advancing into a new phase of
growth
> a nnual RepoRt 2012
2
2012 HigHligHts
10
a leading groWtH profile
18
sustainability report
4
letter to sHareHolders
6
WHere We operate
8
a track record of groWtH
12
identifying platforms
for groWtH
14
production HigHligHts
16
mineral reserves & resources
33
management’s discussion
& analysis
62
consolidated financial
statements & notes
Jinfeng open pit, China
eldoRado g old > 2012 annual report 1
sustainability report
management’s discussion
& analysis
18
33
62
consolidated financial
statements & notes
eldorado gold is a canadian-based gold producer
with mines, development projects and exploration
programs in china, turkey, greece, Brazil and Romania.
eldorado is on track to expand gold production by
125 percent over the next four years, making it the
world’s fastest-growing intermediate gold producer.
eldoRado g old > 2012 annual report 1
2012 Highlights
finanCial
($ millions except as noted)
Revenues (from all metals)
Gross profit from gold mining operations
Profit attributable to shareholders
of the Company
Cash flow from operations
(before changes in working capital)
Capital spending
Cash and cash equivalents
Total assets
Total long-term financial liabilities
operational
2012
2011
2010
1,147.5
595.0
305.3
1,103.7
610.8
318.7
793.7
400.7
221.0
447.7
502.1
357.9
426.2
816.8
7,928.1
662.9
272.8
393.8
3,960.4
63.2
226.3
314.3
3,685.4
113.4
2012
2011
2010
efemÇukuRu pRocessing plant, tuRkey
Gold produced (oz)*
Gold sold (oz)
Average realized gold price ($/oz)
Total cash costs ($/oz)
Cash operating costs ($/oz)
Gold reserves (Moz)
Iron ore produced (t)
Iron ore sold (t)
Average realized iron ore price ($/t)
Cash costs ($/t)
Lead/zinc concentrate produced (t)
Lead/zinc concentrate sold (t)
Average realized concentrate price ($/t)
Cash costs ($/t)
*Includes pre-commercial production
656,324
625,394
1,674
554
483
25.8
613,780
603,668
76
60
50,680
52,934
905
729
658,652
658,919
1,581
472
405
19.0
537,958
473,387
120
64
–
–
–
–
632,539
639,949
1,223
423
382
18.7
182,808
89,074
94
46
–
–
–
–
shareholders
($ except as noted)
2012
2011
2010
Earnings per share attributable
to shareholders of the Company (Basic)
Cash flow from operations per share
(before changes in working capital)
0.44
0.43
0.58
0.93
0.41
0.55
Dividends paid per share
Weighted average shares
outstanding (Basic)
0.15
689,007
0.11
549,791
0.05
542,861
2 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 3
efemÇukuRu pRocessing plant, tuRkey
>
strong earnings and Cash flow growth
> strong revenue growth
e
r
a
H
s
/
$
s
u
$ 1.00
$ 0.80
$ 0.60
$ 0.40
$ 0.20
$ 0.00
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,
1
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(
$
s
u
$ 1,400,000
$ 1,200,000
$ 1,000,000
$ 800,000
$ 600,000
$ 400,000
$ 200,000
$ 0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
eps
cfps
revenue
> strong reserve and resourCe growth
> produCtion and Cash Cost profile
s
e
r
a
H
s
0
0
0
,
1
/
z
o
60
50
40
30
20
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35,000
30,000
25,000
20,000
15,000
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)
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(
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o
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o
700,000
600,000
500,000
400,000
300,000
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$ 1,600
$ 1,400
$ 1,200
$ 1,000
$ 800
$ 600
$ 400
$ 200
$ 0
z
o
/
$
s
u
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
proven and probable
2p/1,000 sHares
measured & indicated
m&i/1,000 sHares
gold production
realized price
operating casH cost
net Cash position
>
expanding Margins per ounCe
$ 1,000,000
$ 800,000
$ 600,000
$ 400,000
$ 200,000
$ 0
-$ 200,000
-$ 400,000
-$ 600,000
-$ 800,000
z
o
/
$
s
u
$1400
$1200
$1000
$800
$600
$400
$200
$0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
casH & casH equivalents
net casH
total debt
restricted casH
margin
eldorado gold > 2012 annual report 3
>
)
0
0
0
,
1
x
(
$
s
u
letter to
sustainability
shareholders
report 2012
stackeRs at kiŞladaĞ, tuRkey
undeRgRound at efemÇukuRu, tuRkey
gold pouR at white mountain, china
4 eldorado gold > 2012 annual report
advanCing into a new phase
of growth
Looking back on our performance and
the accomplishments of 2012, it is clear
that Eldorado is well positioned for a
new phase of growth. This past year was
one of many achievements, including an
important acquisition that broadened our
portfolio, ongoing investment to develop
our assets and debt financings that
strengthened our balance sheet.
In February 2012 we completed
the acquisition of European Goldfields
(EGU), which significantly increased our
gold reserves and enhanced our project
pipeline in Greece and Romania. The
high-quality and long-life nature of the
Olympias, Skouries and Certej assets have
enhanced our portfolio. It is a testament
to the strength of our technical and
management team that we quickly and
successfully integrated these assets.
While we are developing three of the four
assets acquired from EGU, I am extremely
pleased with the significant upside we
have already realized at the Certej project
in Romania. In addition to receiving
approval of the Environmental Permit in
July, we announced a 1.57 million ounce
increase in the project’s measured and
indicated gold resources in October.
I believe Certej has the potential to be
a superior asset for Eldorado.
The EGU acquisition, combined with our
fourth expansion of Kışladağ in Turkey,
positions Eldorado as one of the fastest-
growing intermediate gold producers
globally. We are on track to grow
production 125 percent to 1.5 million
ounces over the next four years, while
decreasing our cash operating
costs by approximately 50 percent
to US$300-$350 net of by-products.
Our assets will generate significant
*Based on a $1,700 gold price assumption, cash costs
of $300 (net of by-products) and gold production of
~1.5 million ounces.
eldorado gold > 2012 annual report 5
eldorado gold > 2012 annual report 5
cash flow, with average annual earnings
before income tax, depreciation and
amortization (EBITDA) anticipated
to grow to US$1.9 billion in 2016.*
We ended the year by further
strengthening our balance sheet. In the
final months of 2012, we completed
a $600 million senior note offering
and increased our credit facility
to $375 million. The note offering
and enhanced credit facility give us
added flexibility as we develop our
assets and ramp up production.
Consistent operating
perforManCe
Record production at our flagship
Kışladağ mine in Turkey enabled us to
reach our mid-year production target, but
temporary setbacks at Efemçukuru and
Jinfeng resulted in lower than anticipated
total gold production and higher cash
costs. Driven by Kışladağ’s successful
year, total gold production for 2012 was
656,324 ounces at a cash operating cost
of US$483 per ounce . Total cash costs
were US$554 per ounce.
In Turkey, we are continuing to make
excellent progress on the fourth
expansion of Kışladağ that will double
current throughput from 12.5 million
tonnes to 25 million tonnes per year.
This expansion is expected to be
complete in late 2014.
We also had continued success in our
exploration activities in 2012. We
converted inferred resource peripheral
to the core deposit at Skouries into
measured and indicated resources
and added to the inferred resources
at Efemçukuru and Tanjianshan.
At Piavitsa, near our Skouries and
Olympias development projects,
we were pleased to announce a new
inferred resource.
solid finanCial results
Our operating performance in 2012
resulted in solid financial results, with
gold revenues increasing by 0.5 percent
to $1,047.1 million. Lower sales volumes
were offset by higher gold prices, with an
average realized gold price of $1,674 per
ounce for the year. Profit attributable to
shareholders of the Company was
$305.3 million or $0.44 per share.
I am pleased to report that we
maintained our commitment to paying a
semi-annual dividend. In 2012, we paid
dividends of $0.15/share, an increase
of 36 percent over 2011 that reflects a
stronger gold price and consistent annual
gold production.
our share priCe
perforManCe in 2012
Although we had a year of many
significant achievements, these
accomplishments were not immediately
reflected in our share performance in
2012. We did, however, outperform the
S&P/TSX Global Gold Index, in 2012
and have consistently done so for the
past five years.
Our focus remains on the longer term
and ensuring that we are making the
capital investments in our assets to
achieve long-term sustainable growth
with high margins. This will continue
to allow the company to increase free
cash flow and earnings per share.
a CoMMitMent to safety
and shared values
Wherever we operate, we work closely
with local communities to create
employment opportunities, improve
access to education and healthcare,
protect the environment and develop
infrastructure. Our goal of operating
responsibly and maximizing the potential
of our assets, balance sheet and people
enables us to create long-term growth
and deliver shared value for all of our
stakeholders – today, tomorrow and
in the future.
This is the second year we have produced
a Sustainability Report to document our
progress on environmental, safety, health
and community initiatives. Some of the
highlights of our 2012 performance in
these areas include:
• Improvements in our safety
performance, with a lost-time incident
frequency rate reduced by 17 percent
compared to 2011
• Achieving a year with no major
environmental incidents
• Becoming a signatory to the
Cyanide Code
• Spending more than US$7 million
on community development projects,
including investments in infrastructure,
education and health.
looking forward
As we move into 2013 we are in a superb
position to build on the progress we made
in 2012. We are focused on delivering on
our targets and continuing to operate
safely and responsibly.
I would like to thank our most important
asset, our people, for their continued
hard work and dedication. It is their skills,
ideas and passion that are at the heart
of Eldorado’s success. We look forward
to sharing this success with all our
stakeholders in 2013.
Sincerely,
paul n. wRight
chief executive officer
march 15, 2013
eldorado gold > 2012 annual report 5
eldorado gold > 2012 annual report 5
Where We operate
sustainability
report 2012
eldorado is focused
on building a solid and
successful gold mining
company. our vision is
to create a long-term,
profitable business with
healthy margins using
a disciplined approach
to growth. We combine
our technical expertise
with prudent financial
management to grow our
resources and reserves,
develop our assets,
increase production
levels and identify new
opportunities. through
exploration, discovery,
development and
production, we create
and deliver value for
all our stakeholders.
13
12
10
11
2
1
Brazil
6 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 7
eldorado gold > 2012 annual report 7
7
roMania
5
6
3
8
9
turkey
greeCe
4
13
12
10
China
11
Operating Mines
Development Projects
pRoduction
constRuction
development
2 vila nova iron ore, brazil
1 toCantinzinho, brazil
5 stratoni, greece
3 olyMpias, greece
8 efeMÇukuru, turkey
4 skouries, greece
9 kiŞladaĞ, turkey
6 peraMa hill, greece
10 tanJianshan, cHina
7 CerteJ, romania
11 Jinfeng, cHina
13 eastern dragon, cHina
12 white Mountain, cHina
eldorado gold > 2012 annual report 7
eldorado gold > 2012 annual report 7
2
1
a track record
of growth
>
over the past five years
we have doubled our
production, materially
increased our resources
and reserves and
maintained cash operating
costs in the lowest quartile
of the global cost curve.
The following three elements underpin
our success:
1 asset Quality
Our robust portfolio of assets consists
of high-quality, long-life mines and
development projects. These elements
are critical in maintaining low cash
operating costs while sustaining a
strong production profile. The quality
of our assets is such that they remain
profitable even at lower metal prices.
Our asset base is also well balanced
across the mining life cycle, with our
mine expansions and development
projects driving organic growth. Our
mine expansions at Kışladağ and
Olympias, and development projects
at Skouries and Perama Hill, will
account for 75 percent of production
growth by 2016. Our project pipeline
is considered one of the best in the
industry, with five of our development
projects ranking in the top half of gold
projects scheduled to begin production
between 2012 and 2020.*
With the addition of the assets
we acquired in February 2012,
we have expanded the geographic
diversification of our portfolio.
We now have seven operating
mines and six development projects
across five countries on three
continents, reducing concentration
risk to any one region.
> gold produCtion
> gold produCtion By Country
(2012)
)
0
0
0
,
1
x
(
z
o
800
700
600
500
400
300
200
100
0
2008 2009
2010
2011
2012
guidance vs
actual
turkey
cHina
> Cash Costs
> gold produCtion By Country
(2016e)
z
o
/
$
600
500
400
300
200
100
0
2008
2009
2010
2011
2012
guidance vs
actual
turkey
romania
cHina
greece
8 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 9
eldorado gold > 2012 annual report 9
2 teChniCal expertise
Discovering, developing and
operating mines is what we do.
Eldorado discovered, built, expanded
and operates the largest gold mine
in Turkey, Kışladağ, and is the largest
foreign gold producer in China. Since
2005, we have built four mines in
three countries. With skilled in-
country teams and close partnerships
with local contractors, we have
up-to-date knowledge of costs and
build times.
Our technical expertise also allows
us to maximize the value of our
current assets and identify new
opportunities where our skills and
experience can add value.
8 km tunnel access at stRatoni, gReece
We have consistently realized
value from Kışladağ through three
expansions that have increased
throughput from 5 million tonnes per
year to 12.5 million tonnes per year.
Now in its fourth phase of expansion,
with completion scheduled for
late 2014, Kışladağ is set to double
throughput again to 25 million
tonnes per year.
Our technical expertise has
also uncovered significant value
from the Certej asset in Romania
acquired through the EGU
transaction. In October 2012, we
announced an increase of 1.57
million ounces of gold in measured
and indicated resources at the
Certej project. Year-on-year, we
have increased our resources at
a compound average growth rate
of approximately 28 percent.**
3 Capital disCipline
Our prudent financial management
continues to result in a strong
balance sheet. We use a rigorous
planning, budgeting and forecasting
process to determine the funds we
will need to support our ongoing
operations and future development
plans. The successful completion of
a $600 million senior note offering
in December 2012 and an increased
revolving credit facility of $375
million provide us with additional
flexibility as we continue to develop
our mines, projects and exploration
programs. Our focus on being a low
cost operator of high-quality assets
continues to return healthy margins
that further strengthen our balance
sheet and enable us to maintain
a semi-annual dividend.
*Source BMO Capital Research, May 7, 2012
** Over a five year period.
eldorado gold > 2012 annual report 9
eldorado gold > 2012 annual report 9
a leading
growth profile
>
by 2016 we aim to:
• produce over 1.5 million
ounces of gold
• Have cash operating
costs of $300-$350/oz,
net of by-products
• maintain the strength
of our balance sheet
• continue to distribute
an attractive dividend
to shareholders
Over the next four years, we’re forecasting significant production growth and
decreasing cash operating costs. Currently, we operate in the lowest quartile of the
industry cash operating cost curve (2012: $483/ounce), and by 2016, we estimate
our cash operating costs (net of by-products) will decline to $300-$350/ounce.
estiMated gold produCtion 2012 – 2016
1,650,000
1,500,000
1,350,000
1,200,000
1,050,000
900,000
750,000
600,000
450,000
300,000
150,000
0
)
z
o
(
i
n
o
t
c
u
d
o
R
p
d
l
o
g
$ 1,800
$ 1,600
$ 1,400
$ 1,200
$ 1,000
$ 800
$ 600
$ 400
$ 200
$ 0
z
o
/
$
s
u
2012
2013
2014
2015
2016
perama Hill
certej
olympias
skouries
efemÇukuru
kiŞladaĞ
WHite mountain
casH operating cost (by-product)
eastern dragon
tanjiansHan
jinfeng
10 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 11
10 eldorado gold > 2012 annual report
efemçukuRu pRocessing plant, tuRkey
eldorado gold > 2012 annual report 11
identifying platforms
for growth
Eldorado has always taken a targeted
and disciplined approach to new
opportunities. We have never completed
acquisitions for the sake of growth alone.
Instead, we have sought out specific
opportunities that enhance our project
pipeline and help us achieve our goal of
becoming a 1.5 million to 2 million ounce
gold producer while retaining a cost
structure in the lowest quartile in our
industry. We look for prospects that add
value to our portfolio over both the short
and long term, and we seek out high-
quality assets in areas where we have
prior operating experience.
>
the european goldfields
assets were an excellent
strategic fit for eldorado.
the transaction provides
shareholders with
unparalleled value and
gives them exposure to:
• underexplored, highly prospective
areas with transformational organic
growth potential
• exceptional quality, long-life assets
in jurisdictions with excellent
infrastructure as well as experienced
and growing local teams
• increased gold reserves of 10 million
ounces
• a leading growth profile with
production reaching 1.5 million ounces
in 2016
Key Value Drivers in
Eldorado's Portfolio
olyMpias and skouries
The Olympias polymetallic gold, silver,
lead and zinc mine and the Skouries
gold-copper porphyry deposit together
account for approximately 30 percent of
Eldorado’s total proven and probable gold
reserves. They rank second (Olympias)
and third (Skouries), behind Kışladağ in
terms of the size of the gold reserves
they bring to Eldorado’s portfolio. They
also account for 30 percent of Eldorado’s
production growth by 2016. Both are
long-life assets with current mine lives
of 21 and 27 years, respectively.
The exploration and development
potential of the Chalkidiki district, in which
the Olympias, Skouries and Stratoni assets
are located, is significant. Geologically, the
area is a metallogenic belt with multiple
deposit styles within a 10 kilometre radius.
Eldorado has a strategic land position
in Chalkidiki, with untested targets that
provide excellent upside potential.
From a development perspective,
the Olympias, Skouries and Stratoni
projects are also located within a 10
kilometre radius of each other in an
area with excellent infrastructure that
includes roads, power and port access.
We have strong government support,
environmental permits for both Olympias
and Skouries, and experienced and
growing teams on the ground.
olyMpias, greeCe
Overview
Location
Deposit
Ownership
Type
Expected Life of Mine
Estimated Development Capital
Production (from tailings)
Chalkidiki Peninsula, Northern Greece
Replacement mixed sulfide
95% Eldorado/5% Aktor Investment Holdings Limited
Underground (UG) mine (previously mined
using UG drift and fill)
21 years
US$165 million (to Phase II UG production)
Q4 2012
Production and Cash Costs
Gold Production (from tailings)
Cash Operating Cost
2013E
35,000–40,000 oz
US$780–$800/oz
skouries, greeCe
Overview
Location
Deposit
Ownership
Type
Expected Life of Mine
Strip Ratio (open pit)
Estimated Development Capital
Production Expected
Chalkidiki Peninsula, Northern Greece
Gold-copper porphyry
95% Eldorado/5% Aktor Investment Holdings Limited
Open pit and underground
27 years
0.7:1
US$340 million (to plant production from open pit)
2015
12 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 13
Chalkidiki Mining distriCt
AEGEAN SEA
OLYMPIAS
8 KM
UNDERGROUND
TUNNEL
PIAVITSA
STRATONI
MINE
GREECE
SKOURIES
FISOCA
TSIKARA
STRATONI
PORT FACILITY
GREECE
ATHENS
OPERATING
MINE
CONSTRUCTION
PROJECT
EXPLORATION
TARGET
PERMIT
BOUNDARY
0
5
10
KILOMETERS
CerteJ, roMania
Overview
Location
GREECE
ATHENS
Deposit
Ownership
Type
Production Expected
CerteJ proJeCt
Golden Quadrilateral area of the Apuseni
Mountains, Western Romania
Epithermal gold-silver deposit
80% Eldorado/19.25% Minvest SA/
0.75% Three minority shareholders
Open pit (previously mined via shallow open pit)
2015
MOLDOVA
UKRAINE
olympias pRocessing plant, gReece
CerteJ
We have already realized increased
value from the Certej project in
Western Romania since acquiring it
in February 2012. Exploration drilling
results targeting the western margin
of the deposit and the deeper levels of
the central deposit between the west
and main pit areas increased measured
and indicated gold resources by 1.5
million ounces. With these promising
initial results, we believe the Certej
project may have the potential to become
a 4.5 million to 5 million ounce deposit.
The epithermal systems around Certej
also provide the possibility of additional
upside in this prospective region.
HUNGARY
CLUJ-NAPOCA
TIMISOARA
ROMANIA
DEVA
CERTEJ
SERBIA
BUCHAREST
BULGARIA
GOLDEN
QUADRILATERAL
FERTILE BELTS
Au by ENDOWMENT
> 10 Moz
5-10 Moz
1-5 Moz
< 1 Moz
12 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 13
production
Highlights
Q4 and Full YE ar 2012 GOld PrOduC tiOn HiGHliGHts (IN US$)
Gold Production
Ounces Sold
Ounces Produced1
Realized Price ($/oz - sold)
Cash Operating Cost ($/oz)2,4,5
Total Cash Cost ($/oz)3,4,5
Kışladağ Mine, Turkey
Ounces Sold
Ounces Produced
Tonnes to Pad
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
Efemçukuru Mine, Turkey
Ounces Sold
Ounces Produced1
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
Tanjianshan Mine, China
Ounces Sold
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
Jinfeng Mine, China
Ounces Sold
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
White Mountain Mine, China
Ounces Sold
Ounces Produced
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
Olympias, Greece
Ounces Sold
Ounces Produced1
Tonnes Milled
Grade (grams/tonne)
Cash Operating Cost ($/oz)4,5
Total Cash Cost ($/oz)3,4,5
First
Quarter
2012
150,661
155,535
1,707
452
529
65,164
65,707
3,140,492
1.13
339
374
-
4,293
70,646
8.74
-
-
28,816
28,816
262,793
4.00
408
605
35,197
35,235
368,756
3.17
643
715
21,484
21,484
158,114
4.46
543
588
-
-
-
-
-
-
second
Quarter
2012
132,919
140,694
1,612
480
550
61,991
61,575
3,259,574
1.30
333
357
-
8,222
95,131
9.60
-
-
27,172
27,172
245,457
3.73
432
621
25,661
25,630
337,560
2.68
786
858
18,095
18,095
188,038
3.60
622
666
-
-
-
-
-
-
third
Quarter
2012
154,841
169,565
1,670
493
567
Fourth
Quarter
2012
186,973
190,530
1,696
502
566
Fourth
Quarter
2011
168,712
168,451
1,686
418
486
Full
Year
2012
625,394
656,324
1,674
483
554
Full
Year
2011
658,919
658,652
1,581
405
472
83,750
84,016
3,245,700
1.05
334
363
78,151
77,996
2,960,809
1.32
324
353
80,572
80,339
3,374,541
0.97
353
379
289,056
289,294
12,606,575
1.20
332
361
284,917
284,648
12,430,447
0.95
374
398
-
14,442
93,779
9.28
-
-
28,944
28,944
283,654
3.55
396
593
25,805
25,821
356,575
2.43
946
1,044
16,342
16,342
210,114
3.14
766
813
-
-
-
-
-
-
37,046
39,913
92,600
9.27
583
613
25,679
25,679
264,943
3.42
427
632
21,149
21,168
359,903
2.30
986
1,088
24,948
24,948
198,407
4.34
607
652
-
826
28,331
5.07
-
-
-
-
-
-
-
-
27,564
27,567
284,138
3.56
415
616
38,672
38,641
383,226
3.63
525
596
21,904
21,904
184,956
4.29
472
519
-
-
-
-
-
-
37,046
66,870
352,156
9.26
583
613
110,611
110,611
1,056,847
3.67
415
612
107,812
107,854
1,422,794
2.65
817
901
80,869
80,869
754,673
3.85
625
671
-
826
28,331
5.07
-
-
-
-
-
-
-
-
114,969
114,972
1,005,236
3.96
377
567
177,758
177,757
1,544,965
4.06
442
507
81,275
81,275
708,882
4.37
474
517
-
-
-
-
-
-
1 Ounces produced include pre-commercial production in Efemçukuru and Olympias.
2 Cost figures calculated in accordance with the Gold Institute Standard.
3 Cash Operating Costs, plus royalties and the cost of off-site administration.
4 Cash operating costs and total cash costs are non-GAAP measures. See the section
“Non-GAAP Measures” of the MD&A.
5 Cash operating costs and total cash costs have been recalculated for prior quarters based
on ounces sold.
14 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 15
eldorado gold > 2012 annual report 15
kiŞladaĞ open pit, tuRkey
eldorado gold > 2012 annual report 15
eldorado gold > 2012 annual report 15
mineral reserves
(as at December 31, 2012)
pRoven
pRoBaBle
total pRoven and pRoBaBle
gold
tonnes
(x1,000)
g/t
in-situ oz
(x1,000)
tonnes
(x1,000)
in-situ oz
(x1,000)
tonnes
(x1,000)
in-situ oz
(x1,000)
g/t
Certej (Mineral Reserve Note 3)
Eastern Dragon
Efemҫukuru
Jinfeng
Kışladağ
Olympias
Perama
Skouries
Tanjianshan
Tocantinzinho
White Mountain
837
1,182
7,775
102,695
11,294
2,477
65,536
3,505
17,735
3,270
Total
silver
216,306
Certej (Mineral Reserve Note 3)
Eastern Dragon
Olympias
Perama
Stratoni
297
411
993
2,913
2,749
354
1,850
331
792
326
2,253
4,019
8,859
344,915
4,686
7,220
82,386
1,156
31,315
2,140
g/t
6.46
6.87
3.62
0.64
8.70
2.68
0.66
2.96
1.17
3.37
467
886
1,032
7,148
1,311
621
1,751
109
1,183
232
3,090
5,201
16,634
447,610
15,980
9,697
147,922
4,661
49,050
5,410
11,016
488,949
0.94
14,740
705,255
2,178
37,763
254
4915
2,253
4,686
7,220
112
67
140
4
107
4,848
21,092
897
385
3,090
15,980
9,697
896
45,110
14,271
59
27,222
29,663
in-situ t
(x1,000)
tonnes
(x1,000)
343
343
82,386
82,386
382
58
440
507
89
596
4,686
112
4,798
4,686
112
4,798
6,940
6,940
%
0.51
0.51
4.7
3.9
4.7
6.2
12.9
6.4
58.5
58.5
in-situ t
(x1,000)
tonnes
(x1,000)
406
406
147,922
147,922
220
4
224
291
14
305
13,572
896
14,468
13,572
896
14,468
9,750
9,750
11.07
10.81
3.97
0.88
7.57
4.44
0.88
2.94
1.39
3.10
1.58
81
104
3
195
91
%
0.64
0.64
4.3
7.4
4.6
5.7
11.3
6.2
59.4
59.4
764
1,297
2,025
10,061
4,060
975
3,601
440
1,975
558
25,756
7,026
58,855
1,151
5,300
72,332
in-situ t
(x1,000)
749
749
602
62
664
798
103
901
7.71
7.77
3.79
0.70
7.90
3.13
0.76
2.95
1.25
3.21
1.14
71
115
4
184
76
%
0.57
0.57
4.4
6.9
4.6
5.9
11.5
6.2
58.8
58.8
837
11,294
2,477
784
15,392
tonnes
(x1,000)
65,536
65,536
8,886
784
9,670
8,886
784
9,670
2,810
2,810
Total
Copper
Skouries
Total
lead
Olympias
Stratoni
Total
zinC
Olympias
Stratoni
Total
iron
Vila Nova
Total
Notes on Mineral Resources and Reserves:
1. Mineral reserves and mineral resources are as of
December 31, 2012.
2. Mineral reserves are included in the mineral resources.
3. The mineral reserves and mineral resources are disclosed
on a total project basis (at 100%).
4. The Olympias mineral reserves and mineral resources
include 2.408 million tonnes of economically recoverable
old tailings that grade 3.4 g/t Au and 14 g/t Ag. These are
added into the gold and silver Proven reserve and Measured
resource categories, respectively.
Mineral Reserve Notes:
1. Gold price used was $1250/oz except for Eastern Dragon,
Tocantinzinho, Skouries underground, and Olympias projects
which used $1000. Silver price was $16.50/oz; Copper price
was $3.00/lb; Pb and Zn prices were $1,500/t for Olympias,
$1,700/t for Stratoni.
2. Cut-off grades (gold g/t): Kışladağ: 0.20 g/t oxide, 0.31 g/t
sulphide; Efemçukuru: 3.5 g/t; Perama: 0.8 g/t; Tanjianshan:
1.6 g/t JLG sulphide, 1.3 g/t JLG oxide/transition, 1.5 g/t
323 Pit; Jinfeng: 0.7 g/t open pit, 2.3g/t underground;
White Mountain: 1.5 g/t; Eastern Dragon: 1.0 g/t open
pit, 1.7g/t underground; Tocantinzinho: 0.49 g/t sulphide,
0.43 g/t oxide; Skouries: $7.00 NSR open pit, $25.26 NSR
underground. Cut-off grade for Stratoni is based on a 16.5%
Zn Equivalent grade (=Zn%+Pb%*1.08+Ag%*167). Cut-off
for Olympias is geology based due to the sharpness of the
mineralized contacts and the high grade nature
of the mineralization.
16 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 17
mineral resources
(as at December 31, 2012)
measuRed
indicated
total measuRed & indicated
infeRRed
gold
Certej
Eastern Dragon
Efemҫukuru
Jinfeng
Kışladağ
Olympias
Perama
Piavitsa
Skouries
Tanjianshan
Tocantinzinho
White Mountain
tonnes
(x1,000)
in-situ oz
(x1,000)
tonnes
(x1,000)
g/t
14,500
800
1,271
11,353
105,533
10,545
3,064
0
99,135
4,383
19,777
4,029
1.84
12.48
11.85
3.94
0.87
8.49
4.30
0.00
0.80
2.77
1.29
3.47
860
322
485
1,437
2,938
2,878
424
0
2,552
389
820
450
92,200
2,700
4,614
13,704
458,222
4,298
9,375
0
184,493
3,694
50,457
3,337
g/t
1.19
6.04
7.85
3.40
0.59
10.00
3.18
0.00
0.49
2.49
0.97
3.23
in-situ oz
(x1,000)
tonnes
(x1,000)
3,520
530
1,165
1,499
8,618
1,382
958
0
2,853
295
1,574
346
106,700
3,500
5,885
25,057
563,755
14,843
12,439
0
283,628
8,077
70,234
7,366
in-situ oz
(x1,000)
tonnes
(x1,000)
4,380
852
1,650
2,936
11,556
4,260
1,382
0
5,405
684
2,394
796
24,400
2,200
5,242
10,422
379,725
1,666
8,766
10,854
168,063
3,541
6,950
4,193
g/t
1.27
7.50
8.71
3.64
0.64
8.93
3.46
0.00
0.60
2.64
1.06
3.36
Total
274,390
1.54
13,555 827,094
0.86
22,740
1,101,484
1.02
36,295
626,022
silver
Certej
Eastern Dragon
Olympias
Perama
Piavitsa
Stratoni
14,500
800
10,545
3,064
0
1,141
7
91
117
3
0
181
3,170
2,400
39,666
335
0
6,640
92,200
2,700
4,298
9,375
0
0
9
67
161
9
0
0
27,500
5,900
22,248
2,833
0
0
106,700
3,500
14,843
12,439
0
1,141
9
73
130
8
0
181
30,670
8,300
61,914
3,168
0
6,640
24,400
2,200
1,666
8,766
10,854
705
Total
30,050
54
52,211 108,573
17
58,481
138,623
25
110,692
48,591
tonnes
(x1,000)
in-situ t
(x1,000)
tonnes
(x1,000)
%
99,135
0.49
484
184,493
99,135
0.49
484 184,493
8,137
1,141
9,278
4.9
6.8
5.1
399
78
4,298
0
477
4,298
8,137
1,141
9,278
6.6
11.3
7.2
537
129
4,298
0
666
4,298
%
0.41
0.41
5.4
0.0
5.4
7.1
0.0
7.1
in-situ t
(x1,000)
tonnes
(x1,000)
in-situ t
(x1,000)
tonnes
(x1,000)
%
750
750
232
0
232
305
0
305
283,628
0.43
1,234
168,063
283,628
0.43
1,234
168,063
12,435
1,141
13,576
5.1
6.8
5.2
12,435
1,141
6.8
11.3
13,576
7.2
631
78
709
842
129
971
1,666
705
2,371
1,666
705
2,371
Copper
Skouries
Total
lead
Olympias
Stratoni
Total
zinC
Olympias
Stratoni
Total
iron
in-situ oz
(x1,000)
800
190
835
1,029
4,908
477
554
1,727
1,673
439
147
704
13,483
4,870
1,500
8,302
1,860
13,610
2,017
32,159
in-situ t
(x1,000)
575
575
85
30
115
120
88
208
g/t
1.01
2.67
4.96
3.07
0.40
8.90
1.96
4.95
0.31
3.85
0.66
5.22
0.67
6
20
155
7
39
89
21
%
0.34
0.34
5.1
4.3
4.9
7.2
12.5
8.8
Vila Nova
3,095
59.4
Total
3,095
59.4
11,480
58.5
11,480
58.5
14,575
58.7
14,575
58.7
10,323
10,323
59.8
59.8
3. Due to a significantly changed resource model the pre-
existing reserves for Certej project (46,960,000 tonnes at
1.60 g/t Au and 11.5 g/t Ag) are now deemed as historical.
New reserves for Certej will be estimated later in 2013.
4. Qualified Persons: Richard Miller, P.Eng., Manager, Mining
for the Company is responsible for the Kışladağ, Tanjianshan,
Tocantinzinho, Vila Nova Iron, Jinfeng open pit, Perama and
Skouries open pit reserves; Norm Pitcher, P.Geo., President
for the Company, is responsible for the Jinfeng underground,
White Mountain, Eastern Dragon, Efemçukuru, Olympias,
Skouries underground and Stratoni reserves.
Mineral Resource Notes:
1. Cut-off grades (gold g/t): Kışladağ: 0.25 g/t; Efemçukuru:
2.5 g/t; Perama: 0.5 g/t; Jinfeng: 0.7 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; Tocantinzinho: 0.3 g/t ; Certej: 0.7
g/t; Skouries: 0.20 g/t Au Equivalent grade open pit, 0.60
Au Equivalent grade underground (=Au g/t + 1.6*Cu %).
Resource cut-offs for Olympias and Stratoni are geology
based due to the sharpness of the mineralized contacts and
the high grade nature of the mineralization.
2. Qualified Persons: Stephen Juras, Ph.D., P.Geo. and
Director, Technical Services for the Company is responsible
for all of the Company’s mineral resources.
eldorado gold > 2012 annual report 17
sustainability
report 2012
sustainaBility
RepoRt 2012
efemçukuRu vineyaRd pRoject, tuRkey
taBle of Contents
goals for 2013
2012 performance
employees
Health & safety
environment
community
glossary
1 9
20
2 1
22
24
28
30
>
Welcome to eldorado’s
second annual
sustainability report.
We are pleased to
present our health,
safety, environmental
and community
performance for 2012.
reporting guidelines
This report includes data on the
economic, environmental and social
performance (known as performance
indicators) of our five wholly or majority-
owned gold mines and our one wholly
owned iron ore mine. We discuss the
Greek assets we acquired in 2012 from
European Goldfields (EGU), and that are
operated by our subsidiary Hellas Gold,
as a single group unless noted otherwise.
Data for all the assets acquired from EGU
are from the acquisition date, February
24, 2012, through year-end 2012. All other
data is for the full 2012 calendar year.
This report complies with the requirements
of the Global Reporting Initiative (GRI)
G3.1 Guidelines (www.globalreporting.
org/resourcelibrary/G3.1-Sustainability-
Reporting-Guidelines.pdf ). We have
assessed this report internally and are
confident that it meets the requirements
for the GRI Application Level C.
Many of the GRI performance indicators
do not yet apply to our exploration,
development and construction projects.
However, they are incorporated in the
discussion and statistics when appropriate.
Performance data from our Vancouver
head office or other regional offices is not
included unless indicated otherwise.
Materiality
The performance indicators included
in this report pertain to issues that we
believe are material to our stakeholders
and operations. We identify material
issues based on their relevance to our
Corporate Responsibility values and
their potential effects on employees,
surrounding communities, investors and
other interested parties.
18 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 19
eldorado gold > 2012 annual report 19
Our Stakeholders
Eldorado has an inclusive definition
of stakeholders that encompasses
employees, contractors, suppliers,
investors, local community members near
our operations, all levels of government
in the countries in which we operate
and non-governmental organizations
(NGOs). We aim to openly and regularly
communicate with all of these groups.
Company employees, contractors and
investors also have multiple modes of
communication available to them to
voice concerns relating to corruption,
environmental impacts and safety.
In 2012, Eldorado’s sites held hundreds
of formal and informal meetings
with local community members
and government officials. The most
commonly raised topics by local
community members were questions
about employment opportunities and
suggestions for community development
projects. Other topics included
environmental and tourism concerns.
stRatoni poRt facilities, gReece
kiŞladaĞ plant nuRseRy, tuRkey
>
goals foR 2013
• Zero fatalities
• To reduce our lost-time incident frequency
rate by at least 10 percent over the next year
• To improve health, safety and environmental
incident prevention through increased
communication between all sites by
standardizing the software used to
collect data
• To improve and standardize tracking
for non-lost-time incidents (medical aid,
first aid and near misses)
• No significant environmental incidents
• To become certified compliant in the
International Cyanide Management
Code at our Kışladağ operation, and prepare
for pre-audits for certification at Jinfeng,
Tanjianshan and White Mountain
• To become ISO 14001 certified for
environmental management at Efemçukuru
and all of our Hellas Gold sites
• To become OHSAS 18001 certified
for safety management at Efemçukuru
and Kışladağ
• To improve transparency by continuing
to publish annual sustainability reports
eldorado gold > 2012 annual report 19
eldorado gold > 2012 annual report 19
sustainability
sustainability
report 2012
report 2012
childRen at gold mountain elementaRy school
neaR jinfeng, china
childRen at gold mountain elementaRy school neaR jinfeng, china
2012 Performance
2012 Goals
Zero fatalities
Zero LTIs
To continue to improve the safety culture in
all countries where we have operations
To improve health, safety and environmental
incident prevention through increased communication
between all sites by standardizing the software
used to collect data
To improve and standardize tracking for
non-lost-time incidents (medical aid, first aid
and near misses)
status
Achieved
Not achieved
In progress
Comment
We had no work-related fatalities at any of our
operations in 2012.
Eldorado’s operations achieved a cumulative lost-time
incident frequency rate of 1.75, compared to 2.11 in 2011.
We decreased our overall lost-time incident
frequency rate by 17% over the last year. For more
information about our safety initiatives, please see the
Health & Safety section.
In progress
In 2012 we started to roll out INX software at our
operations to standardize health and safety data collection.
Partially achieved
All of Eldorado’s European and Chinese operations track non-
lost-time safety incidents.
No significant environmental incidents
Achieved
To become an International Cyanide Management
Code signatory at all of our cyanide-using operations
Achieved
None of Eldorado’s operations had any major environmental
incidents in 2012.
We became a signatory to the Cyanide Code on July 30, 2012.
We are now in the process of certifying our operations
as compliant.
To become ISO 14001 certified for environmental
management at Kışladağ
Achieved
Kışladağ was certified in the ISO 14001:2004 Environmental
Management System on October 23, 2012.
To improve transparency by continuing to publish
annual sustainability reports as per the GRI guidelines
Achieved
This is Eldorado’s second annual sustainability report.
20 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 21
eldorado gold > 2012 annual report 21
Employees
Eldorado has over 7,000 employees and
contractors in six countries. We believe in
hiring locally wherever possible, paying
competitive wages and helping employees
build lifelong skills. We are committed to
the creation of a safe work environment
that allows our employees to maximize
their potential within their chosen careers.
Our male and female employees at all
projects and operations are paid equal
wages for the same jobs.
We strive to maintain an open and
transparent environment at all of our
operations and projects. In 2012, we had
zero employee strikes or lockouts, and no
incidents of discrimination were reported.
Eldorado has a whistleblower policy open
to all employees, officers and directors.
nuMBer of eMployees and ContraCtors
By site at 2012 year-end
Site
Employees
Contractors
Total
Ankara Office
Kışladağ
Efemçukuru
Beijing Office
China Exploration
Jinfeng
Tanjianshan
White Mountain
Eastern Dragon
Belo Horizonte Office
Vila Nova
Tocantinzinho
Athens Office
Skouries
Olympias
Greek Exploration
Stratoni
Perama Hill
Certej
Vancouver Office
Total
94
659
390
38
66
879
437
576
46
13
47
15
21
116
197
17
384
48
106
43
0
94
332
991
264
654
0
38
0
66
572
1,451
727
290
513 1,089
48
25
304
171
21
171
301
102
542
77
109
43
2
12
257
156
0
55
104
85
158
29
3
0
4,192
2,832 7,024
annual eMployee turnover
Site
Rate of Employees
Entering Employment (%)
Rate of Employees Leaving
Employment (%)
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova*
Hellas Gold (Stratoni, Olympias, Skouries)
Perama Hill
Certej
Weighted Average
12.1
11.3
17.3
16.9
21.9
42.6
72.1
31.3
25.5
27.2
4.6
4.0
7.2
11.4
4.2
34.0
15.6
0.0
8.5
8.3
*Employee turnover is higher at Vila Nova due to the high number of short-term contracts in a region that
culturally has a low rate of long-term, full-time positions.
employees at kiŞladaĞ, tuRkey
eldorado gold > 2012 annual report 21
eldorado gold > 2012 annual report 21
sustainability
sustainability
report 2012
report 2012
average hours of annual
training per eMployee
site
Hours
perCentage of eMployees
Covered By ColleCtive
Bargaining agreeMents
Site
Kışladağ*
Efemçukuru*
Jinfeng
Tanjianshan**
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
Perama Hill
Certej
Weighted Average
%
71.9
61.7
100.0
7.3
100.0
100.0
100.0
100.0
100.0
80.4
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
Perama Hill
Certej
Weighted Average
*Less than 100% of Kışladağ and Efemçukuru
employees are covered by collective bargaining
agreements as professional, managerial and
administrative staff are not included in these
agreements.
** Union membership at Tanjianshan is voluntary;
most employees have Individual Bargaining
Agreements.
perCentage of eMployees
reCeiving regular
perforManCe reviews
Site
Kışladağ
Efemçukuru*
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
Perama Hill
Certej
Weighted Average
78.0
18.6
36.9
38.0
56.9
18.8
7.5
20.8
96.4
40.9
%
80.4
9.6
100.0
100.0
88.7
82.0
17.7
2.1
100.0
68.9
*As Efemçukuru, Perama Hill and Hellas Gold sites
start up, they are reviewed on a site-wide basis
rather than per employee.
ratio of average entry-level
wage to loCal MiniMuM wage
site
ratio
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
Perama Hill
1.25
1.35
2.54
2.31
1.41
1.24
1.51
1.88
enviRonmental testing
at kiŞladaĞ, tuRkey
huMan rights
At Eldorado, we hold ourselves to the
highest human rights standards. We
have policies at all of our operations
to prevent the use of forced or child
labour in our projects and operations.
In the communities where we work,
we make direct and indirect economic
contributions to and invest in community
development programs. These programs
focus on health, education and enhancing
the employment skills of our personnel,
and decrease the need for forced or
child labour.
Health and Safety
Safety is our first priority. We recognize
the effects that an injury or illness have
on an employee’s family and community,
as well as on our operations. We continue
to set ambitious health and safety
standards at our operations as we work
toward our ultimate goal of zero harm.
We had no work-related fatalities at
any of our sites in 2012.
safety key perforManCe
indiCators (employees
and contRactoRs)
Lost-time incidents (LTIs) are any
work-related incidents that require an
employee or contractor to take time off
work; the lost-time incident frequency
rate (LTIFR) is the number of incidents per
million man-hours worked. Occupational
diseases result from workplace exposure
to a chemical, physical or biological
agent, such as lead poisoning or
heatstroke. The lost-day rate is the
average number of work days lost
per million man-hours worked.
22 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 23
eldorado gold > 2012 annual report 23
safety key perforManCe indiCators (employees and contRactoRs)
Fatalities
2011
ltiFr
2012 Occupational
diseases
ltiFr
Lost-Day
rate
site
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Eastern Dragon
Vila Nova
Stratoni
Olympias
Skouries
Perama Hill
Certej
1.85
3.70
1.49
1.76
2.09
0.00
7.00
–
–
–
0.00
–
1.97
2.45
0.81
0.00
1.81
0.00
3.70
2.76
7.41
7.16
0.00
0.00
0
0
2
0
0
0
0
0
0
0
0
0
14.9
75.3
48.6
0.00
34.9
0.00
50.5
145.0
42.0
196.9
0.00
0.00
0
0
0
0
0
0
0
0
0
0
0
0
training
All of our operations have a strong focus
on safety training. We include contractors
in our safety training sessions,
recognizing that they play a significant
role in the safety of our operations. We
also conduct regular emergency drills.
Each site has an emergency response
team, emergency equipment and defined
emergency protocols and procedures for
various emergency scenarios. Adjacent
communities, nearby hospitals, police
and fire departments are included in
procedures and advised of potential
situations that may necessitate their
involvement. Our mine emergency
response teams are available to
nearby communities and are often first
responders to external emergencies.
Emergency training includes mine rescue
drills, fire drills, CPR and first aid training,
and training in hazardous material suits
and other safety equipment.
Vila Nova mine uses mosquito spray and
netting to prevent malaria. We also train
our staff at all operations to recognize the
symptoms of relevant endemic diseases
to enable earlier diagnosis and treatment.
ohsas 18001
OHSAS 18001 is a best quality standard
for occupational health and safety
management systems that we are using
or implementing at our sites.
Following a successful audit in October
2012, Hellas Gold’s occupational health
and safety management system was
recertified to OHSAS 18001:2007 in
November 2012. This certification is for
Stratoni, Olympias, Skouries and Hellas
Gold exploration. The management
systems cover exploration, preparatory
works, mining, beneficiation and trade of
mixed sulphide ores and products. The
certificate is valid until January 2014.
Eldorado has health programs at each
site to provide immunizations, checkups
and basic medical treatments or services
for all employees, contractors and
community members. Stringent safety
procedures contribute to a reduced
likelihood of occupational disease. We
also have programs in place to prevent
endemic diseases. For example, our
Efemçukuru and Kışladağ are also
working toward OHSAS 18001
certification and both expect to be
audited in 2013.
For more information about OHSAS
18001, please visit:
www.ohsas-18001-occupational-health-
and-safety.com.
emeRgency tRaining at kiŞladaĞ, tuRkey
total health, safety
and environMental training
Site
Man-Hours
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
21,478
9,603
12,268
1,649
27,964
8,688
4,208
eldorado gold > 2012 annual report 23
eldorado gold > 2012 annual report 23
sustainability
sustainability
report 2012
report 2012
stRatoni pRocessing plant and poRt facilities, gReece
Environment
We aim to minimize the potential
environmental impacts of our operations.
Over the past two decades, Eldorado
has proven its ability to safely develop,
operate and decommission complex
mining projects internationally
while minimizing the environmental
impact of our activities. We have
built four mines in three countries
over a seven-year period with no
significant environmental incidents.
In line with regulations and our own
operating standards, Eldorado maintains
strict monitoring and management of
water (surface, ground, potable and
sea), air (dust and air emissions), soils,
noise, mining wastes and biodiversity
throughout the life of our mining
operations. Our operations are also
regularly audited by independent
government, academic and community
groups to ensure each site is operating
within environmental limits.
perMitting
Eldorado adheres to strict safety
and environmental regulations in each
of the regions where it operates.
These include conducting a full
Environmental Impact Assessment/
Environmental Impact Statement
(EIA/EIS) before receiving a permit
to operate. The EIA/EIS includes a
detailed closure and full rehabilitation
plan. We also complete studies on
environmental parameters such as
biodiversity, water (surface, ground,
potable and sea), air (dust and air
emissions), soils, noise and mining
wastes. These parameters are used
throughout operation and closure to
ensure mitigation programs are effective.
water
Water is a valuable resource and we are
dedicated to conserving and managing
it effectively. At our operations with
less access to water, we have programs
in place to recycle as much water as
possible. At our Jinfeng, White Mountain,
Efemçukuru and Hellas Gold operations,
we have more water than is needed for
processing and we must drain this water
from the mining areas. When excess
water is discharged, it is treated at our
water treatment plants and tested for
quality control before being released.
The water we use at our sites comes
from a variety of sources. Surface water
is drawn from rivers, lakes and areas
where water naturally collects above
ground. Groundwater is drawn from
wells or from below ground and includes
the water we drain from mining areas.
Municipal water comes from municipal
water use at eaCh operation (thousands of cuBic metRes)
Site
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Hellas Gold (Stratoni,
Olympias, Skouries)
Vila Nova
Groundwater
Surface
Water
Municipal
Water
757.7
230.0
0.0
0.0
1,072.5
4,911.1
0.0
0.0
1,815.4
736.5
0.0
0.0
17.0
21.2
0.0
3.0
0.0
0.0
0.0
24.0
0.0
Recycled
18,535.3
396.7
2,203.6
0.0
251.5
26.4
Total
Reused Withdrawn
0.0
400.0
0.0
687.5
1,796.7
2,417.6
757.7
233.0
1,815.4
736.5
1,072.5
4,935.0
0.0
1,296.0
38.2
24 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 25
eldorado gold > 2012 annual report 25
water supply systems. Reused water is
recirculated water from our operations,
processes or offices without treatment.
Recycled water is also recirculated, but is
treated prior to recirculation. Discharged
water is treated and then discharged
into natural sources.
water effiCienCy (cuBic metRes
peR ounce of gold pRoduced)
site
m3/oz
Kışladağ
Efemçukuru (includes
pre-commercial production)
Jinfeng
Tanjianshan
White Mountain
2.62
3.33
16.83
6.66
3.11
disCharged water at eaCh
operation (thousands
of cuBic metRes)
site
total discharged
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Hellas Gold (Stratoni,
Olympias, Skouries)
Vila Nova
43.8
126.7
432.2
0.0
820.9
4,509.3
0.0
energy
Most of Eldorado’s direct energy
comes from fossil fuel and electricity.
We recognize that emissions from
energy use can have environmental
impacts. Energy is also one of the key
cost factors at our operations. We
strive to reduce the energy used at
each site by identifying, evaluating
and implementing energy-efficient
processes. For example, at Kışladağ
we are in the process of switching over
to an electric vehicle fleet to reduce
emissions and save on energy costs.
In 2012, we began reporting our energy
emissions to the Carbon Disclosure
Project. By tracking this information
on an annual basis, we are in a better
position to assess where we can most
effectively decrease our energy use.
Our on-site equipment uses gasoline,
diesel, liquefied propane gas and coal as
fuel. These fuels for on-site stationary
and mobile combustion make up our
Scope 1 energy use. Purchased electricity,
which is reported as Scope 2 energy use,
is used for powering plants and buildings.
sCope 1 energy use at eaCh
operation (gigajoules)
site
GJ
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Hellas Gold (Stratoni,
Olympias, Skouries)
Vila Nova
592,951
45,082
85,559
178,354
201,010
54,650
88,647
sCope 2 energy use at eaCh
operation (gigajoules)
site
GJ
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Hellas Gold (Stratoni,
Olympias, Skouries)
Vila Nova
280,595
133,562
537,196
310,675
214,262
99,072
0
energy effiCienCy (gigajoules
peR ounce of gold pRoduced;
scopes 1 and 2)
Site
GJ/oz
Kışladağ
Efemçukuru (includes
pre-commercial production)
Jinfeng
Tanjianshan
White Mountain
3.02
1.84
5.77
4.42
5.14
tanjianshan wateR tReatment plant, china
eldorado gold > 2012 annual report 25
eldorado gold > 2012 annual report 25
sustainability
sustainability
report 2012
report 2012
Materials used at eaCh operation (tonnes)
Cyanide
Site
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Materials used in gold
produCtion
Cyanide
Cyanide is used safely in many industries
around the world. In gold mining,
cyanide is used to dissolve gold in
order to separate it from the ore.
Protective measures are taken at
each of our sites to ensure worker and
environmental safety. These include:
• providing employees with extensive
training in safe handling procedures,
• ensuring that appropriate personal
protective equipment is worn in all
areas in which cyanide is in use, and
• covering ponds containing cyanide
with plastic balls to deter birds.
The Cyanide Code, developed by the
International Cyanide Management
Institute (ICMI), outlines best practices
for handling cyanide from production
to disposal. In 2012, Eldorado applied
for Code certification for all of its mines
where cyanide is used in producing gold
doré. We are now in the process of having
our operations certified as compliant.
lime
In gold mining, lime is added to the
cyanide solution to keep it at a safe pH
level. Contact with lime can cause skin and
eye irritation. The policies and procedures
in place at each operation for dealing with
cyanide, such as training, safe handling
procedures and the use of appropriate
personal protective equipment, also
protect employees from lime.
26 eldorado gold > 2012 annual report
Lime
Carbon Hydrochloric
Acid
Sulphuric
Sodium
Acid Hydroxide
5,536
0
1,004
637
924
65,200
6
14,858
3,681
962
88
0
25
28
24
434
0
135
120
73
0
415
3,927
0
0
1,406
0
132
32
1,801
Carbon
Activated carbon does not pose health
risks to workers. It is used to extract the
gold and cyanide compound from slurry,
after which the gold is stripped from the
carbon and the carbon is reused.
recovery on the ore-containing sulphide
material. Sodium hydroxide is an irritant
and employees working with this
chemical are trained in safe handling
procedures and required to use personal
protective equipment.
hydrochloric acid
Diluted hydrochloric acid is used to
remove impurities from activated carbon
before recirculation. Hydrochloric acid
is an irritant. Employees who work with
the acid are trained in safe handling
procedures and required to use personal
protective equipment.
sulphuric acid
Sulphuric acid is used at Jinfeng in
the BIOX process and at Efemçukuru
to modify the pH of the float circuit.
Tanjianshan converts gas from the
roaster into sulphuric acid and sells
it, a process that eliminates toxic air
emissions resulting from the roasting.
Measures such as training, safe handling
procedures and the use of appropriate
personal protective equipment are in
place to protect employees.
sodium hydroxide
We use sodium hydroxide to modify the
pH to an appropriate level for stripping
gold from carbon and electro-winning.
Kışladağ uses sodium hydroxide to
increase the pH of the solution being
processed through the ADR (Adsorption
Desorption Regeneration) plant to
decrease the adsorption of copper onto
the carbon. White Mountain also uses
sodium hydroxide to pre-condition the
ore prior to leaching, which improves
waste
Mining waste at our operations is mostly
waste rock, overburden and tailings.
Some overburden and rock can pose a
potential toxicity risk to the environment.
When a risk is identified, we carefully
plan how and where the rock is placed.
We store our tailings on designated lined
pads if necessary and take steps during
rehabilitation to ensure any residual
toxins will not cause any environmental
effects. When tailings do not pose a
toxicity risk, as is the case at Efemçukuru,
Jinfeng, Olympias and Stratoni, they will
be partially recycled for mine backfill.
environMental ManageMent
Potential environmental incidents and
their impacts are identified and assessed
as part of the baseline studies completed
in the EIA/EIS process. Risk mitigation of
the identified scenarios is then factored
into the mine design, using appropriate
technologies and equipment to best
minimize potential incidents.
All of Eldorado’s operations have
a comprehensive environmental
emergency management plan. Each
site has a response team trained in
scenario response methods, including
communication guidelines to involve
relevant external groups.
eldorado gold > 2012 annual report 27
eldorado gold > 2012 annual report 27
waste at eaCh operation (tonnes)
Site
Overburden Waste Rock
Tailings/Sludges
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Hellas Gold (Stratoni, Olympias, Skouries)
Vila Nova
16,942
0
613,205
0
0
0
0
20,937,550
90,852
13,369,468
1,517,604
1,168,706
141,973
3,291,711
0
279,163
1,382,450
1,061,425
1,796,838
208,373
86,644
iso 14001
ISO 14001 is an international standard
for best practice in environmental
management systems. Kışladağ was
certified on October 23, 2012.
Efemçukuru will apply for ISO 14001
certification in 2013, as will our Greek
operations under our subsidiary,
Hellas Gold. The goal is to include all
activities (exploration, construction,
mining, beneficiation and waste
management) at all Hellas Gold sites.
For more information about ISO 14001,
please visit:
www.iso.org/iso/home/standards/
management-standards/iso14000.htm
Cyanide Code
In July 2012, all of Eldorado’s cyanide-
using gold operations became
signatory to the International Cyanide
Management Code. The Code is a set
of standards for cyanide production,
transportation, storage, use and
disposal. We plan to have our sites work
toward undergoing pre-audits and to
have Kışladağ certified compliant by
the end of the year. By becoming Code
signatories, we aim to ensure that all of
our operations are using the world's best
practices for cyanide use.
For more information about the Cyanide
Code, please visit: www.cyanidecode.org.
For more information about the use of
cyanide in mining, please visit: www.
gold.org/about_gold/sustainability/
environmental
Mine Closure and reClaMation
At Eldorado, we are committed to
restoring those areas that are no
longer needed for mining use. All of
our operations have closure plans.
additional land disturBed or rehaBilitated
at eaCh operation in 2012 (hectaRes)
Site
Land Disturbed in 2012
Land Rehabilitated in 2012
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni, Skouries, Olympias)
90.5
0.0
27.8
0.0
0.1
3.5
21.0
6.6
0.0
6.0
0.0
3.3
0.3
0.3
RehaBilitation of the
olympias valley, gReece
>
olympias tailings
RehaBilitation
As part of our environmental
commitment, we are conducting
one of the largest environmental
rehabilitation projects currently
ongoing in Greece. We are
cleaning up more than 2.4
million tonnes of tailings from
previous mining activities
in the Olympias Valley. Over
the next three years, we will
gradually rehabilitate 26.5
hectares of land. In cooperation
with the Forestry and Natural
Environment Department
of Aristotle University in
Thessaloniki, we are conducting
in-situ pilot planting tests. The
area will eventually be replanted
with native species grown in
our nursery, and returned to
the community in a natural
greenfield state.
eldorado gold > 2012 annual report 27
eldorado gold > 2012 annual report 27
sustainability
sustainability
report 2012
report 2012
Community
Eldorado works closely with the
communities neighbouring our areas
of operation. We believe in building
positive, mutually beneficial relationships
with local communities throughout the
life cycle of our operations.
Eldorado begins stakeholder engagement
during the exploration stage, guided
by the UN principles of Free, Prior and
Informed Consent. We respect the
right of every person to voice their
opinion in a safe, legal and responsible
manner and recognize that different
parties have different views.
Eldorado operates in full compliance
with the regulations in place at each
of the regions where we operate. Like
our host communities, our top priorities
are the safety of our people and our
responsibility to the environment. In
the project stage we conduct a full EIA/
EIS before receiving a permit to operate.
Preparing the EIA/EIS requires significant
engagement with local communities,
municipalities and government –
engagement that is ongoing throughout
the mine’s life cycle.
Benefits to loCal CoMMunities
Mining operations provide tangible
benefits to local communities and
national economies. Eldorado invests
billions of dollars in projects around the
world, generating thousands of direct
and indirect jobs in local communities.
Issues around employment are the
most commonly raised topics at our
meetings with community members
and representatives. Host governments
also benefit from various taxes,
including corporate tax, payroll and
social contribution taxes, and royalties
throughout the life of our projects.
Eldorado is also directly involved in
community improvement. Through
consultation with local stakeholders,
we select projects that improve the
livelihood of local communities –
such as investing in infrastructure,
education and health – both during
and beyond the life of the mines.
exaMples of loCal initiatives
In 2012, Eldorado spent over US$7.4
million on community development
programs. Some of our initiatives are
outlined below.
turkey
• At Kışladağ, we work closely
with Uşak province to improve its
infrastructure and to support health
and education programs. Eldorado’s
largest donation in 2012 was funding
the construction of a new building
for Uşak University. We also funded
the construction of a new wedding
hall in a local village and donated an
ambulance to Ulubey Hospital.
• Our largest community initiative at
Efemçukuru is the vineyard project,
where we employ up to 30 local
villagers as permanent and temporary
employees in the management of over
20 hectares of wine and table grapes.
Our first commercial production of
wine is expected in 2013. We are
working with the community and
grape marketing agents to secure the
best prices for local table grapes.
• Also at Efemçukuru, we are supporting
the education of local villagers. Our
contribution goes towards building
improvements, uniforms, school
supplies and providing school services.
When we began the education project
in 2004 there was one high school
graduate from the local villages,
and no students attending a post-
secondary institution. In 2012, there
were 30 high school graduates and four
students attending university. Many of
these high school graduates are now
working at Efemçukuru.
childRen at vila nova
village school, BRazil
28 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 29
eldorado gold > 2012 annual report 29
greece
• In Greece, our community
investments are focused on municipal
infrastructure projects. In the
summer of 2012, we also funded and
coordinated a restoration program of a
cultural monument in time for a related
celebration. We hired local contractors
for the program, further supporting
the municipal economy.
China
• As part of our five-year agreement
with the provincial government,
Eldorado sets aside a minimum of
US$200,000 each year to donate to
charity projects in Qinghai province,
the location of our Tanjianshan
mine. In 2012, one of Tanjianshan’s
community projects was aimed at
improving doctors’ and nurses’ skills.
We donated money to the Dachaidan
People’s Hospital as part of a three-
year program to provide improved
medical training for hospital staff.
• White Mountain is unique in being
located very close to a city. The
mine is seven kilometres away from
Baishan, where we are investing
in an agricultural project to create
sustainable income for locals beyond
the life of the mine. We completed
construction of five greenhouses
in November 2011 and engaged
local university professors to select
appropriate fruit and vegetable
varieties to grow. Since then, locals
have been employed and trained to
use the greenhouses to grow organic
vegetables year-round. The produce
is sold to the mine employees and
contractors and in a local market.
• White Mountain has committed
resources to developing and
constructing a brick factory, and it
coordinates an employee training
program for locals. In the fall of 2012,
to ensure the safety of commuting
staff and villagers, Eldorado worked
with the local municipality to install 70
solar lights along the main road.
geologists woRking neaR ceRtej, Romania
• At Jinfeng, we provide health,
infrastructure and education support
for the neighbouring communities.
In 2012, Jinfeng completed a project
to design and construct an extensive
network of roads in one of the
local villages.
• Our Vancouver Office has worked
in partnership with the Educating
Rural Girls in China Project since
2011. We provide financial support
for the project, which enabled them
to expand to Qinghai Province in
2011 and Guizhou Province in 2012
to sponsor female university students
from our rural mine regions.
Brazil
• In partnership with the city of Porto
Grande, we constructed a large medical
emergency unit in the village of Vila
Nova that includes designated spaces
for medical assessments, treatments,
immunizations and dental work.
• At the Vila Nova Village School, we
donated school supplies and provided
emergency maintenance for the
school buildings.
romania
• At our Certej project, we have built
excellent relationships with local
communities. We are supporting an
after-school program in which students
can receive free tutoring and other
educational and support services.
ValuE OF CHa rita bl E dO natiOns
A ND C OMMuNiT y DE v ELOpMENT
sPEndinG (IN THOUSA NDS )
site
us$
Kışladağ
Efemçukuru
Jinfeng
Tanjianshan
White Mountain
Vila Nova
Hellas Gold (Stratoni,
Olympias, Skouries)
Perama Hill
Certej
Total
1,828.5
307.7
213.9
249.3
372.1
118.5
4,038.7
114.2
190.0
7,432.9
eldorado gold > 2012 annual report 29
eldorado gold > 2012 annual report 29
sustainability
sustainability
report 2012
report 2012
locals a
t the community maRket
neaR jinfeng, china
>
jinfeng stakeholdeR
paRtneRship
In April 2012, Jinfeng founded
its own cooperation program,
consisting of a four-part coalition,
based on our successful program
at White Mountain. The Jinfeng
meetings include representatives
from the mine, local community,
county and provincial government.
These meetings allow each
party to discuss potential areas
of concern, suggest community
improvement projects and
promote mutually beneficial
relationships between the
communities, the government and
Jinfeng. Since the establishment
of the cooperation program,
15 meetings have taken place and
Jinfeng has had no disputes with
local communities, compared to
11 disputes (six of which were
land-related) in 2011.
CoMMunity relations
Building open and respectful
relationships with local community
members is the foundation of our
community relations. We feel that
we have excellent relations with, and
support from, our host communities.
Unfortunately, differences of opinion
occasionally arise. In these instances,
Eldorado is committed to resolving issues
in an equitable manner to find a solution
that is acceptable to all involved groups.
In 2012, we had three land-related
disputes at our operations:
• At our Skouries project in Greece,
the use of forest land for mining was
challenged. We are conducting our site
clearance activities according to valid
permits received from the Greek state.
• Also at Skouries, we face the
opposition of a vocal minority who
are protesting the development of our
project. We believe that the majority
of the population in the area where
our projects are located is supportive
and that the population is benefitting
economically from our investment. We
are working to improve communication
with external stakeholders about how
we operate according to stringent
health, safety, environmental and
engineering standards and regulations.
• At Vila Nova, we have been in
negotiations with a settler in the
mine area since 2011 regarding
compensation for previous
improvements.
At Kışladağ, four households were
relocated in 2012 as we move forward
with the expansion project. These
families willingly moved into the Uşak
city centre and some family members are
employed by the Kışladağ mine.
Glossary
Collective bargaining agreement
Collective bargaining agreements are
between the company and workers’
organizations, such as trade unions.
discharged Water
Discharged water is used by a mine, and
is then collected, treated and released
back into a water body.
Endemic diseases
Endemic diseases are those that occur
frequently in a given area, such as
malaria in Brazil.
Environmental impact Assessment/
Environmental impact Statement EiA/EiS
An EIA/EIS is a study done on an
intended project area in the pre-
construction phase as part of the
permitting process. The EIA/EIS
extensively covers many environmental
aspects, such as air and water quality
and the flora and fauna in the area.
This data is used throughout the mine
life and rehabilitation to gauge the
effect of the mine and the remedial
measures on the environment.
Free, prior and informed Consent (FpiC)
FPIC is a set of United Nations guidelines
outlining the rights of locals and
indigenous peoples. It promotes the
rights of locals to have input regarding
plans in all lifecycle stages, in a timely
manner and free from coercion.
Global Reporting initiative (GRi)
The GRI is a widely used
voluntary framework that seeks
to improve transparency through
sustainability reporting.
Groundwater
Groundwater is collected from
underground sources, including
wells and water pumped from
underground mines.
30 eldorado gold > 2012 annual report
eldorado gold > 2012 annual report 31
eldorado gold > 2012 annual report 31
incidents of discrimination
Eldorado defines incidents of
discrimination as any treatment of a
person in an unethical matter. It can
include the promotion or denial of
promotion or benefits for reasons other
than personal merit, or the harassment
of employees due to cultural differences.
international Cyanide Management Code
(The Cyanide Code)
The Cyanide Code covers best practices
for managing cyanide in all stages of its
lifecycle and was created specifically by
the International Cyanide Management
Institute (ICMI) for the gold mining
industry. Companies can become
signatory to the Code as a company or
on a mine-by-mine basis.
international Organization for
standardization (isO); isO 14001
ISO 14001 is a set of voluntary
standards for environmental
management best practices.
Lost-Day Rate
The lost-day rate is the number of
workdays lost due to LTIs per million
man-hours worked.
lost-time incident (lti)
A lost-time incident is a workplace
accident in which an employee or
contractor sustains an injury that results
in an inability to work for one or more
work days or shifts.
Lost-Time incident Frequency Rate
(ltiFr)
The lost-time incident frequency
rate is the number of LTIs per million
man-hours worked.
Municipal Water
Municipal water is drawn from
a municipal source.
non-lost-time incidents
A non-lost-time incident is an accident
in which an employee or contractor
is injured but does not require time
off work. This includes restricted
work, work transfers, medical
aid, first aid and near misses.
Significant Environmental incident
We define a significant environmental
incident as one in which the effects
have medium- to long-term or
permanent impact. A significant
environmental spill cannot be
readily contained and remedied.
social impact assessment (sia)
SIAs are done in conjunction with EIAs
prior to beginning construction in a new
area as part of the permitting process.
Potentially affected communities are
surveyed to determine the effects the
mine could have on the local residents.
Considerations include the population,
current labour situation, local concerns
and risk assessment.
surface Water
Surface water is collected from
any naturally occurring above-
ground water source, such as
oceans, lakes, rivers and streams.
tailings and sludges
Tailings and sludges are waste residues
that result from ore processing.
Waste Rock
Waste rock is material that is mined
in the process of ore extraction.
Withdrawn Water
Withdrawn water is the cumulative
amount of water used from external
sources. This includes surface, ground,
rain and municipal water. Water
efficiency is calculated from
withdrawn water.
Occupational diseases
Occupational diseases are illnesses
caused by workplace exposure to
physical, chemical or mental agents.
For example, occupational diseases can
include stress-related diseases, illness
due to prolonged proximity to toxic
chemicals or heatstroke.
OHSAS 18001
OHSAS is a set of voluntary standards
for occupational health and safety
management best practices.
Overburden
Overburden is material that is removed
from the surface of the deposit and
stored for subsequent rehabilitation.
Recycled Water
Recycled water has been used in a
task and is treated and then recirculated
for use in other tasks.
reused Water
Reused water has been used in a
task and recirculated for use in other
tasks without treatment.
Scope 1 Energy use
Scope 1 energy use includes fuel
relating to scope 1 emissions. This
includes fuel used on site in both
stationary and mobile equipment.
Scope 2 Energy use
Scope 2 energy use includes purchased
energy relating to scope 2 emissions.
This includes electricity, heating, cooling
and steam.
eldorado gold > 2012 annual report 31
eldorado gold > 2012 annual report 31
financial
Review
33
ManageMent’s disCussion
and analysis of finanCial Condition
and results of operations
63
Consolidated inCoMe
stateMents
59
ManageMent’s responsiBility
for finanCial reporting
60
independent auditors’ report of
registered puBliC aCCounting firm
61
report of independent registered
puBliC aCCounting firM
62
Consolidated BalanCe sheets
64
Consolidated stateMents
of CoMprehensive inCoMe
65
Consolidated stateMents
of Cash flows
66
Consolidated stateMents
of Changes in eQuity
67
notes to the Consolidated
finanCial stateMents
32 eldorado gold > 2012 annual report
kiŞladaĞ gold mine, tuRkey
eldorado gold > 2012 annual report 33
management’s discussion and analysis of
financial condition and results of operations
For the year ended December 31, 2012
Throughout this MD&A, Eldorado, we, us, our and the company mean Eldorado Gold Corporation.
This year means 2012. All dollar amounts are in United States dollars unless stated otherwise.
The information in this MD&A is as of February 21, 2013. You should also read our audited consolidated financial statements for
the year ended December 31, 2012. We prepare our consolidated financial statements in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). We file them with appropriate
regulatory authorities in Canada and the United States. You can find more information about Eldorado, including our annual
information form, on SEDAR at www.sedar.com.
About Eldorado
Based in Vancouver, Canada, Eldorado owns and operates mines around the world. Its activities involve all facets of the mining
industry including exploration, development, production and reclamation.
operating gold Mines
• Kışladağ, in Turkey (100%)
• Efemçukuru, in Turkey (100%)
• Tanjianshan, in China (90%)
• White Mountain, in China (95%)
• Jinfeng, in China (82%)
developMent gold proJeCts
• Perama Hill, in Greece (100%)
• Olympias, in Greece (95%)
• Skouries, in Greece (95%)
• Certej, in Romania (80%)
• Eastern Dragon, in China (95%)
• Tocantinzinho, in Brazil (100%)
other operating Mines
• Stratoni – Lead and Zinc Concentrates (95%)
• Vila Nova – Iron Ore, in Brazil (100%)
eldorado is listed on the following exChanges
• Toronto Stock Exchange (“TSX”) under the symbol ELD
• New York Stock Exchange (“NYSE”) under the symbol EGO
ELD is part of the S&P/TSX Global Gold Index. EGO is part of the AMEX Gold BUGS Index.
eldorado gold > 2012 annual report 33
Management’s discussion and Analysis of
Financial Condition and Results of operations
2012 Overview
• Gold production: 656,324 ounces, including pre-commercial production from Efemçukuru and Olympias (2011 – 658,652 ounces).
• Gold revenues: $1,047.1 million (2011 – $1,042.1 million).
• Profit: $305.3 million (2011 – $318.7 million).
• Basic earnings per share: $0.44 per share (2011 – $0.58 per share).
• Cash generated from operating activities before changes in non-cash working capital: $447.7 million (2011 – $502.1 million).
This is a non-IFRS measure. See page 46 for more information.
• Paid Dividends: CDN$0.15 per share (2011 – CDN$0.11 per share).
• European Goldfields Limited was acquired on February 24, 2012.
• Issued Senior Notes totalling $600.0 million in December 2012 to fund ongoing mine development activities.
CorporatE dEvElopmEnts
Senior Notes
On December 10, 2012, the Company completed an offering of $600.0 million senior notes at par value, with a coupon rate of 6.125%
due December 15, 2020. Proceeds from the notes will be used to fund ongoing mine development activities and other corporate
requirements (see page 48 for details related to the notes).
Acquisition of European Goldfields Limited
On February 24, 2012, the Company acquired 100% of the issued and outstanding shares of European Goldfields Limited (“EGU”).
Under the terms of the Arrangement, former EGU shareholders received 0.85 of an Eldorado common share and CDN$0.0001 in
cash for each EGU share. Eldorado issued 157,959,316 common shares pursuant to the Arrangement for a total purchase price
of approximately $2.4 billion based on the closing market price of Eldorado’s shares trading on the Toronto Stock exchange on
February 24, 2012, the acquisition date, of CDN$15.05 per common share. Eldorado holds a 95% stake in Hellas Gold S.A. (“Hellas Gold”),
which owns the Kassandra Mines in Greece comprised of the Stratoni mine, and the Olympias and Skouries development projects,
and an 80% stake in Deva Gold S.A. (“Deva Gold”) which owns the Certej development project in Romania.
The acquisition has been accounted for as a business combination, with Eldorado being identified as the acquirer and EGU as the
acquiree in accordance with IFRS 3. For accounting purposes, our consolidated financial statements include 100% of EGU’s operating
results for the period from February 24, 2012 to December 31, 2012. For more information please read Note 5 of our consolidated
financial statements for the year ended December 31, 2012.
Change in Greek Corporate Income Tax Rate Post Acquisition
On January 11, 2013 the government of Greece enacted legislation increasing the corporate income tax rate from 20% to 26%,
effective January 1, 2013. The Company calculated its deferred tax liability with respect to its Greek assets including the assets
acquired as part of the EGU acquisition based on the 20% Greek income tax rate, as this was the legislated tax rate at the
acquisition date.
As required by IAS 12, “Income Taxes”, when an income tax rate changes, the deferred tax liability must be adjusted to reflect the
change in the income tax rate. The adjustment is required to be charged to deferred income tax expense. The Company anticipates
that the increase in the Greek income tax rate from 20% to 26% will increase the deferred tax liability and the deferred tax expense
by approximately $130.0 million or approximately $0.18 per share in the first quarter of 2013.
34 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 35
Management’s discussion and Analysis of
Financial Condition and Results of operations
Summarized Annual Financial Results
($ millions except as noted)
Revenues1
Gold sold (ounces)
Average realized gold price ($/ounce)
Average London spot gold price ($/ounce)
Cash operating costs ($/ounce)2
Total cash costs ($/ounce)2
Gross profit from gold mining operations2
Profit3
Earnings per share – Basic ($/share)3
Earnings per share – Diluted ($/share)3
Cash flow from operating activities before changes in non-cash working capital2
Capital spending – cash basis
Dividends paid – (CDN$/share)
Cash and cash equivalents
Total assets
Total long-term financial liabilities4
2012
1,147.5
625,394
1,674
1,669
483
554
595.0
305.3
0.44
0.44
447.7
426.2
0.15
816.8
7,928.1
662.9
2011
1,103.7
658,919
1,581
1,572
405
472
610.8
318.7
0.58
0.58
502.1
272.8
0.11
393.8
3,960.4
63.2
2010
793.7
639,949
1,223
1,225
382
423
400.7
221.0
0.41
0.40
357.9
226.3
0.05
314.3
3,685.4
113.4
1 Revenues include proceeds from the sale of lead and zinc concentrates produced by Stratoni in the amount of $47.9 million (Stratoni was acquired in 2012), the sale of
iron ore from Vila Nova in the amount of $45.6 million in 2012 ($56.8 million – 2011; $8.3 million – 2010), the sale of pyrite from Olympias in the amount of $0.8 million
(Olympias was acquired in 2012), and the sale of silver in the amount of $6.1 million from our gold mines ($4.8 million – 2011; $2.6 million – 2010).
2 Throughout this MD&A we use cash operating cost per ounce, total cash costs per ounce, gross profit from gold mining operations, and cash flow from operating activities
before changes in non-cash working capital as additional measures of Company performance. These are non-IFRS measures. Please see page 46 for an explanation and
discussion of these non-IFRS measures.
3 Attributable to shareholders of the Company.
4 Includes long-term debt net of deferred financing costs, defined benefit plans, and asset retirement obligations.
rEviEw of annual finanCial rEsults
Profit attributable to shareholders of the Company for the year ended December 31, 2012 was $305.3 million, or $0.44 per share,
compared to $318.7 million, or $0.58 per share in 2011. The main factors that impacted our profit as compared to the profit for
the year ended December 31, 2011 were:
1) higher production costs due to higher operating costs at our Chinese gold mines;
2) lower depreciation and amortization expense mainly as a result of lower sales volumes;
3) higher exploration expenses due to an increase in the Company’s worldwide exploration activities;
4) higher general and administrative expenses mainly as a result of the additional costs of managing the general and
administrative activities of our Greek and Romanian subsidiaries from our acquisition of EGU;
5) transaction costs of $21.2 million connected with the acquisition of EGU; and
6) lower income tax expense due to recognition of $15.8 million of investment incentive tax credits in Turkey related to Efemçukuru
and the impact of Turkish lira exchange rate changes on the tax basis of our Turkish tax assets. The effective tax rate decreased
from 32% to 29% year over year for the same reasons.
eldoRAdo Gold > 2012 annual rEport 35
Management’s discussion and Analysis of
Financial Condition and Results of operations
Summarized Quarterly Financial Results
2012
($ millions except as noted)
Revenues
Gold sold (ounces)
Average realized gold price ($/ounce)
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Gross profit from gold mining operations
Profit1
Earnings per share attributable to shareholders of the Company –
Basic ($/share)
Earnings per share attributable to shareholders of the Company –
Diluted ($/share)
Dividends paid– (CDN$/share)
Cash flow from operating activities before changes in non-cash
working capital
2011
($ millions except as noted)
Revenues
Gold sold (ounces)
Average realized gold price ($/ounce)
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Gross profit from gold mining operations
Profit1
Earnings per share attributable to shareholders of the Company –
Basic ($/share)
Earnings per share attributable to shareholders of the Company –
Diluted ($/share)
Dividends paid – (CDN$/share)
Cash flow from operating activities before changes in non-cash
working capital
1 Attributable to shareholders of the Company.
Q1
Q2
Q3
Q4
271.5
150,661
1,707
452
529
150.7
67.9
0.11
0.11
0.09
102.8
244.2
132,919
1,612
480
550
118.7
46.6
0.07
0.07
–
82.1
281.8
154,841
1,670
493
567
146.9
75.8
0.11
350.0
186,973
1,696
502
566
178.7
115.0
0.16
0.11
0.16
0.06
110.8
–
152.0
Q1
Q2
Q3
Q4
219.2
148,530
1,397
410
462
107.8
52.5
0.10
0.10
0.05
91.7
252.6
162,164
1,510
397
477
137.6
74.9
0.14
0.14
–
115.7
327.3
179,513
1,700
397
463
193.2
102.5
0.19
0.19
0.06
159.7
304.6
168,712
1,686
418
486
172.2
88.8
0.16
2012
Total
1,147.5
625,394
1,674
483
554
595.0
305.3
0.44
0.44
0.15
447.7
2011
Total
1,103.7
658,919
1,581
405
472
610.8
318.7
0.58
0.16
0.58
–
135.0
0.11
502.1
rEviEw of QuartErly rEsults
Profit attributable to shareholders of the Company for the quarter ended December 31, 2012 was $115.0 million, or $0.16 per share,
compared to $88.8 million, or $0.16 per share for the same period in 2011. The main factors that impacted our profit as compared to
the profit for the quarter ended December 31, 2011 were: 1) Increased gold revenues from Efemçukuru concentrate sales; 2) Higher
operating costs at our Chinese gold mines; and 3) Lower income tax expense due to recognition of $14.6 million of investment
incentive tax credits in Turkey. The effective tax rate decreased from 32% to 20% quarter over quarter for the same reasons.
36 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 37
Management’s discussion and Analysis of
Financial Condition and Results of operations
Operations Review and Outlook
Gold opErations
Total Operating Gold Mines
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure (millions)
Kışladağ
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
Efemçukuru
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
Tanjianshan
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
Jinfeng
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
White Mountain
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
Olympias
Gold ounces produced
Cash operating costs ($ per ounce)
Total cash costs ($ per ounce)
Capital expenditure ($ millions)
1 Outlook metal prices: gold - $1,700 per ounce; silver - $30 per ounce
2012
2011
2013 Outlook1
656,324
483
554
331.8
289,294
332
361
104.9
66,870
583
613
73.2
110,611
415
612
23.9
107,854
817
901
59.0
80,869
625
671
27.2
826
n/a
n/a
43.6
658,652
405
472
241.9
284,648
374
398
53.1
n/a
n/a
n/a
103.8
114,972
377
567
8.9
177,757
442
507
32.2
81,275
474
517
17.2
n/a
n/a
n/a
n/a
705,000 to 760,000
515 to 530
n/a
410.0
290,000 to 300,000
350 to 360
n/a
200.0
125,000 to 135,000
470 to 490
n/a
45.0
90,000 to 100,000
485 to 500
n/a
10.0
105,000 to 115,000
800 to 820
n/a
55.0
60,000 to 70,000
760 to 780
n/a
30.0
35,000 to 40,000
780 to 800
n/a
70.0
eldoRAdo Gold > 2012 annual rEport 37
Management’s discussion and Analysis of
Financial Condition and Results of operations
Annual Review – Operations
KiŞladaĞ
Operating Data
Tonnes placed on pad
Average treated head grade (g/t Au)
Gold (ounces)
Produced
Sold
Cash operating costs (per ounce)
Total cash costs (per ounce)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
12,606,575
1.20
12,430,447
0.95
289,294
289,056
$332
$361
$483.7
$11.9
$363.2
$104.9
284,648
284,917
$374
$398
$455.3
$11.0
$327.2
$53.1
Gold production at Kışladağ in 2012 was 2% higher than in 2011 while gold ounces placed on the pad during the year increased
28% over 2011, mainly as a result of higher average treated head grade. Heap leach gold inventory levels increased 33% from the
beginning of 2012 as a result of the difference in the rates of placement of ore on the leach pad as compared with gold recoveries
during the year. The heap leach gold inventory level is expected to decline as these additional gold ounces placed on the pad in
2012 are leached and recovered into dore in 2013.
Cash operating costs were lower year over year as a result of the higher grade material placed on the pad as well as lower annual
average exchange rates for the Turkish lira year over year.
Capital expenditures at Kışladağ in 2012 included costs on the Phase IV Mine Expansion preparation works, capitalised waste
stripping and various smaller construction projects.
tanjianshan
Operating Data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs (per ounce)
Total cash costs (per ounce)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
1,056,847
3.67
82.6%
110,611
110,611
$415
$612
$185.5
$26.2
$90.5
$23.9
1,005,236
3.96
82.1%
114,972
114,969
$377
$567
$181.0
$30.0
$84.6
$8.9
Gold production in 2012 was 4% lower than in 2011 mainly as a result of lower average treated head grade and lower additional
flotation concentrate feed. Tonnes milled in 2012 were 5% higher than 2011 while average treated head grade was 7% lower than
2011. Circuit recoveries remained relatively constant with a slight increase in average recovery rate year over year. Additionally,
flotation concentrate produced in prior years from ore mined from the Qinlongtan pit between 2007 and 2008 and added to the
roaster feed was responsible for approximately 7,700 ounces of production in 2012 (2011 – approximately 12,000 ounces).
38 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 39
Management’s discussion and Analysis of
Financial Condition and Results of operations
Cash operating costs per ounce were 10% higher in 2012 than the previous year mainly as a result of lower grade ore and lower
flotation concentrate feed.
Capital expenditures for the year included construction on a new tailings dam, process plant upgrades, and capitalized exploration
costs as well as other sustaining capital.
jinfEnG
Operating Data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs (per ounce)
Total cash costs (per ounce)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
1,422,794
2.65
84.3%
107,854
107,812
$817
$901
$180.9
$28.7
$55.0
$59.0
1,544,965
4.06
87.3%
177,757
177,758
$442
$507
$277.9
$50.0
$137.8
$32.2
Gold production at Jinfeng in 2012 was 39% lower than in 2011 mainly as a result of lower throughput and head grade due to
impact of limited production from the open pit pending completion of a cutback. A total of 96,800 tonnes of ore was mined from
the open pit in 2012 (2011 - 689,737 tonnes). Mining of ore was also impacted by pit wall instability due to excessive rainfall during
the second quarter. It is expected that ore production will recommence from the pit in the second quarter of 2013 once the waste
stripping has uncovered the ore body. A total of 541,555 tonnes of ore were mined from the underground during the year (2011 -
494,422 tonnes). Additionally, a total of 491,101 tonnes of low grade stockpiled ore and 293,338 tonnes of mineralized waste were
fed to the plant during 2012.
Cash costs were 85% higher in 2012 reflecting the impact of the decrease in treated head grade and the slightly lower throughput.
Capital expenditures for the year included capitalized underground development, process plant upgrades and sustaining capital.
whitE mountain
Operating Data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs (per ounce)
Total cash costs (per ounce)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
754,673
3.85
86.3%
80,869
80,869
$625
$671
$135.1
$25.7
$54.9
$27.2
708,882
4.37
81.8%
81,275
81,275
$474
$517
$127.8
$24.2
$61.3
$17.2
eldoRAdo Gold > 2012 annual rEport 39
Management’s discussion and Analysis of
Financial Condition and Results of operations
Gold production at White Mountain in 2012 was slightly below that of 2011 with higher ore throughput offsetting lower grade. The
increase in tonnes was due to an increase in underground mining efficiency as a result of increased mine development. The average
recovery rate at White Mountain continued to improve as a result of the process plant changes related to caustic pre-treatment of
sulfide ore made in late 2011.
Cash operating costs per ounce were 32% higher in 2012 as a result of the decrease in head grade and due to costs related to
increased backfill and secondary development rates to sustain higher production tonnage.
Capital expenditures for the year included capitalized underground development, upgrade of the underground service facility,
capitalized exploration costs and tailing dam lift.
EfEmçuKuru
Operating Data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate (to concentrate)
Gold (ounces)
Produced (including pre-commercial production)
Sold – commercial production
Cash operating costs (per ounce)
Total cash costs (per ounce)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
352,156
9.26
92.7%
66,870
37,046
$583
$613
$61.9
$6.8
$31.4
$73.2
112,612
8.21
89.5%
–
–
–
–
–
–
–
$103.8
Efemçukuru began milling ore at its process plant on a pre-commercial production basis in June 2011 and the facility reached
commercial production rates by the end of 2011. Unseasonably cold and wet weather impacted production during the first quarter of
2012 while delays in commissioning the underground crushing system and the paste fill system affected the second quarter of 2012.
By the fourth quarter of 2012 all systems were in place and operating as expected, and production rates increased accordingly.
During 2012 Efemçukuru shipped its concentrate to the Kışladağ Concentrate Treatment Plant (“KCTP”) and operated the KCTP on a
pre-commercial production basis while modifying the facility in an effort to reach full commercial production. The KCTP was unable
to achieve expected production rates during the year and in September 2012 the plant was placed on care and maintenance pending
completion of metallurgical testwork, and development of design alternatives with a view to commissioning the upgraded plant in
2013. Approximately 30,000 ounces of gold were produced and sold on a pre-commercial basis during the KCTP testing period. The
revenues, net of cost to produce, were credited to plant and equipment.
In November 2012 Efemçukuru began selling its concentrate to third parties for shipment to smelters in China and had sold
36,450 ounces by year end as well as 597 ounces poured from the gravity circuit at Efemçukuru. These sales were recorded as
commercial production and the revenues and costs were reflected in the income statement in 2012. At the end of 2012 approximately
35,000 contained ounces in concentrate remained in inventory and are expected to be sold in the first quarter of 2013.
Capital spending in 2012 included costs related to completion and testing of the KCTP, the underground crushing system, paste fill
system and capitalized underground development.
40 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 41
Management’s discussion and Analysis of
Financial Condition and Results of operations
vila nova
Operating Data
Tonnes processed
Iron ore produced
Average grade (% Fe)
Iron ore tonnes
Sold
Average realized iron ore price
Cash costs (per tonne produced)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Expenditure on mining interests
Total 2012
Total 2011
710,909
613,780
63.9%
603,668
$76
$60
$45.6
$5.3
$3.9
$1.3
623,684
537,958
63.9%
473,387
$120
$64
$56.9
$4.6
$21.8
$2.4
Vila Nova processed 710,909 tonnes of iron ore at an average grade of 63.9% Fe during 2012. A total of 603,668 tonnes of iron ore
were sold on the spot market during 2012 at an average price of $76 per tonne. Iron ore prices were weak during 2012 as compared
with 2011 prices but recovered somewhat in the fourth quarter of 2012. Operating costs fell slightly year over year mainly due to the
weaker Brazilian real.
stratoni
Operating Data
Tonnes ore processed (dry)
Pb grade (%)
Zn grade (%)
Tonnes of concentrate produced
Tonnes of concentrate sold
Average realized concentrate price (per tonne)
Cash costs (per tonne of concentrate sold)
Financial Data (millions)
Revenues
Depreciation and depletion
Gross profit from mining operations
Capital expenditure on mining interests
Total 2012
Total 2011
191,602
6.4%
10.0%
50,680
52,934
$905
$729
$47.9
$6.5
$2.8
$3.2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Stratoni processed 191,602 tonnes of ore and produced 50,680 tonnes of lead/zinc concentrates during 2012 subsequent to the
acquisition of EGU by the Company. A total of 52,934 tonnes of lead/zinc concentrates were sold during that same period at an
average price of $905 per tonne and average cash operating costs of $729 per tonne.
eldoRAdo Gold > 2012 annual rEport 41
Management’s discussion and Analysis of
Financial Condition and Results of operations
Annual Review – Development Projects
KiŞladaĞ phasE iv minE Expansion
The basic engineering package for the process circuit and mine infrastructure for the Phase IV Mine Expansion was completed in the
third quarter of 2012. The capital cost estimate for the project is being updated based on the basic engineering designs. A Connection
Agreement was reached with the high voltage power supplier to provide an additional 154 kV power line to the site. Temporary
power distribution facilities will be required for start up of the first electric shovel. Work continued on design of the North Leach Pad
and North Rock dump including detailed designs for initial construction work.
Procurement of long lead equipment has been ongoing with orders prepared or placed for the mobile mining fleet as well as fixed
plant equipment for the crushing and screening circuits.
Construction activity on site has been focused on earthworks in the proposed plant site and crusher pad areas. The total amount
of cut and fill material within the existing permitted area has been substantially completed. Safety continues to be a major focus
on the site with 150,393 man-hours spent to date on the project this year with no medical aid or lost time incidents.
Capital spending at Kışladağ for the Phase IV Mine Expansion amounted to $74.4 million in 2012, this included $28.7 million for
procurement of long lead equipment.
olympias
Olympias was acquired by the Company in February 2012 as part of the EGU transaction. The Olympias orebody is a carbonate
replacement deposit containing proven and probable gold reserves of 3.8 million ounces of gold with significant lead and zinc
values. Olympias was mined in the past from underground and produced lead and zinc concentrates as well as an arsenopyrite-gold
concentrate. At the time of its acquisition the mine was on care and maintenance.
The Company is planning to develop Olympias in three phases. In Phase I the plan is to refurbish and re-commission the existing
mill and flotation circuits and to reprocess approximately 2.41 million tonnes of historic tailings grading 3.4 g/t gold, at a rate of
approximately 900,000 tonnes per annum. The reprocessing facility is designed to produce a flotation concentrate which can be sold
commercially.
Approximately 28,300 tonnes of tailings were reprocessed during the final quarter of 2012 at a grade of 5.07 grams per tonne during
the re-commissioning of the reprocessing facility. Approximately 826 payable ounces of gold in concentrate were shipped to a
smelter prior to year end and were accounted for as pre-commercial production.
Underground refurbishment was begun during 2012 in tandem with the tailings retreatment with the goal of beginning underground
mining in Phase II. Approximately 1,000 metres of underground drifts were rehabilitated and 1,377 metres of new drifts were
completed. Mine production during Phases II and III, is estimated to be 450,000 and 850,000 tonnes per annum respectively. A core
relogging and geologic interpretation program was begun in 2012 to better understand the full extent and distribution of gold
mineralization. Based on results of this work the production rates may be increased for Phases II and III.
In Phase III (projected to begin in 2018) the Company plans to construct a new metallurgical plant at Stratoni to treat Olympias ore
which will be accessed via an 8 kilometre tunnel, transporting ore to the plant and tailings back to the underground for backfill.
Capital costs incurred in 2012 since the date of the EGU acquisition were $43.6 million for mine development and rehabilitation,
and for mill refurbishment.
sKouriEs
Skouries is a copper/gold porphyry deposit that the Company plans to develop using both open pit and underground mining
methods. The deposit currently hosts proven and probable reserves of 3.6 million ounces of gold and 743,000 tonnes of copper.
From the date of the EGU acquisition a total of $20.6 million was spent on capital development at Skouries. The work consisted
mainly of site clearing and preparation, geotechnical drilling (835 metres), detailed engineering studies and road building.
On February 17, 2013 the Skouries project site was attacked by a group of armed intruders. Office trailers and mobile equipment were
destroyed. The Company is cooperating with the police and other relevant authorities to ensure the safety of our employees and assets.
42 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 43
Management’s discussion and Analysis of
Financial Condition and Results of operations
CErtEj
The Certej development project in Romania was also acquired as part of the EGU transaction. This deposit hosts a 4.3 million ounce
measured and indicated resource that will be developed using open pit mining methods. The Environmental Permit for Certej was
approved by the Timisoara Regional Department of Environment during the third quarter of 2012.
Exploration drilling during 2012 significantly expanded the resource at Certej and work is currently underway to convert the resource
into an updated and expanded pit design and ore reserve. In addition, metallurgical testwork is ongoing, both to validate the
appropriateness of the currently designed metal recovery process and to examine alternative metallurgical processes.
From the date of the EGU acquisition a total of $9.9 million was spent on capital development including land acquisition,
metallurgical drilling and testwork, and exploration drilling.
pErama hill
The Ministry of Environment completed the review of the Preliminary Environmental Impact Assessment (“PEIA”) application and
issued the Approval of the PEIA study in February 2012. Processing of the EIA will be carried out under the Fast Track program
established by the Greek government in 2012. Approval of the EIA is expected to be received in the first quarter of 2013.
Geotechnical drilling in the plant site and tailings disposal basin as well as geotechnical holes in the pit area began during 2012.
Samples for metallurgical testwork were recovered from selected drill holes.
The basic engineering package for the process plant and ancillary facilities was completed in the fourth quarter of 2012. Detailed
engineering including foundation and structural design was initiated for the process plant, ancillary buildings and filtration plant.
Capital spending for Perama Hill in 2012 amounted to $7.6 million.
EastErn draGon
Due to delays in the permitting process for Eastern Dragon the Company elected to reduce activity on site until resolution of the
issues can be achieved. During the course of the year construction work at the site was focused on completing critical work already in
progress as well as securing the site and equipment for care and maintenance.
Capital costs incurred at Eastern Dragon totalled $13.9 million spent on completion of construction work and care and maintenance
of the site facilities.
toCantinzinho
The Preliminary Environmental License for the Tocantinzinho project was issued in September 2012. Public participation meetings
held in the project area in June were positive and supportive of the project development.
Engineering efforts have focused on preparation of a Feasibility Study for the mine and infrastructure and the backup data and
designs required for the study. Preliminary results from the feasibility work have revealed a number of areas which could be
optimized to improve on the economic performance of the project. A critical review of the project will be undertaken in 2013 to
address areas which can potentially impact both capital and operating costs.
Project spending in 2012 was $12.1 million, not including capitalized exploration costs.
eldoRAdo Gold > 2012 annual rEport 43
Management’s discussion and Analysis of
Financial Condition and Results of operations
Annual Review – Exploration
A total of $76.8 million (including capitalized exploration costs) was spent on grassroots, advanced stage and minesite exploration
activities during 2012. The exploration activities included drilling totalling approximately 184,000 metres and were conducted on
32 projects across Turkey, China, Brazil, Greece and Romania.
turKEy
Kışladağ
At Kışladağ, a total of 10,200 metres of diamond drilling was completed in 2012 testing multiple deep targets defined by
a combination of geophysical surveys, soil geochemistry, and geological modelling. The drilling program was not successful at
identifying new mineralized porphyry centers, and most of the mineralization and alteration identified is likely a peripheral
footprint of the Kışladağ deposit. Two final targets remain to be tested once drill-site permitting has been granted.
Efemçukuru
At Efemçukuru, approximately 30,700 metres of exploration drilling was completed during the year on both the Kestane Beleni and
the Kokarpinar vein systems. At Kestane Beleni, drilling was focussed on the Northwest Extension target area (“KBNW”), and also on
the down-dip stepouts in the South Ore Shoot (“SOS”) and Middle Ore Shoot/North Ore Shoot (“MOS/NOS”) transition area. In the
KBNW target area, 2012 drilling defined a new shallowly-plunging ore shoot with high gold grades. This ore shoot remains open
down plunge to the northwest. In both the SOS and MOS/NOS transition areas, the new drilling extended the known mineralization
downdip, and ore shoots remain open at depth. Drilling on the Kokarpinar vein system focused on the relatively untested central
portion of the vein. Two new ore shoots were identified: a northern ore shoot supported to date by multiple bonanza grade intercepts,
and a more limited southern ore shoot, dominated by stockwork mineralization in the hangingwall to the principal vein. The northern
Kokarpinar ore shoot is open downdip, and has also not been tested in the approximately 300 metre interval between the drillhole
intercepts and the surface. Most of the mineralization identified in 2012 drilling at both Kestane Beleni and Kokarpinar falls in the
Inferred Resource category. Infill drilling of these zones is planned for 2013.
Reconnaissance Programs
Drilling campaigns were completed in 2012 at the Sebin and Dolek porphyry/epithermal prospects in the Pontide Belt (2,600 metres
and 3,800 metres respectively); and the Gaybular porphyry prospect in north-western Turkey (2,500 metres). The first-pass programs
at all three of these projects were completed without sufficient positive results to justify further work; consequently, a partner will
be sought to conduct future exploration. Permitting difficulties precluded the 2012 drilling program planned for the Atalan project.
Exploration at the Salinbas epithermal project in the eastern Pontide Belt was conducted under the operatorship of joint venture
partner Ariana Resources. A total of 1,650 metres of drilling was completed, focussing on infill/stepout drilling of the stratiform
mineralized zone, as well as two holes in the previously untested zone linking Salinbas and the Ardala porphyry. Best results were
from the latter area, where one of the drillholes cut an interval of 81.7 metres grading 1.29 grams per tonne gold. Eldorado will
assume operatorship of the Joint Venture in 2013 before conducting further exploration of this area.
China
Tanjianshan District
The 2012 exploration program in the Tanjianshan district included drilling programs at the Xijongou (“XJG”) deposit, the Qinlongtan (“QLT”)
north target area, the Zhongxinshan ("ZXS") prospect, and the Jinlonggou (“JLG”) deposit. At XJG, a total of 5,700 metres of drilling
was conducted on infill and stepout holes, providing further definition of the two main mineralized zones as well as testing new
target areas. At QLT north, drilling tested the mineralized fault zone at depth beneath the north end of the open pit. Several high-
grade intercepts contributed to a new inferred resource in this target area, which is included in the exploration program for 2013.
In addition, exploration drilling by our joint venture partner at QLT north encountered a strongly-mineralized intrusion with high
gold grades adjacent to the controlling fault. Follow-up drilling of this new zone of mineralization began in late 2012 and is included
in the 2013 exploration program.
At the Jinlonggou pit, a total of 10,800 metres of drilling targeted zones of inferred mineralization beneath the floor of the current
design pit, and also tested the continuity of mineralized fault zones behind the west and south pit walls. This drilling yielded several
new zones of Inferred Resources, which are included in the planned infill and stepout drilling program for 2013.
44 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 45
Management’s discussion and Analysis of
Financial Condition and Results of operations
Jinfeng District
During 2012, drilling in the Jinfeng district was completed at the Jinluo, Pogau, Da’ao, Lurong, and Jinfeng 42 license areas, and at
the Jinfeng mine proper. First-pass target definition and drill testing has now been completed over the most prospective areas of the
Jinluo exploration license and the nine Jingdu exploration licenses, with little encouragement for follow-up exploration. Both Joint
Ventures are now in the process of being divested.
At the Jinfeng 42 exploration licenses, drilling was conducted at the Lintan, Shizhu, and HCG target areas. Best results were from
Lintan, where additional narrow moderate grade intercepts were cut along the main controlling fault. Although none of the
mineralization identified to date in the Jinfeng 42 area is consider economic, the position of the licenses surrounding the Jinfeng
mining license is of strategic importance, and a modest exploration program is planned for 2013.
At the Jinfeng mine, drilling included surface and underground programs (16,500 metres and 14,200 metres respectively) which
targeted step-outs along the known major mineralized fault zones (F2, F3, F6), infilled gaps in the existing resource model, and tested
new conceptual targets. The exploration drilling was successful in maintaining Measured and Indicated Resources at the deposit.
White Mountain District
Exploration drilling of the White Mountain deposit was delayed pending development of additional underground drill stations.
Outside of the mining license, drilling was completed in the White Mountain district at the Dongdapo, Xiaoshiren, and Zhenzhumen
prospects. At Dongdapo, a total of 1,800 metres of drilling were completed. No significant mineralization was encountered, and
future exploration will shift to testing other targets within the license area. A total of 2,500 metres of drilling was completed in the
Xiaoshiren Central and Xiaoshiren South target areas. Best results were an intercept of 37.6 metres grading 2.84 grams per tonne
gold from the Xiaoshiren South target.
Brazil
Tocantinzinho District
At Tocantinzinho, 2012 exploration activities included 5,700 metres of diamond drilling testing geophysical and geochemical targets
peripheral to the deposit. Significant results included the discovery of a zone of copper-molybdenum porphyry-style mineralization
several kilometres west of Tocantinzinho, with a drillhole intercept of 295.0 metres grading 0.19% copper and 0.015% molybdenum.
Narrow intervals of high grade gold mineralization were also encountered in several drillholes, and will be further tested in 2013.
Reconnaissance
At the Agua Branca project, 8,800 metres of drilling tested the Camarao Hill zone over a 2 kilometre strike length. Although the
drilling confirmed continuity of the northeast-striking mineralized zone, significant gold values were typically restricted to narrow
intervals within broad low grade zones, and none of the new holes improved on results from previous drill programs. Additional
auger testing is planned for early 2013.
Reconnaissance fieldwork aimed at defining drill targets was completed during the year at the Piranhas and Chapadinha projects,
both being explored under option agreements with private owners.
GrEECE
Chalkidiki District
In the Chalkidiki district, drilling programs were completed in 2012 at the Skouries, Piavitsa and Fisoka project areas. At Piavitsa,
14,000 metres of drilling tested the mineralized Stratoni Fault zone over approximately a 2 kilometre strike length, constraining a
new Inferred Resource for the deposit. Strongest mineralization was encountered in two areas: one near the central portion of the
tested area; and the other in the Piavitsa West area, where the Stratoni Fault appears to be offset by a north-striking younger fault.
Several drillholes also cut mineralized veins with intermediate sulfidation epithermal characteristics and moderate gold grades. This
discovery represents a style of mineralization not previously known in the district.
At Skouries, a total of 12,100 metres of drilling was completed including 19 infill drillholes in the design pit area, and two deep
confirmation drillholes. Infill drillholes converted portions of the low-grade Inferred Resource peripheral to the deposit core into
Measured and Indicated Resources. The two deep confirmation holes intersected intense porphyry-style mineralization within
potassically altered syenite and lesser wallrock zones, with grades similar to those predicted by the resource model.
eldoRAdo Gold > 2012 annual rEport 45
Management’s discussion and Analysis of
Financial Condition and Results of operations
At Fisoka, a total of 2,700 metres of drilling was completed testing the three primary porphyry target areas. Best results were from a
shallow supergene blanket over the northern porphyry body, with grades similar to those obtained from previous drilling programs.
Perama District
In the Perama district, exploration activities during 2012 focused on mapping and sampling of the Perama South deposit area,
directed towards identifying controls on mineralization for future drill targeting. At Perama Hill, infill drilling along the western
margin of the deposit began late in the year.
romania
Certej District
Exploration activities in the Certej district during 2012 included drilling programs at the Certej deposit and at the Sacaramb
prospect. At the Certej deposit, drilling focused on two areas referred to as the link zone and the west pit areas. A total of
13,900 metres of drilling was completed which identified new high grade zones of mineralization within the deeper parts of the
link zone, and significantly increased the deposit resource. At Sacaramb, drilling tested geophysical anomalies along the inferred
extension of vein systems that were mined historically. This drill program did not encounter significant new mineralization.
Non-IFRS Measures
Throughout this document, we have provided measures prepared in accordance with IFRS, as well as some non-IFRS performance
measures as additional information for investors who also use them to evaluate our performance.
Since there is no standard method for calculating non-IFRS measures, they are not a reliable way to compare us against other
companies. Non-IFRS measures should be used with other performance measures prepared in accordance with IFRS.
We have defined our non-IFRS measures below and reconciled them with the IFRS measures we report.
Cash Operating Cost
The table below reconciles cash operating cost to operating costs. We calculate costs according to the Gold Institute Standard.
$ millions (except for gold ounces sold and per ounce amounts)
2012
2011
Production costs – excluding Vila Nova and Stratoni
(from consolidated income statements)
Less:
By-product credits
Total cash cost
Less:
Royalty expense and production taxes
Cash operating cost
Gold ounces sold
Total cash cost per ounce
Cash operating cost per ounce
352.9
(6.6)
346.3
(44.1)
302.2
625,394
554
483
316.2
(5.2)
311.0
(43.9)
267.1
658,919
472
405
Cash Flow From Operations Before Changes in Non-Cash Working Capital
We use cash flow from operations (or operating activities) before changes in non-cash working capital to supplement our consolidated
financial statements, and calculate it by not including the period to period movement of non-cash working capital items, like
accounts receivable, advances and deposits, inventory, accounts payable and accrued liabilities.
We believe this provides a better indication of our cash flow from operations and may be meaningful in evaluating our past
performance or future prospects. It is not meant to be a substitute for cash flow from operations (or operating activities), which
we calculate according to IFRS.
46 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 47
Management’s discussion and Analysis of
Financial Condition and Results of operations
Financial Condition
Operating activities before changes in non-cash working capital generated $447.7 million in cash this year, compared to
$502.1 million in 2011. In addition, cash flow of $54.7 million related to pre-commercial production was recorded as cash flows
from investment activities.
Capital ExpEnditurEs
We invested $426.2 million in capital expenditures, mine development, mining licences and other assets this year.
Mine development and capitalized exploration expenditures at our development projects totalled $117.0 million:
• $43.6 million at Olympias
• $20.6 million at Skouries
• $3.9 million at Piavitsa
• $7.6 million at Perama Hill
• $9.9 million at Certej
• $13.9 million at Eastern Dragon
• $17.5 million at Tocantinzinho
Spending at our producing mines (including capitalized exploration and development activities) totalled $292.7 million:
• $104.9 million at Kışladağ
• $73.2 million at Efemçukuru
• $59.0 million at Jinfeng
• $27.2 million at White Mountain
• $23.9 million at Tanjianshan
• $1.3 million at Vila Nova
• $3.2 million at Stratoni
We also spent $13.0 million on land acquisitions in Turkey. The remaining $3.5 million related to fixed assets for our corporate offices
in Canada, Brazil, Turkey, Greece, Romania and China.
Capital Resources
($ millions)
Cash and cash equivalents
Working capital
Restricted collateralized accounts
Debt – current and long-term
2012
816.8
917.3
0.2
593.3
2011
393.8
435.7
55.4
81.0
Cash and cash equivalents of $228.1 million are held by the Company’s operating entities in China and Turkey where the cash was
generated. No income tax liability has been recognized for the potential repatriation of these funds. If the cash held in these entities
is repatriated by way of dividends to the parent company, withholding taxes would be due on the amounts at the rate of 10% for
Turkey, and 5% to 10% for China.
Management believes that the working capital at December 31, 2012, together with future cash flows from operations and, where
appropriate, selected financing sources, including available credit lines, are sufficient to support our planned and foreseeable
commitments, and dividends, if declared, in 2013 and beyond.
eldoRAdo Gold > 2012 annual rEport 47
Management’s discussion and Analysis of
Financial Condition and Results of operations
Contractual Obligations
as at December 31, 2012
($ millions)
Debt
Capital leases
Operating leases
Purchase obligations
Totals
2013
10.3
0.2
6.6
171.6
188.7
2014
2015
2016 and beyond
–
–
7.1
21.8
28.9
–
–
4.4
16.1
20.5
600.0
–
9.9
29.0
638.9
Total
610.3
0.2
28.0
238.5
877.0
Purchase obligations relate primarily to the Phase IV Mine Expansion Project at Kışladağ, mine development projects in Greece, and
operating and maintenance supply contracts at our operating mines. The table does not include interest on debt.
Debt
sEnior notEs
On December 10, 2012, the Company completed an offering of $600.0 million senior notes (“the notes”) at par value, with a coupon rate
of 6.125% due December 15, 2020. The notes pay interest semi-annually on June 15 and December 15. The Company received proceeds of
$589.5 million from the offering, which is net of a commission payment. The commission payment of $10.5 million will be recognized in
the consolidated income statement over the term of the notes. The notes are redeemable by the Company in whole or in part, for cash:
i)
ii)
At any time prior to December 15, 2016 at a redemption price equal to 100% of the aggregate principal amount of the notes at
the treasury yield plus 50 basis points, and any accrued and unpaid interest;
On and after the dates provided below, at the redemption prices, expressed as a percentage of principal amounts of the notes to
be redeemed, set forth below, plus accrued and unpaid interest on the notes:
December 15, 2016
December 15, 2017
2018 and thereafter
103.063%
101.531%
100.000%
Net deferred financing costs of $6.5 million have been included as an offset in the balance of the notes in the financial statements
and are being amortized over the term of the notes.
rEvolvinG CrEdit faCility
In October 2011, the Company entered into a $280.0 million revolving credit facility with HSBC (“the credit facility”) and a syndicate
of other banks. The credit facility was to mature on October 12, 2015.
In November 2012, the Company amended, restated and increased the existing revolving credit facility with HSBC (“the amended and
restated credit agreement” or “ARCA”) to $375.0 million. The ARCA matures on November 23, 2016. The ARCA is secured by the shares
of SG Resources B.V. and Tuprag Metal Madencilik Sanayi ve Ticaret A.S., wholly owned subsidiaries of the Company.
The ARCA contains covenants that restrict, among other things, the ability of the Company to incur an aggregate unsecured
indebtedness exceeding $850.0 million, incur secured indebtedness up to $200.0 million, make distributions in certain circumstances,
sell material assets and carry on a business other than one related to the mining business. Significant financial covenants include
a maximum debt to Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of 3.5:1 and a minimum EBITDA to
interest of 3:1. The Company is in compliance with these covenants at December 31, 2012.
Loan interest is variable dependent on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately 1:1. At this
ratio, interest charges and fees are as follows: LIBOR plus margin of 2.00% and undrawn standby fee of 0.50%. Fees of $3.0 million
were paid on the establishment of the credit facility in 2011, and additional fees of $1.7 million were paid on the amendment to the
credit facility. These amounts have been deferred as prepayments for liquidity services and will be amortized over the term of the
credit facility. As at December 31, 2012, the prepaid loan cost on the balance sheet was $3.9 million.
No amounts were drawn down under the ARCA as at December 31, 2012.
48 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 49
Management’s discussion and Analysis of
Financial Condition and Results of operations
EastErn draGon
Standby Line of Credit
In January 2010, Rock Mining Industry Development Company Limited (“Eastern Dragon”), our 95% owned subsidiary, entered into
a RMB 320.0 million ($50.8 million) standby letter of credit loan with China Merchants Bank (“CMB”). On February 5, 2010, Eastern
Dragon made a drawdown on this loan which was used to repay its letter of credit loan with China Construction Bank (“CCB”).
This loan had a one year term. In January 2012, the term was extended for a second year term to January 2013 and the annual
management fee of 10% of the interest accrued on the outstanding amount paid quarterly was removed. In addition, the floating
interest rate was to be adjusted monthly at the prevailing lending rate stipulated by the People’s Bank of China for working capital
loans. This loan was collateralized by way of a restricted cash deposit as funding of the irrevocable letter of credit issued by
Sino Gold Mining Pty. (“Sino Gold”) to CMB. The collateral was increased in January 2012 from $52.3 million to $56.5 million.
During 2012, Eastern Dragon repaid the full amount of this loan and the restricted cash was released.
Project Financing Loan
In 2009, Eastern Dragon entered into a RMB 450.0 million ($71.6 million) project financing loan with CMB.
The loan has three components:
• a long-term loan of RMB 320.0 million ($50.9 million), with a five-year term
• a fixed asset loan of RMB 100.0 million ($15.9 million) with a four-year term
• a working capital loan of RMB 30.0 million ($4.8 million) with a one-year term
The project-financing loan is subject to a floating interest rate adjusted quarterly to 90% of the prevailing lending rate stipulated
by the People’s Bank of China for similar loans.
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 are required to be met 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 $40.0 million;
• The aggregate of the amount deposited in the offshore account, Eastern Dragon registered capital and shareholder and
entrusted loan is at least $84.7 million (this threshold has been reached as at December 31, 2009).
In addition, before the drawdown on the fixed asset loan, 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;
• The project has been developed and in production;
• The gold operation permit has been granted; and
• The safety production permit and environmental protection permit have been granted.
The project-financing loan requires Eastern Dragon to maintain a liability to asset ratio of 70% or lower, excluding share-holder loan
and total banking debt cannot exceed RMB 550.0 million ($87.5 million) and it 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-financing loan as at December 31, 2012.
HSBC Revolving Loan Facility
In May 2010, Eastern Dragon entered into a RMB 80.0 million ($12.7 million) revolving facility (“the Facility”) with HSBC Bank (China).
The Facility can be drawn down in minimum tranches of RMB 1.0 million ($0.2 million) or its multiples. Each drawdown bears
interest fixed at the prevailing lending rate stipulated by the People’s Bank of China on the date of draw-down. The Facility has a
term of up to one year. In February 2012, the Facility was reviewed by the bank and was extended to March 11, 2013. The interest rate
on this loan as at December 31, 2012 was 6.16%.
As at December 31, 2012, RMB 65.0 million ($10.3 million) was outstanding on this loan.
The Facility is secured by a letter of guarantee issued by Eldorado. Eldorado must maintain at all times a security coverage ratio of
110% of the amounts drawn down. As at December 31, 2012, the security coverage is $11.4 million.
eldoRAdo Gold > 2012 annual rEport 49
Management’s discussion and Analysis of
Financial Condition and Results of operations
This Facility is to be repaid in full when Eastern Dragon obtains the required project approval that will allow it to complete the
second drawdown on the project-financing loan.
Entrusted Loan
In November 2010, Eastern Dragon, HSBC Bank (China) and Qinghai Dachaidan Mining Ltd (“QDML”), our 90% owned subsidiary,
entered into a RMB 12.0 million ($1.9 million) entrusted loan agreement, which was subsequently increased to RMB 180.0 million
($28.6 million) in September 2011, and to RMB 620.0 million ($98.6 million) in September 2012.
Under the terms of the entrusted loan, QDML with its own funds entrusts HSBC Bank (China) to provide a loan facility in the name
of QDML to Eastern Dragon.
The entrusted loan can be drawn down in tranches. Each drawdown bears interest fixed at the prevailing lending rate stipulated by
the People’s Bank of China on the date of drawdown. Each draw down has a term of three months and can be rolled forward at the
discretion of QDML. The interest rate on this loan as at December 31, 2012 was 4.59%.
As at December 31, 2012, RMB 543.0 million ($86.4 million) had been drawn under the entrusted loan.
Subsequent to December 31, 2012, RMB 5.0 million ($0.8 million) was drawn under this loan.
The entrusted loan has been recorded on a net settlement basis.
jinfEnG
Construction Loan
In 2009, Guizhou Jinfeng Mining Ltd. (“Jinfeng”), our 82% owned subsidiary entered into a RMB 680.0 million ($108.2 million)
construction loan facility (“the construction loan”) with CCB. The construction loan had a term of 6 years commencing from
February 27, 2009 and was subject to a floating interest rate adjusted annually at 95% of the prevailing lending rate stipulated by
the People’s Bank of China for similar loans. Jinfeng made regularly scheduled quarterly loan repayments as well as prepayments
during the period 2010 and 2011, leaving a remaining loan balance at the beginning of 2012 of $19.9 million. During 2012 Jinfeng
paid off the remaining loan balance.
Working Capital Loan
On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($15.9 million) working capital loan with CMB. Each drawdown bears
fixed interest at the prevailing lending rate stipulated by the People’s Bank of China on the date of drawdown. The Facility has a term
of up to one year, from January 16, 2013 to January 15, 2014. The facility is unsecured and has no security pledged as collateral.
As at February 5, 2013, Jinfeng has drawn down RMB 78.0 million ($12.4 million) under this facility, and used the proceeds to fund
working capital obligations. This tranche of the loan has a term of six months and a fixed interest rate of 5.6%.
Defined Benefit Plans
The Company operates defined benefit pension plans in Canada with two components: a registered pension plan (“the Pension Plan”)
and non-registered supplementary pension plan (“the SERP”). During the second quarter of 2012, the Company set up a Retirement
Compensation Arrangement (“RCA”) trust account in connection with its non-registered supplementary pension plan. As it is a trust
account, the assets in the account are protected from the Company’s creditors. The RCA requires the Company to remit 50% of
any contributions made to the Receiver General for Canada to a refundable tax account. 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 related to these plans are actuarially determined and made at or in excess of minimum requirements
prescribed by legislation.
Eldorado’s plans are actuarial valuations for funding purposes. The Pension Plan last had an actuarial valuation performed as of
January 1, 2011 for funding purposes with the next required valuation as of January 1, 2014. The SERP’s last valuation was on
January 1, 2012 for funding purposes and the next valuation will be prepared in accordance with the terms of the Pension Plan.
The measurement date to determine the pension obligation and assets for accounting purposes was December 31, 2012.
50 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 51
Management’s discussion and Analysis of
Financial Condition and Results of operations
The SERP is designed to provide supplementary pension benefits to qualifying employees affected by the maximum pension limits
under the Income Tax Act pursuant to the registered Pension Plan. Further, the Company is not required to prefund any benefit
obligation under the SERP.
Cash contributed to the Pension Plan and the SERP was $39.6 million (2011 – $7.5 million). Cash payments totaling $0.2 million
were made directly to beneficiaries during the year (2011 – $0.2 million). The Company expects to contribute $0.1 million to the
Pension Plan and $2.8 million to the SERP in 2013.
Equity
This year we received net proceeds of $22.1 million for issuing 3,271,683 common shares related to stock options and warrants
being exercised.
We may make minor accounting adjustments to these figures before they are presented in future consolidated financial statements.
Common Shares Outstanding
as of February 21, 2013
as of December 31, 2012
Share purchase options – as of February 21, 2013
(Weighted average exercise price per share: $13.68 CDN)
Managing Risk
714,534,476
714,344,476
14,727,006
This section describes the types of risks we are exposed to and our objectives and policies for managing them (please read the
Company’s Annual Information Form for additional information).
We manage risk using our risk management review process. Management prepares a risk assessment report every quarter outlining
our operational and financial risks. The Board reviews the report to evaluate and assess the risks we are exposed to in various
markets, and discusses the steps management takes to protect the company against them.
finanCial risK
Liquidity Risk
Liquidity risk is the risk that we cannot meet our financial obligations. We use a rigorous planning, budgeting and forecasting process
to help determine the funds we will need to support our ongoing operations and our expansion plans. Management believes that the
working capital at December 31, 2012, together with future cash flows from operations and, where appropriate, selected financing
sources, is sufficient to support our planned and foreseeable commitments in 2013 and beyond.
Credit Risk
Credit risk is the risk that the counterparty to a financial instrument will not meet its obligations and will cause the Company to
incur a financial loss. To mitigate exposure to credit risk on financial assets, we have policies that require counterparties demonstrate
minimum creditworthiness, and ensure liquidity of available funds. We also monitor our concentrations of credit risk and closely
monitor our financial assets.
Payment for metal sales is normally in advance or within fifteen days of shipment depending on the buyer. The historical level of
customer defaults is negligible which reduces the credit risk associated with trade receivables at December 31, 2012.
We invest our cash and cash equivalents in major financial institutions and in government issuances, according to our short-term
investment policy. The credit risk associated with these investments is considered to be low, but many financial institutions have
gone into bankruptcy or been rescued by government authorities over the past few years. That makes us subject to the risk of loss
of the deposits we have with financial institutions. As at December 31, 2012, approximately 71% of our cash and cash equivalents,
including restricted cash, were with one financial institution.
eldoRAdo Gold > 2012 annual rEport 51
Management’s discussion and Analysis of
Financial Condition and Results of operations
Currency Risk
We sell gold in US dollars, but our costs are mainly in US dollars, Canadian dollars, Turkish lira, Brazilian real, Euros, Romanian Lei, and
Chinese renminbi. An increase in the value of any of these currencies against the US dollar can increase our production costs and
capital expenditures, which can affect future cash flows.
The table below shows our assets and liabilities and debt denominated in currencies other than the US dollar at December 31, 2012.
We recognized a gain of $2.8 million on foreign exchange this year, compared to a loss of $5.4 million in 2011.
(thousands)
Cash and cash
equivalents
Marketable securities
Accounts receivable
and other
Accounts payable and
accrued liabilities
Debt
Net balance
Equivalent in
US dollars
Canadian
Dollar
Australian
Dollar
Euro
Swedish
Krona
Romanian
Lei
British
Pound
Turkish
Lira
Chinese
Renminbi
Brazilian
Real
256,134
1,141
2,806
–
3,874
305
3,608
691,460
2,442
1,979
2,147
(12,670)
–
–
–
–
7,418
–
38,775
–
3,471
(33,744)
–
(1,474)
–
–
–
–
26,082
–
142,235
–
35,279
(61,235)
(687,162)
(6,807)
–
247,590
–
1,141
–
(23,520)
–
38,775
–
5,871
–
305
–
(31,545)
(64,998)
81,535
–
30,914
248,857
1,187
(31,013)
5,967
1,749
495
(17,696)
12,972
15,132
Accounts receivable and other current and long-term assets relate to goods and services taxes, income taxes, value-added taxes and
insurance receivables. Based on the balances at December 31, 2012, a 10% increase/decrease in the exchange rates on that date
would have resulted in a decrease/increase of approximately $23.8 million in profit before taxes.
Interest Rate Risk
Interest rates determine how much interest we pay on our debt, and how much we earn on our cash and cash equivalents, which can
affect future cash flows.
The majority of our debt is in the form of notes with a fixed interest rate of 6.125%. We earned an average of approximately 1.4% in
interest on our cash and cash equivalents this year, compared to 1.0% in 2011.
We don’t actively manage our exposure to changes in interest rates.
Price Risk
Our profitability depends on the price of gold, which is affected by many things, including the sale or purchase of gold by 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. We don’t hedge against changes in the price of gold.
• The cost of production, development and exploration varies depending on the market prices of certain mining consumables,
including diesel fuel and electricity. We are evaluating a hedge against changes in the price of diesel fuel.
• Electricity is regionally priced in Turkey and China and semi-regulated by the federal governments of those countries, which
reduces the risk of price fluctuations. We do not hedge against changes in the price of electricity.
Sensitivity Analysis For Key Variables
A change of
Would change our
after-tax net earnings by
Currency values against the US dollar
Price of gold (based on the expectations and assumptions we used in our 2013 outlook)
Interest rate on variable interest debt
Interest earned on cash and cash equivalents
Price of diesel fuel
10%
10%
10%
10%
10%
$23.8 million
$93.8 million
$0.1 million
$0.9 million
$3.0 million
52 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 53
Management’s discussion and Analysis of
Financial Condition and Results of operations
othEr risKs and unCErtaintiEs
Exploration and Development
The cost and results of our exploration and development programs affect our profitability and value. The life of a mine is fixed
based on its mineral reserves, so we actively seek to replace and expand our reserves, mainly through exploration, acquisition and
the development of our existing operations. Exploring for minerals involves many risks and may not lead to new economically
viable mining operations or yield new reserves to replace and expand current reserves. Our reserve estimates are based on certain
assumptions and affected by the inherent 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 that we have, or are seeking, an interest in. Although we take every precaution
to ensure that legal title to our properties is properly recorded in our name, there can be no assurance we will ultimately secure
title on every property. Legal title to our properties depends on the laws in the countries we operate in, and their appropriate and
consistent application.
Operations
The business of gold mining involves many operational risks and hazards. We work to reduce the risks associated with our projects by
setting high operational standards, hiring and training appropriately skilled personnel, and making improvements to our operations.
We maintain adequate insurance to cover normal business risk. We rely on a number of key employees. Our success depends on
attracting and retaining qualified personnel in a competitive labour environment.
Environment
There may be environmental hazards at our mines or projects that we are unaware of. We may be liable for any associated losses, or
be forced to do extensive remedial cleanup or pay for governmental remedial cleanup, even if the hazards were caused by previous
or existing owners or operators of the property, past or present owners of adjacent properties or by natural conditions. The costs of
any cleanup could have a material and adverse effect on our operations and profitability.
Laws, Regulations and Permits
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 government permits and provide associated financial assurance to conduct certain
activities. We are also subject to various conditions related to reclamation that are imposed under federal, state or provincial air,
water quality and mine reclamation rules and permits.
We have budgeted for future capital and operating expenditures to obtain such permits and maintain compliance with these
environmental, health and safety laws, however, any changes to these laws in the future could have an adverse effect on our financial
condition, liquidity or results of operations and could delay our ability to obtain such permits.
If these laws are not complied with, we may face injunctions, damages and penalties, or our permits could be suspended or revoked.
There is no assurance that we have been, or will be, in compliance with environmental, health and safety laws at all times, that our
compliance will not be challenged, or that the cost of complying with current or future laws will not have a material and adverse
effect on our future cash flow, results of operations and financial condition.
Litigation
All industries, including the mining industry, are subject to legal claims that are with and without merit.
We are currently involved in various routine legal and regulatory proceedings. It’s unlikely that the final outcome of these routine
proceedings will have a material and adverse effect on our financial condition or results of operations; however, defense and
settlement costs can be substantial, even for claims that are without merit. Due to the inherent uncertainty of the litigation process
and dealings with regulatory bodies, there is no assurance that any legal or regulatory proceeding will be resolved in a manner that
will not have a material and adverse effect on our future cash flow, results of operations or financial condition.
Political Risk
We operate in five countries outside of North America: Turkey, China, Brazil, Romania and Greece. Our operations in these countries
may be subject to political, economic and other risks that may affect our future operations and financial position.
eldoRAdo Gold > 2012 annual rEport 53
Management’s discussion and Analysis of
Financial Condition and Results of operations
Other Information
CritiCal aCCountinG poliCiEs and EstimatEs
We are required to make estimates that affect the amount of assets, liabilities, contingent liabilities revenue and expenses we report.
We have identified the following critical accounting policies and estimates. You can find all of our significant accounting policies in
note 3 of our 2012 consolidated financial statements.
Inventories
We value finished goods, work-in-process, heap leach ore and stockpiled ore at the average production cost or its net realizable value
– whichever is lower.
We consider ore stacked on our leach pads and in process at our mines as work-in-process inventory and record their value in
earnings, and include them in the cost of sales based on ounces of gold sold, using the following assumptions in our estimates:
• the amount of gold we estimate is in the ore stacked on the leach pads
• the amount of gold we expect to recover from the stacks
• the amount of gold and other metals in the mill circuits
• the amount of gold and other metals in concentrates
• the gold and other metal prices we expect to realize when the gold and other metals is sold.
If our estimates or assumptions are inaccurate, we could be required to write down the value we have recorded on our work-in-process
inventories, which would reduce our earnings and working capital. At December 31, 2012, the average cost of inventory was
significantly below its net realizable value.
Reserves and Resources
Our estimates for Kışladağ, Efemçukuru, Tanjianshan, Jinfeng, White Mountain, Perama, Tocantinzinho, Eastern Dragon, Skouries,
Olympias, Stratoni, Certej and Vila Nova are based on the definitions adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum, and in compliance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101),
developed by the Canadian Securities Administrators.
You will not be able to compare the mineral reserve and resources information in this report with similar information from U.S. companies.
The United States Securities & Exchange Commission (SEC) defines a mineral reserve as the part of a mineral deposit that can be
economically and legally extracted or produced. It does not recognize the terms measured, indicated and inferred mineral resources
(mining terms under NI 43-101), and does not accept them in reports and registration statements. You should not assume that:
• the mineral reserves defined in this report qualify as reserves under SEC standards
• the measured and indicated mineral resources in this report will ever be converted to reserves
• the inferred mineral resources in this report are economically mineable, or will ever be upgraded to a higher category.
Value Beyond Proven And Probable Reserves (“VBPP”)
On acquisition of a mineral property, we prepare an estimate of the fair value of the exploration potential of that property and record
this amount as an asset, called value beyond proven and probable, as at the date of acquisition. As part of our annual business cycle,
we prepare estimates of proven and probable reserves for each mineral property. The change in reserves, net of production, is used to
determine the amount to be converted from VBPP to proven and probable reserves subject to amortization.
Mining Interests
We depreciate most of our mining properties, plant and equipment using the unit-of-production method, where the value of property
is reduced as reserves are depleted. We base this on mining rates and our estimates of reserves. If these change, 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.
At the end of every year, we assess whether there has been an impairment of our capitalized mining properties, plant and equipment.
If there were an impairment, we would be required to write down the recorded value of our mining properties, plant and equipment,
which would reduce our earnings and net assets.
For producing properties, we base our assessment on the future net cash flows we expect the property will generate. There will be
an impairment if metal prices are lower, production costs have increased, or metal recoveries are lower than previously estimated.
54 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 55
Management’s discussion and Analysis of
Financial Condition and Results of operations
For non-producing properties, we base our assessment on whether there are factors that might indicate the need for a write-down.
There will be an impairment if we believe current economics or permitting issues will prevent us from recovering the costs we have
deferred for the property.
At December 31, 2012, based on an average projected gold price for 2013-2017 of $1,700 per ounce and a long-term inflation
adjusted price of $1,350 per ounce by 2018, the estimated discounted net cash flow from our mining properties, plant and equipment
exceeded their carrying values.
Goodwill and Impairment Testing
We account for business combinations using the purchase method of accounting. We record the fair market value of assets acquired
and liabilities assumed as of the date of acquisition, and record any excess of the purchase price over fair value as goodwill. When
the excess is negative it is recognized immediately in income. The assumptions underlying fair value estimates are subject to
significant risks and uncertainties.
We review and evaluate the carrying amount of goodwill every year by comparing the fair value of our units to their carrying
amounts. If a unit’s carrying value exceeds its fair value, we compare its carrying value to the implied fair value of its goodwill, and
charge the amount the carrying value exceeds fair value to operations.
At December 31, 2012, our consolidated balance sheet included $839.7 million in goodwill as follows: EGU Greek assets
($473.8 million), Sino Gold assets ($363.7 million) and Tanjianshan ($2.2 million). We used a discount rate of 7% to calculate the net
present value of cash flows from Tanjianshan 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. There was no impairment of
goodwill for any of these units. Our EGU Greek and Romanian gold projects have been recorded at their fair values as of the date of
acquisition, February 24, 2012, using a discount rate of between 7% and 9%.
Operating Costs
We calculate cash operating costs according to 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 calculate the fair value of stock options that have been given to employees, officers and directors.
This model uses assumptions of share price, volatility and expected life of options.
Asset Retirement Obligations
We estimate the mine closure date, the discount rate, the inflation rate and the timing reclamation costs to determine the carrying
value of an asset retirement obligation.
Income Taxes
We record income taxes using income tax rates we expect to apply in the years we estimate the various temporary differences will
be recovered or settled. Where the tax laws and regulations are unclear or subject to varying interpretations, these estimates could
change, and materially affect the amount of income tax liabilities recorded at the balance sheet date.
Pension Plans
We use various actuarial assumptions to estimate our obligations and expenses, 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.
December 31, 2012
December 31, 2011
Key Assumptions – 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
Pension Plan
6.0%
4.5%
3.9%
3.0%
7.8 years
SERP
3.0%
4.5%
3.9%
3.0%
7.8 years
Pension Plan
6.5%
5.5%
4.5%
3.0%
6.7 years
SERP
6.5%
5.5%
4.5%
3.0%
6.7 years
eldoRAdo Gold > 2012 annual rEport 55
Management’s discussion and Analysis of
Financial Condition and Results of operations
Changes in Accounting Policies
The following standards and amendments to existing standards have been published and are mandatory for Eldorado’s annual
accounting periods beginning January 1, 2013, or later periods:
• IAS 19 ‘Employee Benefits’ – On June 16, 2011, the International Accounting Standards Board (IASB) published a revised version of
IAS 19. The revised IAS 19 (“IAS 19R”) represents IASB’s effort to improve the accounting for employee retirement benefits. The
revisions include:
– Requirement to recognize past service costs immediately in net income rather than using the corridor method.
– Requirement to recognize actuarial gains and losses immediately in other comprehensive income OCI. Previously, companies
had the option of recognizing actuarial gains and losses through OCI immediately or via use of the corridor method.
– Requirement that expected return on plan assets be calculated based on the rate used to discount the defined benefit obligation
which is based on high quality bond yields. Previously, equity returns were incorporated into the expected return on plan assets.
– Requirement for more disclosure relating to the characteristics and risks of the amounts in the financial statements regarding
defined benefit plans, including the timing and uncertainty of the entity’s cash flows.
The revised IAS 19 will be applicable for reporting periods starting on or after January 1, 2013 with retrospective application. If the
standard had been effective January 1, 2012, defined benefits expense for the Company would have been reduced by $0.3 million.
• IFRS 9 ‘Financial Instruments: Classification and Measurement’ – This is the first part of a new standard on classification and
measurement of financial assets that will replace IAS 39, ‘Financial Instruments: Recognition and Measurement’. IFRS 9 has two
measurement categories: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is
recorded at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal
and interest. Otherwise it is measured at fair value with changes in fair value through profit or loss. In addition, this new
standard has been updated to include guidance on financial liabilities and de-recognition of financial instruments. This standard
is effective for years beginning on or after January 1, 2015. The extent of the impact of adoption of IFRS 9 has not yet been
determined.
• IFRS 10 ‘Consolidated Financial Statements’ – IFRS 10 establishes control as the basis for an investor to consolidate its investee;
it defines control as an investor’s power over the investee with exposure, or rights, to variable returns from the investee and
the ability to affect the investor’s return through its power over the investee. This standard is effective for years beginning on
or after January 1, 2013. The Company does not expect the adoption of IFRS 10 to have a material impact on the consolidated
financial statements.
• IFRS 11 ‘Joint Arrangements’ – This standard replaces the guidance in IAS 31 Interests in Joint Ventures. Under IFRS 11, joint arrangements
are classified as either joint operations or joint ventures. Joint ventures are now accounted for using the equity method.
Upon application of IFRS 11, entities which had previously accounted for joint ventures using proportionate consolidation
will collapse the proportionately consolidated net asset value into a single investment balance at the beginning of the earliest
period presented. The investment’s opening balance is tested for impairment in accordance with IAS 28 and IAS 36 ‘Impairment
of Assets’.
Any impairment losses identified on adoption of the new standard are recognized as an adjustment to opening retained earnings
at the beginning of the earliest period presented. The Company intends to adopt IFRS 11 in its financial statements for the
annual period beginning on January 1, 2013 and does not expect its adoption to have a material impact on the consolidated
financial statements.
• IFRS 12 ‘Disclosure of Interests in Other Entities’ – This IFRS shall be applied by companies with an interest in subsidiaries, joint
arrangements, associates or unconsolidated structured entities. The application of this standard intends to enable users of the
financial statements to evaluate the nature of and risks associated with its interests in other entities, and the effects of those
interests on its financial position, financial performance and cash flows. Companies will be required to disclose information
about significant judgments and assumptions made in determining the control of another entity, the joint control of an
arrangement or significant influence over another entity and the type of joint arrangement when the arrangement has been
structured through a separate vehicle. This standard is effective for years beginning on or after January 1, 2013. The Company
does not expect the adoption of IFRS 12 to have a material impact on the consolidated financial statements.
56 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 57
Management’s discussion and Analysis of
Financial Condition and Results of operations
• IFRS 13 ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not
extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or
permitted by other standards within IFRS. The Company does not expect the adoption of IFRS 13 to have a material impact on
the consolidated financial statements.
• IFRIC 20 ‘Stripping costs in the production phase of a surface mine’ – This interpretation applies to waste removal costs that are
incurred in open pit mining activity during the production phase of the mine. Recognition of a stripping activity asset requires
the asset to be related to an identifiable component of the ore body. Stripping costs that relate to inventory produced should
be accounted for as a current production cost in accordance with IAS 2, ‘Inventories’. Stripping costs that generate a benefit
of improved access and meet the definition of an asset should be accounted for as an addition to an existing asset. Existing
stripping costs on the balance sheet at transition that do not relate to a specific ore body should be written off to opening
retained earnings. The stripping activity asset shall be depreciated on a systematic basis, over the expected useful life of the
identified component of the ore body that becomes more accessible as a result of the stripping activity. This interpretation
is effective for years beginning on or after January 1, 2013. The Company does not expect the adoption of IFRIC 20 to have a
material impact on the consolidated financial statements as the Company currently applies comparable principles to those
found in this interpretation.
• There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact
on the Company.
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 CEO and CFO, as appropriate to allow for timely decisions about public disclosure.
Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as at December 31, 2012, as defined in the rules of the U.S. Securities and Exchange Commission and
Canadian Securities Administration. Based on this evaluation, they concluded that our disclosure controls and procedures are
effective in providing reasonable assurance that the information required to be disclosed in reports we filed or submitted under
United States and Canadian securities legislation was recorded, processed, summarized and reported within the time periods
specified in those rules.
For accounting purposes, we acquired control of EGU on February 24, 2012. As permitted by applicable rules of certification, we
excluded, solely to the extent it overlaps with internal control, EGU’s operations from our annual assessment of disclosure controls
and procedures for the year ended December 31, 2012.
intErnal Controls ovEr finanCial rEportinG
Management, including the CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial
reporting, and used the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to
evaluate the effectiveness of our controls in 2012. Based on this evaluation, management concluded that our internal control over
financial reporting was effective as at December 31, 2012 and provided a reasonable assurance of the reliability of our financial
reporting and preparation of the financial statements.
No matter how well it’s designed, however, any system of internal control has inherent limitations. Even systems determined to be
effective can provide only reasonable assurance of the reliability of financial statement preparation and presentation.
For accounting purposes, we acquired control of EGU on February 24, 2012. As permitted by the Sarbanes-Oxley Act and applicable
rules related to business acquisitions, we excluded EGU’s operations from our annual assessment of internal controls over financial
reporting for the year ended December 31, 2012. We are in the process of integrating EGU’s operations and will be expanding
our internal control over financial reporting compliance program to include EGU over the next year. EGU’s operations represent
$2,553.5 million of net assets, $48.7 million of consolidated revenues and $26.1 million of net loss as at and for the year ended
December 31, 2012.
KPMG LLP, an independent registered public accounting firm, has audited management’s assessment of the effectiveness of internal
control over financial reporting, and has expressed their opinion in their report included with our annual consolidated financial
statements in Form 40-F.
eldoRAdo Gold > 2012 annual rEport 57
Management’s discussion and Analysis of
Financial Condition and Results of operations
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the year ended December 31, 2012 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
QualifiEd pErson
Except as otherwise noted, Norman Pitcher, P. Geo., the Company’s President, is the Qualified Person under NI 43-101 who approved
the scientific or technical information contained in this MD&A and has verified the technical data disclosed in this document.
forward-looKinG information and risKs
This MD&A includes statements and information about what we expect to happen in the future. When we discuss our strategy, plans
and future financial and operating performance, or other things that have not yet happened in this review, we are making statements
considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. We refer
to them in this document as forward-looking information.
Key things to understand about the forward-looking information in this document:
• It typically includes words and phrases about the future, such as: plan, expect, forecast, intend, anticipate, believe, estimate, budget,
scheduled, may, could, would, might, will, as well as the negative of these words and phrases.
• Although it represents our current views, which we consider to be reasonable, we can give no assurance that the forward-looking
information will prove to be accurate.
• It is based on a number of assumptions, including things like the future price of gold, anticipated costs and spending, and our
ability to achieve our goals.
• It is also subject to the risks associated with our business, including
– the changing price of gold and currencies,
– actual and estimated production and mineral reserves and resources,
– the speculative nature of gold exploration,
– risks associated with mining operations and development,
– regulatory and permitting risks,
– acquisition risks, and
– other risks that are set out in our Annual Information Form.
• If our assumptions prove to be incorrect or the risks materialize, our actual results and events may vary materially from what we
currently expect.
We recommend that you review our Annual Information Form, which include a more detailed discussion of material risks that could
cause actual results to differ significantly from our current expectations.
Forward-looking information is designed to help you understand management’s current views of our near and longer term prospects,
and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by
securities laws.
58 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 59
eldoRAdo Gold > 2012 annual rEport 59
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 International
Financial Reporting Standards as issued by the International Accounting Standards Board. 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, 2012, 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, 2012 has also been audited by KPMG, and their opinion is included in their report.
Paul N. Wright
Chief Executive Officer
February 21, 2013
Vancouver, British Columbia, Canada
Fabiana Chubbs
Chief Financial Officer
eldoRAdo Gold > 2012 annual rEport 59
eldoRAdo Gold > 2012 annual rEport 59
Independent Auditors’ Report of
Registered public Accounting Firm
to thE sharEholdErs and Board of dirECtors of Eldorado Gold Corporation
We have audited the accompanying consolidated financial statements of Eldorado Gold Corporation, which comprise the consolidated
balance sheets as at December 31, 2012 and December 31, 2011, the consolidated income statements, statements of comprehensive
income, changes in equity and cash flows for each of the years in the two-year period ended December 31, 2012, and notes,
comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
Eldorado Gold Corporation as at December 31, 2012 and December 31, 2011, and its consolidated financial performance and its
consolidated cash flows for each of the years in the two-year period ended December 31, 2012, in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Other Matter
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Eldorado Gold Corporation’s internal control over financial reporting as of December 31, 2012, 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 February 21, 2013 expressed an unmodified (unqualified) opinion on the effectiveness of
Eldorado Gold Corporation’s internal control over financial reporting.
Chartered Accountants
Vancouver, Canada
February 21, 2013
60 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 61
eldoRAdo Gold > 2012 annual rEport 61
Report of Independent Registered
public Accounting Firm
to thE Board of dirECtors and sharEholdErs of Eldorado Gold Corporation
We have audited Eldorado Gold Corporation’s (the Company) internal control over financial reporting as of December 31, 2012, based
on 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 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, 2012, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Eldorado Gold Corporation acquired European Goldfields Ltd. during 2012, and management excluded from its assessment of the
effectiveness of Eldorado Gold Corporation’s internal control over financial reporting as of December 31, 2012, European Goldfields Ltd.’s
internal control over financial reporting associated with total assets of $3,351,485,000 and total revenues of $48,701,000 included in
the consolidated financial statements of Eldorado Gold Corporation and subsidiaries as of and for the year ended December 31, 2012.
Our audit of internal control over financial reporting of Eldorado Gold Corporation also excluded an evaluation of the internal control
over financial reporting of European Goldfields Ltd.
We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2012 and
December 31, 2011 and the related consolidated income statements, statements of comprehensive income, changes in equity and
cash flows for each of the years in the two-year period ended December 31, 2012, and our report dated February 21, 2013 expressed
an unmodified (unqualified) opinion on those consolidated financial statements.
Chartered Accountants
Vancouver, Canada
February 21, 2013
eldoRAdo Gold > 2012 annual rEport 61
eldoRAdo Gold > 2012 annual rEport 61
Consolidated
Balance Sheets
(Expressed in thousands of US dollars)
($)
Note
December 31, 2012
December 31, 2011
Assets
Current assets
Cash and cash equivalents
Restricted cash
Marketable securities
Accounts receivable and other
Inventories
Investments in significantly influenced companies
Deferred income tax assets
Restricted assets and other
Defined benefit pension plan
Property, plant and equipment
Goodwill
Liabilities & Equity
Current liabilities
Accounts payable and accrued liabilities
Current debt
Debt
Asset retirement obligations
Defined benefit pension plan
Deferred income tax liabilities
Equity
Share capital
Treasury stock
Contributed surplus
Accumulated other comprehensive loss
Retained earnings
Total equity attributable to shareholders of the Company
Attributable to non-controlling interests
6
7, 16
8
9
10
11
19
12
18
13
14
15
16
16
17
18
19
20
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board of Directors
Robert R. Gilmore
Director
Date of approval: February 21, 2013
Paul N. Wright
Director
816,843
241
1,988
112,324
220,766
1,152,162
27,949
3,149
31,846
4,571
5,868,742
839,710
7,928,129
224,567
10,341
234,908
582,974
79,971
–
816,941
1,714,794
5,300,957
(7,445)
65,382
(24,535)
594,876
5,929,235
284,100
6,213,335
7,928,129
393,763
55,390
2,640
42,309
190,968
685,070
18,808
4,259
38,430
–
2,847,910
365,928
3,960,405
168,367
81,031
249,398
–
43,213
19,969
336,579
649,159
2,855,689
(4,018)
30,441
(10,069)
382,716
3,254,759
56,487
3,311,246
3,960,405
62 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 63
eldoRAdo Gold > 2012 annual rEport 63
Consolidated
Income Statements
(Expressed in thousands of US dollars except per share amounts)
For the year ended December 31 ($)
Note
2012
2011
Revenue
Metal sales
Cost of sales
Production costs
Depreciation and amortization
Gross profit
Exploration expenses
General and administrative expenses
Defined benefit pension plan expense
Share based payments
Acquisition costs
Foreign exchange (gain) loss
Operating profit
Loss (gain) on disposal of assets
Gain on marketable securities and other investments
Loss on investments in significantly influenced companies
Other income
Asset retirement obligation accretion
Interest and financing costs
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Profit for the year
Weighted average number of shares outstanding
Basic
Diluted
Earnings per share attributable to shareholders of the Company
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of these consolidated financial statements.
28
18
21
5
17
29
19
30
30
1,147,541
1,103,737
427,946
113,529
541,475
606,066
39,521
70,135
1,900
21,794
21,247
(2,780)
454,249
509
(176)
5,627
(6,870)
1,842
6,983
446,334
128,276
318,058
305,302
12,756
318,058
689,007
690,669
0.44
0.44
346,484
122,414
468,898
634,839
30,773
59,239
2,088
19,722
–
5,367
517,650
(2,729)
(664)
4,225
(2,869)
1,546
5,331
512,810
165,587
347,223
318,662
28,561
347,223
549,791
551,625
0.58
0.58
eldoRAdo Gold > 2012 annual rEport 63
eldoRAdo Gold > 2012 annual rEport 63
Consolidated Statements
of Comprehensive Income
(Expressed in thousands of US dollars)
For the year ended December 31 ($)
Note
2012
2011
Profit for the year
318,058
347,223
Other comprehensive loss:
Change in fair value of available-for-sale financial assets (net of income taxes of nil and $12)
Realized gains on disposal of available-for-sale financial assets transferred to net income
Actuarial losses on defined benefit pension plans
Total other comprehensive loss for the year
Total comprehensive income for the year
18
Attributable to:
Shareholders of the Company
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
(1,429)
(56)
(12,981)
(14,466)
303,592
290,836
12,756
303,592
(977)
(794)
(6,661)
(8,432)
338,791
310,230
28,561
338,791
64 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 65
eldoRAdo Gold > 2012 annual rEport 65
For the year ended December 31 ($)
Cash flows generated from (used in):
Operating activities
Profit for the year
Items not affecting cash
Asset retirement obligation accretion
Depreciation and amortization
Unrealized foreign exchange (gain) loss
Deferred income tax (recovery) expense
Loss (gain) on disposal of assets
Loss on investment in significantly influenced companies
Gain on marketable securities and other investments
Share based payments
Defined benefit pension plan expense
Changes in non-cash working capital
Investing activities
Net cash received on acquisition of subsidiary
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Proceeds on pre-production sales
Purchase of marketable securities
Proceeds from the sale of marketable securities
Funding of non-registered supplemental retirement plan investments, net
Investments in significantly influenced companies
Decrease (increase) in restricted cash
Financing activities
Issuance of common shares for cash
Dividend paid to non-controlling interests
Dividend paid to shareholders
Purchase of treasury stock
Long-term and bank debt proceeds
Long-term and bank debt repayments
Loan financing costs
Net increase in cash and cash equivalents
Cash and cash equivalents – beginning of year
Cash and cash equivalents – end of year
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements
of Cash Flows
(Expressed in thousands of US dollars)
Note
2012
2011
318,058
347,223
22
5
1,842
113,529
(1,072)
(14,311)
509
5,627
(176)
21,794
1,900
447,700
(152,472)
295,228
18,789
(426,174)
859
54,705
–
1,270
14,486
(14,768)
55,149
(295,684)
22,145
(9,399)
(93,142)
(6,830)
650,000
(120,430)
(18,808)
423,536
423,080
393,763
816,843
1,546
122,414
6,500
1,804
(2,729)
4,225
(664)
19,722
2,088
502,129
9,948
512,077
–
(272,818)
147
–
(1,823)
8,154
(7,045)
(16,830)
(2,957)
(293,172)
31,600
(8,095)
(61,167)
(6,438)
5,782
(98,169)
(2,999)
(139,486)
79,419
314,344
393,763
eldoRAdo Gold > 2012 annual rEport 65
eldoRAdo Gold > 2012 annual rEport 65
Consolidated Statements
of Changes in equity
(Expressed in thousands of US dollars)
For the year ended December 31 ($)
Note
2012
2011
Share capital
Balance beginning of year
Shares issued upon exercise of share options, for cash
Transfer of contributed surplus on exercise of options
Shares issued on acquisition of European Goldfields Ltd.
Transfer of contributed surplus on exercise of deferred phantom units
Shares issued upon exercise of warrants, for cash
Balance end of year
Treasury stock
Balance beginning of year
Purchase of treasury stock
Shares redeemed upon exercise of restricted share units
Balance end of year
Contributed surplus
Balance beginning of year
Share based payments
Shares redeemed upon exercise of restricted share units
Options issued on acquisition of European Goldfields Ltd.
Deferred phantom units granted on acquisition of
European Goldfields Ltd.
Transfer to share capital on exercise of options and deferred phantom units
Balance end of year
Accumulated other comprehensive loss
Balance beginning of year
Other comprehensive loss for the year
Balance end of year
Retained earnings
Balance beginning of year
Dividends paid
Profit attributable to shareholders of the Company
Balance end of year
Total equity attributable to shareholders of the Company
Non-controlling interests
Balance beginning of year
Profit attributable to non-controlling interests
Dividends declared to non-controlling interests
Acquired non-controlling interest
Balance end of year
2,855,689
22,145
23,221
2,380,140
19,762
–
5,300,957
2,814,679
30,115
9,410
–
–
1,485
2,855,689
(4,018)
(6,830)
3,403
(7,445)
30,441
21,092
(3,403)
31,130
29,105
(42,983)
65,382
(10,069)
(14,466)
(24,535)
382,716
(93,142)
305,302
594,876
5,929,235
56,487
12,756
(9,399)
224,256
284,100
–
(6,438)
2,420
(4,018)
22,967
19,304
(2,420)
–
–
(9,410)
30,441
(1,637)
(8,432)
(10,069)
125,221
(61,167)
318,662
382,716
3,254,759
36,021
28,561
(8,095)
–
56,487
5
5
5
5
Total equity
6,213,335
3,311,246
The accompanying notes are an integral part of these consolidated financial statements.
66 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 67
eldoRAdo Gold > 2012 annual rEport 67
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
1. General Information
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 Turkey, China, Greece, Brazil and Romania. The Company acquired
control of European Goldfields Ltd. (“EGU”) in February 2012, including its producing mine, Stratoni, and development projects,
Olympias and Skouries, in Greece and its development project, Certej, in Romania.
Eldorado is a public company which is listed on the Toronto Stock Exchange and New York Stock Exchange and is incorporated
and domiciled in Canada.
2. Basis of Preparation
These consolidated financial statements, including comparatives, have been prepared using accounting policies in compliance
with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The consolidated financial statements were authorized for issue by the Board of Directors on February 21, 2013.
upCominG ChanGEs in aCCountinG standards
The following standards and amendments to existing standards have been published and are mandatory for Eldorado’s annual
accounting periods beginning January 1, 2013, or later periods:
• IAS 19 ‘Employee Benefits’ – On June 16, 2011, the International Accounting Standards Board (IASB) published a revised version
of IAS 19. The revised IAS 19 (“IAS 19R”) represents IASB’s effort to improve the accounting for employee retirement benefits.
The revisions include:
– Requirement to recognize past service costs immediately in net income rather than using the corridor method.
– Requirement to recognize actuarial gains and losses immediately in other comprehensive income OCI. Previously, companies had
the option of recognizing actuarial gains and losses through OCI immediately or via use of the corridor method.
– Requirement that expected return on plan assets be calculated based on the rate used to discount the defined benefit obligation
which is based on high quality bond yields. Previously, equity returns were incorporated into the expected return on plan assets.
– Requirement for more disclosure relating to the characteristics and risks of the amounts in the financial statements regarding
defined benefit plans, including the timing and uncertainty of the entity’s cash flows.
The revised IAS 19 will be applicable for reporting periods starting on or after January 1, 2013 with retrospective application. If the
standard had been effective January 1, 2012, defined benefits expense for the Company would have been reduced by $294.
• IFRS 9 ‘Financial Instruments: Classification and Measurement’ – This is the first part of a new standard on classification and
measurement of financial assets that will replace IAS 39, ‘Financial Instruments: Recognition and Measurement’. IFRS 9 has two
measurement categories: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is
recorded at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal
and interest. Otherwise it is measured at fair value with changes in fair value through profit or loss. In addition, this new standard
has been updated to include guidance on financial liabilities and derecognition of financial instruments. This standard is effective
for years beginning on or after January 1, 2015. The extent of the impact of adoption of IFRS 9 has not yet been determined.
• IFRS 10 ‘Consolidated Financial Statements’ – IFRS 10 establishes control as the basis for an investor to consolidate its investee; it
defines control as an investor’s power over the investee with exposure, or rights, to variable returns from the investee and the ability
to affect the investor’s return through its power over the investee. This standard is effective for years beginning on or after January 1,
2013. The Company does not expect the adoption of IFRS 10 to have a material impact on the consolidated financial statements.
• IFRS 11 ‘Joint Arrangements’ – This standard replaces the guidance in IAS 31 ‘Interests in Joint Ventures’. Under IFRS 11, joint
arrangements are classified as either joint operations or joint ventures. Joint ventures entities are now accounted for using the
equity method.
eldoRAdo Gold > 2012 annual rEport 67
eldoRAdo Gold > 2012 annual rEport 67
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
2. Basis of Preparation (CONTINUED)
Upon application of IFRS 11, entities which had previously accounted for joint ventures using proportionate consolidation will
collapse the proportionately consolidated net asset value into a single investment balance at the beginning of the earliest period
presented. The investment’s opening balance is tested for impairment in accordance with IAS 28 and IAS 36 ‘Impairment of Assets’.
Any impairment losses identified on adoption of the new standard are recognized as an adjustment to opening retained earnings
at the beginning of the earliest period presented. The Company intends to adopt IFRS 11 in its financial statements for the
annual period beginning on January 1, 2013 and does not expect its adoption to have a material impact on the consolidated
financial statements.
• IFRS 12 ‘Disclosure of Interests in Other Entities’ – This IFRS shall be applied by companies with an interest in subsidiaries, joint
arrangements, associates or unconsolidated structured entities. The application of this standard intends to enable users of the
financial statements to evaluate the nature of and risks associated with its interests in other entities, and the effects of those
interests on its financial position, financial performance and cash flows. Companies will be required to disclose information about
significant judgments and assumptions made in determining the control of another entity, the joint control of an arrangement or
significant influence over another entity and the type of joint arrangement when the arrangement has been structured through
a separate vehicle. This standard is effective for years beginning on or after January 1, 2013. The Company does not expect the
adoption of IFRS 12 to have a material impact on the consolidated financial statements.
• IFRS 13 ‘Fair value measurement’ – Aims to improve consistency and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not
extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or
permitted by other standards within IFRS. The Company does not expect the adoption of IFRS 13 to have a material impact on the
consolidated financial statements.
• IFRIC 20 ‘Stripping costs in the production phase of a surface mine’ – This interpretation applies to waste removal costs that are
incurred in open pit mining activity during the production phase of the mine. Recognition of a stripping activity asset requires
the asset to be related to an identifiable component of the ore body. Stripping costs that relate to inventory produced should
be accounted for as a current production cost in accordance with IAS 2, ‘Inventories’. Stripping costs that generate a benefit of
improved access and meet the definition of an asset should be accounted for as an addition to an existing asset. Existing stripping
costs on the balance sheet at transition that do not relate to a specific ore body should be written off to opening retained earnings.
The stripping activity asset shall be depreciated on a systematic basis, over the expected useful life of the identified component of
the ore body that becomes more accessible as a result of the stripping activity. This interpretation is effective for years beginning
on or after January 1, 2013. The Company does not expect the adoption of IFRIC 20 to have a material impact on the consolidated
financial statements as the Company currently applies comparable principles to those found in this interpretation.
• There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on
the Company.
3. Significant Accounting Policies
The principal accounting policies set out below have been applied consistently to all years presented in these consolidated financial
statements, and have been applied consistently by Eldorado entities.
3.1 Basis of prEsEntation and prinCiplEs of Consolidation
(i) Subsidiaries and Business Combinations
Subsidiaries are entities controlled by Eldorado. Control exists when Eldorado has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that
currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
68 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 69
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
The acquisition method of accounting is used to account for business acquisitions. The cost of an acquisition is measured as the
fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are generally measured initially at
their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.
The excess of the cost of acquisition over the fair value of Eldorado’s share of the identifiable net assets acquired is recorded
as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference, or gain is recognised
directly in the income statement.
Transaction costs, other than those associated with the issue of debt or equity securities, which the Company incurs in
connection with a business combination, are expensed as incurred.
The most significant wholly owned and partially owned subsidiaries of Eldorado, are presented below:
Subsidiary
Location
Ownership
Interest
Status
Operations and Development
Projects Owned
Tüprag Metal Madencilik Sanayi ve Ticaret AS (“Tüprag”)
Turkey
100%
Consolidated
Unamgen Mineração e Metalurgia S/A
Qinghai Dachaidan Mining Ltd (“QDML”)
Thracean Gold Mining SA
Sino Guizhou Jinfeng Mining Limited
Sino Gold Jilin BMZ Mining Limited
Heihe Rockmining Limited
Brazauro Resources Corporation (“Brazauro”)
Hellas Gold SA (“Hellas”)
Brazil
China
Greece
China
China
China
Brazil
Greece
100%
90%
100%
82%
95%
95%
100%
95%
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Deva Gold SA (“Deva”)
Romania
80%
Consolidated
Kişladağ Mine
Efemçukuru Mine
Vila Nova Iron Ore Mine
TJS Mine
Perama Hill Project
Jinfeng Mine
White Mountain Mine
Eastern Dragon Project
Tocantinzinho Project
Stratoni Mine
Olympias Project
Skouries Project
Certej Project
(ii) Investments in Associates (Equity Accounted for Investees)
Associates are those entities where Eldorado has the ability to exercise significant influence, but not control, over the financial
and operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the
voting power of another entity. Joint ventures are those entities over whose activities the Company has joint control, established
by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.
Associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are
recognized initially at cost. The consolidated financial statements include Eldorado’s share of the income and expenses and equity
movements of equity accounted investees, after adjustments to align the accounting policies with those of Eldorado, from the date
that significant influence or joint control commences until the date that significant influence or joint control ceases.
When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest
(including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent
that the Company has an obligation to make, or has made, payments on behalf of the investee.
At each balance sheet date, the investment in associates is assessed for indicators of impairment.
(iii) Transactions with Non-Controlling Interests
Eldorado treats transactions with non-controlling interests as transactions with third parties. For purchases from non-controlling
interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the
subsidiary acquired is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(iv) Transactions Eliminated on Consolidation
Intra-company and intercompany balances and transactions, and any unrealized income and expenses arising from all such
transactions, are eliminated in preparing the consolidated financial statements.
eldoRAdo Gold > 2012 annual rEport 69
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
3. Significant Accounting Policies (CONTINUED)
3.2 forEiGn CurrEnCy translation
(i) Functional and Presentation Currency
Items included in the financial statements of each of Eldorado’s entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements are
presented in US dollars, which is the Company’s functional and presentation currency, as well as the functional currency
of all significant subsidiaries.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the
functional currency at the exchange rate at that date. Foreign exchange gains and losses resulting from the settlement of such
transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the
income statement.
3.3 propErty, plant and EQuipmEnt
(i) Cost and Valuation
Property, plant and equipment are carried at cost less accumulated depreciation and any impairment in value. When an asset is
disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is recognized as a gain or
loss in the income statement.
(ii) Property, Plant and Equipment
Property, plant and equipment include expenditures incurred on properties under development, significant payments related to
the acquisition of land and mineral rights and property, plant and equipment which are recorded at cost on initial acquisition.
Cost includes the purchase price and the directly attributable costs of acquisition or construction required to bring an asset to
the location and condition necessary for the asset to be capable of operating in the manner intended by management.
(iii) Depreciation
Mine development costs, property, plant and equipment and other mining 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 units-of-production method calculated based on proven and probable reserves related to each pit.
Property, plant and equipment and other assets 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.
Where components of an asset have a different useful life and cost that is significant to the total cost of the asset, depreciation
is calculated on each separate component.
Depreciation methods, useful lives and residual values are reviewed at the end of each year and adjusted if appropriate.
(iv) Subsequent Costs
Expenditure on major maintenance or repairs includes the cost of replacement parts of assets and overhaul costs. Where
an asset or part of an asset is replaced and it is probable that further future economic benefit will flow to the Company, the
expenditure is capitalized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that
future economic benefit will flow to the Company and any remaining costs of previous overhauls relating to the same asset are
derecognized. All other expenditures are expensed as incurred.
70 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 71
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
(v) Deferred Stripping Costs
Stripping costs incurred during the production phase of a mine are considered production costs and included in the cost of
inventory produced during the period in which the 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 to which they relate.
(vi) Borrowing Costs
Borrowing costs are expensed as incurred except where they are directly attributable to the financing of construction or
development of qualifying assets requiring a substantial period of time to prepare for their intended future use. Interest is
capitalized up to the date when substantially all the activities necessary to prepare the asset for its intended use are complete.
Investment income arising on the temporary investment of proceeds from borrowings is offset against borrowing costs
being capitalized.
(vii) 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. Mine standby costs include labour, maintenance and mine support costs during temporary shutdowns of a mine.
Restructuring costs include severance payments to employees laid off as a result of outsourcing the mining function.
3.4 Exploration and Evaluation ExpEnditurEs
Exploration expenditures reflect the costs related to the initial search for mineral deposits with economic potential or obtaining
more information about existing mineral deposits. Exploration expenditures typically include costs associated with the acquisition
of mineral licenses, prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore. All expenditures
relating to exploration activities are expensed as incurred except for the costs associated with the acquisition of mineral licenses
which are capitalized.
Evaluation expenditures reflect costs incurred at development projects related to establishing the technical and commercial viability
of developing mineral deposits identified through exploration or acquired through a business combination or asset acquisition.
Evaluation expenditures include the cost of:
i)
establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore
body that is classified as either a mineral resource or a proven and probable reserve;
determining the optimal methods of extraction and metallurgical and treatment processes;
ii)
iii) studies related to surveying, transportation and infrastructure requirements;
iv) permitting activities; and
v)
economic evaluations to determine whether development of the mineralized material is commercially justified, including
scoping, prefeasibility and final feasibility studies.
Evaluation expenditures and the subsequent mine development costs are capitalized if management determines that there is
sufficient evidence to support probability of generating positive economic returns in the future. A mineral resource is considered to
have economic potential when it is expected the technical feasibility and commercial viability of extraction of the mineral resource
is demonstrable 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;
• The Company can obtain the benefit and control access to it; and
• The transaction or event giving rise to the benefit has already occurred.
Expenditures incurred on development projects continue to be capitalized until the mine and mill commences commercial
production. Alternatively, if the factors that impact the technical feasibility and commercial viability of a project change and no
longer support the probability of generating positive economic returns in the future, expenditures will no longer be capitalized.
Expenditures incurred on extensions of mineral properties which are already being mined or developed that increase production
volume or extend the life of those properties are also capitalized. The criteria for determining whether expenditures on extensions
of mineral properties are capitalized are the same as those presented for capitalizing evaluation expenditures and subsequent mine
development costs. Capitalized expenditures are assessed for potential impairment at the end of each reporting period.
eldoRAdo Gold > 2012 annual rEport 71
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
3. Significant Accounting Policies (CONTINUED)
3.5 Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of Eldorado’s share of the net assets of the acquired
business at the date of acquisition. When the excess is negative (negative goodwill), it is recognized immediately in income. Goodwill
on acquisition of subsidiaries and businesses is shown separately as goodwill in the financial statements. Goodwill on acquisition of
associates is included in investments in significantly influenced companies and tested for impairment as part of the overall investment.
Goodwill is carried at cost less accumulated impairment losses and tested annually for impairment. Impairment losses on goodwill
are not reversed. The impairment testing is performed annually or more frequently if events or changes in circumstances indicate
that it may be impaired.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. If
the composition of one or more cash-generating units to which goodwill has been allocated changes due to a re-organization, the
goodwill is re-allocated to the units affected.
The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold.
Acquisitions prior to January 1, 2010
On transition to IFRS, Eldorado elected to restate only those business combinations that occurred on or after January 1, 2010.
In respect of acquisitions prior to January 1, 2010, goodwill represents the amount recognized under Eldorado’s previous accounting
framework, Canadian GAAP.
3.6 impairmEnt of non-finanCial assEts
Other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment test is performed when the impairment indicators demonstrate that the carrying amount may
not be recoverable and it is reviewed at least annually.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less cost to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units, or ‘CGU’s). These are
typically the individual mines or development projects.
Value in use is determined as the present value of the future cash flows expected to be derived from an asset or CGU based on
the detailed mine and/or production plans. The estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Fair value less cost to sell is the amount obtainable from the sale of an asset or CGU in an arm’s length transaction between
knowledgeable, willing parties, less the costs of disposal. For mining assets, fair value less cost to sell is often estimated using
a discounted cash flow approach because a fair value is not readily available from an active market or binding sale agreement.
Estimated future cash flows are calculated using estimated future prices, mineral reserves and resources, operating and capital costs.
All assumptions used are those that an independent market participant would consider appropriate. Non-financial assets other than
goodwill impaired in prior periods are reviewed for possible reversal of the impairment when events or changes in circumstances
indicate that an item is no longer impaired.
3.7 finanCial assEts
(i) Classification
The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables,
and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.
72 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 73
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for
trading unless they are designated as hedges.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for those with maturities of greater than 12 months after the end
of the reporting period, which are classified as non-current assets. Eldorado’s loans and receivables comprise cash and cash
equivalents, restricted cash, accounts receivable and other, and restricted assets and other in the balance sheet.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose of it within 12 months of the end of the reporting period. Eldorado’s available-for-sale
financial assets comprise marketable securities not held for the purpose of trading.
(ii) Recognition and Measurement
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and
transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows
from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards
of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.
Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are
presented in the income statement within ‘Gain or loss on marketable securities’ in the period in which they arise. Dividend
income from ‘financial assets at fair value through profit or loss’ is recognised in the income statement as part of other income
when Eldorado’s right to receive payments is established.
Gains or losses arising from changes in the fair value of available-for-sale financial assets are recognized in other
comprehensive income and presented within equity. When marketable securities classified as available-for-sale are sold or
impaired, the accumulated fair value adjustments recognised in other comprehensive income are included in the income
statement as ‘Gain or loss on marketable securities’.
(iii) Impairment of Financial Assets
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only
if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the
asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment
loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. In the case of equity instruments
classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence
that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as
the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset that was
previously recognized in profit or loss – is removed from equity and recognized in the income statement.
All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset
recognized previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognized. Impairment losses recognized for equity securities
are not reversed.
eldoRAdo Gold > 2012 annual rEport 73
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
3. Significant Accounting Policies (CONTINUED)
3.8 dErivativE finanCial instrumEnts
Derivatives are recognized initially at fair value on the date a derivative contract is entered into. Subsequent to initial recognition,
derivatives are measured at fair value, and changes in fair value thereafter are recognized in profit and loss. Fair values for derivative
instruments are determined using valuation techniques, using assumptions based on market conditions existing at the balance sheet
date. Derivatives are not accounted for using hedge accounting.
3.9 invEntoriEs
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location
and condition are accounted for as follows:
i)
Product inventory consists of stockpiled ore, ore on leach pads, crushed ore, in-circuit material at properties with milling or
processing operations, gold concentrate, other metal concentrate, iron ore stockpile awaiting shipment, doré awaiting refinement
and unsold bullion. Product inventory costs consist of direct production costs including mining, crushing and processing; site
administration costs; and allocated indirect costs, including depreciation and amortization of property, plant and equipment.
Inventory costs are charged to production costs on the basis of quantity of metal sold. The Company regularly evaluates and
refines estimates used in determining the costs charged to production costs and costs absorbed into inventory carrying values
based upon actual gold recoveries and operating plans.
Net realizable value is the estimated selling price, less the estimated costs of completion and selling expenses.
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 net realisable value and, where appropriate, less a provision for obsolescence.
Costs include acquisition, freight and other directly attributable costs.
3.10 tradE rECEivaBlEs
Trade receivables are amounts due from customers for bullion, doré or iron ore sold in the ordinary course of business.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less a provision for impairment where necessary.
3.11 Cash and Cash EQuivalEnts
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with
maturities at the date of acquisition of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
3.12 sharE Capital
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are
recognized as a deduction from equity, net of any tax effects. Common shares held by the Company are classified as treasury stock
and recorded as a reduction of shareholders’ equity.
3.13 tradE payaBlEs
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the
business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
74 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 75
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
3.14 dEBt and BorrowinGs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost, calculated using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities and other borrowings are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility and other borrowings will be drawn down. In this case, the fee is deferred until the
draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility and borrowings will be drawn
down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the loan to which it relates.
3.15 CurrEnt and dEfErrEd inComE tax
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the income statement except to the
extent that it relates to items recognized either in other comprehensive income or directly in equity, in which case it is recognized in
other comprehensive income or in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years. Taxes on income in the interim periods are accrued using
the tax rate that would be applicable to expected total annual earnings. The tax rate used is the rate that is substantively enacted.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is settled.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which
the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized.
3.16 EmployEE BEnEfits
(i) Defined Benefit Plans
Certain employees have entitlements under Company pension plans which are defined benefit pension plans. For defined benefit
plans, the level of benefit provided is based on the length of service and earnings of the person entitled.
The cost of the defined benefit plan is determined using the projected unit credit method. The related pension liability
recognized in the consolidated balance sheet is the present value of the defined benefit obligation at the balance sheet date
less the fair value of plan assets.
The Company obtains actuarial valuations for defined benefit plans for each balance sheet date. Actuarial assumptions used in
the determination of defined benefit pension plan liabilities are based on best estimates, including discount rates, rate of salary
escalation and expected retirement dates of employees. The expected long-term rate of return on assets is estimated based on
the fair value of plan assets, asset allocation and expected long-term rates of return.
Actuarial gains and losses are recognized in full in the period in which they occur in other comprehensive income without
recycling to the statement of income in subsequent periods. Current service cost, the vested element of any past service cost,
the expected return on plan assets and the interest arising on the pension liability are included in the same line items in the
statement of income as the related compensation cost.
Past service costs are recognized immediately to the extent the benefits are vested, and otherwise are amortized on a straight-line
basis over the average period until the benefits become vested.
eldoRAdo Gold > 2012 annual rEport 75
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
3. Significant Accounting Policies (CONTINUED)
(ii) Termination Benefits
Eldorado recognizes termination benefits when it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal, or providing benefits as a result of an offer
made to encourage voluntary termination. Benefits falling due more than twelve months after the end of the reporting period
are discounted to their present value.
(iii) Short-term Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if
Eldorado has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee
and the obligation can be estimated reliably.
3.17 sharE-BasEd paymEnt transaCtions
The Company applies the fair value method of accounting for all stock option awards and equity settled restricted share units. Under
this method the Company recognizes a compensation expense for all stock options awarded to employees, based on the fair value of
the options on the date of grant which is determined by using the Black-Scholes option pricing model. For equity settled restricted
share units, compensation expense is recognized based on the quoted market value of the shares.
The fair value of the options and restricted share units are expensed over the vesting period of the awards with a corresponding
increase in equity. No expense is recognized for awards that do not ultimately vest. Deferred share units are liability awards recorded
at the quoted market price at the grant date. The corresponding liability is marked to market at each reporting date.
3.18 provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. They are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
(i) Rehabilitation and Restoration
Provision is made for mine rehabilitation and restoration when an obligation is incurred. The provision is recognised as a
liability with a corresponding asset recognised in relation to the mine site. At each reporting date the rehabilitation liability is
re-measured in line with changes in discount rates, and timing or amount of the costs to be incurred. The rehabilitation liability
is classified as an ‘Asset retirement obligation’ on the balance sheet.
The provision recognised represents management’s best estimate of the present value of the future costs required. Significant
estimates and assumptions are made in determining the amount of restoration and rehabilitation provisions. Those estimates
and assumptions deal with uncertainties such as: requirements of the relevant legal and regulatory frameworks, the magnitude
of necessary remediation activities and the timing, extent and costs of required restoration and rehabilitation activity.
These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision
recognised is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to
the estimated future costs for operating sites are recognised in the balance sheet by adjusting both the restoration and
rehabilitation asset and provision. Such changes give rise to a change in future depreciation and financial charges.
3.19 rEvEnuE rECoGnition
Revenue from the sale of bullion, doré, gold concentrate, other metal concentrates and iron ore is recognized when persuasive
evidence of an arrangement exists, the bullion, doré, metal concentrates and iron ore has been shipped, title has passed to the
purchaser, the price is fixed or determinable, and collection is reasonably assured. Revenues realized from sales of pre-commercial
production are recorded as a reduction of property, plant and equipment.
76 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 77
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
Our metal concentrates are sold under pricing arrangements where final metal prices are determined by market prices subsequent
to the date of shipment. Provisional revenue is recorded at date of shipment based on metal prices at that time. Adjustments are
made to the provisional revenue in subsequent periods based on fluctuations in the market prices until date of final metal pricing.
Consequently, at each reporting period the receivable balances relating to sales of concentrates changes with the fluctuations in
market prices.
3.20 finanCE inComE and ExpEnsEs
Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the disposal of
available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income
is recognized as it accrues in profit or loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of
financial assets at fair value through profit or loss and impairment losses recognized on financial assets. All borrowing costs are
recognized in profit or loss using the effective interest method, except for those amounts capitalized as part of the cost of qualifying
property, plant and equipment.
3.21 EarninGs pEr sharE
Eldorado presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the
profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding
during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted
average number of common shares outstanding for the effects of all dilutive potential common shares, which comprise warrants and
share options granted to employees.
4. Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the
period in which the estimates are revised and in any future periods affected.
Significant areas requiring the use of management estimates include assumptions and estimates relating to determining defined
proven and probable reserves, value beyond proven and probable reserves, fair values for purposes of purchase price allocations for
business acquisitions, asset impairment analysis, asset retirement obligations, share-based payments and warrants, pension benefits,
valuation allowances for deferred income tax assets, the provision for income tax liabilities, deferred income taxes and assessing and
evaluating contingencies.
Actual results could differ from these estimates. Outlined below are some of the areas which require management to make
judgments, estimates and assumptions in determining carrying values.
purChasE priCE alloCation
Business combinations require judgment and estimates to be made at the date of acquisition in relation to determining asset and
liability fair values and the allocation of the purchase consideration over the fair value of the assets and liabilities.
In respect of mining company acquisitions, such as the acquisition of EGU in February 2012, purchase consideration is typically
allocated to the mineral reserves and resources being acquired. The estimate of reserves and resources is subject to assumptions
relating to life of the mine and may change when new information becomes available. Changes in reserves and resources as a result
of factors such as production costs, recovery rates, grade or reserves or commodity prices could impact depreciation rates, asset
carrying values and environmental and restoration provisions. Changes in assumptions over long-term commodity prices, market
demand and supply, and economic and regulatory climates could also impact the carrying value of assets, including goodwill.
eldoRAdo Gold > 2012 annual rEport 77
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
4. Critical Accounting Estimates and Judgements (CONTINUED)
EstimatEd rECovEraBlE rEsErvEs and rEsourCEs
Mineral reserve and resource estimates are based on various assumptions relating to operating matters, including, with respect to
production costs, mining and processing recoveries, cut-off grades, as well as assumptions relating to long-term commodity prices
and, in some cases, exchange rates, inflation rates and capital costs. Cost estimates are based on feasibility study estimates or
operating history. Estimates are prepared by appropriately qualified persons, but will be impacted by forecasted commodity prices,
inflation rates, exchange rates, capital and production costs and recoveries amongst other factors. Estimated recoverable reserves and
resources are used to determine the depreciation of property, plant and equipment at operating mine sites, in accounting for deferred
stripping costs, in performing impairment testing and for forecasting the timing of the payment of decommissioning and restoration
costs. Therefore, changes in the assumptions used could impact the carrying value of assets, depreciation and impairment charges
recorded in the income statement and the carrying value of the decommissioning and restoration provision.
CurrEnt and dEfErrEd taxEs
The Company calculates current and deferred tax provisions for each of the jurisdictions in which it operates. Actual amounts of
income tax expense are not final until tax returns are filed and accepted by the relevant authorities. This occurs subsequent to the
issuance of financial statements. Therefore, profit in subsequent periods will be affected by the amount that estimates differ from the
final tax return.
Judgment is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized on the balance
sheet. The Company also evaluates the recoverability of deferred tax assets based on an assessment of the ability to use the
underlying future tax deductions before they expire against future taxable income. Deferred tax liabilities arising from temporary
differences on investments in subsidiaries, joint ventures and associates are recognized unless the reversal of the temporary
differences is not expected to occur in the foreseeable future and can be controlled. Assumptions about the generation of future
taxable profits and repatriation of retained earnings depend on management’s estimates of future production and sales volumes,
commodity prices, reserves, operating costs, decommissioning and restoration costs, capital expenditures, dividends and other capital
management transactions.
Judgement is also required in the application of income tax legislation. These estimates and judgments are subject to risk and
uncertainty and could result in an adjustment to current and deferred tax provisions and a corresponding credit or debit to profit.
5. Acquisition of European Goldfields Ltd.
On February 24, 2012 the Company acquired 100% of the issued and outstanding shares of EGU. Under the terms of the Arrangement
former EGU shareholders received 0.85 of an Eldorado common share and C$0.0001 in cash for each EGU share. Eldorado issued
157,959,316 common shares pursuant to the Arrangement. EGU holds a 95% stake in the Kassandra Mines district in Greece, which is
comprised of the Stratoni Mine, and the Olympias and Skouries development projects, and an 80% stake in the Certej development
project in Romania.
The Company acquired EGU to increase its presence in the Aegean region and leverage local operating knowledge and expertise.
The goodwill of $473,782 resulting from the acquisition arises mainly on the recognition of deferred income tax liabilities and
non-controlling interests and represents, among other things, the exploration potential within the assets acquired and future
variability in the price of minerals. None of the goodwill is deductible for tax purposes.
In April 2007, Hellas Gold (“Hellas”), a subsidiary of EGU, agreed to sell to Silver Wheaton (Caymans) Ltd. (“Silver Wheaton”) all of the
silver metal to be produced from ore extracted during the mine-life within an area of approximately seven square kilometres around
the Stratoni mine up to 15 million ounces, or 20 million ounces if additional silver is processed through the Stratoni mill from areas
other than the current producing mine. The sale was made in consideration of a prepayment to Hellas of $57.5 million in cash, plus
a payment per ounce of payable silver equal to the lesser of $3.90 and the prevailing market price per ounce calculated, due and
payable at the time of delivery. The expected cash flows associated with the sale of the silver to Silver Wheaton at a price lower than
market price have been reflected in the fair value of the mining interest recorded upon acquisition of EGU.
78 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 79
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
The Company has presented the value of any expected future cash flows from the sale of any future silver production to Silver Wheaton
as part of the mining interest, as the Company did not receive any of the original upfront payment. Further, the Company does not
believe that the agreement to sell to Silver Wheaton meets the definition of an onerous contract or other liability as the obligation
only arises upon production of the silver.
A preliminary allocation of the purchase price, which is subject to final adjustments, is as follows:
Preliminary purchase price:
157,959,316 common shares of shares of Eldorado at C$15.05/share
4,713,248 replacement options
1,931,542 equity settled deferred phantom units
Cash consideration
Total Consideration
Net assets acquired:
Cash
Accounts receivable
Inventory
Other assets
Mining interests
Goodwill
Accounts payable
Other liabilities
Deferred income taxes
Non-controlling interest
$2,380,140
31,130
29,105
19
$2,440,394
$18,808
20,844
9,689
9,232
2,745,440
473,782
(71,944)
(45,457)
(495,744)
(224,256)
$2,440,394
For the purpose 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 based on management’s best estimates 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. The Company will continue to review information and perform further analysis with respect to these assets, prior to
finalizing the allocation of the purchase price in the first quarter of 2013.
Eldorado has conducted a preliminary assessment of contingent liabilities identified during its due diligence and has recognized
certain contingent liabilities in its initial accounting for the acquisition. However, the Company is continuing its review to determine
whether additional contingent liabilities exist. If during the measurement period new information is found that identifies
adjustments to the amount of contingent liabilities recognized initially, or additional contingent liabilities that existed at the
acquisition date, then the acquisition accounting will be revised to reflect the resulting adjustments to the amounts initially
recognized. During the measurement period the Company has received additional information regarding contingent liabilities that
existed at acquisition date. This added information has resulted in an increase to the liabilities acquired and the goodwill recognized
in our March 31, 2012 condensed consolidated financial statements of $36,215. Furthermore, the Company has revised the valuation
model of the acquired assets for new information existing at the acquisition date by changing inputs such as increasing the discount
rate on the Greek projects, timing of cash flows at the projects and long term metal pricing. These changes combined to reduce the
fair value of the acquired projects which has resulted in an increase in goodwill of approximately $160,000, a decrease in deferred
income tax liability of approximately $42,000 and a decrease in non-controlling interest of approximately $36,000.
The fair value of the common shares and replacement options issued and the equity settled deferred phantom units (“DPUs”) as
part of the consideration paid for EGU was based on the closing share price on February 24, 2012 on the Toronto Stock Exchange.
The value of the replacement options was calculated using the Black-Scholes model. The following inputs were used to value the
replacement options:
Risk-free interest rate
Expected volatility (range)
Expected life (range)
Expected dividends per share
Forfeiture rate
1.28%
39% – 44%
0.7 – 1.7 years
CDN $0.09
0%
eldoRAdo Gold > 2012 annual rEport 79
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
5. Acquisition of European Goldfields Ltd. (CONTINUED)
Acquisition related costs of $21,247 have been charged to transaction costs in the consolidated income statement for the year ended
December 31, 2012.
These consolidated financial statements include EGU’s results from February 24, 2012 to December 31, 2012. The revenue included in
the consolidated income statement since February 24, 2012 contributed by EGU was $48,701. This is from the sales of zinc, lead and
silver concentrates produced at the Stratoni Mine in Greece. The net loss before tax was $26,348.
Had EGU been consolidated from January 1, 2012, the consolidated income statement would include additional revenue of $56,479
and a net loss before tax of $49,392 from EGU.
Eldorado received net cash of $18,789 as a result of the EGU transaction. This net increase of cash was a result of an acquired cash
balance of $18,808 less cash consideration of $19.
6. Cash and Cash Equivalents
($)
Cash at bank and on hand
Short-term bank deposits
December 31, 2012
December 31, 2011
559,267
257,576
816,843
387,761
6,002
393,763
Short-term deposits at the end of December 31, 2012 include part of the proceeds from the senior notes (note 16(g)). A total of
$248,250 was invested in December, 2012 and redeemed in January, 2013.
7. Restricted Cash
Restricted cash represents short-term interest-bearing money market securities and funds held on deposit as collateral for the
following loans:
($)
December 31, 2012
December 31, 2011
Eastern Dragon CMB standby letter of credit loan (Note 16(c))
Unamgen HSBC letter of credit
Other restricted cash – Hellas SA
–
–
241
241
52,390
3,000
–
55,390
8. Marketable Securities
All marketable securities owned by the Company are categorized as available-for-sale.
The fair value of all equity securities is based on the balance sheet date bid prices in an active market.
80 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 81
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
9. Accounts Receivable and Other
($)
December 31, 2012
December 31, 2011
Trade receivables
Value added and other taxes recoverable
Other receivables and advances
Prepaid expenses and deposits
10. Inventories
($)
Ore stockpiles
In-process inventory and finished goods
Materials and supplies
53,147
6,724
27,173
25,280
112,324
7,037
7,679
5,528
22,065
42,309
December 31, 2012
December 31, 2011
46,826
83,639
90,301
220,766
66,656
58,382
65,930
190,968
The cost of materials and supplies consumed during the year and included in production costs amounted to $181,013 (2011 – $143,985).
11. Investments in Significantly Influenced Companies
($)
Serabi Mining Plc (“Serabi”)
Kopy Goldfields (“Kopy”)
Glory Resources (“Glory”)
Kenai Resources (“Kenai”)
Nordic Mines (“Nordic”)
(a) Serabi
December 31, 2012
December 31, 2011
2,145
4,929
10,675
1,150
9,050
27,949
3,646
3,959
11,203
–
–
18,808
During 2012, the Company acquired an additional 4,500,000 units of Serabi for $696. As at December 31, 2012, the Company
holds 21,340,000 ordinary shares and 750,000 purchase warrants of Serabi. This represents a 26.3% interest in Serabi.
The investment in Serabi is being accounted for under the equity method as follows:
($)
Balance at January 1,
Purchases during the year
Equity loss for the year
Balance at December 31,
2012
3,646
696
(2,197)
2,145
2011
6,202
1,318
(3,874)
3,646
Based on quoted market prices, the fair value of the Company’s investment in Serabi at December 31, 2012 was $2,145.
Subsequent to December 31, 2012, Serabi issued 270,000,000 new shares; the Company did not participate in the issue. As a
result, the Company recorded equity losses at December 31, 2012 to reduce the carrying value of the investment to the fair
market value of the Serabi shares. The Company’s interest in Serabi after the new issue of shares is approximately 6% and the
Company will begin to account for the investment as a marketable security in 2013.
Serabi is a gold mining company that is focused on the Tapajós region of Northern Brazil.
eldoRAdo Gold > 2012 annual rEport 81
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
11. Investments in Significantly Influenced Companies (CONTINUED)
(b) Kopy
During 2012, the Company acquired an additional 3,915,000 shares of Kopy for $2,161, including 945,000 purchase warrants.
The Company’s total investment in Kopy amounts to 6,615,000 ordinary shares. This represents a 28.9% interest in Kopy.
The investment in Kopy is being accounted for under the equity method as follows:
($)
Balance at January 1,
Purchases during the year
Equity loss for the period
Balance at December 31,
2012
3,959
2,161
(1,191)
4,929
2011
–
4,273
(314)
3,959
Based on quoted market prices, the fair value of the Company’s investment in Kopy at December 31, 2012 was $2,250.
Kopy is focused on gold exploration and development in the Lena Goldfields area of the Irkutsk region of Russia.
(c) Glory
In November 2011, the Company entered into a purchase agreement with Glory and acquired 44,595,920 ordinary shares for
$11,240. There were no issues of shares in 2012. This represents a 19.9% interest in Glory and, under the agreement, gives the
Company the ability to appoint one board member.
The investment in Glory is being accounted for under the equity method as follows:
($)
Balance at January 1,
Purchases during the year
Equity loss for the period
Balance at December 31,
2012
11,203
–
(528)
10,675
2011
–
11,240
(37)
11,203
Based on quoted market prices, the fair value of the Company’s investment in Glory at December 31, 2012 was $10,195.
Glory currently holds mineral interests in the Sapes gold project in Thrace, Greece.
(d) Kenai
In March 2012, the Company entered into a purchase agreement with Kenai and acquired 15,000,000 ordinary shares for $1,496,
including 7,500,000 purchase warrants. This represents a 14.2% interest in Kenai. If the Company exercised its purchase warrants
the Company would hold a 19.6% interest in Kenai. Under the agreement, the Company has the ability to appoint one board
member in Kenai.
The investment in Kenai is being accounted for under the equity method as follows:
($)
Balance at January 1,
Purchases during the year
Equity loss for the period
Balance at December 31,
2012
–
1,495
(345)
1,150
Based on quoted market prices, the fair value of the Company’s investment in Kenai at December 31, 2012 was $754.
Kenai is focused on gold exploration in Brazil.
82 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 83
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
(e) Nordic
During 2012, the Company purchased 11,750,000 shares of Nordic for $10,417. This represents a 13.8% interest in Nordic and,
under the agreement, gives the Company the ability to appoint one board member in Nordic.
The investment in Nordic is being accounted for under the equity method as follows:
($)
Balance at January 1,
Purchases during the year
Equity loss for the period
Balance at December 31,
2012
–
10,416
(1,366)
9,050
Based on quoted market prices, the fair value of the Company’s investment in Nordic at December 31, 2012 was $3,555.
Subsequent to the year ended December 31, 2012, the Company subscribed to an additional 36,855,167 shares which increased
the Company’s interest in Nordic to 14.2%.
Nordic is a gold mining and exploration company focusing on the Nordic region of Europe.
12. Restricted Assets and Other
($)
Restricted non-current asset – SERP (Note 18)
Restricted credit card deposits
Non-current accounts receivable
Prepaid loan costs (Note 16(f))
Environmental guarantee deposits
Deposit on land acquisition at Jinfeng
Long-term value added and other taxes recoverable
2012
–
673
673
1,288
3,918
12,468
654
12,845
31,846
2011
14,456
648
15,104
369
2,849
12,304
7,804
–
38,430
eldoRAdo Gold > 2012 annual rEport 83
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
13. Property, Plant and Equipment
($)
Cost
Balance at January 1, 2011
Additions/transfers
Other movements
Disposals
Balance at December 31, 2011
Balance at January 1, 2012
Additions/transfers
Acquisition of EGU
Proceeds on pre-production sales
Other movements
Disposals
Balance at December 31, 2012
Depreciation and impairment losses
Balance at January 1, 2011
Depreciation for the year
Disposals
Balance at December 31, 2011
Balance at January 1, 2012
Depreciation for the year
Other movements
Disposals
Balance at December 31, 2012
Carrying amounts
At January 1, 2011
At December 31, 2011
Balance at December 31, 2012
Land and
Buildings
Plant and
Equipment
Capital Works
in Progress
Mineral
Properties
and Leases
1,818,685
118,299
–
(3,430)
1,933,554
1,933,554
110,439
2,399,998
–
(1,682)
–
4,442,309
(38,740)
(27,611)
–
(66,351)
(66,351)
(28,513)
192
–
(94,672)
Total
2,971,796
279,785
(6,303)
(5,193)
3,240,085
3,240,085
449,353
2,745,440
(54,705)
1,627
(3,621)
6,378,179
(272,009)
(123,192)
3,026
(392,175)
(392,175)
(115,292)
(4,112)
2,142
(509,437)
728,897
185,012
(6,303)
(1,418)
906,188
906,188
199,349
345,442
(54,705)
3,309
(3,621)
1,395,962
(175,572)
(63,869)
1,179
(238,262)
(238,262)
(61,083)
(4,304)
2,142
(301,507)
140,285
(81,593)
–
–
58,692
58,692
75,293
–
–
–
–
133,985
–
–
–
–
–
–
–
–
–
553,325
667,926
1,094,455
140,285
58,692
133,985
1,779,945
1,867,203
4,347,637
2,699,787
2,847,910
5,868,742
283,929
58,067
–
(345)
341,651
341,651
64,272
–
–
–
–
405,923
(57,697)
(31,712)
1,847
(87,562)
(87,562)
(25,696)
–
–
(113,258)
226,232
254,089
292,665
The amount of expenditures capitalized related to exploration and evaluation costs during the year ended December 31, 2012
included in mineral properties and leases was $37,297 (2011 – $24,385).
The amount of capitalized interest during the year ended December 31, 2012 included in property, plant and equipment was $3,382
(2011 – $3,651).
14. Goodwill
($)
Cost
Balance at January 1,
Acquired during the year
Balance at December 31,
2012
2011
365,928
473,782
839,710
365,928
-
365,928
As a result of the preliminary purchase price allocation for the EGU acquisition, the Company recognized goodwill of $473,782 during
the year (note 5). The Company will continue to review information and perform further analysis with respect to these assets, prior to
finalizing the allocation of the purchase price in the first quarter of 2013.
84 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 85
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
There has been no goodwill impairment recorded for the years ended December 31, 2012 and 2011.
Impairment Tests for Goodwill
Goodwill is allocated to Eldorado’s cash-generating units (CGUs). As of December 31, 2012, $365,928 relates to goodwill in our
China operating segment. The remaining $473,782 relates to our Greece operating segment, which remains under review during
the measurement period, and is excluded from the impairment test.
The recoverable amount of a CGU is determined based on the higher of the fair value less costs to sell and value-in-use. These
calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period.
Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.
Goodwill is allocated to the Jinfeng, White Mountain, Eastern Dragon and Tanjianshan CGUs in the amounts of $138,529, $50,276,
$174,885 and $2,238, respectively. Recoverability of goodwill is determined using fair value less costs to sell calculations.
The key assumptions used for fair value less cost to sell calculations are as follows:
Gold price ($/ounce)
Discount rate
These assumptions have been used for the analysis of each CGU.
The discount rates used reflect specific risks relating to the relevant CGUs.
2012
2011
$1,350 - $1,700
7% - 9%
$1,300 - $1,700
7% - 9%
The values assigned to the key assumptions represent management’s assessment of future trends in the gold mining industry and
in the global economic environment. The assumptions used are management’s best estimates and are based on both current and
historical information from external and internal sources.
15. Accounts Payable and Accrued Liabilities
($)
Trade payables
HST and other taxes
Accrued expenses
16. Debt
($)
Current:
Jinfeng construction loan (a)
Eastern Dragon CMB standby letter of credit loan (c)
Eastern Dragon HSBC revolving loan facility (d)
Non-current:
Senior notes (g)
Total debt
December 31, 2012
December 31, 2011
101,505
19,607
103,455
224,567
67,056
40,256
61,055
168,367
December 31, 2012
December 31, 2011
–
–
10,341
10,341
582,974
–
593,315
19,929
50,786
10,316
81,031
–
–
81,031
eldoRAdo Gold > 2012 annual rEport 85
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
16. Debt (CONTINUED)
(a) Jinfeng Construction Loan
In 2009, Guizhou Jinfeng Mining Ltd. (“Jinfeng”), our 82% owned subsidiary entered into a RMB 680.0 million ($108,186)
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 95% of the prevailing
lending rate stipulated by the People’s Bank of China for similar loans. The construction loan is secured by the following:
i) Sino Gold corporate guarantee;
ii) Pledge of all 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.
During 2010, Jinfeng pre-paid RMB 180.0 million ($28,637) on the outstanding balance of this loan; during 2011 it made
scheduled quarterly payments totalling RMB 140.0 million ($22,273) and pre-paid RMB 230.0 million ($36,592). Then in 2012,
Jinfeng made scheduled quarterly payments totalling RMB 130.0 million ($20,682) which repaid the loan in full.
(b) Jinfeng CMB Working Capital Loan
On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($15,910) working capital loan with CMB. Each drawdown bears
fixed interest at the prevailing lending rate stipulated by the People’s Bank of China on the date of drawdown. The Facility has a
term of up to one year, from January 16, 2013 to January 15, 2014. The facility is unsecured and has no security pledged as collateral.
As at February 5, 2013, Jinfeng has drawn down RMB 78.0 million ($12,410) under this facility and used the proceeds to fund
working capital obligations. This tranche of the loan has a term of six months and a fixed interest rate of 5.6%.
(c) Eastern Dragon CMB Standby Letter of Credit Loan
In January 2010, Rock Mining Industry Development Company Limited (“Eastern Dragon”), our 95% owned subsidiary, entered
into a RMB 320.0 million ($50,786) standby letter of credit loan with CMB. This loan has a one year term. In January 2012, the
term was extended for a second year term to January 2013 and the annual management fee of 10% of the interest accrued
on the outstanding amount paid quarterly was removed. In addition, the floating interest rate is now adjusted monthly at the
prevailing lending rate stipulated by the People’s Bank of China for working capital loans. This loan is collateralized by way of a
restricted cash deposit as funding of the irrevocable letter of credit issued by Sino Gold to CMB. The collateral was increased in
January 2012 from $52,300 to $56,500.
On February 5, 2010, Eastern Dragon made a drawdown on this loan which was used to repay its letter of credit loan with CCB.
During 2012, Eastern Dragon repaid the full amount of this loan and the restricted cash was released.
(d)
Eastern Dragon HSBC Revolving Loan Facility
In May 2010, Eastern Dragon entered into a RMB 80.0 million ($12,728) revolving facility (“the Facility”) with HSBC Bank (China).
The Facility can be drawn down in minimum tranches of RMB 1.0 million ($159) or its multiples. Each drawdown bears interest
fixed at the prevailing lending rate stipulated by the People’s Bank of China on the date of drawdown. The Facility has a term
of up to one year. In February 2012, the Facility was reviewed by the bank and was extended to March 11, 2013. The interest rate
on this loan as at December 31, 2012 was 6.16%.
As at December 31, 2012, RMB 65.0 million ($10,341) was outstanding on this loan.
The Facility is secured by a letter of guarantee issued by Eldorado. Eldorado must maintain at all times a security coverage ratio
of 110% of the amounts drawn down. As at December 31, 2012, the security coverage is $11,375.
This Facility is to be repaid in full when Eastern Dragon obtains the required project approval that will allow it to complete the
second drawdown on the project-financing loan.
86 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 87
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
(e)
Eastern Dragon CMB Project-Financing Loan
In 2009, Eastern Dragon entered into a RMB 450.0 million ($71,593) project-financing loan (“project-financing loan”) with CMB.
The project-financing loan has three components:
i)
A 5 year term, RMB 320.0 million ($50,911) long term loan (“the long term loan”);
ii) A 4 year term RMB 100.0 million ($15,910) fixed asset loan (“the fixed asset loan”); and
iii)
A one year term RMB 30.0 million ($4,773) working capital loan (“the working capital loan”).
The project-financing loan is subject to a floating interest rate adjusted quarterly to 90% of the prevailing lending rate
stipulated by the People’s Bank of China for similar loans.
The project-financing loan will be secured by an irrevocable letter of Guarantee issued by Sino Gold. Under the terms of the
agreement, the following conditions are required to be met before the first drawdown:
1. Receipt of project approval from the Heilongjiang Provincial Development and Reform Commission;
2. Sino Gold to open an offshore banking business bank account with CMB and deposit $40,000;
3.
The aggregate of the amount deposited in the offshore account, Eastern Dragon registered capital and shareholder and
entrusted loan is at least $84,660 (this threshold has been reached as at December 31, 2009).
In addition, before the drawdown on the fixed asset loan, Eastern Dragon is required to obtain the gold operation permit.
The working capital loan can be drawn down once the following conditions are satisfied:
i) The project obtains the mining license;
ii) The project has been developed and is in production;
The gold operation permit has been granted; and
iii)
The safety production permit and environmental protection permit have been granted.
iv)
The project-financing loan requires Eastern Dragon to maintain a liability to asset ratio of 70% or lower, excluding shareholder
loan and total banking debt cannot exceed RMB 550.0 million ($87,503) and it 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-financing loan as at December 31, 2012.
(f) HSBC Revolving Credit Facility
In October 2011, the Company entered into a $280.0 million revolving credit facility with HSBC (“the credit facility”) and a
syndicate of other banks. The credit facility was to mature on October 12, 2015.
In November 2012, the Company amended, restated and increased the existing revolving credit facility with HSBC (“the amended
and restated credit agreement” or “ARCA”) to $375.0 million. The ARCA matures on November 23, 2016. The ARCA is secured by
the shares of SG Resources and Tuprag, wholly owned subsidiaries of the Company.
The ARCA contains covenants that restrict, among other things, the ability of the Company to incur an aggregate unsecure
indebtedness exceeding $850.0 million, incur secured indebtedness up to $200.0 million, make distributions in certain
circumstances, sell material assets and carry on a business other than one related to the mining business. Significant financial
covenants include a maximum debt to Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of 3.5:1 and a
minimum EBITDA to interest of 3:1. The Company is in compliance with these covenants at December 31, 2012.
Loan interest is variable dependent on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately 1:1.
At this ratio, interest charges and fees are as follows: LIBOR plus margin of 2.00% and undrawn standby fee of 0.50%. Fees of
$2,999 were paid on the establishment of the credit facility in 2011, and additional fees of $1,729 were paid on the amendment
to the credit facility. These amounts have been deferred as pre-payments for liquidity services and will be amortized over the
term of the credit facility. As at December 31, 2012, the prepaid loan cost on the balance sheet was $3,918 (Note 12).
No amounts were drawn down under the ARCA as at December 31, 2012.
eldoRAdo Gold > 2012 annual rEport 87
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
16. Debt (CONTINUED)
(g) Senior Notes
On December 10, 2012, the Company completed an offering of $600.0 million senior notes (“the notes”) at par value, with a
coupon rate of 6.125% due December 15, 2020. The notes pay interest semi-annually on June 15 and December 15. The Company
received proceeds of $589.5 million from the offering, which is net of the commission payment. The commission of $10,500
will be recognized in the consolidated income statement over the term of the notes. In addition, net deferred financing costs
of $6,526 have been included as an offset in the balance of the notes in the financial statements and are also being amortized
over the term of the notes. The notes are redeemable by the Company in whole or in part, for cash:
i)
At any time prior to December 15, 2016 at a redemption price equal to 100% of the aggregate principal amount of the
notes at the treasury yield plus 50 basis points, and any accrued and unpaid interest;
ii)
On and after the dates provided below, at the redemption prices, expressed as a percentage of principal amount of the
notes to be redeemed, set forth below, plus accrued and unpaid interest on the notes:
103.063%
December 15, 2016
101.531%
December 15, 2017
100.000%
2018 and thereafter
The early prepayment prices are to reimburse the lender for lost interest for the remaining term. The fair market value of the
notes as at December 31, 2012 is $612.0 million.
Net deferred financing costs of $6,526 have been included as an offset in the balance of the notes in the financial statements
and are being amortized over the term of the notes.
(h) Entrusted Loan
In November 2010, Eastern Dragon, HSBC Bank (China) and Qinghai Dachaidan Mining Ltd (“QDML”), our 90% owned subsidiary,
entered into a RMB 12.0 million ($1,909) entrusted loan agreement, which was subsequently increased to RMB 180.0 million
($28,637) in September 2011 and to RMB 620.0 million ($98,640) in September 2012.
Under the terms of the entrusted loan, QDML with its own funds entrusts HSBC Bank (China) to provide a loan facility in the
name of QDML to Eastern Dragon.
The entrusted loan can be drawn down in tranches. Each drawdown bears interest fixed at the prevailing lending rate stipulated
by the People’s Bank of China on the date of drawdown. Each draw down has a term of three months and can be rolled forward
at the discretion of QDML. The interest rate on this loan as at December 31, 2012 was 4.59%.
As at December 31, 2012, RMB 543.0 million ($86,389) had been drawn under the entrusted loan.
Subsequent to December 31, 2012, RMB 5.0 million ($795) was drawn under this loan.
The entrusted loan has been recorded on a net settlement basis.
88 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 89
17. Asset Retirement Obligations
($)
Greece
At January 1, 2011
Accretion during the year
Revisions to estimate of obligation
At December 31, 2011
Estimated undiscounted amount
At January 1, 2012
Acquired during the year
Accretion during the year
Revisions to estimate of obligation
At December 31, 2012
Estimated undiscounted amount
–
–
–
–
–
–
6,750
272
26,627
33,649
33,041
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
Asset Retirement Obligations
China
Turkey
Total
17,103
855
1,991
19,949
25,788
19,949
–
865
4,789
25,603
29,856
13,284
556
6,179
20,019
51,640
20,019
–
570
(3,276)
17,313
43,454
33,228
1,546
8,439
43,213
81,709
43,213
6,750
1,842
28,166
79,971
110,274
Brazil
2,841
135
269
3,245
4,281
3,245
–
135
26
3,406
3,923
The Company’s asset retirement obligations relate to the restoration and rehabilitation of the Company’s mining operations and
projects under development. The expected timing of the cash flows in respect of the provision is based on the closure of the various
mining operations.
The provision is calculated as the present value of estimated future net cash outflows based on the following key assumptions:
(%)
At January 1, 2011
Inflation rate
Discount rate
At December 31, 2011
Inflation rate
Discount rate
At December 31, 2012
Inflation rate
Discount rate
Asset Retirement Obligations
Greece
Brazil
China
Turkey
–
–
–
–
2.5
0.7 to 2.7
5.0
3.3
3.5
3.1
2.5
1.6
4.0
2.0 to 3.3
5.0
4.1 to 4.3
3.5
3.1
3.5
3.1
2.5
0.7 to 1.8
2.5
1.9 to 3.0
The discount rate is a risk-free rate determined based on US Treasury bond rates. US Treasury bond rates have been used for all of the
mine sites as the liabilities are denominated in US dollars as the majority of the expenditures are expected to be incurred in US dollars.
The inflation rates used in determining the present value of the future net cash outflows are based on worldwide inflation rates.
Environmental guarantee deposits exist with respect to the environmental rehabilitation of the mines in China (Note 12). Additionally,
the Company has provided a €50.0 million Letter of Guarantee to the Ministry of Environment of Greece as security for the due and
proper performance of rehabilitation works in relation to the mining and metallurgical facilities of the Kassandra Mines and the
removal, cleaning and rehabilitation of the old Olympias tailings
eldoRAdo Gold > 2012 annual rEport 89
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
18. Defined Benefit Plans
($)
December 31, 2012
December 31, 2011
Balance sheet obligations (asset) for:
Pension plan
Non-registered supplementary pension plan
616
(5,187)
(4,571)
388
19,581
19,969
($)
December 31, 2012
December 31, 2011
Income statement charge for:
Pension plan
Non-registered supplementary pension plan
Actuarial losses recognised in the statement of other comprehensive income
in the period (before tax)
Cumulative actuarial losses recognised in the statement of other comprehensive
income (before tax)
146
1,754
1,900
12,981
22,277
118
1,970
2,088
6,661
9,296
The Company operates defined benefit pension plans in Canada with two components: a registered pension plan (“the Pension Plan”)
and non-registered supplementary pension plan (“the SERP”). During the second quarter of 2012, the Company set up a Retirement
Compensation Arrangement (“RCA”) trust account in connection with its non-registered supplementary pension plan. As it is a trust
account, the assets in the account are protected from the Company’s creditors. The RCA requires the Company to remit 50% of any
contributions made to the Receiver General for Canada to a refundable tax account.
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 related to these plans are actuarially determined and made at or in excess
of minimum requirements prescribed by legislation.
Eldorado’s plans have actuarial valuations performed for funding purposes. The Pension Plan last had an actuarial valuation
performed as of January 1, 2011 for funding purposes with the next required valuation as of January 1, 2014. The SERP’s last valuation
was on January 1, 2012 for funding purposes and the next valuation will be prepared in accordance with the terms on the pension
plan. The measurement date to determine the pension obligation and assets for accounting purposes was December 31, 2012.
The SERP is designed to provide supplementary pension benefits to qualifying employees affected by the maximum pension limits
under the Income Tax Act pursuant to the registered Pension Plan. Further, the Company is not required to pre-fund any benefit
obligation under the SERP.
Total Cash Payments
Amount contributed to the Pension Plan and the SERP was $39,601 (2011 – $7,549). Cash payments totalling $172 were made
directly to beneficiaries during the year (2011 – $174). The Company expects to contribute $127 to the Pension Plan and $2,836 to
the SERP in 2013.
The estimated future pension payments for the next five years and five years thereafter are as follows:
($)
Estimated future pension payments
2013
253
2014
1,811
2015
2016 and Later
1,811
2,187
90 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 91
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
The amounts recognised in the balance sheet are determined as follows:
($)
Present value of funded obligations
Fair value of plan assets
Liability (asset) on balance sheet
December 31, 2012
December 31, 2011
Pension Plan
SERP
Pension Plan
SERP
2,585
(1,969)
616
35,903
(41,090)
(5,187)
2,101
(1,713)
388
19,581
–
19,581
The movement in the defined benefit obligation over the year is as follows:
($)
Pension Plan
SERP
Total
Pension Plan
SERP
Total
2012
2011
Balance at January 1,
Current service cost
Interest cost
Actuarial losses
Benefit payments
Exchange variance
Balance at December 31,
2,101
154
100
182
–
48
2,585
19,581
1,470
925
13,619
(172)
480
35,903
21,682
1,624
1,025
13,801
(172)
528
38,488
1,609
120
92
265
–
15
2,101
11,690
1,292
678
6,396
(174)
(301)
19,581
13,299
1,412
770
6,661
(174)
(286)
21,682
The movement in the fair value of plan assets of the year is as follows:
($)
At January 1,
Expected return on plan assets
Actuarial gains and losses
Contributions by employer
Exchange variance
At December 31,
The amounts recognised in the income statement are as follows:
($)
Current service cost
Interest cost
Expected return on plan assets
Defined benefit plans expense
The actual return on plan assets was $1,520 (2011 – $152).
The principal actuarial assumptions used were as follows:
(%)
Expected return on plan assets
Discount rate – beginning of year
Discount rate – end of year
Rate of salary escalation
Average remaining service period of active employees
expected to receive benefits
2012
2011
Pension Plan
SERP
Pension Plan
SERP
1,713
108
(20)
130
38
1,969
–
641
841
39,471
137
41,090
1,280
94
58
322
(41)
1,713
–
–
–
–
–
–
2012
2011
Pension Plan
SERP
Pension Plan
SERP
154
100
(108)
146
1,470
925
(641)
1,754
120
92
(94)
118
1,292
678
–
1,970
2012
2011
Pension Plan
SERP
Pension Plan
SERP
6.0
4.5
3.9
3.0
7.8 years
3.0
4.5
3.9
3.0
7.8 years
6.5
5.5
4.5
3.0
6.7 years
6.5
5.5
4.5
3.0
6.7 years
eldoRAdo Gold > 2012 annual rEport 91
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
18. Defined Benefit Plans (CONTINUED)
The assumptions for the expected long-term rate of return on plan assets for the purposes of the actuarial valuation are based on
the asset mix of the portfolio, historical data from similar plans and the review of projected returns by asset class.
Plan Assets
The assets of the Pension Plan and the amounts deposited in the SERP account are managed by a major investment management
company and are invested only in conformity with the investment requirements of applicable pension laws.
The following table summarizes the defined benefit plans’ weighted average asset allocation percentages by asset category
at December 31:
($)
Cash and equivalents
Fixed income
Equity
Total
December 31, 2012
December 31, 2011
Pension Plan
SERP
Pension Plan
SERP
1%
99%
–
100%
49%
22%
29%
100%
2%
98%
–
100%
2%
43%
55%
100%
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Discount rate
Salary escalation rate
Change in assumption
Impact on overall liability
Increase by 0.5%
Decrease by 0.5%
Increase/decrease by 0.5%
Decrease by 6.2%
Increase by 6.8%
Increase/decrease by 0.3%
19. Income Tax Expense and Deferred Taxes
Total income tax expense consists of:
($)
Current tax expense
Deferred tax expense (recovery)
Total income tax expense attributable to geographical jurisdiction is as follows:
($)
Turkey
China
Greece
Brazil
Canada
Romania
Other jurisdictions
December 31, 2012
December 31, 2011
142,587
(14,311)
128,276
2012
74,052
52,794
847
1,110
–
(540)
13
128,276
163,783
1,804
165,587
2011
94,781
70,131
260
125
172
–
118
165,587
92 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 93
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
Factors affecting income tax expense for the year:
($)
2012
2011
Profit before income tax
Canadian statutory tax rate
Tax on profit at Canadian statutory tax rate
Items that cause an increase (decrease) in income tax expense:
Foreign income subject to different income tax rates than Canada
Derecognition (initial recognition) of deferred tax assets
Non-tax effected operating losses and capital gains
Non-deductible expenses and other items
Foreign exchange and other translation adjustments
Amounts under (over) provided in prior years
Investment tax credits
Withholding tax on foreign income
Income tax expense
446,951
25.00%
111,738
(18,256)
–
19,261
12,179
(6,325)
(50)
(15,846)
25,575
128,276
512,810
26.50%
135,895
(23,973)
(7,634)
16,593
9,302
18,699
5,800
–
10,905
165,587
The Canadian income tax rate declined during the year due to changes in the law that reduced corporate income tax rates in Canada.
The change for the year in the Company’s net deferred tax position was as follows:
($)
Net deferred tax (liability)
Balance at January 1,
Deferred income tax (expense) recovery in the income statement
Deferred income tax charged to other comprehensive income
Adjustments to acquisitions
Other
Net balance at December 31,
2012
2011
(332,320)
14,311
–
(495,744)
(39)
(330,512)
(1,804)
(12)
–
8
(813,792)
(332,320)
The composition of the Company’s net deferred income tax asset and liability and deferred tax expense (recovery) is as follows:
Type of temporary difference
Deferred Tax Assets
Deferred Tax Liabilities
Expense (recovery) on
the Income Statement
($)
2012
2011
2012
2011
2012
2011
Property, plant and equipment
Loss carryforwards
Liabilities
Investment tax credits
Other items
Balance at December 31,
2,428
11,246
15,955
11,050
4,549
1,838
11,142
11,534
–
1,536
852,556
346,687
–
5,510
–
954
–
6,365
–
5,318
7,506
329
(5,372)
(11,050)
(5,724)
45,228
26,050
859,020
358,370
(14,311)
9,259
(4,561)
2,015
–
(4,909)
1,804
eldoRAdo Gold > 2012 annual rEport 93
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
19. Income Tax Expense and Deferred Taxes (CONTINUED)
Unrecognized Deferred Tax Assets
($)
Tax losses
Other deductible temporary differences
Total unrecognized deferred tax assets
2012
92,566
4,471
97,037
2011
61,287
9,639
70,926
unrECoGnizEd tax lossEs
At December 31, 2012 the Company had losses with a tax benefit of $92,566 (2011 – $61,287) which are not recognized as deferred
tax assets. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable income that can be
reduced by the tax losses. The gross amount of the tax losses for which a tax benefit has not been recorded expire as follows:
Expiry date ($)
2013
2015
2016
2025
2026
2027
2028
2029
2030
2031
2032
No Expiry
Capital losses with no expiry
Canada
5,989
6,030
–
7,946
14,874
10,729
25,906
23,457
7,515
45,375
86,548
–
234,369
146,309
Brazil
–
–
–
–
–
–
–
–
–
–
–
9,354
9,354
–
Greece
Australia
Total
1,679
8,355
600
–
–
–
–
–
–
–
–
–
10,634
–
–
–
–
–
–
–
–
–
–
–
34,596
34,596
7,668
14,385
600
7,946
14,874
10,729
25,906
23,457
7,515
45,375
86,548
43,950
288,953
–
–
146,309
Tax effect of total losses not recognized
76,881
3,180
2,127
10,378
92,566
dEduCtiBlE tEmporary diffErEnCEs
At December 31, 2012 the Company had deductible temporary differences for which deferred tax assets of $4,471 (2011 – $9,639)
have not been recognized because it is not probable that future taxable profits will be available against which the Company can
utilize the benefits. The vast majority of these temporary benefits have no expiry date.
tEmporary diffErEnCEs assoCiatEd with invEstmEnts in suBsidiariEs
The Company has not recognized deferred tax liabilities in respect of historical unremitted earnings of foreign subsidiaries for which
we are able to control the timing of the remittance and are considered reinvested for the foreseeable future. At December 31, 2012,
these earnings amount to $1,397,881 (2012 – $1,028,127). Substantially all of these earnings would be subject to withholding taxes
if they were remitted by the foreign subsidiaries.
tax CrEdits
The Company has $3,900 (2011 – $18,600) of tax credits that have not been recognized.
othEr faCtors affECtinG taxation
During the year the Turkish Lira has strengthened. This has caused a deferred income tax recovery during the year of $6,294 due
to the increase in the value of the future tax deductions associated with the Turkish operations. The Company expects that in the
future significant foreign exchange movements in the Turkish Lira, Euro or Chinese Renminbi in relation to the US dollar will cause
significant volatility in the deferred income tax expense or recovery.
During the year the Company’s income tax expense was reduced by $15,846 due to the benefit of investment tax credits associated
with the Efemçukuru Mine in Turkey. In the current year, $4,796 of the investment tax credit was used while $11,050 is expected to
be realized in future periods.
94 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 95
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
20. Share Capital
Eldorado’s authorized share capital consists of an unlimited number of voting common shares without par value and an unlimited
number of non-voting common shares without par value. At December 31, 2012 there were no non-voting common shares
outstanding (December 31, 2011 – none).
Voting Common Shares ($)
Number of Shares
Total
At January 1, 2011
Shares issued upon exercise of share options, for cash
Estimated fair value of share options exercised
Shares issued for cash upon exercise of warrants
At December 31, 2011
Shares issued upon exercise of share options, for cash
Estimated fair value of share options exercised
Shares issued for acquisition of subsidiary
Common shares issued for deferred phantom units
At December 31, 2012
21. Share-based Payments
(a) Share Option Plans
548,187,192
3,399,096
–
96,629
551,682,917
3,271,683
–
157,959,316
1,430,560
714,344,476
2,814,679
30,115
9,410
1,485
2,855,689
22,145
23,221
2,380,140
19,762
5,300,957
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 (“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, 2012, a total of
6,269,117 options (2011 – 9,710,429) 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 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, 2012, a total of
8,112,250 Options (2011 – 9,687,704) were available to grant to directors and officers under the D&O Plan.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
At January 1,
Regular options granted
Replacement options granted on acquisition
of European Goldfields Ltd (note 5)
Exercised
Forfeited
At December 31,
2012
2011
Weighted
Average
Exercise Price
CDN$
12.60
14.80
9.73
6.73
15.24
13.68
Number of
Options
8,616,113
5,915,081
4,713,248
(3,271,683)
(898,315)
15,074,444
Weighted
Average
Exercise Price
CDN$
9.49
16.53
–
8.70
14.96
12.60
Number of
Options
8,720,524
3,869,691
–
(3,399,096)
(575,006)
8,616,113
eldoRAdo Gold > 2012 annual rEport 95
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
21. Share-based Payments (CONTINUED)
At December 31, 2012, 10,293,934 share purchase options (December 31, 2011 – 4,992,624) with a weighted average exercise
price of CDN$12.99 (December 31, 2011 – CDN$10.57) had vested and were exercisable. Options outstanding are as follows:
Total Options Outstanding
Exercisable Options
December 31, 2012
Range of
Exercise Price
CDN$
$4.00 to $4.99
$5.00 to $5.99
$6.00 to $6.99
$7.00 to $7.99
$9.00 to $9.99
$10.00 to $10.99
$11.00 to $11.99
$12.00 to $12.99
$13.00 to $13.99
$14.00 to $14.99
$15.00 to $15.99
$16.00 to $16.99
$18.00 to $18.99
$19.00 to $20.02
Shares
1,135,936
66,250
201,000
725,000
302,900
162,922
10,000
744,485
2,242,122
325,622
5,097,383
4,016,824
24,000
20,000
15,074,444
Weighted
Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise Price
CDN$
0.8
1.1
0.2
2.6
1.3
4.0
1.2
4.0
2.1
4.5
4.1
3.3
2.9
3.8
3.2
4.88
5.92
6.38
7.13
9.64
10.85
11.40
12.70
13.24
14.61
15.25
16.57
18.81
19.19
13.68
Weighted
Average
Exercise Price
CDN$
4.88
5.92
6.38
7.13
9.64
10.85
11.40
12.66
13.24
14.72
15.27
16.55
18.81
19.19
12.99
Shares
1,135,936
66,250
201,000
725,000
302,900
54,306
10,000
330,649
2,242,122
184,094
1,890,279
3,114,064
24,000
13,334
10,293,934
Share based payments expense related to share options for the year ended December 31, 2012 was $15,933 (2011 – $14,104).
The assumptions used to estimate the fair value of options granted during the years ended December 31, 2012 and 2011 were:
Risk-free interest rate (range)
Expected volatility (range)
Expected life (range)
Expected dividends
Forfeiture rate
2012
2011
1.08% – 1.23%
39% – 46%
0.7 – 2.7 years
CDN $0.10 to $0.12
6%
1.60% – 2.05%
29% – 61%
0.8 – 2.8 years
CDN $0.08 to $0.10
4%
The weighted average fair value per stock option was CDN$2.80 (2011 – CDN$3.75). Volatility was determined based on the
historical volatility over the estimated lives of the options.
(b) Restricted Share Unit Plan
In March 2011, the Company commenced a Restricted Share Unit (‘‘RSU’’) plan whereby restricted share units may be granted
to senior management of the Company. Once vested, an RSU is exercisable into one common share entitling the holder to
receive the common share for no additional consideration. A portion of the RSUs granted have a vesting schedule where half
vest immediately and the remaining half vest on the first anniversary of the grant. The remaining portion of the RSUs granted
vest over two years with one third of the RSUs vesting immediately.
96 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 97
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
The current maximum number of common shares authorized for issue under the RSU plan is 1,500,000. A total of 470,070 RSUs
(2011 – 416,454) at a grant-date fair value of CDN$14.65 per unit were granted during the year ended December 31, 2012
(2011 – CDN$15.69) and 156,691 were exercisable at December 31, 2012 (2011 – 168,027).
The fair value of each RSU issued is determined as the closing share price at grant date.
A summary of the status of the RSU plan and changes during the year is as follows:
At January 1,
Granted
Redeemed
Forfeited
At December 31,
2012
2011
253,587
470,070
(257,825)
–
465,832
–
416,454
(146,059)
(16,808)
253,587
As at December 31, 2012, 465,832 common shares purchased by the Company remain held in trust in connection with this plan
(2011 – 253,587). At the end of the period, 80,011 RSUs are fully vested and exercisable (2011 – 21,968). These shares purchased
and held in trust have been included in treasury stock in the balance sheet.
Restricted share units expense for the year ended December 31, 2012 was $5,159 (2011 – $5,166).
(c)
Deferred Share Units Plan
In July 15, 2010 the Company adopted the Independent Directors Deferred Share Unit (“DSU”) Plan under which DSU’s will be
granted by the Board from time to time to independent directors (“participants”). The performance period of each DSU commences
on the Grant Date and expires on the Termination Date of the participant. The Termination Date is when the participant ceases
to be a Director of the Company. On redemption each unit entitles the participant to receive a cash payment equal to the market
value of the Company’s shares on the date of redemption. At December 31, 2012, 126,406 DSUs were outstanding (2011 – 65,982
DSUs) with a value of $1,626 (2011 – $910), which is included in accounts payable and accrued liabilities.
Compensation expense related to the DSUs was $702 for the year ended December 31, 2012 (2011 – $452).
(d)
Deferred Phantom Units
In accordance with the acquisition agreement of EGU (note 5), the EGU DPUs will be converted on redemption to Eldorado
shares using the 85% share exchange ratio as indicated within the plan of Arrangement. The DPU plan was amended to allow
for share settlement only. Each DPU is exercisable into one common share entitling the holder to receive the common share for
no additional consideration. During the year, 1,430,560 DPUs were exercised. The remaining 500,982 DPUs are expected to be
exercised during 2013.
22. Supplementary Cash Flow Information
($)
December 31, 2012
December 31, 2011
Changes in non-cash working capital
Accounts receivable and other
Inventories
Accounts payable and accrued liabilities
Total
Supplementary cash flow information
Income taxes paid
Interest paid
Non-cash investing and financing activities
Shares, options and DPUs issued on acquisition of European Goldfields Ltd.
(47,729)
(18,346)
(86,397)
(152,472)
105,364
4,013
2,440,375
(7,902)
(13,299)
31,149
9,948
134,594
7,856
–
eldoRAdo Gold > 2012 annual rEport 97
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
23. Financial Risk Management
23.1 finanCial risK faCtors
Eldorado’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price
risk), credit risk and liquidity risk. Eldorado’s overall risk management program focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on Eldorado’s financial performance.
(a) Market Risk
(i)
Foreign Exchange Risk
The Company operates principally in Canada, Turkey, China, Brazil, Greece and Romania, and is therefore exposed to foreign
exchange risk arising from transactions denominated in foreign currencies. Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.
Eldorado’s cash and cash equivalents, accounts receivable, marketable securities, accounts payable and accrued liabilities and
debt are denominated in several currencies, and are therefore subject to fluctuation against the US dollar.
The table below summarizes Eldorado’s exposure to the various currencies denominated in the foreign currency, as listed below:
(thousands)
Canadian Australian
Dollar
Dollar
Swedish Romanian
Lei
Krona
British
Pound
Turkish
Lira
Chinese
Renminbi
Brazilian
Real
Euro
Cash and cash
equivalents
Marketable securities
Accounts receivable
and other
Accounts payable and
accrued liabilities
Debt
Net balance
Equivalent in
US dollars
256,134
1,141
2,806
–
3,874
305
3,608
691,460
2,442
1,979
2,147
(12,670)
–
–
–
–
7,418
–
38,775
–
3,471
(33,744)
–
(1,474)
–
–
–
–
26,082
–
142,235
–
35,279
(61,235)
(687,162)
(6,807)
–
247,590
–
1,141
–
(23,520)
–
38,775
–
5,871
–
305
–
(31,545)
(64,998)
81,535
–
30,914
248,857
1,187
(31,013)
5,967
1,749
495
(17,696)
12,972
15,132
Based on the balances as at December 31, 2012, a 1% increase/decrease in the US dollar exchange rate against all of the other
currencies on that date would have resulted in a increase/decrease of approximately $2,377 in profit before taxes. There would
be no effect in other comprehensive income.
Cash flows from operations are exposed to foreign exchange risk, as commodity sales are set in US dollars and a certain amount
of operating expenses are in the currency of the country in which mining operations take place.
(ii) Metal Price Risk and Other Price Risk
Eldorado is subject to price risk for fluctuations in the market price of gold and other metals. Gold and other metals prices
are affected by numerous factors beyond the Company’s 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 and other metals production levels also affect their prices, and the price of these metals is occasionally subject
to rapid short-term changes due to speculative activities. The Company has elected not to actively manage its exposure to metal
price risk at this time. From time to time, Eldorado may use commodity price contracts to manage its exposure to fluctuations in
the price of gold and other metals.
Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices.
98 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 99
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
Eldorado’s other price risk includes equity price risk, whereby the Company’s investments in marketable securities are subject
to market price fluctuation.
(iii) 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. The majority of the Company’s debt is in the form of notes with a fixed interest rate of 6.13%. As at
December 31, 2012 the average interest rate in Eldorado’s debt was 6.09% (2011 – 6.09%). A 10% increase or decrease in the
interest rate on debt held at December 31, 2012 would result in a $63 increase or decrease (2011 – $125) in the Company’s
profit before tax.
(b) 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, 2012, approximately 71%
(2011 – 37%) of Eldorado’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.
Payment for metal sales is normally in advance or within fifteen days of shipment depending on the buyer. The historical level of
customer defaults is negligible which reduces the credit risk associated with trade receivables at December 31, 2012.
(c) 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. Management 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 16.
23.2 Capital risK manaGEmEnt
Eldorado’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of our mining projects. Capital consists of all of the components of equity; share capital from ordinary shares,
contributed surplus, accumulated other comprehensive income, retained earnings and non-controlling interests.
Consistent with others in the industry, Eldorado monitors capital on the basis of the debt to capital ratio and debt to EBITDA.
The debt to capital ratio is calculated as debt, including current and non-current debt, divided by capital. The debt to EBITDA ratio
is calculated as debt, including current and non-current debt, divided by earnings before interest costs, taxes and depreciation.
This policy includes a target debt to capital ratio of less than 30% and a debt to EBITDA target ratio below 3.5.
As at December 31, 2012, our debt to capital ratio was 9.6% (2011 – 2.4%) and our debt to EBITDA ratio was 1.01 (2011 – 0.12).
These policy targets are managed through the repayments and issuances of debt as well as the continuing management of
operations and capital expenditures.
23.3 fair valuE Estimation
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 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).
eldoRAdo Gold > 2012 annual rEport 99
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
23. Financial Risk Management (CONTINUED)
Assets and liabilities measured at fair value on a recurring basis as at December 31, 2012 include:
($)
Assets
Available-for-sale financial assets
Marketable securities
Total assets
Balance at
December 31,
2012
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
Significant
Other Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
1,988
1,988
1,988
1,988
–
–
–
–
No liabilities are measured at fair value on a recurring basis as at December 31, 2012.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market
is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length
basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included
in Level 1. Instruments included in Level 1 comprise primarily publicly-traded equity investments classified as held-for-trading
securities or available-for-sale securities.
24. Commitments
The Company’s contractual obligations, not recorded on the balance sheet, at December 31, 2012, include:
($)
Operating leases and capital expenditures
Purchase obligations
Totals
2013
6,644
171,621
178,265
2014
7,095
21,767
28,862
2015
2016 and Later
4,399
16,079
20,478
9,919
29,036
38,955
Purchase obligations in 2013 relate primarily to mine expansion projects at Kişladağ, mine development projects at Tocantinzinho
and Eastern Dragon as well as operating and maintenance supply contracts at our operating mines.
25. Contingencies
The Company is involved in legal proceedings from time to time, arising in the ordinary course of its business. As at December 31, 2012,
the amount of ultimate liability with respect to these actions will not, in the opinion of management, materially affect Eldorado’s
financial position, results of operations or cash flows.
100 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 101
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
26. Related Party Transactions
Key management includes directors (executive and non-executive), officers and senior management. The compensation paid or
payable to key management for employee services, including amortization of share based payments, is shown below:
($)
Salaries and other short-term employee benefits
Termination benefits
Defined benefit pension plan
Share based payments
2012
12,206
–
1,900
11,959
26,065
2011
18,897
732
2,088
10,654
32,371
In November, 2012, our wholly owned subsidiary, Eldorado Gold Cooperatief U.A. (“the Coop”), entered into a bridge loan agreement
with Nordic, a significantly influenced investment, for SEK 38,775,000 ($5,967). The loan is to be settled by way of Nordic units
at the time of Nordic’s new rights subscription. The loan is to be repaid in full, plus accrued interest at a rate of 15% per annum.
On January 22, 2013, the Nordic rights issue was fully subscribed and the Coop was issued 35,250,000 shares in Nordic at SEK 1.10
per share and was paid SEK 545,732 ($84) in accrued interest.
27. Financial Instruments by Category
fair valuE
The following table provides the carrying value and the fair value of financial instruments at December 31, 2012 and December 31, 2011:
($)
Financial Assets
Held-for-trading
Restricted assets and other (SERP)
Available-for-sale
Marketable securities
Loans and receivables
Cash and cash equivalents
Restricted cash
Accounts receivable and other
Restricted assets and other
Financial Liabilities
Accounts payable and accrued liabilities
Debt
December 31, 2012
December 31, 2011
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
–
–
14,456
14,456
1,988
1,988
2,640
2,640
816,843
241
105,600
31,846
816,843
241
105,600
31,846
393,763
55,390
34,630
23,974
393,763
55,390
34,630
23,974
224,567
593,315
224,567
593,315
168,367
81,031
168,367
81,031
eldoRAdo Gold > 2012 annual rEport 101
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
28. Production Costs
($)
Production costs
Labor
Fuel
Reagents
Electricity
Mining contractors
Operating and maintenance supplies and services
Site general and administrative costs
Inventory change
Royalties, production taxes and selling expenses
Total production costs
29. Interest and Financing Costs
($)
Interest expense
Financing fees
Total interest and financing costs
30. Earnings Per Share
2012
2011
90,709
36,641
44,156
38,612
58,628
100,216
26,082
(12,448)
45,350
427,946
2012
4,203
2,780
6,983
59,079
30,580
39,873
31,753
31,677
73,532
19,210
13,185
47,595
346,484
2011
4,208
1,123
5,331
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average
number of ordinary shares used in the calculation of basic earnings per share as follows:
(in thousands)
December 31, 2012
December 31, 2011
Weighted average number of ordinary shares used in the calculation
of basic earnings per share
Diluted impact of stock options
Weighted average number of ordinary shares used in the calculation
of diluted earnings per share
689,007
1,662
690,669
549,791
1,834
551,625
The earnings used to calculate basic and diluted earnings per share for the year ended December 31, 2012 were $305,302
(2011 – $318,662).
102 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 103
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
31. Segment Information
idEntifiCation of rEportaBlE sEGmEnts
The Company has identified its operating segments based on the internal reports that are reviewed and used by the chief executive
officer and the executive management (the chief operating decision makers or CODM) in assessing performance and in determining
the allocation of resources.
The CODM considers the business from both a geographic and product perspective and assesses the performance of the operating
segments based on measures of profit and loss as well as assets and liabilities. These measures include operating profit,
expenditures on exploration, property, plant and equipment and non-current assets, as well as total debt. As at December 31, 2012,
Eldorado had six reportable segments based on the geographical location of mining and exploration and development activities.
31.1 GEoGraphiCal sEGmEnts
Geographically, the operating segments are identified by country and by operating mine or mine under construction. The Brazil
reporting segment includes the Vila Nova mine, development activities of Tocantinzinho and exploration activities in Brazil. The
Turkey reporting segment includes the Kişladağ and the Efemçukuru mines and exploration activities in Turkey. The China reporting
segment includes the Tanjianshan (“TJS”), Jinfeng and White Mountain mines, the Eastern Dragon development project and
exploration activities in China.
The Greece reporting segment includes the Stratoni mine and the Olympias, Skouries and Perama Hill development projects and
exploration activities in Greece. The Romania reporting segment includes the Certej development project. Other reporting segment
includes operations of Eldorado’s corporate office and exploration activities in other countries. Financial information about each
of these operating segments is reported to the CODM on at least a monthly basis.
2012
($)
Turkey
China
Brazil
Greece
Romania
Other
Total
Information about profit and loss
Metal sales to external customers
Production costs
Depreciation
Gross profit
Other material items of income and expense
Exploration expense
Income tax expense
550,781
132,390
19,023
399,368
502,494
220,476
80,853
201,165
45,565
36,443
5,277
3,845
48,701
38,637
6,463
3,601
–
–
–
–
–
–
1,913
(1,913)
1,147,541
427,946
113,529
606,066
8,504
74,052
12,635
52,794
10,379
1,110
1,574
847
150
(540)
6,279
13
39,521
128,276
Additions to property, plant and equipment
191,659
119,571
18,843
79,800
9,923
1,315
421,111
during the year
Information about assets and liabilities
Property, plant and equipment*
Goodwill
699,182
–
699,182
1,952,545
365,928
2,318,473
198,586
–
198,586
2,422,868
473,782
2,896,650
593,210
–
593,210
2,351
–
2,351
5,868,742
839,710
6,708,452
Debt
–
10,341
–
–
–
582,974
593,315
*Net of revenues from sale of pre-commercial production
eldoRAdo Gold > 2012 annual rEport 103
notes to the Consolidated
Financial Statements
(Expressed in thousands of US dollars, unless otherwise stated)
31. Segment Information (CONTINUED)
($)
Turkey
China
Brazil
Greece
Other
Total
2011
Information about profit and loss
Metal sales to external customers
Production costs
Depreciation
Gross profit
Other material items of income and expense
Exploration expense
Income tax expense
Additions to property, plant and equipment
during the year
Information about assets and liabilities
Property, plant and equipment
Goodwill
458,985
117,189
11,342
330,454
587,889
198,995
104,154
284,740
56,863
30,300
4,689
21,874
–
–
–
–
–
–
2,229
(2,229)
1,103,737
346,489
122,414
634,839
10,515
94,781
8,741
70,131
5,639
125
–
260
5,878
290
30,773
165,587
166,601
82,249
17,532
2,902
2,062
271,346
591,896
–
591,896
1,903,793
365,298
2,269,721
185,667
–
185,667
163,239
–
163,239
3,315
–
3,315
2,847,910
365,928
3,213,838
Debt
–
81,031
–
–
–
81,031
The Turkey and China segments derive their revenues from sales of gold. The Brazil segment derives its revenue from sales of iron
ore. The Greece segment derives its revenue from sales of zinc, lead and silver concentrates.
The measure of total debt represents the current and long-term portions of debt.
31.2 EConomiC dEpEndEnCE
At December 31, 2012, each of our Chinese mines had one major customer, to whom each sells its entire production, as follows:
TJS Mine
Jinfeng Mine
White Mountain Mine
Henan Zhongyuan Gold Smelter Factory Co. Ltd. of Zhongjin Gold Holding Co. Ltd.
Zijin Refinery
Refinery of Shandong Humon Smelting Co. Ltd.
31.3 sEasonality/CyCliCality of opErations
Management does not consider operations to be of a significant seasonal or cyclical nature.
32. Events Occurring After the Reporting Date
On January 11, 2013 the government of Greece has enacted legislation increasing the corporate income tax rate from 20% to 26%,
effective January 1, 2013. The Company calculated its deferred tax liability with respect to its Greek assets including the assets acquired
as part of the EGU acquisition based on the 20% Greek income tax rate, as this was the legislated tax rate at the acquisition date.
As required by IAS 12, “Income Taxes”, when an income tax rate has changed the deferred tax liability must be adjusted to reflect the
change in the income tax rate. The adjustment is required to be charged to deferred income tax expense. The Company anticipates
that the increase in the Greek income tax rate from 20% to 26% will increase the deferred tax liability and the deferred tax expense
by $130.0 million or approximately $0.18 per share in the first quarter of 2013.
104 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 105
eldoRAdo Gold > 2012 annual rEport 105
Board of directors, officers
and Senior Management team
Board of dirECtors
ExECutivE offiCErs
sEnior manaGEmEnt
Paul N. Wright
Chief Executive Officer
Norman S. Pitcher
President
Fabiana E. Chubbs
Chief Financial Officer
Paul J. Skayman
Chief Operating Officer
Dale L. Churcher
Vice President, Engineering
Doug M. Jones
Senior Vice President, Operations
Peter D. Lewis
Vice President, Exploration
Nancy E. Woo
Vice President, Investor Relations
Dawn L. Moss
Executive Vice President,
Administration and Corporate Secretary
David A. Bickford
Vice President and General Manager,
Turkey
Eduardo E. Moura
Vice President and General Manager,
Greece
Lincoln Silva
Vice President and General Manager,
Brazil
Nicolae Stanca
Vice President and General Manager,
Romania
Hailong Xu
Vice President and General Manager,
China
Robert R. Gilmore1,2
Denver, CO, USA
Non-executive Chairman of the Board
(Independent Director)
Timothy C. Baker4*
Toronto, ON, Canada
(Independent Director)
K. Ross Cory1,3
Vancouver, BC, Canada
(Independent Director)
Geoffrey A. Handley2,4
Bronte, NSW, Australia
(Independent Director)
Wayne D. Lenton2,4
Tucson, AZ, USA
(Independent Director)
Michael A. Price1,4
London, UK
(Independent Director)
Jonathan A. Rubenstein2,3
Vancouver, BC, Canada
(Independent Director)
Donald M. Shumka1,3
Vancouver, BC, Canada
(Independent Director)
Paul N. Wright
Vancouver, BC, Canada
Chief Executive Officer
Eldorado Gold Corporation
Committees of the Board of Directors
1Audit Committee
2Compensation Committee
3Corporate Governance and Nominating Committee
4Sustainability Committee
* Tim Baker resigned his position as an Independent
Director effective December 31, 2012.
eldoRAdo Gold > 2012 annual rEport 105
eldoRAdo Gold > 2012 annual rEport 105
auditors
KPMG LLP
Vancouver, BC Canada
lEGal CounsEl
Fasken Martineau DuMoulin LLP
Vancouver, BC Canada
Dorsey & Whitney LLP
Denver, CO USA
Corporate Information
offiCEs
Canada (Head Office)
Eldorado Gold Corporation
1188 Bentall 5
550 Burrard Street
Vancouver, BC
V6C 2B5 Canada
Tel:
604.687.4018
Fax: 604.687.4026
Toll-Free: 1.888.353.8166
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
China
Eldorado Gold Corporation
Room 1001, West Tower
LG Twin Towers
B-12 Jianguomenwai Avenue
Chaoyang District, Beijing
100022 China
Tel:
86.10.5828.7966
Fax: 86.10.5828.7967
Greece
Hellas Gold SA & Thracean
Gold Mining SA
23A Vasilissis Sofias Avenue
Athens
10674 Greece
Tel: 30.214.687.0000
Fax: 30.214.687.0095
Brazil
Unamgen Mineração e Metalurgia S/A
Avenida Olegário Maciel
1846 - Santo Agostinho
Belo Horizonte, MG
CEP 30180-112 Brazil
Tel:
55.31.2101.3753
Fax: 55.31.2101.3758
Romania
Deva Gold SA
Piata Unirii No.9
Deva, Hunedoara County
Romania
Tel:
40.25.423.3680
Fax: 40.25.423.3682
Barbados
Eldorado Gold (Barbados) Limited
White Park House
White Park Road
Bridgetown, Barbados
BB11135
Tel:
246.271.5357
Fax: 246.271.5357
The Netherlands
Eldorado Gold (Netherlands) BV
Barbara Strozzilaan 101
1083 HN
Amsterdam, The Netherlands
Tel:
31.(0)20.450.9610
Fax: 31.(0)20.450.9611
106 Eldorado Gold > 2012 AnnuAl RepoRt
eldoRAdo Gold > 2012 annual rEport 107
Shareholder Information
stoCK ExChanGEs
The Toronto Stock Exchange Symbol: ELD
The New York Stock Exchange Symbol: EGO
annual GEnEral mEEtinG
May 2, 2013
3:00pm Pacific Time
Hyatt Regency Hotel
655 Burrard Street
Vancouver, BC
Company filinGs
www.sedar.com
www.sec.gov
transfEr aGEnt and rEGistrar
Valiant Trust Company
600-750 Cambie Street
Vancouver, BC
V6B 0A2 Canada
Shareholder Inquiries Line: 1.866.313.1872
inquiries@valianttrust.com
invEstor ContaCt information
For inquiries related to shares
or dividends:
Valiant Trust Company
Shareholder Inquiries
Line: 1.866.313.1872
inquiries@valianttrust.com
For inquiries related to Eldorado Gold’s
operating activities and financial
performance:
Nancy Woo
Vice President Investor Relations
604.687.4018
info@eldoradogold.com
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 consolidated financial
statements published annually.
• The consolidated 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 40-F
and other corporate and continuous
disclosure documents available on
the Company’s website, the Canadian
Depository for Securities (CDS)
SEDAR website www.sedar.com and the
US Securities and Exchange Commission
(SEC) EDGAR website www.sec.gov.
Section 303A.11 of the NYSE Listed
Company Manual permits foreign private
issuers to follow home country practices
in lieu of certain provisions of the
NYSE Listed Company Manual. A foreign
private issuer that follows home country
practices in lieu of certain provision of
the NYSE Listed Company Manual must
disclose any significant ways in which its
corporate governance practices differ from
those followed by domestic companies.
A description of the significant ways in
which the Company’s governance practices
differ from those followed by domestic
companies pursuant to the NYSE Listed
Company Manual is available on the
Company’s website at www.eldoradogold.com.
eldoRAdo Gold > 2012 annual rEport 107
eldoRAdo Gold > 2012 annual rEport 107
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 our strategy, plans, goals,
outlook, financial disclosure; our future financial and operational performance, price of gold and other commodities, cash flow, cash costs, targets, production and expenditures; our mineral reserves
and resources estimates; and our proposed mine development (including permitting), exploration, acquisitions and other events and developments that have not yet happened. 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; production, mineral reserves and resources and metallurgical recoveries; the impact of acquisitions on
our business; the political and economic environment in which we operate; 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 and other metal price volatility and the impact of any related hedging activities;
• risks of not meeting production and cost targets;
• discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries;
• subjectivity of estimating mineral resources and reserves and the reliance on available data and assumptions and judgments used in interpretation of such data;
• depletion of quantities of grades of reserves;
• infrastructure, water, energy and other commodity availability and costs and the impact on capital and operating costs and exploration, development and production schedules;
• prices for energy inputs, labour, material costs, supplies on services (including shipping) remaining consistent with expectations;
• currency fluctuations;
• risks associated with maintaining substantial levels of indebtedness, including restrictions on operations;
• regulatory restrictions, including environmental regulatory restrictions and liability, including actual costs of reclamation;
• changes in law and regulatory requirements, including environmental regulations;
• risks of sovereign investment and operating in foreign countries, including controls, regulations and political or economic developments in the countries in which we currently or may in the
future conduct business;
• risk associated with joint ventures;
• speculative nature of gold and other mineral exploration and uncertainties associated with mineral exploration;
• developments, mining and operational risk, including timing, hazards and accidents associated with mining operations and losses which are uninsured or uninsurable;
• increased capital requirements and the ability to obtain financing;
• environmental risks;
• competition;
• the loss of key employees and our ability to attract and retain qualified personnel and labour disputes;
• title permitting and licenses risks, including the risks of obtaining and maintaining the validity and enforceability of necessary permits and licenses, the timing of obtaining and renewing such
permits and licenses, and risks of defective title to mineral property;
• litigation risks, including the uncertainties inherent in current and future legal challenges we are, or may become, a party to;
• community and non-governmental actions and regulatory risks, including the possibility of a shutdown at any of our operations;
• taxation, including change in tax laws and interpretations of tax laws;
• volatility of global and local economic climate;
• climate change risk;
• 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;
• the impact of acquisitions, including expanded portfolio of projects on our operations, capital requirements, and financial condition and ability to complete acquisitions; and
• share capital dilution and share price volatility.
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 and local 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 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 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”) Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time. 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 cannot be assumed that all or
any part of a “measured mineral resource”, “indicated mineral resource” or “inferred mineral resource” will ever be upgraded to a higher category. Accordingly, information herein containing descriptions
of our mineral deposits may not be comparable to similar information made public by US companies subject to the reporting and disclosure requirements under US federal securities laws and the
rules and regulations thereunder.
108 Eldorado Gold > 2012 AnnuAl RepoRt
dEsiGn By porCaro CommuniCations printEd By rr donnEllEy
jinfEnG proCEssinG plant, China
eldorado gold Corporation
1188 bentall 5, 550 burrard street
vancouver, british columbia
canada v6c 2b5
t: 604.687.4018
f: 604.687.4026
www.eldoradogold.com
info@eldoradogold.com
tsx : eld
nyse : ego
kiŞladaĞ gold Mine, turkey