to develop our mining projects and take them into production, and
c) meet external capital requirements on our credit facilities.

The Company monitors capital based on the debt to adjusted capital ratio. Debt is defined as
the total of current and long-term debt shown on the balance sheet. Adjusted capital includes all
components of shareholders’ equity, which includes accumulated comprehensive income, share
capital, contributed surplus and deficit. Eldorado’s strategy is to keep the debt to adjusted capital
ratio below 40%. The debt to adjusted capital ratio at December 31, 2009 and December 31, 2008
was 7.23% and nil respectively.

22 Financial instruments

Recognition, measurement and presentation
Financial instruments are either measured at amortized cost or fair value. Held-to-maturity
investments, loans and receivables and other financial liabilities are measured at amortized
cost. Held-for-trading financial assets and liabilities and available-for-sale financial assets and
liabilities are measured on the balance sheet at fair value.

Fair value
The following table provides the carrying value and the fair value of financial instruments at
December 31, 2009 and December 31, 2008:

ELDORADO GOLD 2009 Annual Report 85

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

22continued

December 31, 2009

December 31, 2008

Carrying
amount
$

Fair value
$

Carrying
amount
$

Fair value
$

Financial Assets
Held-for-trading

Cash and cash equivalents
Restricted cash
Marketable securities
Restricted assets and other

265,369
50,000
481
8,152

61,851
-
31,526
6,000

Available-for-sale

Marketable securities

Loans and receivables

Financial Liabilities

Accounts payable and accrued
liabilities

13,626
26,085

12,084
27,655

154,011

41,342

Debt

191,032

139

Fair values are determined directly by reference to published price quotations in an active
market, when available, or by using a valuation technique that uses inputs observed from
relevant markets.

The fair value hierarchy established by CICA Handbook Section 3862, Financial Instruments
– Disclosures (‘‘Section 3862’’), establishes three levels to classify the inputs to valuation
techniques used to measure fair value and is harmonized with disclosure requirements
included in ASC Subtopic 820-10 on financial instruments under US GAAP. The three levels of
the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or liabilities.

Level 2 – Inputs that are observable, either directly or indirectly, but do not qualify as Level 1
inputs (i.e., quoted prices for similar assets or liabilities).

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair
value measurement and unobservable (i.e., supported by little or no market activity).

Assets and liabilities measured at fair value on a recurring basis as at December 31, 2009
include:

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

22continued

Quoted prices
in active
markets for
identical
assets
$

Balance at
December
31, 2009
$

Significant
other
observable
inputs
$

Significant
unobservable
inputs
$

(Level 1)

(Level 2)

(Level 3)

Financial Assets
Held-for-trading

Cash and cash
equivalents

265,369

Restricted cash
Marketable securities

Restricted assets and
other

50,000
481

8,152

50,000
307

8,152

Available for sale

Marketable securities

13,626

13,282

-
-

-
174

344

The table below sets forth a summary of changes in the fair value of the Company’s Level 3
financial assets and liabilities for the year ended December 31, 2009.

Assets

Marketable securities

Held-for-trading
$

Available-for-sale
$

Total $

Beginning balance

Total gains or losses (realized/
unrealized)

Included in earnings (or changes
in net assets)

Included in other comprehensive
income

Purchases, issuances and
settlements

Transfers in and/or out of Level 3

Ending balance

174

563

(219)

344

563

(45)

518

Financial risk management
Eldorado’s activities expose it to a variety of financial risks, including credit risk, foreign
exchange risk, interest rate risk, gold price risk and liquidity risk.

ELDORADO GOLD 2009 Annual Report 87

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

22continued

Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation
and cause the other party to incur a financial loss. Financial instruments that potentially
subject the Company to credit risk consist of cash and cash equivalents, restricted cash and
accounts receivable. Eldorado deposits its cash and cash equivalents, including restricted
cash, with high credit quality financial institutions as determined by rating agencies. As
at December 31, 2009, approximately 43% of the Company’s cash and cash equivalents,
including restricted cash, are held with one financial institution. The Company considers this to
be its only significant credit risk exposure.

The Company sells its gold bullion exclusively to large international financial institutions or on
the Istanbul and Shanghai Gold Exchanges. Payment is normally in advance or within one week
of receipt of shipment. The historical level of customer defaults is negligible which reduces the
credit risk associated with trade receivables at December 31, 2009.

Currency risk
The Company operates principally in Canada, Turkey, China, Brazil and Greece, and is therefore
exposed to foreign exchange risk arising from transactions denominated in foreign currencies.
Eldorado’s cash and cash equivalents, accounts receivable, accounts payable and accrued
liabilities are denominated in several currencies (mainly Canadian dollars, Turkish liras,
Chinese renminbi and Brazilian real) and are therefore subject to fluctuation against the US
dollar.

As a result of the acquisitions of Afcan, Frontier and Sino Gold assets in 2005, 2008 and 2009
respectively, the Company has recorded $392,419 of future income tax liabilities on mining
interests which are recorded in local currencies. The future income tax liabilities are monetary
items that are revalued each period-end at current exchange rates, with the gain or loss
recorded in net earnings in the period.

The Company is exposed to currency risk through the following financial assets and liabilities,
value added tax and other taxes recoverable and future income tax asset and liabilities
denominated in currencies other than US dollars at December 31, 2009:

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

22continued

Cash and cash
equivalents

Marketable
securities
Accounts
receivable and
other
Accounts payable
and accrued
liabilities

Loan

Future income tax
liabilities

Canadian
dollar

Australian
dollar

Euro

Turkish

lira

Chinese
renminbi

Brazilian
real

51,379

6,299

237

2,019

393,885

809

5,550

1,197

169

475

13,889

92,855

575

(17,715)

(3,242)

(111)

(22,915)

(596,994)

(4,214)

- (1,305,433)

- (26,288)

(14,981)

(2,357,511)

Net balance

40,411

3,226 (25,687)

(21,988)

(3,773,198)

(2,830)

Equivalent in US
dollars

38,448

2,893 (36,723)

(14,604)

(552,683)

(1,626)

Based on the balances as at December 31, 2009, a 1% increase (decrease) in the exchange
rates on that date would have resulted in a (decrease) increase of approximately $5,643 in
earnings before income. There would be no effect in other comprehensive income.

Our cash flows from our operations are exposed to foreign exchange risk, as commodity sales
are set in US dollars and a certain amount of our operating expenses are in the currency of the
country in which our mining operations take place. We have elected not to actively manage our
exposure to currency risk at this time.

Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument
will fluctuate due to changes in market interest rates. Current financial assets and financial
liabilities are generally not exposed to interest rate risk because of their short-term nature.
Eldorado’s debt is exposed to interest rate risk as it is subject to floating interest rates. As at
December 31, 2009 the average interest rate in Eldorado’s debt was 5.45%. A 1% increase or
decrease in the interest rate on debt held at December 31, 2009 would result in a $1.4 million
increase or decrease in the Company’s after-tax net earnings.

The approximate average interest rate earned by the Company in 2009 on its cash and cash
equivalents was 0.83% (2008 – 2.36%). A 1% increase or decrease in the interest earned from
financial institutions on deposits and money market investments held at December 31, 2009
would result in a $2.4 million increase or decrease in the Company’s after-tax net earnings.

We have elected not to actively manage our exposure to interest rate risk at this time.

ELDORADO GOLD 2009 Annual Report 89

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

22continued

Gold price risk and other price risk
Eldorado is subject to price risk for fluctuations in the market price of gold. Gold prices are
affected by numerous factors beyond our control, including central bank sales, producer
hedging activities, the relative exchange rate of the US dollar with other major currencies,
global and regional demand and political and economic conditions.

Worldwide gold production levels also affect gold prices, and the price of gold is occasionally
subject to rapid short-term changes due to speculative activities. We have elected not to
actively manage our exposure to gold price risk at this time. From time to time, we may use
commodity price contracts to manage our exposure to fluctuations in the price of gold.

Other price risk is the risk that the value of a financial instrument will fluctuate as a result of
changes in market prices. Eldorado’s other price risk includes equity price risk, whereby the
Company’s investments in marketable securities are subject to market price fluctuation.

Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet
commitments associated with financial instruments. The Company manages liquidity by
maintaining adequate cash and cash equivalent balances and by using its lines of credit as
required. Our treasury department monitors and reviews both actual and forecasted cash
flows, and also matches the maturity profile of financial assets and liabilities. Contractual
maturities relating to debt are included in note 13.

23 Segmented information

During the period ended December 31, 2009, Eldorado had four reporting segments. The Brazil
reporting segment includes the development activities of Vila Nova and exploration activities in
Brazil. The Turkey reporting segment includes the operations of the Kişladağ mine, development
activities of the Efemçukuru project and exploration activities in Turkey. The China reporting
segment includes the operations of the Tanjianshan mine, Jinfeng mine, White Mountain mine,
other mining interests in the Eastern Dragon exploration project and exploration activities in China.
The Greece reporting segment includes development activities on the Perama Hill project. The
other reporting segment includes the operations of the Company’s corporate office and exploration
activities in other countries.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

23continued

December 31, 2009

Turkey
$

China
$

Brazil
$

Greece
$

Canada
$

Total
$

196,066

1,261,367

96,275

7,214

745,187

299,555
-

2,006,554
324,935

209,408

47,212

15,544

62,756
-

209,408
-

1,457,433

305,683

47,212

2,543

2,543
-

770,488

2,580,816
324,935

December 31, 2008

Turkey
$

China
$

Brazil
$

Greece
$

Canada
$

Total
$

190,881

163,157

54,378

4,151

249,410
-

163,157
2,238

207,407

38,986

7,359

46,345
-

207,407
-

1,990

1,990
-

354,038

261,785

38,986

13,500

668,309
2,238

Net mining interests

Producing
properties

Properties under
development

Iron ore property

Other mining
interests

Goodwill

Net mining interests

Producing
properties

Properties under
development

Iron ore property

Other mining
interests

Goodwill

ELDORADO GOLD 2009 Annual Report 91

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

23continued

Operations

Revenue

Turkey
$

China
$

Brazil
$

Greece
$

Other (1)
$

Total
$

2009

Gold sales

233,133

125,334

999

278

234,132

125,612

358,467

983

2,262

360,729

Interest and
other income

Expenses except
the undernoted
Depletion,
depreciation and
amortization

Exploration

Mine standby
costs
Loss (gain) on
disposal of
assets

Income (loss)
before tax
Income tax
recovery
(expense)

Non-controlling
interest

71,902

68,643

169

519

20,221

161,454

12,015

6,074

25,665

1,001

2,284

2,580

501

905

2,611

38,658

11,970

2,580

(1,355)

(854)

144,141

29,802

(5,104)

(519)

(21,399)

146,921

(29,752)

(12,362)

(2,627)

14,813

(96)

320

(41,890)

(2,627)

(5,104)

(615)

(21,079)

102,404

Net income (loss)

114,389

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

23continued

Turkey
$

China
$

Brazil
$

Greece
$

Other
$

Total
$

2008

Revenue

Gold sales

161,442

116,281

765
162,207

387
116,668

7,661
7,661

-
-

277,723

1,695
1,695

10,508
288,231

Interest and
other income

Expenses except
the undernoted
Depletion,
depreciation and
amortization
Exploration
Loss (gain) on
disposal of
assets

Income (loss)
before tax
Income tax
recovery
(expense)

Non-controlling
interest
Net income (loss)

63,506

47,652

13,399

(4,543)

19,426

139,440

8,190
5,865

17,201
1,897

206
1,235

1,665

(72,455)

-
-

398
3,319

25,995
12,316

(70,774)

84,646

48,253

65,276

4,543

(21,464)

181,254

(17,866)

(10,311)

5,473

10,288

(83)

(12,499)

-
66,780

(5,099)
32,843

-
70,749

-
14,831

-
(21,547)

(5,099)
163,656

(1) Interest and other income for the year 2009 of $981 (2008 – $1,640) pertaining to the center of
domicile are reflected in the Revenue section of the “Other” segment of operations.

ELDORADO GOLD 2009 Annual Report 93

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24 Differences between Canadian and United States GAAP

These consolidated financial statements have been prepared in accordance with Canadian GAAP.
The material differences between Canadian GAAP and US GAAP affecting the Company are
summarized below:

Statement of operations
Net earnings reported under Canadian GAAP
Add (deduct) items subject to US GAAP
Exploration costs (a)
Capitalized interest expense (e)
Depreciation on capitalized interest (e)
Bonus cash award units (f)
Deferred start-up costs and revenues (b)
Depreciation related to start-up period (b)
Transaction costs on Sino Gold acquisition (i)
Sino Gold step acquisition gains (i)
Depreciation related to recording 100% of fair value of
Sino Gold assets (i)
Future income taxes (c)
Non-controlling interest (i)
Net earnings under US GAAP attributable to Company
Attributable to non-controlling interest
Attributable to common shareholders

Other comprehensive income (loss) for the year under
Canadian GAAP
Add (deduct) items subject to US GAAP:
Pension plans (net of tax) (g)
Comprehensive income under US GAAP attributable to
Company
Attributable to non-controlling interest
Attributable to common shareholders
Basic and diluted earnings per share ― US GAAP

Accumulated other comprehensive income (loss)

Balance under Canadian GAAP
Pension plans (net of tax) (g)
Balance under US GAAP

2009
$

2008
$

102,404

163,656

(7,768)
228
(418)
198
-
225
(23,602)
110,644

(304)

343
2,627
184,577
2,323
182,254

(1,361)
1,368
(440)
187
(2,172)
175
-
-

3,280
5,099
169,792
5,099
164,693

8,198

(6,185)

(1,916)

188,536

-
188,536
0.47

2009
$

2,227
(4,652)
(2,425)

(2,736)

155,772

-
155,772
0.46

2008
$

(5,971)
(2,736)
(8,707)

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Assets
Total assets reported under Canadian GAAP
Exploration costs (a)
Future income taxes (c)
Pension plan (g)
Depreciation related to start-up period (b)
Capitalized interest expense – net (e)
Adjust non-controlling interest to fair value on Sino Gold
acquisition (i)
Goodwill adjustments related to Sino Gold acquisition (i)
Deferred financing costs (j)

2009
$

3,436,108
(37,900)
4,884
(113)
(1,001)
4,135

182,247

533,411
1,743

2008
$

905,369
(30,132)
4,541
-
(1,226)
4,325

-
-

Total assets under US GAAP

4,123,514

882,877

Liabilities
Total liabilities reported under Canadian GAAP
Future income taxes related to Sino Gold acquisition (i)
Pension plans (g)
Deferred financing costs (j)
Bonus cash award units (f)
Total liabilities under US GAAP

Shareholders’ equity
Shareholders’ equity reported under Canadian GAAP
Cumulative adjustments to shareholders’ equity:
Exploration costs (a)
Future income taxes (c)

Depreciation related to start-up period (b)
Accumulated other comprehensive income ― pension
plans (g)
Bonus cash award units (f)
Transaction costs on Sino Gold acquisition (i)
Sino Gold step acquisition gains (i)
Share capital (i)
Adjust non-controlling interest to fair value on Sino Gold
acquisition (i)
Interest expense capitalized – net (e)
Shareholders’ equity under US GAAP attributable to
Company
Non-controlling interest (i)
Total shareholders’ equity

769,354
45,562
4,539
1,743
-
821,198

108,750
-
2,736

198
111,684

2,640,610

791,820

(37,900)
4,985

(1,001)

(4,652)

-
(23,602)
110,644
400,706

182,247

4,135

3,276,162

26,144
3,302,316

(30,132)
4,541

(1,226)

(2,736)

(198)
-
-
-

4,325

766,394

4,799
771,193

ELDORADO GOLD 2009 Annual Report 95

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Cash flows (used in) generated from:
Operating activities under Canadian GAAP

Exploration costs (a)
Transaction costs on Sino Gold acquisition (i)
Capitalized interest expense (e)

2009
$

192,042
(7,768)
(23,602)
228

2008
$

105,544
(1,361)
-
1,368

Operating activities under US GAAP (k)

160,900

105,551

Investing activities under Canadian GAAP

Exploration costs (a)
Transaction costs on Sino Gold acquisition (i)
Capitalized interest expense (e)

(13,576)
7,768
23,602
(228)

(38,258)
1,361
-
(1,368)

Investing activities under US GAAP

17,566

(38,265)

Financing activities under Canadian and US GAAP

25,052

(51,449)

Net increase (decrease) in cash and cash equivalents for
Canadian and US purposes

Cash and cash equivalents – beginning of year
Cash and cash equivalents – end of year

203,518

61,851
265,369

15,837

46,014
61,851

A description of US GAAP that results in differences from Canadian GAAP is as follows:

Exploration costs
Exploration costs are accounted for in accordance with Canadian GAAP as disclosed in note
2(j). For US GAAP purposes, exploration costs relating to unproven mineral properties are
expensed as incurred until completion of an economic feasibility study, after which exploration
and development costs are capitalized.

A difference in classification on the cash flow also arises as expenditures associated with
capitalized exploration costs under Canadian GAAP are treated as an investing activity whereas
under US GAAP, such exploration costs are expensed and shown in the operating section of the
cash flow statement.

Deferred start-up costs and revenues
US GAAP requires that operating profits and losses from newly commissioned operations be
recorded at the time the first product is shipped. Canadian GAAP records operating profits
and losses from the date commercial production commences. Under Canadian GAAP, deferred
start-up costs and revenues are amortized over the life of the project.

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Future income taxes
Under US GAAP, the Company would record an increase of $343 (2008 – $3,280) in future
income tax recovery related to the reconciliation items described under items (a), (b), (e) and (i)
of this note.

Tax uncertainties
US GAAP requires that the tax effect(s) of a tax position be recognized only if it is “more-likely-
than-not” to be sustained based solely on its technical merits as of the reporting date. The
more-likely-than-not threshold represents a positive assertion by management that a company
is entitled to the economic benefits of a tax position. If a tax position is not considered more-
likely-than-not to be sustained based solely on its technical merits, no benefits of the tax
position are to be recognized. The more-likely-than-not threshold must continue to be met in
each reporting period to support continued recognition of a benefit.

As a result of this adoption, the Company did not recognize any further increases or decreases
in the liability for unrecognized tax benefits. A reconciliation of the beginning and ending
amount of the unrecognized tax benefits is as follows:

Balance at January 1,

Additions based on tax positions related to the
current year

Reductions based on tax positions related to the
current year

Additions for tax positions of prior years

Reductions for tax positions of prior years

Additions on acquisition of Sino Gold

Balance at December 31,

2009
$

6,930

(266)

1,059

3,300

11,110

2008
$

10,034

(294)

(2,810)

6,930

As at December 31, 2009, the Company had $11,110 in unrecognized tax benefits (2008
– $6,930). If recognized, none of the unrecognized tax benefits would materially affect the
effective tax rate.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in
income taxes. During the years ended December 31, 2009 and 2008, the Company recognized
approximately $209 and $nil in interest and penalties respectively. The Company had
approximately $209 and $nil accrual for paying interest and penalties at December 31, 2009
and 2008 respectively.

The Company is subject to taxes in Canada, Brazil, China, Turkey and Australia. The tax years
that remain subject to examination as of December 31, 2009 for these jurisdictions are:

ELDORADO GOLD 2009 Annual Report 97

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Canada
Brazil
China
Turkey
Australia

2001 to the present
2005 to the present
2007 to the present
2005 to the present
2001–2002 and 2006 to the present

Interest expense
Under Canadian GAAP, where the Company has secured debt financing to finance the cost
of specific projects, interest is capitalized on the related construction and development
project until the project begins commercial operation or development ceases, at which time
the interest is charged to operations. Under US GAAP, interest is capitalized on an interest-
avoidance basis. Under this method, regardless of the application of the loan proceeds, any
interest incurred is capitalized to the cost of any development or construction project to the
extent of the lesser of the interest cost incurred or the amount that can be attributed to the
cost of any capital development or construction costs and any uncapitalized interest is charged
to operations.

Bonus cash award units
Under Canadian GAAP, bonus cash award units are measured at the amount by which the
quoted market value of the shares covered by the grant exceeds the option price. US GAAP
requires that awards classified as liabilities be measured at fair value at each reporting date.
The fair value is estimated using an option pricing model.

Pension plans
For US GAAP purposes, the Company is required to report the overfunded net asset or
underfunded net liability of its defined benefit pension plans on its consolidated balance
sheet. Changes in the funded status are recorded through other comprehensive income. The
information set out below should be read in conjunction with the information disclosed under
Canadian GAAP requirements for pension plans provided in note 15.

The funded status at the end of the year and the related amounts recognized on the statement
of financial position for US GAAP purposes are as follows:

2009

2008

Pension Plan
$

SERP
$

Pension Plan
$

SERP
$

Funded status as at December 31,
Fair value of plan assets
Benefit obligations
Funded status

1,137
1,263
(126)

-
7,652
(7,652)

848
753
95

-
4,037
(4,037)

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Amounts recognized in the balance
sheet:

Non-current assets
Current liabilities
Non-current liabilities
Funded status

Amounts recognized in other
comprehensive income:

Net actuarial loss (gain)
Past service cost (credit)
Funded status

2009

2008

Pension Plan
$

SERP
$

Pension Plan
$

SERP
$

-
-
126
(126)

-
-
7,652
(7,652)

2009

-
-
4,037
(4,037)

95
-
-
95

2008

Pension Plan
$

SERP
$

Pension Plan
$

SERP
$

17
222
239

1,995
2,418
4,413

(243)
259
16

(108)
2,828
2,720

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets
for pension plans with an accumulated benefit obligation in excess of plan assets at December
31, 2009 are as follows:

Accumulated benefit obligation in excess of plan
assets

Projected benefit obligation at end of year
Accumulated benefit obligation at end of year
Fair value of plan assets at end of year

2009
$

8,915
7,778
1,137

2008
$

4,145
4,037
-

The Company has $7,066 in an investment account to fund its SERP obligation. This amount is
included in restricted assets and other (note 10).

The estimated amounts that will be amortized from accumulated other comprehensive income
into net periodic benefit cost in 2010 are as follows:

Net actuarial loss (gain)
Past service cost (credit)
Total

Pension Plan
$

-
78
78

SERP
$

264
859
1,123

ELDORADO GOLD 2009 Annual Report 99

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Pension plan asset information
i.

Investment objective and strategies

The investment objectives are to satisfy the plans’ financial liabilities, and to achieve the
highest long-term investment return that can be obtained within a below average degree
of risk.

Target asset allocations for aggregate of the plans’ assets, which were established in
2009, are 40% public equity investments and 60% fixed income investments. For tax
efficiency, the registered plan assets are invested in fixed income securities.

The investment objectives for the plan assets have been reviewed with regard to the risk
tolerance of the Company and characteristics of the plans, and their financial condition.

All assets are externally managed and invested in actively managed pooled funds.
Managers are not permitted to invest outside of the asset classes outlined in the written
agreements. Investment policies are established to ensure investment managers invest
solely within the investment context they have been retained.

Derivatives are permitted investments as efficient substitutes for traditional securities and
to manage exposure to risks, in accordance with the investment policies of the investment
manager’s pooled funds.

ii.

Significant concentration of risk

Significant concentration of risk in the plans’ assets relate to equity, interest rate and
operating risk. In order to increase investment return to satisfy contribution requirements,
a portion of the plans' assets is allocated to equity investments that are expected
to earn higher returns with more volatility than fixed income investments over time.
Within equities, risk is mitigated by constructing a portfolio that is broadly diversified by
geography, industry and market capitalization.

In order to reduce asset volatility relative to the liabilities, a higher portion of the plans’
assets is allocated to fixed income investments that are exposed to interest rate risk.
Rate increases generally will result in a decline in fixed income assets while reducing the
present value of liabilities.

Operating risks include the risks of inadequate diversification and weak controls. To
mitigate these risks, the external fund manager’s investments are diversified across and
within asset classes in support of investment objectives. Policies to address operating
risks include ongoing manager oversight, investment guidelines, and periodic compliance
reviews to ensure adherence.

The plan assets were not loaned to or invested in securities of the Company or any
affiliated organization during 2009 or 2008.

100

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

iii. Expected long-term rate of return on assets.

The long-term return assumption at year-end 2009 is 6.5% for the plans and was
developed based primarily on inputs from advisors for long-term capital market returns,
inflation, bond yields and other variables, adjusted for specific aspects for our investment
strategy. Historical returns were considered where appropriate.

At December 31, 2009, our actual one-year annual rate of return on pension plan assets
was 6.8% for the registered plan and 15.4% for the supplemental retirement plan. As the
plans were established in late 2008, the contributions made in December 2008 were
adjusted with the expected rate of return on assets.

Fair value of plan assets
The fair value of our pension benefits plan assets at December 31, 2009 by asset
category is as follows:

Balance at
December 31,
2009

Level 1
$

Level 2
$

Level 3
$

Pension plan
Fixed income
Canadian government
Corporate bonds (a)
Investment grade
High yield

Cash and cash equivalents (b)

SERP
Equity
Canadian companies
U.S. companies
International companies

Fixed income
Canadian government
Corporate bonds (a)
Investment grade
High yield

Cash and cash equivalents (b)

748

362
11
1,121
16
1,137

1,627
945
828
3,400

362
11
1,121
16
1,137

1,627
945
828
3,400

2,301

1,109
36
3,446

220
7,066

1,109
36
3,446

220
7,066

-
-
-
-
-

-
-
-
-

-
-
-

-
-

-
-
-
-
-

-
-
-
-

-
-
-

-
-

ELDORADO GOLD 2009 Annual Report 101

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

(a) “Investment Grade” bonds are those rated Baa3/BBB or higher by at least two rating
agencies; “High Yield” bonds are those rated below investment grade.

(b) Primarily short-term investment funds to provide liquidity to plan investment managers.

The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or liabilities.

Level 2 – Inputs that are observable, either directly or indirectly, but do not qualify as Level 1
inputs (i.e., quoted prices for similar assets or liabilities).

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair
value measurement and unobservable (i.e., supported by little or no market activity).

Non-controlling interest
For US GAAP purposes, non-controlling interest, previously referred to as minority interest,
should be reported as part of equity in the consolidated financial statements; losses should
be allocated to the non-controlling interest even when such allocation might result in a deficit
balance, reducing the losses attributed to the controlling interest; changes in ownership
interests should be treated as equity transactions if control is maintained and, upon a loss of
control, any gain or loss on the interest disposed of should be recognized in earnings.

Business combination
The Company has accounted for the 2009 acquisition of Sino Gold in accordance with Section
1581 of the CICA Handbook as disclosed in note 4(a). For US GAAP purposes, the Company
adopted ASC805 (SFAS No. 141R – Business Combinations). The effect of adopting the new
requirements is outlined below with respect to the Sino Gold acquisition. Adoption of the new
requirements had no effect on prior year numbers.

The following provides an analysis of the significant accounting and disclosure differences
between Section 1581 and ASC 805 on the Sino Gold acquisition:

Purchase price allocation

The allocation of the purchase price of the shares of Sino Gold based on preliminary
estimates is summarized as follows:

Preliminary purchase price
131,772,777 common shares of Eldorado issued as CDIs
4,057,762 common shares of Eldorado issued to GFA

Fair value of the Sino Gold shares originally acquired in
July 2009

US GAAP
$

1,786,842
55,026

373,937

2,215,805

102

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Fair value of net assets acquired based on preliminary allocation

Cash
Restricted cash
Accounts receivable and other
Inventory

Mining interests and property, plant and equipment, including
value beyond proven and probable reserves

Goodwill
Accounts payable and accrued liabilities
Asset retirement obligations
Debt
Future income taxes
Non-controlling interests

ii.

Acquisition consideration and costs

77,781
50,000
21,171
38,791

2,040,553

856,108
(76,201)
(19,249)
(191,121)
(381,523)
(200,505)
2,215,805

Under existing Canadian GAAP, the value of shares issued in a business combination is
determined based on the announcement date. Under US GAAP the value of shares issued
in a business combination is determined based on the fair value of the shares at the
date of closing. The effect of this difference is to increase share capital by $400,706 and
increase goodwill by a similar amount.

Under Canadian GAAP, step acquisitions are accounted for at original cost subject to
equity accounting adjustments. Under US GAAP, acquisitions of equity interests prior to
acquisition of control are included in the business combination accounting at fair value at
the date of acquisition with any gain or loss being included within the determination of net
income. Under US GAAP, net income and goodwill would be higher by $110,644.

Under Canadian GAAP, non-controlling interests are carried at the pro-rata value of the
underlying assets and liabilities based on carrying values. Under US GAAP, non-controlling
interests at the date of the business combination are recorded at fair value.

Under Canadian GAAP, transaction costs are included as a cost of an acquisition. Under
US GAAP, transaction costs, including restructuring costs, are expensed in the Statement
of Earnings. Under US GAAP, expenses would increase and goodwill arising on the
business combination would be $23,602 lower.

iii.

Goodwill

The $856,108 of goodwill resulting from the acquisition is currently assigned to the China
operating segment. The assignment is subject to change when this business combination
accounting is finalized. The goodwill recognized is attributable primarily to the exposure
to sustained increases in gold prices, over the long term price expectations used in the
Company’s fair value estimates and other factors. None of the goodwill is expected to be
deductible for income tax purposes.

ELDORADO GOLD 2009 Annual Report 103

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

iv.

Deferred tax liabilities

The deferred tax liabilities of $381,523 recognized upon acquisition under US GAAP are
related primarily to the difference between the book basis and fair value of identifiable
tangible assets. To the extent of any change to the provisional fair values of tangible
assets or other items, we would also expect to change the related deferred tax liabilities
that have been recorded at the date of acquisition.

Pro forma information

The following supplemental pro forma information presents the financial results as
if the acquisition of Sino Gold had occurred on January 1, 2009 for the year ended
December 31, 2009 and on January 1, 2008 for the year ended December 31, 2008. This
supplemental pro forma information has been prepared for comparative purposes and
does not purport to be indicative of what would have occurred had the acquisition of Sino
Gold been completed on January 1, 2008 or January 1, 2009, nor are they indicative of
any future results.

Pro forma consolidated results, in thousands except per share date:

Year ended

2009
$

Revenue – gold sales
Net income
Basic net (loss) income per share
Diluted net (loss) income per share

529,387
(63,327)
(0.12)
(0.12)

2008
$

446,600
38,362
0.07
0.07

These amounts have been calculated after applying the Company’s accounting policies
and adjusting the results of Sino Gold to reflect the additional depreciation and
amortization that would have been charged assuming the fair value adjustments to
property, plant and equipment and mineral interests, had been applied on January 1,
2009 and 2008, as applicable, together with the consequential tax effects.

Deferred financing costs
Deferred financing costs represent legal, other professional and bank underwriting fees
incurred in connection with the issuance of debt. Under Canadian GAAP, unamortized deferred
financing costs are included as an offset to debt in liabilities. Under US GAAP such costs are
included in assets as a deferred asset. Such fees are amortized over the life of the related
debt using the interest method. Amortization of deferred financing costs is included in interest
expense, net.

Presentation of statement of cash flows
Under Canadian GAAP, the presentation of the statement of cash flows includes a subtotal in
the operating activities section that is not allowed under US GAAP.

104

ELDORADO GOLD 2009 Annual Report

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

Adoption of new other United States accounting pronouncements
i.

FASB Accounting Standards Codification

In July 2009, the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) became the single source of authoritative U.S. GAAP for non-
governmental entities. The ASC hierarchy consists of two levels, authoritative literature,
and non-authoritative literature. The ASC does not change GAAP, rather, it is designed
to simplify access to and research on authoritative GAAP. The authority of the rules and
interpretive releases of the Securities Exchange Commission have not changed as a result
of the implementation of the ASC. The ASC is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The Company adopted the
FASB ASC in the preparation of this US GAAP reconciliation note.

ii.

Business combinations

In December 2007, the FASB amended the Consolidation Topic of the ASC. The
amendments establish how an entity accounts for identifiable assets acquired, liabilities
assumed, and any non-controlling interests acquired, how to account for goodwill acquired
and determines what disclosures are required as part of a business combination. The
amendments apply prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Company adopted the amendments in the preparation of this
US GAAP reconciliation note (note 24(i)).

iii.

Non-controlling interests

In December 2007, the FASB amended the Consolidation Topic of the ASC as it relates
to the presentation and disclosure for entities that have equity investments that are not
attributable directly to the parent, called non-controlling interests or minority interests.

The amendments establish where and how to report non-controlling interests in the
consolidated balance sheet and statement of earnings (loss), how to account for changes
in non-controlling interests and provides disclosure requirements. The amendments are
effective for fiscal years beginning on or after December 15, 2008. The Company adopted
the amendments in the preparation of this US GAAP reconciliation note (note 24(i)(ii)).

iv.

Post-retirement benefit plan

In December 2008, the FASB amended the Compensation-Retirement Benefits Topic of
the ASC. The amendments provide guidance on an employer’s disclosures about plan
assets of a defined benefit pension or other post-retirement plan and require disclosures
surrounding how investment allocation decisions are made, including the factors that are
pertinent to an understanding of investment policies and strategies.

Additional disclosures include (a) the major categories of plan assets, (b) the inputs and
valuation techniques used to measure the fair value of plan assets, and (c) the effect of
fair value measurements using significant unobservable inputs on changes in plan assets
for the period and the significant concentrations of risk within plan assets. The disclosures
are effective for fiscal years ending after December 15, 2009. Upon initial application,

ELDORADO GOLD 2009 Annual Report 105

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008 (expressed in thousands of U.S. dollars, unless otherwise stated)

NOTE

24continued

the amendments to this Topic are not required for earlier periods that are presented for
comparative purposes. The Company adopted the disclosure requirements of this Topic in
the preparation of this US GAAP reconciliation note (note 24(g)).

Subsequent events

In May 2009, the FASB issued a new Subsequent Events Topic in the ASC, which
establishes general standards of accounting for and disclosure of subsequent events.
The Topic is based on the same principles as those that currently exist in the auditing
standards and requires disclosure of the date through which an entity has evaluated
subsequent events and is effective for interim or annual financial periods ending
after June 15, 2009. The adoption of this new pronouncement had no impact on the
preparation of this US GAAP reconciliation note.

25 Subsequent events

White Mountain mine
On January 12, 2010 the Company announced that the mine has received all of the necessary
approvals and production has re-commenced. During the approximately five-month shutdown
period, the mine continued to work on underground access and development and as a result
it is expected that the mine will ramp up to full production quickly. The mine is now able to
discharge treated water under an approved change to the Environmental Impact Assessment.

Acquisition of Xunke project
In January 2010, the Company acquired an additional 40% interest in the Xunke project for
$11,000. The Company now holds a 65% interest in the property. The exploration license
of Xunke is currently in the process of being transferred into the Company’s joint venture
company in Heilongjiang.

Sale of Beyinhar joint venture
On February 6, 2010, the Company entered into a Share Purchase Agreement for the sale of
its interest in its Beyinhar joint venture in the Inner Mongolian Autonomous Region, China,
through the sale of its wholly owned subsidiary Golden China Nei Men Gold Exploration
Corporation. The consideration of $20,000 was to be paid by the buyer in two instalments. The
first instalment of $2,000 was received on February 26, 2010 and the second instalment of
$18,000 is due on or before April 30, 2010. Beyinhar was included in the acquisition of Sino
Gold but is considered to be a non-core asset by Eldorado.

106

ELDORADO GOLD 2009 Annual Report

Consolidated Financial Information

Five-Year Summary
(Expressed in thousands of U.S. dollars, except per share and per ounce amounts)

Balance Sheet

Net working capital
Mining interests
Other non-current assets and restricted cash
Goodwill
Non-current liabilities

Non-controlling interest
Net assets

2009

2008

2007

2006

2005

272,545
2,580,816
39,799
324,935
(551,341)

(26,144)
2,640,610

184,816
668,309
6,111
2,238
(64,855)

(4,799)
791,820

97,625
377,705
8,300
2,238
(36,689)

-
449,179

102,164
311,080
58,300
2,238
(77,877)

-
395,905

30,456
209,936
56,850
2,238
(74,553)

-
224,927

Share capital
Contributed surplus
Accumulated other comprehensive income (loss)
Deficit
Net equity

2,671,634
17,865
2,227
(51,116)
2,640,610

931,933
19,378
(5,971)
(153,520)
791,820

753,058
13,083
214
(317,176)
449,179

740,061
9,314
-
(353,470)
395,905

573,721
7,976
-
(356,770)
224,927

Operations
Revenues

Revenues
Gold revenues
Interest and other

Operating
Depreciation, depletion and amortization
General and administrative
Exploration
Mine standby costs

Net operating income (loss) before the undernoted

(Gain) loss on disposal of assets
(Gain) loss on marketable securities held for
trading
Interest and financing expense
Foreign exchange (gains) losses
Unrealized (gain) on derivative contracts
Non-controlling interest
Writedown of assets
Income tax (expense) recovery
Net income (loss)

358,467
2,262
360,729
132,464
38,658
32,530
11,970
2,580
142,236
(854)
(1,689)

824
(2,966)
-
2,627
-
41,890
102,404

277,723
10,508
288,231
92,004
25,995
38,299
12,316
2,432
114,077
(70,774)
(2,475)

2,940
176
2,956
5,099
-
12,499
163,656

179,302
9,397
188,699
72,691
20,041
26,798
11,634
6,575
50,356
(3,602)
(221)

3,415
(4,658)
(2,083)
-
-
22,084
35,421

77,641
7,048
84,689
45,850
1,763
19,030
12,719
-
4,666
(41)
(904)

1,586
(2,050)
-
-
2,186
589
3,300

29,680
4,117
33,797
35,378
9,798
14,937
7,386
-
(34,186)
(227)
662

88
547
-
-
13,375
495
(49,126)

ELDORADO GOLD 2009 Annual Report 107

Consolidated Financial Information

Five-Year Summary
(Expressed in thousands of U.S. dollars, except per share and per ounce amounts)

Cash flows generated from (used in)

Operating activities

Operations before stock-based compensation
Stock-based compensation

Non-cash working capital changes

Investing activities

Net mining interest investment
Acquisition of subisidiary net of cash received
Restricted cash
Other

Financing activities
Debt proceeds, net of repayments
Common shares, net of issuance costs

Net cash generated (used)
Cash ― beginning of year
Cash ― end of year

2009

2008

2007

2006

2005

137,892
9,091
146,983
45,059
192,042

111,865
11,866
123,731
(18,187)
105,544

61,051
7,267
68,318
1,487
69,805

5,618
3,542
9,160
(31,668)
(22,508)

(17,390)
2,426
(14,964)
4,478
(10,486)

(106,614)
54,179
1,877
36,982
(13,576)

(123,950)
7,479
71,515
6,698
(38,258)

(97,297)
-
5,540
-
(91,757)

(100,904)
-
(29,550)
-
(130,454)

(97,940)
664
(50,000)
-
(147,276)

(149)
25,201
25,052
203,518
61,851
265,369

(66,179)
14,730
(51,449)
15,837
46,014
61,851

(1,501)
9,500
7,999
(13,953)
59,967
46,014

14,967
164,136
179,103
26,141
33,826
59,967

49,014
7,184
56,198
(101,564)
135,390
33,826

Mining Operations

Production:
Gold (oz.)
Ounces produced
Ounces sold

Average selling price realized
($/oz.) ― sold
Total cash cost ($/oz.)

108

ELDORADO GOLD 2009 Annual Report

363,509
360,226

308,802
316,919

281,135
266,012

135,653
127,552

64,298
66,804

995
337

876
289

674
263

609
330

444
416

Corporate Information

DIRECTORS

SENIOR MANAGEMENT

Robert R. Gilmore (1) (2)
Denver, CO, USA
Non-executive Chairman of the Board
(Independent Director)

James Askew
Denver, CO, USA
(Independent Director)

John S. Auston (2) (3)
West Vancouver, BC, Canada
(Independent Director)

Peter Cassidy
Sydney, NSW, Australia
(Independent Director)

K. Ross Cory (1) (3)
Vancouver, BC, Canada
(Independent Director)

Geoffrey Handley (2) (3)
Dover Heights, NSW, Australia
(Independent Director)

Wayne D. Lenton (2)
Tucson, AZ, USA
(Independent Director)

Hugh C. Morris (1) (3)
Delta, BC, Canada
(Independent Director)

Jonathan A. Rubenstein (1) (3)
Vancouver, BC, Canada
(Independent Director)

Donald Shumka (1) (2)
Vancouver, BC, Canada
(Independent Director)

Paul N. Wright
Vancouver, BC, Canada
President & Chief Executive Officer
Eldorado Gold Corporation

Dale L. Churcher
VP, Engineering

Peter Lewis
VP, Exploration

Eduardo E. Moura
VP, Corporate Development

Paul J. Skayman
VP, Operations

Nancy E. Woo
VP, Investor Relations

Brazil Operations

Lincoln Silva
General Manager and Director
Unamgen Mineração e Metalurgia S/A

Turkey Operations

David A. Bickford
Chairman of the Board of Directors and
General Manager
Tüprag Metal Madencilik Sanayi ve Ticaret
Anonim Şirketi

China Operations

Hanjing Xu
Managing Director, China

Greece Operations

George Markopoulos
General Manager and Director
Thracean Gold Mining SA

OFFICES

Committees of the Board of Directors
(1) Audit Committee
(2) Compensation Committee
(3) Corporate Governance and Nominating
Committee

OFFICERS

Paul N. Wright
President & Chief Executive Officer

Canada
Eldorado Gold Corporation
Head Office
1188 Bentall 5
550 Burrard Street
Vancouver, BC, Canada V6C 2B5
Tel: 604-687-4018
Fax: 604-687-4026
Toll Free: 1-888-353-8166

Earl W. Price
Chief Financial Officer

Norman S. Pitcher
Chief Operating Officer

Dawn L. Moss
VP, Administration and Corporate Secretary

Brazil
Unamgen Mineração e Metalurgia S/A
Avenida Olegário Maciel, 1846 -
Santo Agostinho
Belo Horizonte, MG, Brazil,
CEP 30180-112
Tel: 55-31-2101-3753
Fax: 55-31-3837-1670

China
Eldorado Gold Corporation
Room 1001, West Tower, LG Twin
Towers
B-12 Jianguomenwai Avenue,
Chaoyang District,
Beijing, China 100022
Tel: 86-10-5828-7966
Fax: 86-10-5828-7967

Turkey
Tüprag Metal Madencilik Sanayi ve
Ticaret A.S.
Iran Caddesi
Turan Emeksiz Sok. No. 1
06700 Gaziosmanpasa, Ankara,
Turkey
Tel: 90-312-468-4536
Fax: 90-312-468-2646

Greece
Thracean Gold Mining SA
27, Omirou Street
Athens, Greece, 10672
Tel: 30-210-3633930
Fax: 30-210-3633383

LEGAL COUNSEL

Fasken Martineau DuMoulin LLP

Vancouver, BC, Canada

Dorsey & Whitney LLP
Denver, CO, USA

AUDITORS

KPMG LLP
Chartered Accountants
Vancouver, BC, Canada

ELDORADO GOLD 2009 Annual Report 109

Shareholder Information

Transfer Agent
Valiant Trust Company
600-750 Cambie Street
Vancouver, BC, Canada V6B 0A2
Shareholder Inquiries Line (Toll Free): 1-866-313-1872

In Australia:
Link Market Services Limited
Level 12, 680 George Street, Sydney South NSW 2000

Stock Exchanges
The Toronto Stock Exchange
Stock Symbol: ELD

The New York Stock Exchange
Stock Symbol: EGO

Australian Securities Exchange
Stock Symbol: EAU

Sources of Shareholder Information
This Annual Report is one of several sources of information for shareholders of Eldorado Gold Corporation.

Other sources include:

The audited comparative financial statements published annually.

The comparative interim financial statements published quarterly.

The Management Proxy Circular describing the matters to be considered at the Annual Meeting of Shareholders.

The Annual Information Form, Form 40F and other corporate and continuous disclosure documents available on
the Company’s website, CDS SEDAR website (www.sedar.com) and the US Securities and Exchange Commission
EDGAR website (www.edgar-online.com).

Website Address:
www.eldoradogold.com

Investor Relations Email:
info@eldoradogold.com

110

ELDORADO GOLD 2009 Annual Report

Cautionary Notes

Cautionary Note about Forward-Looking Statements and Information
Certain statements and information in this Annual Report, including all statements that are not historical facts, are forward-looking statements and forward-looking
information within the meaning of applicable US and Canadian securities laws. Such forward-looking statements or information include, but are not limited to, statements
or information with respect to financial disclosure, estimates of future production, cash costs, and future growth, the future price of gold, estimation of mineral reserves
and resources and estimates of exploration and development capital expenditures, permitting and our goals and strategies. Often, these statements include words such
as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes”
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.

With respect to forward-looking statements and information included in this Annual Report, we have made numerous assumptions including among other things,
assumptions about the price of gold and other commodities; exchange rates; anticipated costs and expenditures; estimated production, mineral reserves and
metallurgical recoveries; the impact of the integration of acquired businesses on our operation, financial position, reserves and resources and gold production;
and the ability to achieve our goals. 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. By their nature, forward-
looking statements and information are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be materially different from future results, performance or achievements expressed or
implied by such forward-looking statements or information. Such risks, uncertainties and other factors include among other things the following: gold price
volatility; risks of not meeting production and cost targets; discrepancies between actual and estimated production, mineral reserves and resources and
metallurgical recoveries; mining operational and development risk; litigation risks; regulatory restrictions, including environmental regulatory restrictions and
liability; risks of sovereign investment and operating in foreign countries; currency fluctuations; speculative nature of gold exploration; global economic climate;
dilution; share price volatility; the risks that the integration of acquired businesses may take longer than expected, the anticipated benefits of the integration
may be less than estimated and the costs of acquisition may be higher than anticipated; ability to complete acquisitions; competition; the speculative nature
of gold exploration; ability to obtain financing; environmental risks; share price volatility; community and non-governmental actions and regulatory risks.

See our Annual Information Form and our quarterly and annual MD&A for additional information on risks, uncertainties and other factors relating to the forward-looking
statements and information. Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed
in the forward-looking statements or information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated,
estimated or intended. Also, many of the factors are beyond our control. Accordingly, readers should not place undue reliance on forward-looking statements or
information. We undertake no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date of this
Annual Report except as may be required by law. All forward-looking statements and information made in this document are qualified by this cautionary statement.

Cautionary Note about Production Outlook, Guidance and Estimates
Readers are cautioned that production outlook, guidance and estimates are subject to a variety of factors that are likely to cause actual results to vary from our
estimates, and such variations may be material. Forward-looking information generally involves risks and uncertainties as described above which are, in many
instances beyond our control, including: (i) global economic conditions; (ii) pricing and cost factors; (iii) unanticipated events or changes in current development
plans, execution of development plans, future operating results, financial conditions or business over time; and (iv) unfavourable regulatory developments, that
could cause actual events and results to vary significantly from those included in or contemplated by such statements. The production outlook, guidance and
estimates reflect certain assumptions by us, which assumptions may differ with respect to future events, economic, competitive and regulatory conditions, financial
market conditions and future business decisions, including, without limitation, a continuation of existing business operations on substantially the same basis as
currently exists all of which assumptions are difficult to predict and many of which are beyond our control. Accordingly, there can be no assurance that the outlook,
guidance and estimates are indicative of our future performance or that actual results would not differ materially from those in the outlook, guidance and estimates.

Cautionary Note Regarding Mineral Reserves and Mineral Resources
Eldorado’s disclosure of mineral reserve and mineral resource information is governed by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI
43-101”) under the guidelines set out in the Canadian Institute of Mining and Metallurgy and Petroleum (the “CIM”) CIM Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as may be amended from time to time. As disclosed herein, the disclosure of mineral reserve and mineral resource information for
properties recently acquired by the Company through its acquisition of Sino Gold, is based on the reporting requirements of the Australasian Code for Reporting of Mineral
Resources and Ore Reserves (“JORC Code”). CIM definitions of the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”,
“measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, are substantially similar to the JORC Code corresponding definitions of the
terms “ore reserve,” proved ore reserve”, “probable ore reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral
resource”, respectively. Estimates of mineral resources and mineral reserves prepared in accordance with the JORC Code would not be materially different if prepared
in accordance with the CIM definitions applicable under NI 43-101. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Cautionary Note to US Investors Concerning Estimates of Measured, Indicated and Inferred Resources
The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource”, “inferred mineral resource” used herein are Canadian mining terms
used in accordance with NI 43-101. These definitions differ from the definitions in the United States Securities & Exchange Commission (“SEC”) Industry Guide
7. In the United States, a mineral reserve is defined as a part of a mineral deposit which could be economically and legally extracted or produced at the time the
mineral reserve determination is made.

While the terms “mineral resource”, “measured mineral resource,” “indicated mineral resource”, and “inferred mineral resource” are recognized and
required by Canadian regulations, they are not defined terms under standards in the United States and normally are not permitted to be used in reports and
registration statements filed with the SEC. As such, information contained herein concerning descriptions of mineralization and resources under Canadian
standards may not be comparable to similar information made public by U.S. companies in SEC filings. With respect to “indicated mineral resource” and
“inferred mineral resource” there is a great amount of uncertainty as to their existence and a great uncertainty as to their economic and legal feasibility.
It can not be assumed that all or any part of an “indicated mineral resource” or “inferred mineral resource” will ever be upgraded to a higher category.

Certain mineral resource and reserve numbers pertaining to properties recently acquired by the Company through its acquisition of Sino Gold have been prepared
in accordance with the JORC Code. The terms “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” used in accordance with
the JORC Code, are not recognized by the SEC. JORC standards differ significantly from the requirements of the SEC, and mineral resource information prepared
in accordance with the JORC Code is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC.

Accordingly,
information made public by
US companies subject to the reporting and disclosure requirements under US federal securities laws and the rules and regulations thereunder.

information herein containing descriptions of our mineral deposits may not be comparable to similar

ELDORADO GOLD 2009 Annual Report

111

Corporate Office: 1188 - 550 Burrard Street, Bentall 5, Vancouver, BC, Canada V6C 2B5

Telephone: (604) 687-4018 Fax: (604) 687-4026 Email: info@eldoradogold.com

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