Building
OUR FUTURE
E L D O R A D O G O L D A N N UA L R E P O R T 2 0 1 4
Eldorado gold
Eldorado is a leading low-cost gold producer with mining,
development and exploration operations in Turkey, China,
Greece, Romania and Brazil. Our success to date is based on
a low-cost strategy, a highly skilled and dedicated workforce,
safe and responsible operations, and long-term partnerships
with the communities where we operate.
Table of ConTenTs
2014 Highlights
2014 Results
letter to Our Shareholders
in Conversation with Our Executives
Strategic Priorities
Where We Operate
Operational Highlights: Turkey
1
2
4
6
8
10
12
Operational Highlights: China
Adding Value Through Exploration
development Highlights: Key Projects
development Highlights: Other Projects
Our World, Our Responsibility
Building Opportunities
Financial Review
14
16
18
20
22
24
28
Cover: Efemçukuru processing plant, Turkey Back cover: Kişladağ open pit, Turkey
2014 Highlights
Record production of
789,224
ounces of gold
9%
increase in gold
production year
over year
Year end proven and
probable gold reserves of
~26 million
ounces
flat cash costs
year over year of
$500/oz
(2013: $494 per ounce)
approximately
$875 million
of liquidity on balance
sheet at year end
Year over year
reduction in our
global lost-Time
Injury frequency
Rate (lTIfR)
< Efemçukuru processing plant, Turkey
Eldorado gold Annual Report 2014
1
2014 Results
oPeR aTIonal
Gold produced (oz) (1)
Cash operating costs ($/oz)
Total cash costs ($/oz)
All-in sustaining costs ($/oz) (2)
Average realized gold price ($/oz)
Gold reserves (Moz) (3)
fInanCIal ($ mIllIons ex CePT wheRe no Ted )
Revenues (from all metals)
Gross profit from gold mining operations
Adjusted net earnings
Adjusted net earnings per share (basic)
Net profit (loss) attributable to shareholders
Net profit (loss) attributable to shareholders per share
Cash flow from operations (before changes in working capital)
Dividends paid per share ($CDN)
2014
2013
2012
789,224
721,201
656,324
500
557
779
1,266
25.9
1,067.9
382.7
138.7
0.19
102.6
0.14
342.9
0.02
494
551
–
1,407
27.7
1,124.0
481.1
192.9
0.27
(653.3)
(0.91)
382.0
0.12
483
554
–
1,674
25.8
1,147.5
595.0
327.3
0.48
305.3
0.44
447.7
0.15
(1) Includes production from Olympias tailings retreatment.
(2) The Company adopted all-in-sustaining-costs (a non-IFRS measure) in 2014.
(3) Please see our Annual Information Form for the year ended December 31, 2014 for more information on our resources and reserves.
All dollar figures, unless otherwise noted, are in US dollars.
RevIew of Resul Ts
2014 was another year of lower gold prices, with gold trading between $1,142 and $1,385 per ounce. We finished the year with
an average realized gold price of $1,266 per ounce, 10% lower than 2013. While lower realized gold prices impacted gross profit
from gold mining operations, the impact of lower gross margins was partially offset by a 7% increase in gold ounces sold. Costs
remained flat with all-in sustaining costs (AISC) of $779 per ounce. Gold reserves totalled almost 26 million ounces at year end,
a decrease of 6.5% driven by depletion from mining and a pit redesign at Kişladağ. Both White Mountain and Jinfeng increased
reserves in 2014.
2
Eldorado gold Annual Report 2014
Gold PR oduCTIon
oPeR aTInG C ash C osTs
ToTal lIQuIdITY
(oz) (1)
656,324
789,224
721,201
($/oz)
483
494
500
($M)
1,191.8
998.9
876.3
2012
2013
2014
0
0
2012
2013
2014
2012
2013
2014
Revenues fR om
all meT als
($M)
1,147.5
1,124.0
1,067.9
aveR aGe RealIZed
Gold PRICe
Cash flow fR om
oPeR aTIons
($/oz)
1,674
1,407
1,266
($M)
447.7
382.0
342.9
0
2012
2013
2014
0
2012
2013
2014
0
2012
2013
2014
(1) 2013 and 2014 includes production from Olympias tailings retreatment.
Eldorado gold Annual Report 2014
3
letter to Our Shareholders
Fellow shareholders,
Despite challenging market conditions, I am very pleased
to report that 2014 has been another successful year for
Eldorado Gold.
Eldorado achieved its highest-ever gold production of close to
800,000 ounces at industry-leading cash operating costs. All of
our mines delivered solid operational results, reflective of the
skills and dedication of all of our fellow employees who raise
the quality of our performance each year. We made significant
progress at our two key development projects Skouries and
Olympias in Greece. With approximately $875 million in total
liquidity at year end, our balance sheet remains one of the
strongest in the industry, allowing us to internally fund our
robust growth pipeline.
oPeR aTIonal hIGhlIGhTs
It was a strong year for our operations, with all of our mines
delivering a consistently solid performance and meeting
or exceeding their guidance for 2014. Gold production
increased 9% to 789,224 ounces (2013 –721,201 ounces) and
operating cash costs remained virtually flat at $500 per ounce
(2013 –$494 per ounce) and with all in sustaining cash costs
of $779 per ounce for the year. Our costs remained within the
lower quartile of the industry average.
In Turkey, Kişladağ and Efemçukuru delivered reliably with
cash operating costs coming in below guidance. Our Chinese
mines had very strong years with production about 10% above
guidance across the board. Jinfeng and Tanjianshan performed
4
Eldorado gold Annual Report 2014
“All of our mines delivered solid
operational results, reflective of
the skills and dedication of all of
our fellow employees who raise
the quality of our performance
each year.”
particularly well, with cash costs some 12% and 14% below
guidance respectively. These results show the disciplined
approach in which our teams operate and the pride they take
in delivering to plan.
buIldInG value In ChIna
Over the past year, we evaluated various options to maximise
value from our Chinese assets. With our Eastern Dragon
project, we entered into a joint venture with CDH Investments,
whereby CDH invested $40 million for a 20% partnership
interest. Construction is expected to resume at Eastern
Dragon this upcoming summer, with production expected
late in the year. We also announced that we are evaluating
a potential listing of our Chinese assets on the Hong Kong
Stock Exchange. We would complete the permitting on Eastern
Dragon before any listing and timing will be predicated on
suitable equity conditions, along with other considerations.
ouR fuTuRe GR owTh
Greece, in a period of evolving political, economic and social
change, remains a priority for us and our future growth.
In 2014, we made excellent progress at Skouries. At year end,
all mills were set in place and underground development
was well under way with over 500 metres of the decline
complete. By the latter part of 2015, we will have peak
construction crews on site of about 1,300–1,400 people and
we are on schedule to commence production towards the end
< Electric loader at Kişladağ, Turkey
Installation of the SAG mill at Skouries, Greece
of 2016. At Olympias we continued with tailings treatment
and surface rehabilitation while moving ahead with Phase II
development and Phase III planning. Our operations in Greece
now employ over 2,000 people directly, and we estimate that
there are over 3,000 additional people employed indirectly
as a result of our investment in the country. Once in full
production, Olympias and Skouries will be very strong cash
generators for the Company and significant contributors to the
local society and Greek economy.
At Certej in Romania, we will complete a feasibility study by
mid 2015 and we expect to spend approximately $25 million
in the year ahead on land acquisition, the feasibility study and
site development costs.
At Kişladağ in Turkey, we received a positive Environmental
Assessment decision on our planned Phase IV mine expansion,
which allows for an expanded production rate of 20 million
tonnes of crushed ore. However, due to capital commitments
at Skouries and Olympias, we have opted to defer this
expansion project until 2017.
solId fInanCIal Resul Ts
We ended the year with liquidity of approximately
$875 million, including more than $500 million in cash and
the remainder in unused lines of credit. This places us in
an excellent position to build out our mines and invest in
our business.
In a year that saw the S&P/TSX Global Gold Index decrease
almost 11%, Eldorado’s share performance again separated us
from our peers, with a share price appreciation of 13% over
the year.
“Every year our people work hard
to maintain Eldorado’s position
as an industry-leading producer.
I would like to sincerely thank
our teams for their collaboration,
effort and dedication in 2014.”
safe, aCC ounTable and CRedIble
Our teams worked collaboratively on strengthening our
safety culture in 2014. Their dedication helped us achieve
record safety performance and finish another year with no
environmental incidents.
We continue to put our stated values of acting with
respect for our people and our neighbours into practice.
Our 20-year history of successfully operating in Brazil and
Turkey is a testament to how we manage our relationships
in those countries with integrity and transparency. We invest
time and money not only in our operations but also in the
communities where we operate, building opportunities for
individuals, communities and governments.
ouR ouTlook
Looking at the year ahead, we expect to produce between
640,000–700,000 ounces of gold at an average cash cost
ranging between $570–$615 per ounce, again in the lowest
quartile of an industry which is experiencing a constant
increase in operating costs.
Every year our people work hard to maintain Eldorado’s
position as an industry-leading producer. I would like to
sincerely thank our teams for their collaboration, effort and
dedication in 2014. They are integral to this Company’s
success, and with their skills, ideas and passion, we will
continue to build a quality business that delivers value for
all of our stakeholders.
(Signed)
Paul wright
CEO, Eldorado Gold Corporation
Eldorado gold Annual Report 2014
5
in Conversation
with eldorado’s executive team
Paul wRIGhT , Ceo
How has Eldorado got to where it is today?
The strategy for the Company has remained the same over
the past 15 years, driven by a desire to build a sustainable,
high-quality business in the gold sector. That strategy has
led us on a path of acquisition and exploration to assemble
a portfolio of high-quality assets that provide geographic
diversification in prospective regions. We have been deliberate
in selecting regions where we were able to enter with first-
mover advantage - where we were able to establish dominant
land positions and show that we intended to be there in the
long term.
A large part of our success in executing on our portfolio of
assets is directly attributable to the strength of our in-country
teams in the regions we operate. These teams have ensured
the Corporation’s success in understanding and adapting to
each of these unique operating environments.
Today, we are proud of our industry-leading growth and cost
profile. We continue to expand and develop our assets with
a view to becoming a 1.5 million ounce gold producer.
Paul skaYman, C oo
What sets Eldorado apart in terms of how it operates?
Eldorado is very decentralized and that alone makes us quite
unique. With a head office in Vancouver and significant time
differences between the countries where we operate, we do
not try to micro-manage our operations. We leave the day-
to-day business to our in-country teams, who understand the
cultural, community and political nuances of doing business in
their home countries.
This approach has been particularly successful for Eldorado:
it encourages local ownership and only significant issues are
elevated to the corporate level. Frequent contact with our
in-country management ensures they have adequate corporate
support. We all share a commitment to being responsible
operators focused on building and managing quality assets.
“The strategy for the Company has
remained the same over the past
15 years, driven by a desire to
build a sustainable, high-quality
business in the gold sector.”
Paul Wright, CEO
noRm PITCheR , PResIdenT
What do you see as essential to Eldorado’s
continued success?
Eldorado has always focused on developing quality assets
managed by strong technical teams, prioritizing stakeholder
relationships at all levels, and conducting exploration in
prospective geological locations. We’ve learned over the
years to be patient, do our due diligence and hire good
people. These are the pillars of support that provide the basis
for a successful mining company, and in many ways define
what Eldorado stands for. They have gotten us to where we
are today and will be what we continue to focus on to be
successful going forward.
fabIana Chubbs, Cfo
How would you describe the Company’s financial
performance in 2014?
This was another solid year for Eldorado. Despite depressed
metal prices, cash flows from operations were stable and
we continued to allocate capital prudently. We ended the
year with liquidity of approximately $875 million, including
$500 million in cash, cash equivalents and term deposits,
and $375 million in undrawn lines of credit. While lower
6
Eldorado gold Annual Report 2014
Left to right: Paul Skayman, Fabiana Chubbs, Norm Pitcher, Paul Wright, Dawn Moss.
realized gold prices impacted gross profit from gold mining
operations, the impact of lower gross margins was partially
offset by a 7% increase in gold ounces sold. Costs were
virtually flat year over year, reflecting our focus on controlling
costs across our operations. Eldorado’s low leverage continues
to ensure we have a leading balance sheet and the cash,
liquidity and financial flexibility to fund our development
projects going forward.
dawn moss, evP admInIsTR aTIon
and CoRP oR aTe seCReT aRY
How does Eldorado approach governance? Is Eldorado
making any significant changes to its policies and/or
practices in 2015?
While Eldorado is subject to the disclosure regulations of
the securities administrations and stock exchanges where
our securities are traded, we also take note of the guidance
requirements of proxy advisory firms and our shareholders.
Our Corporate Governance and Nominating Committee (CGNC)
works closely with Management to combine compliance of
reporting with best practices in our industry and amongst
our peer group. The CGNC and Management take into
consideration mandates of all governance stakeholders
and adopt a responsible reporting structure that is in
the best interest of the Company, its business units and
its shareholders.
An example of how the Company engages in corporate
governance compliance is our approach to developing
gender diversity within its Board of Directors and on its
senior management team. For many years Eldorado has
promoted women into senior management positions, both
at its corporate office and in the regions where we operate.
Three of the 10 members of the Executive and Senior Officer
team in Vancouver are women and we are proud of our
record of promoting and retaining a strong female workforce
throughout our global operations. In 2014, Eldorado appointed
its first female director to the Board of Directors and will
continue to seek out individuals as Directors, regardless of
gender, who exhibit the necessary skill set and experience
and who are able to make the time commitment to serve as
members of the Board.
“Eldorado has always focused
on developing quality assets
managed by strong technical
teams, prioritizing stakeholder
relationships at all levels, and
conducting exploration in
prospective geological locations.”
Norm Pitcher, President
Eldorado gold Annual Report 2014
7
Strategic Priorities
2014 PerFormaNce aNd 2015 tarGets
sTR aTeGIC PRIoRITY
how we delIveR ouR PRIoRITIes
2014 TaRGeTs
2014 PeRfoRmanCe
2015 TaRGeTs
operational excellence
Being a low-cost business that consistently delivers on
guidance is integral to investor confidence.
We have reported record production each year for the past
three years while maintaining some of the lowest cash
operating costs among our peer group.
■ Produce between 730,000–800,000 oz of gold
■ Deliver cash operating costs between $550–$590
per ounce
■ Deliver AISC between $915–$985 per ounce
■ Maintain gold reserves between 20 and 25 times the
production rate
■
Improve reserves and resources per share
Capital discipline
Having the financial flexibility to sustain and grow our
business is fundamental. Disciplined capital allocation drives
every business decision we make.
■ Maintain a significant liquidity to support our ongoing
aChIeved
operations and expansion plans
■ Maintain a strong balance sheet
■ Exercise prudent financial management
■ Maintain a semi-annual dividend
accountability
Our reputation for doing business honestly, respecting our
neighbours, minimizing our environmental impacts and
keeping our people safe is essential to the sustainability of
our business.
■ Reduce our Lost-Time Incident Frequency Rate (LTIFR)
■ Have no reportable environmental incidents
■ Become International Cyanide Management Code (ICMC)
compliant at one or more of our Chinese operations by 2015
Building Value
We are committed to building value for all those invested
in us – from shareholders to community members.
■
Invest approximately 1% of pre-tax revenues in direct
initiatives in the local communities where we operate
■ Review small-scale acquisition opportunities suited to our
technical skills and experience
8
Eldorado gold Annual Report 2014
aChIeved
■ Produced 789,224 oz of gold
■ Cash operating costs of $500 per ounce
■ AISC of $779 per ounce
■ Gold reserves of 26 million ounces
noT aChIeved
Reserves per share
Resources per share
2014: 36.2 oz
2013: 38.7 oz
2014: 49.4 oz
2013: 50.8 oz
Reserves and resources stated in thousands of ounces.
Resources are inclusive of reserves.
■ Produce between 640,000–700,000 oz of gold
■ Deliver cash operating costs between $570–$615
per ounce
■ Deliver AISC between $960–$995 per ounce
■ Maintain gold reserves between 20 and 25 times the
production rate
■ Continue to advance our development projects at
Skouries and Olympias in Greece
■ Begin implementation of a select number of Towards
Sustainable Mining protocols from the Mining
Association of Canada
■ Total liquidity of ~$875 million at year end 2014
■ Debt-to-capital ratio of 10.8% at year end
■ Rigorous planning, budgeting and forecasting processes
■ Pay a semi-annual dividend
■ Remain in the lowest quartile of industry cash costs
■ Maintain liquidity of no less than $200 million
■ Maintain a debt-to-capital ratio of less than 30%
■ Paid dividends of CDN$0.02/share
in place
aChIeved
■ Reduced LTIFR to 1.44 from 1.85 in 2013
■ Reduce our LTIFR
■ No reportable environmental incidents occurred in 2014
■ Finish ICMC roll-out at our Chinese operations
■
Identify and mitigate environmental and safety risks
PaRTIall Y aChIeved
■
Jinfeng was audited by ICMC authorities in late 2014.
Certification was received in early 2015.
aChIeved
in 2014
■ Donations and community spending totalled $6.5 million
■ Acquisition of Glory Resources added approximately
475,000 oz of gold to our resource base in Greece
■ Maximize the value of our Chinese assets
■ Continue to treat our host communities with respect and
deliver tangible and ongoing benefits
■ Expand our channels of engagement with stakeholders
Achieved
Partially Achieved
Not Achieved
2014 TaRGeTs
2014 PeRfoRmanCe
2015 TaRGeTs
aChIeved
■ Produced 789,224 oz of gold
■ Cash operating costs of $500 per ounce
■ AISC of $779 per ounce
■ Gold reserves of 26 million ounces
noT aChIeved
Reserves per share
2014: 36.2 oz
2013: 38.7 oz
Reserves and resources stated in thousands of ounces.
Resources are inclusive of reserves.
Resources per share
2014: 49.4 oz
2013: 50.8 oz
Capital discipline
■ Maintain a significant liquidity to support our ongoing
aChIeved
■ Total liquidity of ~$875 million at year end 2014
■ Debt-to-capital ratio of 10.8% at year end
■ Produce between 640,000–700,000 oz of gold
■ Deliver cash operating costs between $570–$615
per ounce
■ Deliver AISC between $960–$995 per ounce
■ Maintain gold reserves between 20 and 25 times the
production rate
■ Continue to advance our development projects at
Skouries and Olympias in Greece
■ Begin implementation of a select number of Towards
Sustainable Mining protocols from the Mining
Association of Canada
■ Remain in the lowest quartile of industry cash costs
■ Maintain liquidity of no less than $200 million
■ Maintain a debt-to-capital ratio of less than 30%
■ Reduce our Lost-Time Incident Frequency Rate (LTIFR)
aChIeved
■
Identify and mitigate environmental and safety risks
■ Rigorous planning, budgeting and forecasting processes
■ Pay a semi-annual dividend
in place
■ Paid dividends of CDN$0.02/share
■ Reduced LTIFR to 1.44 from 1.85 in 2013
■ Reduce our LTIFR
■ No reportable environmental incidents occurred in 2014
■ Finish ICMC roll-out at our Chinese operations
PaRTIall Y aChIeved
■
Jinfeng was audited by ICMC authorities in late 2014.
Certification was received in early 2015.
aChIeved
■ Maximize the value of our Chinese assets
■ Donations and community spending totalled $6.5 million
in 2014
■ Acquisition of Glory Resources added approximately
475,000 oz of gold to our resource base in Greece
■ Continue to treat our host communities with respect and
deliver tangible and ongoing benefits
■ Expand our channels of engagement with stakeholders
Eldorado gold Annual Report 2014
9
sTR aTeGIC PRIoRITY
how we delIveR ouR PRIoRITIes
operational excellence
Being a low-cost business that consistently delivers on
guidance is integral to investor confidence.
per ounce
We have reported record production each year for the past
three years while maintaining some of the lowest cash
operating costs among our peer group.
■ Produce between 730,000–800,000 oz of gold
■ Deliver cash operating costs between $550–$590
■ Deliver AISC between $915–$985 per ounce
■ Maintain gold reserves between 20 and 25 times the
production rate
■
Improve reserves and resources per share
Having the financial flexibility to sustain and grow our
business is fundamental. Disciplined capital allocation drives
every business decision we make.
operations and expansion plans
■ Maintain a strong balance sheet
■ Exercise prudent financial management
■ Maintain a semi-annual dividend
accountability
Our reputation for doing business honestly, respecting our
neighbours, minimizing our environmental impacts and
keeping our people safe is essential to the sustainability of
our business.
■ Have no reportable environmental incidents
■ Become International Cyanide Management Code (ICMC)
compliant at one or more of our Chinese operations by 2015
Building Value
We are committed to building value for all those invested
in us – from shareholders to community members.
■
Invest approximately 1% of pre-tax revenues in direct
initiatives in the local communities where we operate
■ Review small-scale acquisition opportunities suited to our
technical skills and experience
Where We Operate
ouR aReas of foCus
Our activities span three continents: Europe, Asia and South
America. Of our five operating gold mines, two are in Turkey
and three are in China. We also operate a silver-lead-zinc
mine in Greece. Our diversified portfolio also includes flexible
development options from six projects.
whY we foCus on These aReas
Eldorado has a solid track record of operating successfully
in non-mainstream jurisdictions. We have strategically built
our portfolio in under-explored, highly prospective areas that
provide organic growth potential and access to high quality
assets. Asset quality is fundamental to our strategy of being
a low-cost operator. We focus on jurisdictions with a strong
degree of pragmatism and a solid work ethic. From Brazil to
China, we have sought out targeted opportunities that suit our
technical expertise and enhance our project pipeline.
White Mountain mine, China
asseT PIPelIne
evaluaTIon and develoPmenT
ConsTRuCTIon
1
6
ToC anTInZInho, BRA zIL
(GOLD)
CeRTej, ROMANIA
(GOLD, SILVER)
5
12
PeR ama hIll, GREECE
(GOLD, SILVER)
easTeRn dR aGon, CHINA
(GOLD, SILVER)
2
3
olYmPIas, GREECE
(GOLD, SILVER,
LEAD, zINC )
skouRIes, GREECE
(GOLD, COPPER)
10
Eldorado gold Annual Report 2014
Production
Construction
evaluation & development
HEAD OFFICE
VANCOUVER, CANADA
6
2
4
5
7
8
3
12
11
9
10
PRoduCTIon
4
9
sTRaTonI , GREECE
(SILVER, LEAD, zINC )
7
efemçukuRu, TURKEy
(GOLD)
TanjIanshan, CHINA
(GOLD)
10
jInfenG , CHINA
(GOLD)
8
11
KIşl ADAğ, TURKEy
(GOLD)
whITe mounT aIn, CHINA
(GOLD)
Eldorado gold Annual Report 2014
11
Operational Highlights
turKeY: our corNerstoNe miNes
Eldorado operates two
gold mines in western
Turkey: Kişladağ and
efemçukuru.
KIşl ADAğ
2014 hIGhlIGhTs
Kişladağ, our open pit flagship asset, had another solid year with production up approximately 2% year over year. Fleet size was
increased in 2014 to accommodate the deepening pit and increased haulage routes. Fleet electrification commenced with the
implementation of the first electric shovel. Approval of the supplementary Environmental Impact Assessment (EIA) was received
in Q2 2014 which allows for an expanded processing capacity. Results of optimization studies completed in 2014 indicate an
optimum production rate of 20 million tonnes per year, taking into account existing plant capacity and available equipment, as well
as additional accelerated capital costs. We deferred completion of this expansion at year end and will revisit it in late 2016 when
the bulk of capital spending on our other development projects is complete.
oPeR aTInG daTa
PRoduCTIon (Oz)
Ounces sold
Tonnes to pad
Grade
Sustaining capital expenditure
Proven & probable reserves
2014
311,451
15,501,790
1.01
$41.6 M
8.1 Moz
2013
2014
CosTs ($/Oz)
306,182
311,233
443
461
338
358
Cash Operating
Total
2014
2013
12
Eldorado gold Annual Report 2014
efemçukuRu
2014 hIGhlIGhTs
Gold production from our underground Efemçukuru mine increased 9% year over year while cash operating
costs decreased. Work during 2014 focused on improving efficiencies across the mine’s operations with
improvements made in mining methods and the implementation of the Pitram Mine Control software.
We continued to mine according to plan with mining commencing in the North Ore Shoot.
oPeR aTInG daTa
PRoduCTIon (Oz)
Ounces sold
Tonnes milled
Grade
Sustaining capital expenditure
Proven & probable reserves
2014
101,717
436,852
8.34
$25.6 M
1.0 Moz
2013
2014
CosTs ($/Oz)
604
573
595
580
2014
2013
90,818
98,829
Cash Operating
Total
Eldorado gold Annual Report 2014
13
Operational Highlights
chiNa: our coNsisteNt ProducERS
Eldorado operates three
gold mines in China:
jinfeng, Tanjianshan
and White Mountain.
Together these produced
over 360,000 ounces of
gold in 2014.
jInfenG
2014 hIGhlIGhTs
Our open pit and underground Jinfeng mine had a very strong year with gold production 37% higher due to a full
year’s production from the open pit, higher average head grade and higher recovery rates. Cash operating costs were
22% lower than in 2013. Jinfeng trialled various long-hole mining methods and implemented a full tailings backfill
system that will reduce future needs for tailings dam capital. The mine was audited in late 2014 by the International
Cyanide Management Code (ICMC) authorities and received certification in early 2015. Jinfeng is the first gold mine
in China to receive ICMC certification.
oPeR aTInG daTa
PRoduCTIon (Oz)
Ounces sold
Tonnes milled
Grade
Sustaining capital expenditure
Proven & probable reserves
2014
168,432
1,470,824
3.99
$16.0 M
2.0 Moz
14
Eldorado gold Annual Report 2014
2013
2014
123,246
168,503
CosTs ($/Oz)
658
575
823
736
2014
2013
Cash Operating
Total
TanjIanshan
whITe mounT aIn
2014 hIGhlIGhTs
2014 hIGhlIGhTs
Our Tanjianshan open pit mine remained Eldorado’s lowest-
cost producer with cash operating costs of $389 per ounce
in 2014. Gold production was 6% higher year over year due
to higher average treated head grade and gold-in-circuit
inventory drawdown. Work commenced on the underground
decline to access the high-grade Qinlongtan deeps deposit
which we expect to start drilling in Q2 2015. Tanjianshan
achieved a year with no lost-time injuries.
Gold production at our underground White Mountain mine
was 17% higher year over year due to higher average treated
head grade, ore throughput and average recovery rate. Cash
operating costs were 12% lower than in 2013. Cost savings
were achieved through efficiencies and optimization of
backfill operations. Improvements were made to White
Mountain’s fleet maintenance program, with all maintenance
now done onsite. Underground exploration saw a 20%
increase in proven and probable gold reserves and safety
performance improved through various initiatives.
oPeR aTInG daTa
oPeR aTInG daTa
Ounces sold
Tonnes milled
Grade
Sustaining capital expenditure
Proven & probable reserves
2014
107,614
1,045,440
3.69
$5.4 M
288 koz
Ounces sold
Tonnes milled
Grade
Sustaining capital expenditure
Proven & probable reserves
2014
85,308
850,782
3.47
$20.4 M
571 koz
PRoduCTIon (Oz)
PRoduCTIon (Oz)
2013
2014
101,451
107,614
2013
2014
73,060
85,308
CosTs ($/Oz)
601
559
415
389
Cash Operating
Total
CosTs ($/Oz)
657
617
705
745
Cash Operating
Total
2014
2013
2014
2013
Eldorado gold Annual Report 2014
15
Adding Value Through Exploration
2014 iN review
In Greece’s Halkidiki district, we completed 6,500 metres of
drilling at the Piavitsa project, which now extends over a
2.5-kilometre strike length along the mineralized Stratoni
Fault zone. At Skouries, exploration activity focused on
drill target definition at the nearby Tsikara prospect and
preliminary drill-testing of an untested porphyry target
adjacent to the deposit. We also added the Sapes project to
our Greece portfolio during the year with the acquisition of
Glory Resources.
In Romania, exploration drilling was completed at the Bocsa,
Magura, Muncel, Brad and Deva projects, all of which are
situated in the Apuseni district near our Certej deposit. The
team also relogged 105,000 metres of Certej drillcore, the
results of which form the basis of an updated geological
interpretation and resource model for the deposit.
We invested a total of $33.8 million, including capitalized
exploration costs, at our mine sites and exploration
projects in 2014. Our exploration activities included drilling
approximately 58,000 metres on 20 projects across Turkey,
China, Brazil, Greece and Romania
In Turkey, drilling programs focused on surface targets at our
Efemçukuru mine site, which included step-outs from previous
drilling on the Kokarpinar vein and preliminary drill testing of
the Dedebaĝ vein.
Brownfields and in-mine exploration programs were the
exploration focus in China. At Tanjianshan, resource drilling
programs included Qinlongtan North, step-out drilling at
the Xijingou deposit and testing targets within the pit at
Jinlonggou. At the White Mountain mine, exploration drilling
identified down-dip extensions to all three zones of the
main orebody.
In Brazil, we drill-tested our early-stage projects at Goldfish,
Anicuns and Rubens zilio. At Tocantinzinho, we further defined
resources within historical tailings overlying the main deposit
and completed the first-pass drilling program on the more
than 6 kilometre-long copper-gold anomaly at Santa Patricia.
Drilling at Certej, Romania
16
Eldorado gold Annual Report 2014
85 geoscience
professionals employed
in our exploration groups
worldwide
Exploration budget of
$40 million
in 2015
63,000 m
planned drilling
for 2015
58,000 m
drilled by Eldorado
in 2014
105,000 m
of core relogged
at our Certej project
in 2014
20
projects drilled
in 2014
Eldorado gold Annual Report 2014
17
development Highlights
KeY Growth ProJects
With high grades and
mine lives in excess of
25 years, Skouries and
olympias will be strong
cash generators and
our future cornerstone
operations. eastern
Dragon also adds high-
grade, low-cost gold
ounces to our future
production profile.
skouRIes
skouries is a high-grade gold-copper project. It will initially operate as an open pit mine for
about seven years, followed by approximately 20 years of underground development. The
project benefits from a simple metallurgical process and will produce a clean copper-gold
concentrate via flotation as well as doré from a gravity circuit.
2014
2015
2016
open Pit
■
Earthworks ongoing
Process Plant
■ All mill foundations complete
■
Semi-Autogenous Grinding (SAG)
mill installed
■ Regrind and ball mill installation ongoing
■ Pre-stripping for plant foundations
ongoing
Tailings facilities
■ Construction continues
■ Access road largely complete
Underground Development
■ 500 metres of the decline complete
18
Eldorado gold Annual Report 2014
■ Peak construction with
1,300–1,400 people
expected on site
■ Commence steel erection
Start open pit mining
■
■ Commence
production
oPen PIT
undeRGRound (2024 on)
Estimated annual
production
140,000 oz Au
30,000 t Cu
90,000 oz Au
22,000 t Cu
Estimated cash costs (1)
-$500/oz
$170/oz (underground)
Expected mine life
27 years
Proven & probable
reserves (2)
3.7 Moz Au; 767 kt Cu
(1) Includes by-product credits (2) As at December 31, 2014
olYmPIas
olympias is a pre-existing gold-silver-lead-
zinc underground mine. It has very high
in-situ gold grades and an orebody that will
allow for mining rates of up to one million
tonnes per annum. We are redeveloping
Olympias in three phases.
2012–2015
2016–2019
2020 on
Phase I is an environmental clean-up of previously
mined tailings and includes the refurbishment of the
processing plant and underground mine. Phase I is
expected to be complete later this year.
■ Reprocessed 625,345 tonnes of tailings
■ Underground refurbishment 90% complete
■ 2 kilometres of new development completed
■ 1.6 kilometres of the 8-kilometre tunnel complete
Phase II, beginning
in 2016, involves
processing ore from
the underground
through the refurbished
mill using a flotation
process to produce three
concentrates: lead-silver,
zinc and gold-bearing
pyrite-arsenopyrite.
Phase III will see
a ramping up of
production after the
completion of an
8-kilometre tunnel
between the Olympias
underground and
the new mill site
in the adjacent
Stratoni Valley.
Estimated annual production
35,000 oz Au (1)
70,000 oz Au
175,000 oz Au
Phase I (2012–2015)
Phase II (2016–2019)
Phase III (2020 on)
Expected mine life
25 years
Proven & probable reserves (2)
4.2 Moz Au; 66.3 Moz Ag; 693 kt Pb; 921 kt zn
(1) Production is from tailings retreatment (2) As at December 31, 2014
easTeRn dR aGon
eastern dragon is a high-grade gold-
silver deposit in northern China. It will
start operating as a small open pit mine
and then become an underground mine.
After receipt of the final permits, four
months of construction will be required
to move the project into production by
late 2015.
In 2014, Eldorado partnered with CDH
Investments, who acquired a 20%
interest in the project.
Estimated annual
production
70,000 oz Au
400,000 oz Ag
Estimated cash costs (1)
$175/oz
Expected mine life
10 years
Proven &
probable reserves (2)
744 koz Au
6.8 Moz Ag
(1) Includes by-product credits
(2) As at December 31, 2014
Eldorado gold Annual Report 2014
Eldorado gold Annual Report 2014
19
19
development Highlights
ProJects iN the PiPeliNe
our Certej project in
Romania, Perama hill
project in Greece, and
Tocantinzinho project
in Brazil also provide
future growth potential.
Certej is an epithermal gold-silver project located in the
Apuseni Mountains of Transylvania in western Romania. The
deposit extends from the surface, and Certej will operate as an
open pit mine.
Estimated annual production
135,000 oz Au
Estimated cash costs
Expected mine life
$600/oz
16 years
Proven & probable reserves (1)
2.5 Moz Au; 16.3 Moz Ag
(1) As at December 31, 2014
CeRTej
2013
2014
■ Gold resources
increased 10% year
over year from 4.3 Moz
to 4.8 Moz
■ Trade-off studies to refine design options and costing
■ Ongoing metallurgical testwork to provide data for
pressure oxidation optimization
■ Updated Technical Report published
eaRlY 2015
■ Completion
of feasibility
study
PeR ama hIll
ToC anTInZInho
Perama hill is an epithermal gold-silver deposit in the Thrace
region of northern Greece. It will operate as a small open
pit mine that uses a conventional carbon-in-leach circuit for
gold recovery.
Tocantinzinho is a non-refractory gold project located in the
prolific Tapajos district in northern Brazil.
20
Eldorado gold Annual Report 2014
Road construction near Certej, Romania
Our World
our resPoNsiBilitY
1
2
exPloR aTIon dRIllInG
feasIbIlITY /develoPmenT
Small teams visit geologically prospective
areas to drill exploration holes and
determine whether economically viable
concentrations of metals exist. During
this phase we familiarize ourselves
with the local community and its social
and environmental concerns, and we
also begin conducting environmental
baseline studies.
Environmental planning is integral to project
development. Before we receive a permit
to start construction, we complete a full
Environmental Impact Assessment (EIA), which
is a comprehensive baseline study of the current
state of the environment at the proposed mine
site. The EIA also identifies the potential effects
of our planned activities and outlines steps to
minimize any identified risks.
IN ACTION: MANAGING OUR WATER USE AT KIşl ADAğ
The Kişladağ water treatment plant, installed in late 2013, treats up to
5,000 m3/day of surface water from the waste rock dump and groundwater from
the open pit. In 2014, we began using the treated water in the processing phase,
reducing the need to collect fresh water from wells. As much water as possible
is recycled in the process, and in the dry season the additional water is used in
water trucks to suppress dust at the site. Excess treated water is discharged as
a final option.
22
Eldorado gold Annual Report 2014
oPeR aTInG wITh InTeGRITY
Operating responsibly is not just a philosophy; it takes careful planning, commitment and implementation. Every day we
strive to demonstrate that mining can be done responsibly by exercising the utmost care for the safety and security of our
people, our neighbours and the environment. We uphold industry best practices, strictly adhere to safety and environmental
regulations and maintain systems to identify, manage, audit, and remedy potential impacts from project inception to closure.
3
ConsTRuCTIon
Once our EIA is approved and any
other relevant permits are received,
we can begin constructing our mine
site. The risk mitigation measures
identified in the EIA guide all of
our activities – including how we
design and construct the mine and
its associated tailings ponds and
wastewater systems, as well as our
choice of equipment.
4
PR oduCTIon
Once in production, an ongoing monitoring
plan ensures that our operations comply
with regulations. Monitoring and data
collection give us the ongoing information
we need to reduce potential environmental
impacts and minimize our use of water,
energy and chemicals.
5
ClosuRe
Before we even begin mine
construction, we develop plans for
mine closure and environmental
restoration. In fact, during the life of
the mine we will often rehabilitate
areas no longer needed for mining
use. We work with environmental
experts to restore the site to a
productive ecosystem.
In aCTIon : RehabIlIT aTIon of The olYmPIas valleY
At our Olympias site, we are overseeing one of the largest environmental rehabilitation projects in
Greece. The old Olympias tailings management facility, constructed in 1976 for a previous mining
project, is located about 2 kilometres from the Olympias village. The facility was closed in 1995,
leaving behind 2.4 million tonnes of tailings.
We are removing the old tailings and reprocessing them and we are restoring topsoil to the area so
that it can support vegetation. As part of this project, we are doing tests with the Aristotle University
of Thessaloniki to identify which native plants are best suited to the area. We are growing these native
species in our nursery, one of the largest in northern Greece, and will then plant them at the site.
The project will continue until the valley area is returned to a greenfield state.
Eldorado gold Annual Report 2014
23
Building Opportunities
For a Better Future
The benefits of our mining projects go far beyond the value of
the metals we produce. Our projects create a series of direct,
indirect and induced impacts that benefit local communities
and national economies. This ripple effect of economic activity
multiplies as it moves outwards from our mining projects.
mInInG CRea Tes emPlo YmenT
Our mining projects create significant job opportunities for
local communities. Direct jobs are created working for the
mine itself and indirect jobs are created throughout the
industry supply chain. Jobs in the wider economy are created
as demand for local services, such as shops, restaurants, sport
centres, schools and hospitals, increases. It is estimated that
for every one direct mining employee, three to five people
may be employed indirectly elsewhere in the economy. (1)
mInInG GeneR aTes Revenues
Our mines can be a significant source of income for
employees and for governments. Our projects generate
revenues in the form of wages, income taxes (personal and
corporate), royalties and exports. Recent studies suggest
that in industrialized economies $1 of economic activity
in the mining sector can generate $3 or more of economic
activity elsewhere. (1)
mInInG buIlds CommunITIes
The infrastructure we build for new mining projects, such as
power, water, and road development, has also benefited local
communities, particularly in more remote regions. Water wells
have been used for agricultural activities in Greece and road
development has improved transportation between villages
near our Jinfeng mine in China. In more developed areas, our
projects have made direct contributions to the well-being
of communities through donations to health centres, sports
facilities, university funding and other educational initiatives.
(1) ICMM Report: The Role of Mining in National Economies
2nd Edition (Published: October 2014)
24
Eldorado gold Annual Report 2014
We build more than just
mines. We also build opportunities
– for our people, for local
communities, for suppliers and
for host governments.
Gold Mountain Elementary School near Jinfeng, China
eC onomIC ImP aCTs of a mInInG PR ojeCT
INDUCED
INDUCED impacts result from
employees of both the mine and
the supply chain relocating to,
and spending their wages in, the
local community.
INDIRECT impacts result
from suppliers purchasing
goods and services to meet
mine demand.
INDIRECT
Parts, equipment
and machinery
Job creation
(wider economy)
Utilities
DIRECT impacts
result from the
development and
operation of a mine.
Salaries
Export revenues
Sales of metals
Community
projects
Industrial
materials
DIRECT
Government taxes
(personal & corporate)
Job creation
(supply chain)
Payments for
land use
Royalties
Increased need
for municipal
services
(police, fire,
transport)
MINING PROJECT
Job creation
(with mining Co.)
Transport
Skill development
Infrastructure
development
(installation of power,
water, roads)
Mining fleet
(trucks and
loaders)
Lodging for
mine personnel
Payments
to suppliers
Engineering and
environmental services
Accounting
services
Development of
local goods and services
(shops, grocers, restaurants,
leisure activities)
Development
of municipal facilities
(schools, universities,
hospitals,
sport centres)
Eldorado gold Annual Report 2014
25
Building Opportunities
creatiNG ProsPeritY iN Greece
The Skouries and Olympias deposits we are developing in Greece have
the potential to make the country a leading gold producer in Europe.
With combined mine lives in excess of 50 years, these projects will benefit
Greece over the long term.
job CRea TIon
In the past two years, we have quadrupled our labour force in the Halkidiki
area and currently employ more than 2,000 people in Greece. We estimate
about 5,000 direct and indirect jobs will be created once the mines are in
full production. These projects have the potential to sustain generations of
Greeks in family-supporting jobs across a range of industries.
Revenue GeneR aTIon
We estimate that our projects will generate more than $1 billion in direct
taxes for the Greek state over the next 20 years. When in full production,
Eldorado’s projects could help to reduce Greece’s current trade deficit –
contributing export revenues of up to $550 million per year, depending on
metal prices.
Already, we have generated more than $110 million in export revenues
through the sales of various mineral concentrates. Our business accounts
for approximately 30% of shipping container traffic through the Port of
Thessaloniki – Greece’s second-largest port.
CommunITY InvesTmenT
We have provided approximately $4 million to the Municipality of
Aristotle, where our Skouries and Olympias projects are located, to fund
improvements to street paving, lighting, sewage and other municipal
infrastructure. As our projects advance, we will focus on community
initiatives that develop sustainable social capital such as infrastructure
development, educational initiatives and healthcare.
In -CounTRY exPendITuRe In GReeCe
($M)
Payments to government
Royalties and land use
Employee taxes
Other payments
Payments to suppliers
Payments to people and communities
Wages/salaries
Community investments
Total
2014
49.5
2.6
15.3
31.6
159.2
52.2
47.5
4.7
260.9
Total number of employees and contractors in 2014: 2,021.
Figures include expenditures related to Stratoni, Olympias, Skouries,
Perama Hill and Sapes assets. Figures reported on a total project basis.
20%
People and
communities
19%
Payments
to government
61%
Payments to suppliers
“Every day we work hard to maximize our social and economic impacts and
minimize our environmental impacts. we aim to partner with communities
and governments to develop sustainable opportunities. ”
Norm Pitcher, President
26
Eldorado gold Annual Report 2014
Local residents visit our Halkidiki assets in Greece
In aCTIon : buIldInG Rela TIonshIPs In GReeCe
We believe that an important characteristic of being a good neighbour is welcoming visitors to our
sites. In 2014, we started a series of tours of our Greek operations. This began as an initiative to
familiarize local residents with our premises and our environmental commitments. Initially, most of
the visitors were retired miners, who wanted to see how the mining industry has advanced, and local
women who had never been to the mines. As word spread, the program grew, and by the end of 2014
around 4,000 people from all over Greece had toured our sites. Visitors got to observe our mining
operations first-hand and talk with Company managers about issues of interest to them.
Eldorado gold Annual Report 2014
27
Financial Review
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Management’s Responsibility for Financial Reporting
Independent Auditors’ Report of Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to the Consolidated Financial Statements
Board of Directors, Officers and Senior Management Team
Mineral Reserves
Mineral Resources
Shareholder Information
Corporate Information
Cautionary Note About Forward-Looking Statements and Information
29
55
56
57
58
59
60
61
62
63
99
100
101
102
103
104
28
Eldorado gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
for the year ended December 31, 2014
Throughout this MD&A, Eldorado, we, us, our and the Company mean Eldorado Gold Corporation.
This year means 2014. All dollar amounts are in US dollars unless stated otherwise.
The information in this MD&A is as of February 19, 2015. You should also read our audited consolidated financial statements for
the year ended December 31, 2014. 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.
OpEr Ating gOld minEs
■ Kişladağ, in Turkey (100%)
■ Efemçukuru, in Turkey (100%)
■ Tanjianshan, in China (90%)
■ White Mountain, in China (95%)
■
Jinfeng, in China (82%)
gOld pr OjEcts
■ Perama Hill, in Greece (100%)
■ Olympias, in Greece (95%)
■ Skouries, in Greece (95%)
■ Certej, in Romania (81%)
■ Eastern Dragon, in China (75%)
■ Tocantinzinho, in Brazil (100%)
OthEr OpEr Ating minEs
■ Stratoni – Lead and zinc concentrates, in Greece (95%)
■ Vila Nova – Iron ore, in Brazil (100%)
EldOr AdO is listEd On thE fOll Owing 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 Annual Report 2014
29
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
2014 Overview
sElEctEd c OnsOlid AtEd finAnciAl infOrmA tiOn
■ Net profit attributable to shareholders of the Company was $102.6 million ($0.14 per share), compared to loss attributable
to shareholders of the Company of $653.3 million ($0.91 per share) in 2013.
■ Dividends paid were CDN$0.02 per share (2013 – CDN$0.12 per share).
■ Liquidity was $876.3 million at year end, including $501.3 million in cash, cash equivalents, and term deposits, and
$375.0 million in unused lines of credit (2013 – $998.9 million of liquidity).
sElEctEd pErfOrmAncE mEAsurEs (1)
■ Gold production of 789,224 ounces, including production from Olympias tailings retreatment (2013 – 721,201 ounces).
■ Total cash costs averaged $557 per ounce (2013 – $551 per ounce).
■ All-in sustaining cash costs averaged $779 per ounce (2013 – n/a).
■ Gross profit from gold mining operations of $382.7 million (2013 – $481.1 million).
■ Adjusted net earnings of $138.7 million ($0.19 per share) compared to adjusted net earnings of $192.9 million ($0.27 per share)
in 2013.
■ Construction at Skouries advanced with the completion of the mill foundations, installation of the semi-autogenous grinding
(“SAG”) and ball mills, and the start of construction of the tailings dam.
■ Cash generated from operating activities before changes in non-cash working capital was $342.9 million
(2013 – $382.0 million).
(1) Throughout this MD&A we use cash operating cost per ounce, total cash costs per ounce, all-in sustaining cash costs, gross profit from gold mining operations, adjusted net earnings, and
cash flow from operating activities before changes in non-cash working capital as additional measures of Company performance. These are non-IFRS measures. Please see page 41 for an
explanation and discussion of these non-IFRS measures.
30
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
summarized Annual financial results
($ millions except as noted)
2014
2013
2012
Revenues
Gold revenues
Gold sold (ounces)
Average realized gold price ($/ounce)
Average London spot gold price ($/ounce)
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Gross profit from gold mining operations
Adjusted net earnings
Net profit (loss) attributable to shareholders of the Company
Earnings (loss) per share attributable to shareholders of the Company – basic ($/share)
Earnings (loss) per share attributable to shareholders of the Company – diluted ($/share)
Cash flow from operating activities before changes in non-cash working capital
Capital spending – cash basis
Dividends paid – (CDN$/share)
Cash, cash equivalents and term deposits
Total assets
Total long-term financial liabilities(1)
1,067.9
980.9
774,522
1,266
1,266
500
557
382.7
138.7
102.6
0.14
0.14
342.9
410.7
0.02
501.3
7,393.6
745.5
1,124.0
1,020.0
725,095
1,407
1,411
494
551
481.1
192.9
(653.3)
(0.91)
(0.91)
382.0
482.0
0.12
623.9
7,235.2
670.3
1,147.5
1,047.1
625,394
1,674
1,669
483
554
595.0
327.3
305.3
0.44
0.44
447.7
426.2
0.15
816.8
7,928.1
662.9
(1) Includes long-term debt net of deferred financing costs, other non-current liabilities, and asset retirement obligations.
rEviEw Of AnnuAl finAnciAl rEsults
Gold sales volumes increased 7% year over year, with increases from the Company’s Chinese mines and Kişladağ offsetting
a decrease in sales from Efemçukuru. Total cash costs per ounce increased slightly year over year, reflecting the Company’s
ongoing focus on controlling operating costs. Gross profit from gold mining operations of $382.7 million fell 20% year over year
on decreasing gross margins as a result of the drop in gold prices, and an increase in depreciation, depletion and amortization
(“DD&A”) per ounce sold. The combined DD&A rate increased year over year due to the higher volume of ounces sold in 2014 from
Jinfeng and White Mountain which have higher depreciation rates than the other mines.
Net profit attributable to shareholders of the Company was $102.6 million, or $0.14 per share, compared to a loss attributable to
shareholders of the Company of $653.3 million, or $0.91 per share in 2013. The loss in 2013 was mainly due to an impairment
loss, net of tax, in the amount of $684.6 million related to Jinfeng and Eastern Dragon, as well as a deferred income tax charge of
$125.2 million related to a change in income tax rates in Greece.
Adjusted net earnings were $138.7 million ($0.19 per share) as compared with $192.9 million ($0.27 per share) for 2013, a
decrease of $54.2 million in adjusted net earnings year over year. The main factor in the decrease in adjusted net earnings was
the $98.4 million decrease in gross profit from gold mining operations described above. Offsetting this were the following factors:
1) an $18.5 million decrease in exploration costs, 2) an $11.6 million decrease in interest expense related to capitalization of
interest on the Company’s development projects, and 3) a decrease in tax expense related to lower taxable income. Please see
page 42 for a reconciliation between loss attributable to shareholders of the Company and adjusted net earnings.
Eldorado Gold Annual Report 2014
31
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
summarized Quarterly financial results
2014
($ millions except as noted)
Q1
Q2
Q3
Q4
2014
Revenues
Gold revenues
Gold sold (ounces)
Average realized gold price ($/ounce)
Cash operating costs ($/ounce)
All-in sustaining cash cost ($/ounce sold)
Gross profit from gold mining operations
Net profit (loss) attributable to shareholders of the Company
Earnings (loss) per share attributable to shareholders
of the Company – basic ($/share)
Earnings (loss) per share attributable to shareholders
of the Company – diluted ($/share)
Cash flow from operating activities before changes
in non-cash working capital
279.9
247.6
190,628
1,299
519
786
95.4
31.3
0.04
0.04
94.7
265.5
247.6
190,621
1,299
489
829
100.8
37.6
0.05
0.05
92.2
263.5
241.2
189,321
1,274
488
735
102.0
19.8
0.03
0.03
78.7
259.0
244.5
203,952
1,199
505
761
84.5
13.9
0.02
0.02
77.3
1,067.9
980.9
774,522
1,266
500
779
382.7
102.6
0.14
0.14
342.9
2013
($ millions except as noted)
Q1
Q2
Q3
Q4
2013
Revenues
Gold revenues
Gold sold (ounces)
Average realized gold price ($/ounce)
Cash operating costs ($/ounce)
All-in sustaining cash cost ($/ounce sold)
Gross profit from gold mining operations
Net profit (loss) attributable to shareholders of the Company
Earnings (loss) per share attributable to shareholders
of the Company – basic ($/share)
Earnings (loss) per share attributable to shareholders
of the Company – diluted ($/share)
Cash flow from operating activities before changes
in non-cash working capital
338.1
307.2
189,346
1,622
505
n/a
163.8
(45.5)
(0.06)
(0.06)
139.9
266.9
243.6
176,260
1,382
478
n/a
117.2
43.3
0.06
0.06
84.9
287.3
266.4
199,117
1,338
472
n/a
123.2
36.4
0.05
0.05
104.8
231.7
202.8
160,372
1,264
526
n/a
76.9
(687.5)
(0.96)
(0.96)
52.4
1,124.0
1,020.0
725,095
1,407
494
n/a
481.1
(653.3)
(0.91)
(0.91)
382.0
rEviEw Of QuArtErly rEsults
Net profit attributable to shareholders of the Company for the quarter was $13.9 million ($0.02 per share) as compared to a loss for
the quarter ended December 31, 2013 of $687.5 million ($0.96 per share). The main factors that impacted earnings for the fourth
quarter year over year were: 1) the impairment charge, net of taxes, of $684.6 million recorded in 2013, and 2) higher gold sales
volumes and lower gold sales prices in the fourth quarter 2014.
32
Eldorado Gold Annual Report 2014
Operations review and Outlook
gOld OpEr AtiOns
total Operating gold mines
Gold ounces produced (1)
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
All-in sustaining cash costs ($/ounce)
Sustaining capital expenditure (millions)
Kışladağ (3)
Gold ounces produced
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure ($ millions)
Efemçukuru
Gold ounces produced
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure (millions)
tanjianshan
Gold ounces produced
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure (millions)
jinfeng
Gold ounces produced
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure (millions)
white mountain
Gold ounces produced
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure (millions)
Olympias
Gold ounces produced from tailings retreatment (1)
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
Sustaining capital expenditure (millions) (2)
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
2014
2013
2015 Outlook
789,224
500
557
779
109.0
311,233
443
461
41.6
98,829
573
595
25.6
107,614
389
559
5.4
168,503
575
658
16.0
85,308
617
657
20.4
17,737
n/a
n/a
–
721,201
494
551
n/a
269.3
306,182
338
358
145.3
90,818
580
604
29.9
101,451
415
601
11.3
123,246
736
823
54.0
73,060
705
745
28.8
26,444
n/a
n/a
–
640,000 to 700,000
570 to 615
n/a
960 to 995
165.0
230,000 to 245,000
600 to 650
n/a
70.0
90,000 to 100,000
550 to 600
n/a
25.0
90,000 to 100,000
475 to 500
n/a
20.0
135,000 to 145,000
660 to 700
n/a
30.0
70,000 to 75,000
650 to 690
n/a
20.0
20,000 to 25,000
n/a
n/a
–
(1) Gold ounces produced from tailings retreatment at Olympias in 2013 & 2014 are all on a pre-commercial production basis.
(2) Olympias development capital expenditure planned for 2015 are $110.0 million.
(3) In the 2015 outlook Kışladağ is expected to place 17.5 million tonnes of ore on the leach pad at a grade of 0.70 grams per tonne gold, including 4.6 million tonnes of run of mine ore
(2014 – 15.5 million tonnes of ore at a grade of 1.01 grams per tonne). The projected decrease in grade year over year is due to the phase of ore mining within the pit. Higher projected
cash operating cost per ounce is mainly driven by the lower projected grade of the ore.
Eldorado Gold Annual Report 2014
33
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Annual review – Operations
Kişladağ
Operating data
Tonnes placed on pad
Average treated head grade (g/t Au)
Gold (ounces)
Produced
Sold
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
financial data ($ millions)
Gold revenues
Depreciation and depletion
Gross profit from mining operations
Sustaining capital expenditures
2014
2013
15,501,790
1.01
13,296,621
1.12
311,233
311,451
443
461
392.5
28.1
218.2
41.6
306,182
306,176
338
358
430.9
15.3
302.9
145.3
Gold production at Kişladağ was 2% higher year over year mainly as a result of an increase in ore placed on the leach pad. Kişladağ
placed 17% more total tonnes on the leach pad compensating for a lower head grade than in 2013. Cash operating costs were
higher year over year as a result of the increased volume of ore and operational waste mined, partly offset by the impact of the
decline in the Turkish lira on operating costs. Capital expenditures at Kişladağ in 2014 included capitalized waste stripping, and
sustaining construction projects.
EfEmçukuru
Operating data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate (to concentrate)
Gold (ounces)
Produced
Sold
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
financial data ($ millions)
Gold revenues
Depreciation and depletion
Gross profit from mining operations
Sustaining capital expenditures
2014
2013
436,852
8.34
93.3%
98,829
101,717
573
595
128.8
26.9
40.2
25.6
413,513
8.87
93.3%
90,818
121,119
580
604
171.1
26.6
68.4
29.9
Gold production at Efemçukuru increased 9% year over year, as concentrate sales contracts were renegotiated to improve
payability. Gold ounces sold were lower due to a drawdown in 2013 in the high concentrate inventory levels that existed at the
end of 2012. Lower cash operating costs were the result of both the impact of the weakening Turkish lira as well as higher gold
production. Capital spending in 2014 included costs related to capitalized underground development, mobile equipment, tailings
dam construction, and process improvements.
34
Eldorado Gold Annual Report 2014
tAnjiAnshAn
Operating data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
financial data ($ millions)
Gold revenues
Depreciation and depletion
Gross profit from mining operations
Sustaining capital expenditures
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
2014
2013
1,045,440
3.69
81.7%
107,614
107,614
389
559
136.6
22.2
53.5
5.4
1,064,058
3.47
82.2%
101,451
101,451
415
601
143.5
24.7
56.5
11.3
Gold production at Tanjianshan was 6% higher year over year mainly due to higher average treated head grade and gold-in-circuit
inventory drawdown. Cash operating costs per ounce in 2014 were lower than 2013 mainly due to lower fuel and reagent costs.
Capital expenditures for the year included capitalized waste stripping and process plant upgrades.
jinfEng
Operating data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
financial data ($ millions)
Gold revenues
Depreciation and depletion
Gross profit from mining operations
Sustaining capital expenditures
2014
2013
1,470,824
3.99
86.8%
168,503
168,432
575
658
214.5
52.2
51.5
16.0
1,412,548
3.24
85.4%
123,246
123,289
736
823
171.1
38.5
31.0
54.0
Gold production at Jinfeng was 37% higher year over year due to a full year’s production from the open pit, higher average head
grade and higher recovery rate. Production from the open pit in 2013 recommenced mid-year after completion of a push-back.
Cash operating costs per ounce were 22% lower than 2013 mainly due to an increase in production due to higher average head
grade. Capital expenditures for the year included capitalized underground development, process plant upgrades, and tailings
dam construction.
Eldorado Gold Annual Report 2014
35
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
whitE mOunt Ain
Operating data
Tonnes milled
Average treated head grade (g/t Au)
Average recovery rate
Gold (ounces)
Produced
Sold
Cash operating costs ($/ounce)
Total cash costs ($/ounce)
financial data ($ millions)
Gold revenues
Depreciation and depletion
Gross profit from mining operations
Sustaining capital expenditures
2014
2013
850,782
3.47
86.9%
85,308
85,308
617
657
108.6
33.1
19.2
20.4
810,389
3.39
86.0%
73,060
73,060
705
745
103.4
26.4
22.3
28.8
Gold production at White Mountain was 17% higher year over year due to higher average treated head grade, ore throughput and
average recovery rate. Cash operating costs per ounce were 12% lower than 2013 as a result of the higher average treated head
grade and recovery rate. In addition, the mine generated cost savings through optimization of backfill operations by using ash fill in
place of cement. Capital expenditures for the year included capitalized underground development, process plant upgrades, tailings
dam construction, and the acquisition of underground mobile equipment.
str AtOni
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)
Concentrate revenues
Depreciation and depletion
Gross profit (loss) from mining operations
Sustaining capital expenditures
2014
2013
219,861
5.9%
10.5%
58,375
57,719
$884
$714
51.0
8.4
0.6
5.0
225,493
6.3%
10.0%
59,626
59,534
$850
$757
50.6
10.2
(4.6)
4.0
Stratoni processed 2% fewer ore tonnes than 2013 due to lower mine output as a result of fewer production faces in the
underground mine. Concentrate tonnes produced were 2% lower than 2013, which was a direct result of lower mill throughput.
Tonnes of concentrate sold were 3% lower than 2013 due to lower production, however, this reduction was offset by higher zinc
prices which resulted in an increase in concentrate revenues year over year. Capital expenditures for the year included upgrades to
health, safety and environment equipment, upgrades to the water treatment plant, and equipment upgrades in the mine.
36
Eldorado Gold Annual Report 2014
vilA nO vA
Operating data
Tonnes processed
Iron ore produced
Average grade (% Fe)
Iron ore tonnes
Sold
Average realized iron ore price
Cash costs ($/tonne sold)
financial data ($ millions)
Iron ore revenues
Depreciation and depletion
Gross profit (loss) from mining operations
Sustaining capital expenditures
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
2014
2013
806,082
693,714
63.1%
524,645
$60
55
31.6
4.9
(16.7)
1.0
812,003
700,857
63.1%
470,140
$99
63
46.4
4.5
12.3
4.8
Vila Nova processed slightly fewer tonnes at the same grade year over year. Iron ore sales were 12% higher than in 2013 as a
result of increased shipments in the first half of the year compared to 2013. Shipments of iron ore were routed through the smaller
capacity public port in Santana since the Anglo port collapse in March 2013. Iron ore prices declined throughout the year, ending
the year below the net realizable value of Vila Nova’s inventory, resulting in an inventory write-down of $13.5 million (included
in the loss from mining operations in the table above). As a result, a decision was made during the fourth quarter of 2014 to
place the mine on care and maintenance. Iron ore shipments are scheduled to continue through mid-2015 until existing iron ore
stockpiles are depleted.
Eldorado Gold Annual Report 2014
37
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Annual review – development projects
Kişladağ Phase iV Mine exP ansion
In June 2014 Kişladağ received a positive Environmental Assessment decision from the Ministry of Environment and Urbanization
of Turkey on the Kişladağ Expansion project. The Company reviewed a number of optimization scenarios during the year to expand
mine throughput. The results of the studies indicated an optimum production rate of 20 million tonnes per year of crushed ore
taking into account existing plant capacity and available equipment, as well as the additional accelerated capital costs required for
waste stripping and construction of leach pads and waste dumps. Engineering work to support this approach was completed during
the year, including the development of detailed design packages. The Company decided to defer the Kişladağ expansion at year end
after taking into account prioritization of capital resources for its other development projects. Capital costs incurred in 2014 related
to the expansion were $11.6 million.
OlympiAs
In 2014, the Olympias plant retreated 625,345 tonnes of tailings at a grade of 2.70 grams per tonne. Approximately 17,737 ounces
of gold were produced during the year. Conceptual designs were prepared for conversion of the process concentrator from
retreating tailings material to handling run of mine ore as planned for Phase II. Implementation of Phase II is scheduled to begin
during 2015 with commissioning forecast to begin in 2016.
New mine development and underground refurbishment continued at Olympias during 2014. Underground mining on Phase II
is projected to begin early in 2016. During 2014 approximately 933 metres of underground drifts were rehabilitated and
3,016 metres of new drifts were completed, including approximately 328 metres of advance on the main Stratoni-Olympias decline
to the 1.6 kilometre mark, representing 20% completion of the planned 8.0 kilometre decline. Capital costs incurred in 2014 were
$68.5 million, excluding capitalized exploration and capitalized interest.
sk OuriEs
During the year, work at Skouries focused on advancing engineering and procurement as well as opening major work fronts on the
construction site. Engineering design work progressed considerably over the year with designs at over 80% complete by year end.
Major earthworks continued in the process plant area. In the process plant, the focus for the year was on the installation of the
grinding mills. By year end the foundations for the SAG, Ball and Regrind Mills were completed and all the mills were installed to
various stages of completion. Pre-stripping commenced in the open pit, and by year end over 500,000 cubic metres of topsoil and
overburden had been removed in advance of open pit mining. The engineering design was completed during 2014 for the Tailings
Management Facility, and initial earthworks, including a road to access the base of the tailings dam had begun.
A scoping level study for the development of the Skouries underground mine was completed in 2014. The results of the study
confirmed that sub-level open stoping would be the preferred method of mining the deposit below the planned open pit.
A prefeasibility study to be completed during 2015 is expected to further define the production profile and infrastructure required
for the underground operation. During 2014 a total of $108.2 million was spent on Skouries, excluding capitalized exploration and
capitalized interest.
cErtEj
In April 2014 the Company filed a National Instruments 43-101 (“NI 43-101”) Technical Report on the Certej project, including the
findings of an updated prefeasibility study. The study was based on revised mineral resources and new data from metallurgical test
work. The study identified a number of opportunities to improve the economic performance of the project, which are now being
incorporated into a full feasibility study to be released in 2015. During 2014 a total of $12.2 million was spent on Certej, mainly on
geotechnical and metallurgical testing, site preparation and engineering studies.
38
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
pEr AmA hill
During 2014 a Front End Engineering Design (“FEED”) study for Perama Hill was completed. A design for the access roads, power
supply and enabling works was also completed to allow for quick start-up upon receipt of the Environmental Impact Assessment
(“EIA”). In 2014, a total of $6.8 million was spent on the Perama Hill project.
EAstErn dr AgOn
Eastern Dragon continued on care and maintenance during 2014, pending resolution of permitting issues. Site management
worked with local authorities to maintain permits and environmental compliance in good standing. Based on discussions with local
and national authorities the EIA was resubmitted during the year. Receipt of the Project Permit Approval is expected during 2015,
allowing Eastern Dragon to complete the construction of the mine, and begin commissioning by the end of 2015. Capital costs
incurred at Eastern Dragon totalled $0.7 million.
tOc AntinzinhO
A detailed review and optimisation of the feasibility study for Tocantinzinho was carried out in 2014. Significant improvements
to the project were realized in the areas of offsite infrastructure costs and reduced taxes which reduced projected capital
expenditures for the project. A decision on the project has been deferred pending availability of capital resources. Capital costs
incurred at Tocantinzinho in 2014 totalled $4.3 million and were spent on engineering and site works to advance the design of the
access road to the site.
Eldorado Gold Annual Report 2014
39
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Annual review – Exploration
A total of $33.8 million was spent on exploration during 2014, including capitalized exploration costs. Exploration drilling during
the year totalled approximately 58,000 metres and was conducted on 20 projects including early-stage exploration projects,
resource definition projects, brownfields exploration, and in-mine exploration across Turkey, China, Brazil, Greece and Romania.
turkEy
In Turkey, exploration drilling programs focused on surface targets at our Efemçukuru mine site. Step-out drilling tested the central
and northern parts of the Kokarpinar vein, and an initial phase of drilling was completed on the Dedebaĝ vein, located in the
footwall of the Kestane Beleni vein. Our reconnaissance exploration teams advanced early-stage exploration projects at Dölek,
Kışladağ North, and Bambal to drill-ready stage, and conducted project generation work in northern and western Turkey.
chinA
Brownfields and in-mine exploration programs were the exploration focus in China. At Tanjianshan, brownfields drilling programs
included additional drilling at Qinlongtan North, step-out drilling at the Xijingou deposit, and testing targets in the Jinlonggou pit.
Underground development commenced late in the fourth quarter 2014 at Qinlongtan North, and is scheduled to provide platforms
for delineation drilling and further step-out drilling beginning in mid to late 2015.
At White Mountain, underground exploration drilling outlined down-dip extensions to the Central and North zones of the main
orebody. Additional drilling from both surface and underground stations further defined the high-grade Northern Deeps zone.
BrAzil
In Brazil, exploration programs drill-tested early stage projects at Goldfish, Anicuns, and Rubens Zilio. At Tocantinzinho, drilling
further defined geological resources contained within historical tailings overlying the main deposit. A first-pass drilling program
was completed on the >6.0 km long copper-gold anomaly at Santa Patricia, located on the northern part of the Tocantinzinho
license area.
grEEcE
In the Halkidiki district, 6,500 metres of drilling were completed at the Piavitsa Project. Drilling targeted gaps in the existing
drill coverage and the deposit has now been defined over a 2.5 km strike length along the mineralized Stratoni Fault zone.
At Tsikara, adjacent to the Skouries deposit, fieldwork was directed towards identifying porphyry drill targets.
In the Perama District, completion of the acquisition of Glory Resources in early 2014 added the Sapes project to our project
portfolio. Exploration at Sapes during the year consisted of geological mapping of the large alteration system hosting and
surrounding the deposit, and reinterpretation of the geological model for the Viper Zone.
rOmAniA
In Romania, exploration drilling was completed during the year at the Bocsa, Magura, Muncel, Brad and Deva projects, all of
which are situated in the Apuseni district near the Certej deposit. Re-logging of Certej drill core was also completed, the results
of which form the basis for an updated geological interpretation and resource model for the deposit.
40
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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, total cash cost
The table below reconciles cash operating cost and total cash cost to operating costs. We calculate costs according to the Gold
Institute Standard.
$ millions (except for gold ounces sold and per ounce amounts)
Production costs (from consolidated income statements)
Vila Nova and Stratoni production costs
Production costs – excluding Vila Nova and Stratoni
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
2014
508.3
72.5
435.8
(4.4)
431.4
2013
481.9
74.7
407.2
(7.7)
399.5
(44.1)
(41.3)
387.3
774,522
557
500
358.2
725,095
551
494
All-in sustaining cash cost
The Company adopted, effective January 1, 2014, an all-in sustaining cost performance measure. All-in sustaining costs are
calculated by taking total cash costs and adding sustaining capital expenditures, corporate administrative expenses, exploration
and evaluation costs, and reclamation cost accretion. Sustaining capital expenditures are defined as those expenditures which
do not increase annual gold ounce production at a mine site and exclude all expenditures at the Company’s projects and certain
expenditures at the Company’s operating sites which are deemed expansionary in nature. Certain other cash expenditures,
including tax payments, dividends and financing costs are also not included. The Company believes that this measure represents
the total costs of producing gold from current operations, and provides the Company and other stakeholders of the Company with
additional information of the Company’s operational performance and ability to generate cash flows. The Company reports this
measure on a gold ounces sold basis.
calculation of All-in sustaining cash costs
$ millions (except for gold ounces sold and all-in sustaining cash cost per ounce sold)
Total cash cost – excluding Vila Nova and Stratoni (per table above)
Sustaining capital spending at operating gold mines
Exploration spending at operating gold mines
General and administrative expenses(1)
All-in sustaining cash costs
Gold ounces sold
All-in sustaining cash cost per ounce sold
2014
$431.4
109.0
9.1
53.6
$603.1
774,522
$779
(1) Excludes G&A expenses related to business development activities and projects. Includes share based payments expense and defined benefit pension plan expense as well as asset retirement
obligation accretion expense.
Eldorado Gold Annual Report 2014
41
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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 to investors 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.
Adjusted net Earnings
The Company has included non-IFRS performance measures, adjusted net earnings and adjusted net earnings per share, throughout
this document. Adjusted net earnings excludes gains/losses and other costs incurred for acquisitions and disposals of mining
interests, impairment charges, unrealized and non-cash realized gains/losses of financial instruments and foreign exchange
impacts on deferred income tax. The Company also excludes net earnings and losses of certain associates that the Company does
not view as part of the core mining operations. The Company excludes these items from net earnings to provide a measure which
allows the Company and investors to evaluate the results of the underlying core operations of the Company and its ability to
generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with IFRS.
The following table provides a reconciliation of adjusted net earnings to the consolidated financial statements for the years ended
December 31:
$ millions (except for weighted average shares and earnings per share)
2014
2013
2012
net earnings (loss) attributable to shareholders
Acquisition costs
Losses on disposal of assets
Losses (gains) on available-for-sale securities
Loss on investment in associates
Impairment loss on investment in associates
Write-down of assets & inventory
Impairment loss on property, plant and equipment, and goodwill (net of taxes)
Unrealized losses (gains) on foreign exchange translation of deferred income tax balances
Deferred income tax charge for change in Greek tax rates
total adjusted net earnings
102.6
0.0
1.9
2.4
0.1
0.0
16.5
0.0
15.2
0.0
138.7
(653.3)
305.3
0.0
0.8
2.4
1.3
14.1
4.0
684.6
13.8
125.2
192.9
21.2
0.5
(0.2)
5.6
0.0
0.0
0.0
(5.1)
0.0
327.3
Weighted average shares outstanding
Adjusted net earnings ($/share)
716,288
0.19
715,181
0.27
689,007
0.48
gross profit from gold mining Operations
Gross profit from gold mining operations represents gross revenues from gold mining operations less production costs and
depreciation, depletion and amortization related to those operations.
42
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
financial condition & liquidity
OpEr Ating A ctivitiEs
Operating activities before changes in non-cash working capital generated $342.9 million in cash, compared to $382.0 million in
2013. In addition, cash flow of $26.6 million related to gold concentrate sales proceeds from tailings retreatment was recorded as
cash flows from investment activities (2013 – $24.9 million).
invEsting A ctivitiEs
The Company invested $410.7 million in capital expenditures this year and paid $30.3 million for the acquisition of Glory Resources
and its Sapes project. Mine evaluation and development totalled $249.5 million while sustaining capital spending at our producing
mines totalled $115.0 million ($109.0 million at our producing gold mines and $6.0 million at Stratoni and Vila Nova). Capitalized
exploration totalled $16.4 million. We also spent $4.6 million on land acquisitions, $5.8 million on acquisition of mineral rights
related to the Sapes project, and $2.3 million on the development of a lime plant in Turkey. A total of $14.5 million in bond interest
was also charged to capital projects. The remaining $2.6 million related to fixed assets for our corporate offices in Canada, Brazil,
Turkey, Greece, Romania, and China.
finAncing A ctivitiEs
The Company received $40.0 million in cash for the sale of a 20% interest in its Eastern Dragon project to CDH Fortune II
Limited. Additionally, the Company paid dividends of $12.5 million to non-controlling interests and $13.0 million to shareholders
during 2014.
capital resources
$ millions
Cash, cash equivalents and term deposits
Working capital
Restricted collateralized accounts
Debt – current and long-term
2014
501.3
646.2
0.3
603.5
2013
623.9
734.0
0.3
601.4
Management believes that the working capital at December 31, 2014, 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 2015 and beyond.
contractual Obligations
As at December 31, 2014
$ millions
Debt
Capital leases
Operating leases
Purchase obligations
totals
The table does not include interest on debt.
within 1 year
2 to 3 years
3 to 4 years
Over 5 years
16.3
0.8
5.5
73.1
95.7
–
1.6
6.3
1.1
9.0
–
–
6.4
0.4
6.8
600.0
–
5.8
–
605.8
total
616.3
2.4
24.0
74.6
717.3
Eldorado Gold Annual Report 2014
43
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
As at December 31, 2014, Hellas Gold had entered into off-take agreements pursuant to which Hellas Gold agreed to sell a total of
50,500 dry metric tonnes of zinc concentrates, 22,500 dry metric tonnes of lead/silver concentrates, and 86,500 gold concentrate
through the financial year ending December 31, 2015.
In April 2007, Hellas Gold 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 Stratoni, 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 Gold of $57.5 million in cash, plus a fee per ounce of payable
silver to be delivered to Silver Wheaton of the lesser of $3.90 and the prevailing market price per ounce. As at December 31, 2014
approximately 6.6 million ounces of silver have been delivered of the original 15 million ounce commitment.
In May 2013, the Company, in connection with Hellas Gold, entered into a Letter of Guarantee in favour of the Greek Ministry of
Environment, Energy and Climate Change, in the amount of EUR50.0 million, as security for the due and proper performance of
rehabilitation works committed in connection with the Environmental Impact Assessment approved for the Kassandra Mines
(Stratoni, Olympias and Skouries). The Letter of Guarantee is renewed annually and expires on July 26, 2026. The Letter of
Guarantee has an annual fee of 57 basis points.
As at December 31, 2014, Tuprag Metal Madencilik Sanayi Ve Ticaret A.S. (“Tuprag”) had entered into off-take agreements
pursuant to which Tuprag agreed to sell a total of 19,301 dry metric tonnes of gold concentrate through the financial year ending
December 31, 2015.
In September 2013, the Company, in connection with Tuprag, entered into a letter of guarantee in favour of the Turkish ministry
of environment, energy and climate change, in the amount of $30.0 million, as security for the due and proper performance of
rehabilitation works committed in connection with the EIA approved for Kişladağ and Efemçukuru. The Letter of Guarantee is
renewed annually and expires on September 18, 2015. The Letter of Guarantee has an annual fee of 27 basis points.
debt
jinfEng
On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($16.3 million) working capital loan with China Commerce Bank
(“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 had a term of up to one year, from January 16, 2013 to January 14, 2014. In January 2014 the term of the
facility was extended to January 28, 2015 and was not subsequently renewed. This facility is unsecured. As at December 31, 2014,
Jinfeng has drawn down the full amount of RMB 100.0 million ($16.3 million) under this facility, and has used the proceeds to fund
working capital obligations. Subsequent to December 31, 2014, Jinfeng repaid RMB 50.0 million ($8.2 million) on this facility, and
subsequently drew down the same amount. All tranches of the loan have a term of six months and a fixed interest rate of 5.6%.
hsBc rEv Olving crEdit fA cility
The Company has a $375.0 million revolving credit facility with HSBC (“the credit facility” or “ARCA”) and a syndicate of other
banks. 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 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, 2014. Loan
interest is variable depending on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately 1.2:1. 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 $4.7 million
were paid in relation to the credit facility. This amount has been deferred as pre-payments for liquidity services and will be
amortized over the term of the credit facility. No amounts were drawn down under the ARCA as at December 31, 2014.
44
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
sEniOr nO tEs
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 notes are redeemable by the Company
in whole or in part, for cash.
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 amount 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%
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, 2014 is $583.9 million.
EntrustEd l OAn
In November 2010, Eastern Dragon, HSBC Bank (China) and QDML, our 90% owned subsidiary, entered into a RMB 12.0 million
($2.0 million) entrusted loan agreement, which has been increased to RMB 720.0 million ($117.7 million) through a series of
amendments. 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 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, 2014 was
4.59%. As at December 31, 2014, RMB 651.5 million ($106.5 million) had been drawn under the entrusted loan. Subsequent to
December 31, 2014, RMB 2.0 million ($0.3 million) was drawn under this loan. The entrusted loan has been recorded on a net
settlement basis.
defined Benefit plans
The Company operates defined benefit pension plans in Canada with two components: a registered pension plan (“the Pension
Plan”) and a supplementary pension plan (“the SERP”). During the second quarter of 2012, the SERP was converted into a
Retirement Compensation Arrangement (“RCA”), a trust account. 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 and any realized investment gains to the
Receiver General of Canada as refundable tax.
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, 2014 for funding purposes with the next required valuation as of January 1, 2017. The SERP’s last
valuation was on January 1, 2013 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, 2014.
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.
Cash contributed to the Pension Plan and the SERP was $2.7 million (2013 – $3.0 million). Cash payments totaling $0.2 million
were made directly to beneficiaries during the year (2013 – $0.2 million). The Company expects to contribute $0.2 million to the
Pension Plan and $2.6 million to the SERP in 2015.
Eldorado Gold Annual Report 2014
45
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Equity
In 2014 the Company received net proceeds of $2.0 million for issuing 315,914 common shares related to stock options and
warrants being exercised.
common shares Outstanding
– as of February 5, 2015
– as of December 31, 2014
Share purchase options – as of February 5, 2015
(Weighted average exercise price per share: $11.57 CDN)
managing risk
716,587,134
716,564,524
18,970,754
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).
The Company and the mining industry generally face turbulence in the evolving economic, social and political landscape. This
turbulence is presently being experienced in Greece. Despite this backdrop, the Company continues to operate its normal business,
actively engaging all stakeholders and confidently responding and adapting to the evolving environment.
We monitor 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 manage and mitigate them.
finAnciAl risk
liquidity risk
Liquidity risk is the risk that we cannot meet our financial obligations. The Company mitigates liquidity risk through the
implementation of its capital management policy by spreading the maturity dates of investments over time, managing its capital
expenditures and operational cash flows, and by maintaining adequate lines of credit. 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, 2014, together with future cash flows from operations and, where
appropriate, selected financing sources, is sufficient to support our planned and foreseeable commitments in 2015 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. The Company limits counterparty risk by entering into business arrangements with high credit-quality
counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of counterparties.
For cash, cash equivalents and accounts receivable, credit risk is represented by the carrying amount on the balance sheet.
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, 2014.
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, 2014, approximately 57% of our cash and cash equivalents,
including restricted cash, were with one financial institution.
46
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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 Company has a risk management policy that includes hedging
its foreign exchange exposure to reduce the risk associated with currency fluctuations. The Company currently does not have any
currency hedges, but may hedge in the future.
The table below shows our assets and liabilities and debt denominated in currencies other than the US dollar at December 31,
2014. We recognized a loss of $7.2 million on foreign exchange this year, compared to a loss of $6.8 million in 2013.
(thousands)
canadian Australian
dollar
dollar
Euro
turkish
lira
chinese
renminbi
swedish romanian great British
pound
krona
lei
Brazilian
real
Cash and cash equivalents
Marketable securities
Accounts receivable and
other
Accounts payable and
accrued liabilities
Debt
14,196
4,933
865
–
3,734
–
12,731
–
482,898
–
1,774
–
27,466
–
136
–
32,966
–
4,632
1
28,735
21,642
228,055
(12,505)
–
(99)
–
(36,571)
–
(6,973)
–
(503,392)
(100,000)
–
–
–
13,092
(18,047)
–
–
–
–
25,875
(4,430)
–
net balance
11,256
767
(4,102)
27,400
107,561
1,774
22,511
136
54,411
Equivalent in US dollars
9,703
628
(4,932)
11,816
17,577
227
6,106
212
20,480
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, 2014, a 10% increase/decrease in the exchange rates on that
date would have resulted in a decrease/increase of approximately $6.2 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%. However borrowings under the ARCA are at
variable rates of interest and any borrowings would expose the Company to interest rate cost and interest rate risk. In the future we
may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest
rate volatility.
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. The cost of production, development and exploration varies depending on the market prices of certain mining
consumables, including diesel fuel and electricity. 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. The Company currently does not have any long
term gold hedges or other commodity hedges, but we may hedge in the future.
sensitivity Analysis for key variables
A change of
would change our
after-tax net earnings by
10%
Currency values against the US dollar
Price of gold (based on the expectations and assumptions we used in our 2015 outlook) 10%
10%
Interest rate on variable interest debt
10%
Price of diesel fuel
$6.2 million
$60.0 million
$0.1 million
$3.0 million
Eldorado Gold Annual Report 2014
47
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
OthEr risks And uncErt AintiEs
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.
48
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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.
Other information
critic Al A ccOunting p OliciEs And EstimA tEs
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 2014 consolidated financial statements.
inventories
We value finished goods (including metal concentrates, doré and iron ore), 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, 2014, the average cost of inventory was
below its net realizable value.
reserves and resources
Our estimates for Kişladağ, 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
US 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.
Eldorado Gold Annual Report 2014
49
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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.
property, plant and Equipment
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 each reporting period if there are indicators of an impairment of property, plant and equipment we assess whether there has
been impairment. In the event of 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
may be an impairment if metal prices have declined, production costs have increased, or metal recoveries are lower than
previously estimated.
For non-producing properties, we base our assessment on whether there are factors that might indicate the need for a write-down.
There may 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, 2014, based on an average projected gold price for 2015 of $1,300 per ounce and a long-term inflation adjusted
price of $1,300 per ounce, 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 in the fourth quarter of every fiscal year, and when events or changes in
circumstances suggest that the carrying amount may not be fully recoverable. Management is required to make a judgment with
respect to which CGU’s should be grouped together for goodwill testing purposes, including the assessment of operating segments,
the highest level at which goodwill can be tested.
To test the recoverability of the carrying amount of goodwill we compare the fair value of our cash generating units (“CGU’s”) or
operating segments to their carrying amounts. Calculating the estimated fair values of these CGU’s or operating segments requires
management to make estimates and assumptions with respect to future production levels, operating and capital costs in our
life-of-mine (“LOM”) plans, long-term metal prices, foreign exchange rates and discount rates. Changes in any of the assumptions
or estimates used in determining the fair values could impact the impairment analysis. If a CGU’s or operating segment’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, 2014, our consolidated balance sheet included $526.3 million in goodwill as follows: Greece operating segment
($473.8 million), White Mountain ($50.3 million) and Tanjianshan ($2.2 million). We used a discount rate of between 7% and 9%
to calculate the net present value of cash flows from these assets.
50
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
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, 2014
december 31, 2013
key Assumptions – pension plans
pension plan
sErp
pension plan
sErp
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
4.0%
4.8%
4.0%
2.5
7.2 years
4.0%
4.8%
4.0%
2.5
7.2 years
4.8%
3.9%
4.8%
–
7.6 years
4.8%
3.9%
4.8%
–
7.6 years
Eldorado Gold Annual Report 2014
51
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
Adoption of new Accounting standards and upcoming changes
The following interpretation of a standard has been adopted by the Company commencing January 1, 2014:
■
IFRIC 21 ‘Levies’ – This interpretation of IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’, applies to the accounting
for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for
the entity to have a present obligation as a result of a past event (“obligating event”). IFRIC 21 clarifies that the obligating event
that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
There was no impact on the consolidated financial statements as a result of the adoption of this standard.
The following standards have been published and are mandatory for Eldorado’s annual accounting periods no earlier than
January 1, 2017:
■
■
IFRS 9 ‘Financial Instruments’ – This standard was published in July 2014 and replaces the existing guidance in IAS 39,
‘Financial Instruments: Recognition and Measurement’. IFRS 9 includes revised guidance on the classification and measurement
of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the
new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial
instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early
adoption permitted. The Company is currently evaluating the extent of the impact of the adoption of this standard.
IFRS 15 ‘Revenue from Contracts with Customers’ – This standard contains a single model that applies to contracts with customers
and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step
analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental
thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. This standard is effective
for fiscal years ending on or after December 31, 2017, with early adoption permitted. The Company does not expect this standard
to have a material impact on its financial statements.
52
Eldorado Gold Annual Report 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
disclOsurE cOntr Ols And pr OcEdurEs
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, 2014, as defined in the rules of the US Securities and Exchange Commission and Canadian
Securities Administrators. 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.
intErnAl c Ontr Ols O vEr finAnciAl rEp Orting
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 (1992) to
evaluate the effectiveness of our controls in 2014. Based on this evaluation, management concluded that our internal control over
financial reporting was effective as at December 31, 2014 and provided a reasonable assurance of the reliability of our financial
reporting and preparation of the financial statements.
No matter how well 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.
KPMG LLP, an independent registered public accounting firm, has audited 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.
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, 2014 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.
Eldorado Gold Annual Report 2014
53
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
fOrw Ard -lOOking infOrmA tiOn 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 and the impact of any hedging activities,
■ actual and estimated production and cost of production,
■ discrepancies between actual and estimated mineral reserves and resources,
■ the speculative nature of gold exploration,
■ risks associated with mining operations and development,
■ regulatory, title, permitting and licensing 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 the risk factors of our business in our Annual Information Form, which includes 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.
54
Eldorado Gold Annual Report 2014
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 (1992) in Internal Control – Integrated Framework. Based on
this assessment, management has concluded that as at December 31, 2014, 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 their report titled “Independent Auditors’ Report
of Registered Public Accounting Firm”. The effectiveness of the Company’s internal control over financial reporting as at
December 31, 2014 has also been audited by KPMG, and their opinion is included in their report titled “Report of Independent
Registered Public Accounting Firm”.
(Signed)
paul n. wright
Chief Executive Officer
February 19, 2015
Vancouver, British Columbia, Canada
(Signed)
fabiana chubbs
Chief Financial Officer
Eldorado Gold Annual Report 2014
55
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, 2014 and December 31, 2013, 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, 2014,
and notes, comprising a summary of significant accounting policies and other explanatory information.
mAnA gEmEnt’s rEsp OnsiBility fOr thE cOnsOlid AtEd finAnciAl st AtEmEnts
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’ rEsp OnsiBility
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, 2014 and December 31, 2013, and its consolidated financial performance and its
consolidated cash flows for each of the years in the two-year period ended December 31, 2014, in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
OthEr mA ttEr
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, 2014, based on the criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992),
and our report dated February 19, 2015 expressed an unmodified (unqualified) opinion on the effectiveness of Eldorado Gold
Corporation’s internal control over financial reporting.
(Signed)
chartered Accountants
Vancouver, Canada
February 19, 2015
56
Eldorado Gold Annual Report 2014
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, 2014,
based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (1992). 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 report titled “Management’s Responsibility for Financial Reporting”. 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, 2014, based on criteria established in Internal Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (1992).
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, 2014
and December 31, 2013 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, 2014, and our report dated
February 19, 2015 expressed an unmodified (unqualified) opinion on those consolidated financial statements.
(Signed)
chartered Accountants
Vancouver, Canada
February 19, 2015
Eldorado Gold Annual Report 2014
57
CONSOLIDATED
bALANCE SHEETS
(Expressed in thousands of US dollars)
$
Assets
Current assets
Cash and cash equivalents
Term deposits
Restricted cash
Marketable securities
Accounts receivable and other
Inventories
Investments in associates
Deferred income tax assets
Other assets
Defined benefit pension plan
Property, plant and equipment
Goodwill
liabilities & equity
Current liabilities
Accounts payable and accrued liabilities
Current debt
Debt
Other non-current liability
Asset retirement obligations
Deferred income tax liabilities
Equity
Share capital
Treasury stock
Contributed surplus
Accumulated other comprehensive loss
Deficit
total equity attributable to shareholders of the company
Attributable to non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board of Directors
note
december 31, 2014
december 31, 2013
6
7
8
9
17
10
16
11
12
13
14
14
5(b)
15
17
18
498,514
2,800
262
4,251
117,995
223,412
847,234
–
104
43,605
12,790
5,963,611
526,296
7,393,640
184,712
16,343
201,055
587,201
49,194
109,069
869,207
589,180
34,702
262
4,387
89,231
244,042
961,804
10,949
997
37,330
13,484
5,684,382
526,296
7,235,242
211,406
16,402
227,808
585,006
–
85,259
842,305
1,815,726
1,740,378
5,318,950
(12,949)
38,430
(18,127)
(53,804)
5,272,500
305,414
5,577,914
7,393,640
5,314,589
(10,953)
78,557
(17,056)
(143,401)
5,221,736
273,128
5,494,864
7,235,242
(Signed)
robert r. gilmore
Director
Date of approval: February 19, 2015
58
Eldorado Gold Annual Report 2014
(Signed)
paul n. wright
Director
CONSOLIDATED
INCOME STATEMENTS
(Expressed in thousands of US dollars except per share amounts)
for the year ended december 31
note
2014
2013
revenue
Metal sales
cost of sales
Production costs
Inventory write-down
Depreciation and amortization
gross profit
26
Exploration expenses
General and administrative expenses
Defined benefit pension plan expense
Share based payments
Impairment loss on property, plant and equipment and goodwill
Foreign exchange loss
16
19
11, 12
Operating profit (loss)
Loss on disposal of assets
Loss on marketable securities and other investments
Loss on investments in associates
Impairment loss on investment in associates
Other income
Asset retirement obligation accretion
Interest and financing costs
Writedown of assets
profit (loss) before income tax
Income tax expense
profit (loss) for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
profit (loss) for the year
weighted average number of shares outstanding (thousands)
Basic
Diluted
Earnings per share attributable to shareholders of the company:
Basic earnings (loss) per share
Diluted earnings (loss) per share
The accompanying notes are an integral part of these consolidated financial statements.
9
15
27
17
28
1,067,899
1,123,992
508,280
13,469
177,227
698,976
368,923
16,230
68,196
1,620
18,775
–
7,176
256,926
1,926
2,415
102
–
(9,436)
2,326
28,779
3,001
227,813
121,269
106,544
102,607
3,937
106,544
716,288
716,300
0.14
0.14
481,892
–
149,068
630,960
493,032
34,686
68,291
2,478
19,492
808,414
6,799
(447,128)
830
2,421
1,285
14,051
(6,201)
1,337
40,412
3,990
(505,253)
144,362
(649,615)
(653,329)
3,714
(649,615)
715,181
715,181
(0.91)
(0.91)
Eldorado Gold Annual Report 2014
59
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(Expressed in thousands of US dollars)
for the year ended december 31
note
profit (loss) for the year
Other comprehensive income (loss):
Change in fair value of available-for-sale financial assets
Realized losses (gains) on disposal of available-for-sale financial
assets transferred to net income
Actuarial gains (losses) on defined benefit pension plans
16
total other comprehensive income (loss) for the year
total comprehensive income (loss) for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2014
106,544
(2,353)
1,878
(596)
(1,071)
105,473
101,536
3,937
105,473
2013
(649,615)
(1,258)
(17)
8,754
7,479
(642,136)
(645,850)
3,714
(642,136)
60
Eldorado Gold Annual Report 2014
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Expressed in thousands of US dollars)
for the year ended december 31
note
2014
2013
Cash flows generated from (used in):
Operating activities
Profit (loss) for the year
Items not affecting cash
Asset retirement obligation accretion
Depreciation and amortization
Unrealized foreign exchange loss
Deferred income tax expense
Loss on disposal of assets
Loss on investment in associates
Impairment loss on investment in associates
Writedown of assets
Impairment loss on property, plant and equipment and goodwill
Loss on marketable securities and other investments
Share based payments
Defined benefit pension plan expense
20
5(a)
5(b)
Property reclamation payments
Changes in non-cash working capital
investing activities
Net cash paid on acquisition of subsidiary
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Proceeds on production of tailings retreatment
Purchase of marketable securities
Proceeds from the sale of marketable securities
Investments in associates
Redemption of (investment in) term deposits
Decrease (increase) in restricted cash
financing activities
Issuance of common shares for cash
Proceeds from contributions net of dispositions from
non-controlling interest
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 decrease 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.
106,544
2,326
177,227
1,154
27,795
1,926
102
–
3,001
–
2,415
18,775
1,620
342,885
(3,038)
(56,502)
283,345
(30,318)
(410,690)
147
26,599
(3,313)
1,521
–
31,902
31
(384,121)
1,996
40,000
(12,466)
(13,010)
(6,413)
32,625
(32,622)
–
10,110
(90,666)
589,180
498,514
(649,615)
1,337
149,068
775
27,516
830
1,285
14,051
3,990
808,414
2,421
19,492
2,478
382,042
–
(25,669)
356,373
–
(481,986)
2,086
24,877
–
2,025
(6,357)
(34,702)
(12)
(494,069)
7,003
2,321
(13,281)
(84,948)
(6,462)
15,977
(10,354)
(223)
(89,967)
(227,663)
816,843
589,180
Eldorado Gold Annual Report 2014
61
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
(Expressed in thousands of US dollars)
for the year ended december 31
note
2014
2013
share capital
Balance beginning of year
Shares issued upon exercise of share options, for cash
Transfer of contributed surplus on exercise of options
Transfer of contributed surplus on exercise of deferred phantom units
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
Recognition of other non-current liability and related costs
Partial reversal of non-controlling interest acquired on buy-out
Transfer to share capital on exercise of options and deferred phantom units
5(b)
Balance end of year
Accumulated other comprehensive loss
Balance beginning of year
Other comprehensive gain (loss) for the year
Balance end of year
deficit
Balance beginning of year
Dividends paid
Profit (loss) 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
Increase (decrease) during the period
5(b)
Balance end of year
total equity
The accompanying notes are an integral part of these consolidated financial statements.
62
Eldorado Gold Annual Report 2014
5,314,589
1,996
2,141
224
5,318,950
(10,953)
(6,413)
4,417
(12,949)
78,557
18,503
(4,417)
(51,848)
–
(2,365)
38,430
(17,056)
(1,071)
(18,127)
(143,401)
(13,010)
102,607
(53,804)
5,272,500
273,128
3,937
(11,651)
40,000
305,414
5,300,957
7,003
2,934
3,695
5,314,589
(7,445)
(6,462)
2,954
(10,953)
65,382
19,847
(2,954)
–
2,911
(6,629)
78,557
(24,535)
7,479
(17,056)
594,876
(84,948)
(653,329)
(143,401)
5,221,736
284,100
3,714
(14,096)
(590)
273,128
5,577,914
5,494,864
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 and mining company. The Company
has operations and ongoing exploration and development projects in Turkey, China, Greece, Brazil and Romania. The Company
acquired Glory Resources Ltd. (“Glory”) in March 2014. Glory has the Sapes project in Thrace, Greece.
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 19, 2015.
AdOptiOn Of nEw AccOunting stAnd Ards And upc Oming chAngEs
The following interpretation of a standard has been adopted by the Company commencing January 1, 2014:
■
IFRIC 21 ‘Levies’ – This interpretation of IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’, applies to the accounting
for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for
the entity to have a present obligation as a result of a past event (“obligating event”). IFRIC 21 clarifies that the obligating event
that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
There was no impact on these consolidated financial statements as a result of the adoption of this standard.
The following standards have been published and are mandatory for Eldorado’s annual accounting periods no earlier than
January 1, 2017:
■
■
IFRS 9 ‘Financial Instruments’ – This standard was published in July 2014 and replaces the existing guidance in IAS 39, ‘Financial
Instruments: Recognition and Measurement’. IFRS 9 includes revised guidance on the classification and measurement of financial
instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general
hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments
from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption
permitted. The Company is currently evaluating the extent of the impact of the adoption of this standard.
IFRS 15 ‘Revenue from Contracts with Customers’ – This standard contains a single model that applies to contracts with customers
and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step
analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental
thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. This standard is effective
for fiscal years ending on or after December 31, 2017, with early adoption permitted. The Company does not expect this standard
to have a material impact on its financial statements.
There are other new standards, amendments to standards and interpretations that have been published and are not yet effective.
The Company believes they will have no material impact to its consolidated financial statements.
Eldorado Gold Annual Report 2014
63
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
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 all Eldorado entities.
3.1 BAsis Of prEsEnt AtiOn And principlEs Of c OnsOlid AtiOn
(i)
subsidiaries and Business combinations
Subsidiaries are entities controlled by Eldorado. Control exists when Eldorado is exposed to, or has rights, to variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
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.
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
Operations and development
status
projects owned
Tüprag Metal Madencilik Sanayi ve Ticaret AS (“Tüprag”)
Turkey
100%
Consolidated
Qinghai Dachaidan Mining Ltd. (“QDML”)
Sino Guizhou Jinfeng Mining Ltd. (“Jinfeng”)
Sino Gold Jilin BMZ Mining Ltd.
Heihe Rockmining Ltd. (“Eastern Dragon”)
Hellas Gold SA (“Hellas”)
Thracean Gold Mining SA
Glory Resources Ltd.
Unamgen Mineração e Metalurgia S/A
Brazauro Resources Corporation (“Brazauro”)
Deva Gold SA (“Deva”)
China
China
China
China
Greece
Greece
Greece
Brazil
Brazil
Romania
90%
82%
95%
75%
95%
100%
100%
100%
100%
81%
Kişladağ Mine
Efemçukuru Mine
TJS Mine
Jinfeng Mine
Consolidated
Consolidated
Consolidated White Mountain Mine
Consolidated
Consolidated
Eastern Dragon Project
Stratoni Mine
Olympias Project
Skouries Project
Perama Hill Project
Sapes Project
Vila Nova Iron Ore Mine
Tocantinzinho Project
Certej Project
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
(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.
Associates 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 commences until the date that significant influence ceases.
64
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
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, each investment in associates is assessed for indicators of impairment.
(iii) transactions with non-controlling interests
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.
Eldorado treats transactions in the ordinary course of business with non-controlling interests as transactions with third parties.
(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.
3.2 fOrEign currEncy tr AnslAtiOn
(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 pr OpErty, pl Ant And EQuipmEnt
(i)
(ii)
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.
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.
Eldorado Gold Annual Report 2014
65
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
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.
(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 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.
3.4 ExplOr AtiOn, Ev AluA tiOn And dEvEl OpmEnt ExpEnditurEs
(i)
Exploration
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.
(ii) Evaluation
Evaluation expenditures reflect costs incurred at projects related to establishing the technical and commercial viability of
mineral deposits identified through exploration or acquired through a business combination or asset acquisition.
66
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
Evaluation expenditures include the cost of:
a) 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;
b) determining the optimal methods of extraction and metallurgical and treatment processes;
c) studies related to surveying, transportation and infrastructure requirements;
d) permitting activities; and
e) economic evaluations to determine whether development of the mineralized material is commercially justified, including
scoping, prefeasibility and final feasibility studies.
Evaluation expenditures are capitalized if management determines that there is 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.
The evaluation phase is complete once technical feasibility of the extraction of the mineral deposit has been determined
through preparation of a reserve and resource statement, including a mining plan as well as receipt of required permits and
approval of the Board of Directors to proceed with development of the mine.
(iii) development
Development expenditures are those that are incurred during the phase of preparing a mineral deposit for extraction and
processing. These include pre-stripping costs and underground development costs to gain access to the ore that is suitable
for sustaining commercial mining, preparing land, construction of plant, equipment and buildings and costs of commissioning
the mine and mill.
Expenditures incurred on development projects continue to be capitalized until the mine and mill moves into the production
stage. The Company assess each mine construction project to determine when a mine moves into production stage. The
criteria used to assess the start date are determined based on the nature of each mine construction project, such as the
complexity of a plant or its location. Various relevant criteria are considered to assess when the mine is substantially
complete and ready for its intended use and moved into the production stage. Some of the criteria considered would include,
but are not limited to, the following: (1) the level of capital expenditures compared to construction cost estimates; (2) the
completion of a reasonable period of testing of mine plant and equipment; (3) the ability to produce minerals in saleable
form (within specification); and (4) the ability to sustain ongoing production of minerals.
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.
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.
Eldorado Gold Annual Report 2014
67
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
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 (“CGU”s) 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.
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 or CGUs.
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.
(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 other assets in the balance sheet.
68
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
(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 Annual Report 2014
69
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
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
invEnt OriEs
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 tr AdE rEcEiv ABlEs
Trade receivables are amounts due from customers for bullion, doré, gold concentrate, other metal concentrates and 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 neccesary.
3.11 cAsh And c Ash 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 tr AdE 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.
70
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
3.14 dEB t And BOrr Owings
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 inc OmE 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 rate of salary
escalation and expected retirement dates of employees. The discount rate is based on high quality bond yields, as per IAS 19.
The assumption used to determine the interest income on plan assets is equal to the discount rate, as per IAS 19.
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 interest income 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.
Eldorado Gold Annual Report 2014
71
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
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.
(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 p AymEnt tr AnsA ctiOns
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 pr OvisiOns
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.
72
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
3. significant Accounting policies (continued)
3.19 rEvEnuE rEc OgnitiOn
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.
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 (lOss ) 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 analyses, asset retirement obligations, share-based payments and
warrants, pension benefits, valuation of 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
significant estimates and assumptions in determining carrying values.
purchAsE pricE All Oc AtiOn
Business combinations require 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.
Eldorado Gold Annual Report 2014
73
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
4. critical Accounting Estimates and judgements (continued)
In respect of mining company acquisitions 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.
EstimAtEd rEc OvEr ABlE 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 t AxEs
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 returns.
Estimates of recoverability are 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.
impAirmEnt Of nOn -currEnt AssEts And gOOdwill
Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount
may not be fully recoverable. We conduct an annual test for impairment of goodwill in the fourth quarter of each fiscal year
and at any other time of the year if an indicator of impairment is identified.
Calculating the estimated fair values of CGUs for non-current asset impairment tests and CGUs or groups of CGUs for
goodwill impairment tests requires management to make estimates and assumptions with respect to future production
levels, operating and capital costs in our life-of-mine (“LOM”) plans, long-term metal prices, foreign exchange rates and
discount rates. Changes in any of the assumptions or estimates used in determining the fair values could impact the
impairment analysis.
74
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
4. critical Accounting Estimates and judgements (continued)
Management is also required to make judgments with respect to the level at which goodwill is tested for impairment.
Judgments include an assessment of whether CGUs should be grouped together for goodwill testing purposes at a level not
larger than an operating segment or tested at the individual CGU level.
5. Acquisitions and Other transactions
A)
AcQuisitiOn Of gl Ory
Eldorado completed the acquisition of all of the issued and outstanding common shares of Glory that it did not already
own on March 14, 2014. As a result, Eldorado acquired a 100% interest in the Sapes project in Thrace, Greece. Prior to the
transaction, Eldorado owned 19.9% interest in Glory and the investment was accounted for as an investment in associate.
Total consideration of $39,219 included cash for 179,504,179 shares in the amount of $27,583, an option buy-out payment
of $1,590 to holders of Glory options, and $10,046 related to the 44,595,920 shares of Glory that Eldorado had purchased
prior to the off-market takeover bid. A total of $1,229 was incurred as transaction costs and was capitalized as property,
plant and equipment.
This transaction has been accounted for as an acquisition of assets and liabilities as Glory did not constitute a business, as
defined in IFRS 3. Other than a small working capital amount the remainder of the value for this transaction was assigned
to property, plant and equipment.
Eldorado paid net cash of $30,318 as a result of the transaction. This amount was a result of an acquired cash balance of
$84 less cash consideration of $29,173 and transaction costs of $1,229.
B)
EAstErn dr AgOn A grEEmEnt
In March 2014, the Company, through one of its subsidiaries, entered into a Subscription and a Shareholders agreement
(“Agreements”) with CDH Fortune II Limited (“CDH”).
As a result of these Agreements, CDH acquired 21.5% of the total ordinary shares of Sino Gold Tenya (HK) Limited (“Tenya”),
a subsidiary of the Company, and indirectly a 20% interest in the Eastern Dragon Project.
Under the terms of the Agreements, CDH has the right to require Eldorado to purchase or procure the purchase by another
party of CDH’s shares in Tenya at a fixed price (“Put Option”) for 90 days following the second anniversary of the Agreements.
The Agreements include other rights and obligations of the Company and CDH associated with the advancement of the
Eastern Dragon Project.
This transaction has been accounted as an equity transaction with the recognition of a non-controlling interest in the
amount of $40,000 representing the consideration received. A liability in the amount of $46,970 has been recorded at
the transaction date, representing the present value of the redemption amount of the Put Option, as well as $2,654 of
transaction costs. The sum of these amounts was recorded against equity. Future changes in the present value of the
redemption amount of the Put Option are being charged against equity. The present value of the liability representing the
Put Option as of December 31, 2014 is $49,194.
6. cash and cash Equivalents
$
Cash at bank and on hand
Short-term bank deposits
december 31, 2014
december 31, 2013
444,176
54,338
498,514
508,611
80,569
589,180
Eldorado Gold Annual Report 2014
75
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
7. Accounts receivable and Other
$
december 31, 2014
december 31, 2013
Trade receivables
Value added and other taxes recoverable
Other receivables and advances
Prepaid expenses and deposits
8.
inventories
$
Ore stockpiles
In-process inventory and finished goods
Materials and supplies
19,771
40,378
18,572
39,274
117,995
21,510
10,984
16,704
40,033
89,231
december 31, 2014
december 31, 2013
44,195
64,314
114,903
223,412
59,152
73,510
111,380
244,042
The cost of materials and supplies consumed during the year and included in production costs amounted to $244,003
(2013 – $195,936).
Inventory write downs related to Iron Ore inventory amounting to $13,469 (2013 – nil) were recognized during the year.
9.
interests in Other Entities
9.1
invEstmEnts in AssOciA tEs
$
Glory Resources Ltd.
Nordic Mines (“Nordic”)
december 31, 2014
december 31, 2013
–
–
–
10,046
903
10,949
(a) glory
In March 2014, the Company completed the acquisition of Glory as described in note 5(a).
(b) nordic
In May 2014, the Company, through one of its subsidiaries, sold 26,834,026 shares of Nordic and lost its significant influence
in this company. Nordic was reclassified to marketable securities and the remaining 7,771,141 shares were sold during the
months of June and July 2014. As at December 31, 2014 the Company does not own any more shares in Nordic.
The continuity of this investment was as follows:
$
Balance at January 1,
Purchases during the year
Sales during the year
Equity loss for the year
Impairment loss
Transferred to marketable securities
Balance at december 31,
76
Eldorado Gold Annual Report 2014
2014
903
–
(755)
(101)
–
(47)
–
2013
9,050
6,357
(350)
(103)
(14,051)
–
903
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
9.
interests in Other Entities (continued)
9.2
invEstmEnt in suBsidiAriEs
The following table summarized the information relating to each of the Company’s subsidiaries that has non-controlling
interests (“NCI”) with material impact on net profit. The amounts disclosed for each subsidiary are based on those included in
the consolidated financial statements before inter-company eliminations. Disclosures related to Eastern Dragon, Hellas and
Deva have not been provided as these subsidiaries currently have no material impact on net profit.
$
december 31, 2014
december 31, 2013
nci percentage
Current assets
Non-current assets
Current liabilities
Non-current liabilities
net assets
carrying amount of nci
Revenue
Net profit
Total comprehensive income
profit allocated to nci
Dividends paid to NCI
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Qdml
jinfeng
Qdml
jinfeng
10%
18%
10%
18%
216,368
103,164
(71,843)
(7,968)
59,570
610,952
(474,010)
(26,583)
222,216
107,219
(82,179)
(7,983)
57,417
647,064
(503,695)
(22,823)
239,721
169,929
239,273
177,963
22,445
17,136
22,112
19,734
136,982
39,427
214,527
35,040
144,057
45,506
171,104
20,308
39,427
35,040
45,506
20,308
4,231
5,155
4,228
490
3,898
46,481
(8,833)
(38,978)
7,753
65,219
(15,956)
(43,069)
4,066
(104)
(11,333)
(40,664)
7,584
83,179
(53,284)
(26,156)
net increase (decrease) in cash and cash equivalents
(1,330)
6,194
(52,101)
3,739
significant restrictions
The Company cannot increase the drawdown limit of the entrusted loan described in note 14(d) without the consent of
QDML’s non-controlling interest.
10. Other Assets
$
Restricted credit card deposits
Non-current accounts receivable and other
Prepaid loan costs (note 14(b))
Environmental guarantee deposits
Deposit on land acquisition at Jinfeng
Long-term value added and other taxes recoverable
december 31, 2014
december 31, 2013
627
2,925
1,011
14,423
2,907
21,712
43,605
658
898
2,528
13,285
2,918
17,043
37,330
Eldorado Gold Annual Report 2014
77
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
11. property, plant and Equipment
$
cost
Balance at January 1, 2013
Additions/transfers
Proceeds on production of
tailings retreatment
Other movements
Disposals/impairment losses
land and
buildings
plant and
equipment
capital works
in progress
mineral
properties
and leases
capitalized
evaluation
total
266,718
85,803
1,443,858
183,237
149,590
10,806
4,480,597
198,352
37,416
18,303
6,378,179
496,501
–
(2,287)
(21,122)
–
(3,954)
(53,602)
–
(812)
–
(24,877)
(742)
(429,909)
–
239
–
(24,877)
(7,556)
(504,633)
Balance at december 31, 2013
329,112
1,569,539
159,584
4,223,421
55,958
6,337,614
Balance at January 1, 2014
Additions/transfers
Acquisition of Glory
Proceeds on production of
tailings retreatment
Other movements
Disposals
329,112
36,657
–
15,955
(153)
1,569,539
93,527
268
159,584
11,086
–
535
(876)
–
(26,410)
–
4,223,421
287,602
39,285
(26,599)
6,862
–
55,958
13,122
–
360
–
6,337,614
441,994
39,553
(26,599)
(2,698)
(1,029)
Balance at december 31, 2014
381,571
1,662,993
144,260
4,530,571
69,440
6,788,835
Depreciation
Balance at January 1, 2013
Depreciation for the year
Other movements
Disposals
(21,947)
(35,679)
(335)
601
(382,630)
(79,137)
570
2,046
(2,280)
2,280
–
–
(102,580)
(35,102)
906
55
Balance at december 31, 2013
(57,360)
(459,151)
–
(136,721)
Balance at January 1, 2014
Depreciation for the year
Other movements
Disposals
(57,360)
(35,160)
2,619
102
(459,151)
(110,923)
153
785
Balance at december 31, 2014
(89,799)
(569,136)
–
–
–
–
–
(136,721)
(23,698)
(5,870)
–
(166,289)
–
–
–
–
–
–
–
–
–
–
(509,437)
(147,638)
1,141
2,702
(653,232)
(653,232)
(169,781)
(3,098)
887
(825,224)
carrying amounts
At January 1, 2013
244,771
1,061,228
147,310
4,378,017
37,416
5,868,742
At December 31, 2013
271,752
1,110,388
159,584
4,086,700
55,958
5,684,382
Balance at december 31, 2014
291,772
1,093,857
144,260
4,364,282
69,440
5,963,611
* Prior period balances have been reclassified to conform with current period presentation.
The amount of capitalized interest during the year ended December 31, 2014 included in property, plant and equipment was
$14,450 ($2013 – $3,705).
As at December 31, 2013 the carrying value of goodwill at our Jinfeng mine and Eastern Dragon project was impaired
by the entire allocated amounts of $138,529 and $174,885, respectively (note 12). As a result, the Company assessed the
recoverable amounts of property, plant and equipment for each of these locations using the same fair value less costs to sell
approach and key assumptions as used in the annual goodwill impairment testing as described in note 12.
78
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
11. property, plant and Equipment (continued)
As at December 31, 2013, we recorded impairment charges of $495,000 ($371,250 net of deferred income tax recovery) on
the property, plant and equipment in China. Impairment charges included $350,000 impairment ($262,500 net of deferred
income tax recovery) at our Eastern Dragon project and $145,000 ($108,750 net of deferred income tax recovery) at our
Jinfeng mine. These impairment charges were applied to the property, plant and equipment based on the relative carrying
amounts of the assets as at December 31, 2013 that were subject to impairment charges. At December 31, 2014, the carrying
amount of our Eastern Dragon project and our Jinfeng mine after impairment charges was $445,391 (2013 –$444,830) and
$594,460 (2013 – $630,512) respectively.
12. goodwill
$
cost
Balance at January 1,
Acquired during the year
Impaired during the year
Balance at december 31,
2014
2013
526,296
–
–
526,296
839,710
–
(313,414)
526,296
impairment tests for goodwill
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may not be recoverable.
Impairment is determined for goodwill by assessing the recoverable amount of each cash generating unit or group of CGUs
to which the goodwill relates. Where the recoverable amount of the CGU is less than its carrying amount including goodwill,
an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Goodwill is allocated to the individual CGUs of TJS and White Mountain in China and to a group of CGUs in Greece.
The recoverable amount of a CGU or group of CGUs is determined based on the higher of fair value less costs to sell and
value-in-use. These calculations use projections based on financial budgets approved by management. Cash flows beyond
the five-year period are extrapolated using the estimated growth rates stated below. The estimates of future cash flows were
derived from the most recent LOM plans with mine lives ranging from 7 to 33 years.
Key assumptions used for fair value less costs to sell calculations are as follows:
Gold price ($/oz)
Silver price ($/oz)
Copper ($/lb)
Lead ($/lb)
Zinc ($/lb)
Inflation rate
Discount rate
2014
1,300
20
3.00
0.95
1.00
2%
7%–9%
2013
1,200–$1,300
22
3.04–$3.36
1.00
0.86
2%
7%–12%
Based on the goodwill impairment test performed on its CGUs, the Company concluded that the goodwill was recoverable
in all of the assessed CGUs.
The above assumptions have been used for the analysis of the recoverability of goodwill and the CGUs to which it
relates. The discount rates used reflect specific risks relating to the relevant CGUs.
Eldorado Gold Annual Report 2014
79
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
12. goodwill (continued)
As at December 31, 2014, goodwill is allocated to the White Mountain CGU, TJS CGU and Greece group of CGUs in the
amounts of $50,276, $2,238 and $473,782, respectively.
The recoverable amount of CGUs is sensitive to change in gold prices. A 6% decrease in the long-term gold price, in isolation,
could cause the carrying value to exceed the recoverable amount of these CGUs.
The Company believes that a long term decline in the gold price environment would result in changes in operating cost
inputs that may offset the impact of a lower gold price environment.
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.
As at December 31, 2013 the fair value less costs to sell discounted cash flow model yielded impairments of the full carrying
value of goodwill of the Jinfeng mine ($138,529) and Eastern Dragon project ($174,885). The impairment charge was due to
a decrease in gold price assumptions which reflected the decline in observed market prices in 2013. Furthermore, a Chinese
permitting risk premium was applied to the Eastern Dragon project to reflect the permitting delays that the development
project has experienced.
13. Accounts payable and Accrued liabilities
$
Trade payables
Taxes payable
Accrued expenses
14. debt
$
december 31, 2014
december 31, 2013
83,566
6,230
94,916
184,712
106,098
6,442
98,866
211,406
december 31, 2014
december 31, 2013
current:
Jinfeng China Merchant Bank (“CMB”) working capital loan (a)
16,343
16,402
non-current:
Senior notes (c)
total debt
587,201
603,544
585,006
601,408
(a)
jinfeng cmB working capital loan
On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($16,343) 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 had a term of up to one year. In January 2014, the term of the facility was extended to January 28, 2015 and was not
subsequently renewed. This facility is unsecured.
80
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
14. debt (continued)
As at December 31, 2014, Jinfeng has drawn down the full amount of RMB 100.0 million ($16,343) under this facility and has
used the proceeds to fund working capital obligations. Subsequent to December 31, 2014, Jinfeng repaid RMB 50.0 million
($8,171) on this facility and drew down the same amount.
All tranches of the loan have a term of six months and a fixed interest rate of 5.6%.
(b) hsBc revolving credit facility
The Company has a $375.0 million revolving credit facility with HSBC (“the credit facility” or “ARCA”) and a syndicate of other
banks. 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 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, 2014.
Loan interest is variable dependent on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately
1.3:1. 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 $4,728 were paid in relation to the credit facility. This amount has been deferred as pre-payments for liquidity
services and will be amortized over the term of the credit facility. As at December 31, 2014, the prepaid loan cost on the
balance sheet was $1,011 (note 10).
No amounts were drawn down under the ARCA as at December 31, 2014.
(c)
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 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:
December 15, 2016
December 15, 2017
2018 and thereafter
103.063%
101.531%
100.000%
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, 2014 is $583.9 million.
Net deferred financing costs of $12,799 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.
(d) Entrusted loan
In November 2010, Eastern Dragon, HSBC Bank (China) and QDML, our 90% owned subsidiary, entered into a RMB
12.0 million ($1,961) entrusted loan agreement, which has been increased to RMB 720.0 million ($117,666) through a series
of amendments.
Eldorado Gold Annual Report 2014
81
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
14. debt (continued)
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 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, 2014
was 4.59%.
As at December 31, 2014, RMB 651.5 million ($106,475) had been drawn under the entrusted loan.
Subsequent to December 31, 2014, RMB 2.0 million ($327) was drawn under this loan.
The entrusted loan has been recorded on a net settlement basis.
15. Asset retirement Obligations
$
greece
Brazil
china
turkey
romania
total
At january 1, 2014
Accretion during the year
Revisions to estimate of obligation
Settlements
At december 31, 2014
32,642
717
12,985
–
46,344
Estimated undiscounted amount
74,373
2,839
86
185
–
3,110
3,754
25,298
612
837
(3,038)
23,564
875
10,015
–
916
36
500
–
85,259
2,326
24,522
(3,038)
23,709
34,454
1,452
109,069
30,772
65,886
2,514
177,299
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 estimated
life of the various mining operations. The increase in the estimate of the obligation in 2014 was mainly due to lower
discount rates which create a higher net present value of the reclamation obligation, and higher rehabilitation costs at
Skouries and Stratoni.
The provision is calculated as the present value of estimated future net cash outflows based on the following
key assumptions:
%
greece
Brazil
china
turkey
romania
At december 31, 2013
Inflation rate
Discount rate
At december 31, 2014
Inflation rate
Discount rate
2.0
0.4 to 4.0
2.0
3.0
2.0
1.3 to 3.0
2.0
3.1 to 4.0
2.0
0.7 to 2.8
2.0
2.1
2.0
1.1 to 2.1
2.0
2.2 to 2.7
2.0
4.0
2.0
2.5
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 and 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 10).
82
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
15. Asset retirement Obligations (continued)
Additionally, the Company has provided the following:
a) 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 (Stratoni,
Olympias and Skouries) and the removal, cleaning and rehabilitation of the old Olympias tailings. This Letter of Guarantee
is renewed annually, expires on July 26, 2026 and has an annual fee of 57 basis points.
b) a $30.0 million Letter of Guarantee to the Ministry of Environment, Energy and Climate change of Turkey as security
for the due and proper performance of rehabilitation works committed in connection with the environmental impact
assessment approved for Kişladağ and Efemçukuru. This Letter of Guarantee is renewed annually, expires on September
18, 2015 and has an annual fee of 28 basis points.
16. defined Benefit plans
$
december 31, 2014
december 31, 2013
Balance sheet obligations (asset) for:
Pension Plan
Supplementary pension plan
839
(13,629)
(12,790)
477
(13,961)
(13,484)
$
december 31, 2014
december 31, 2013
income statement charge for:
Pension Plan
Non-registered supplementary pension plan
Actuarial losses (gains) 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)
198
1,422
1,620
596
14,119
215
2,263
2,478
(8,754)
13,523
The Company operates defined benefit pension plans in Canada with two components: a registered pension plan
(“the Pension Plan”) and a supplementary pension plan (“the SERP”). During the second quarter of 2012, the SERP was
converted into a Retirement Compensation Arrangement (“RCA”), a trust account. 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 and
any realized investment gains to the Receiver General of Canada as refundable tax.
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 Gold Annual Report 2014
83
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
16. defined Benefit plans (continued)
Eldorado’s plans have actuarial valuations performed for funding purposes. The Pension Plan last had an actuarial valuation
performed as of January 1, 2014 for funding purposes with the next required valuation as of January 1, 2017. The SERP’s last
valuation was on January 1, 2014 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, 2014.
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.
total cash payments
The amount contributed to the Pension Plan and the SERP was $2,700 (2013 – $2,958). Cash payments totalling $156 were
made directly to beneficiaries during the year (2013 – $167). The Company expects to contribute $215 to the Pension Plan
and $2,636 to the SERP in 2015.
The amounts recognised in the balance sheet are determined as follows:
$
december 31, 2014
december 31, 2013
pension plan
sErp
total
pension plan
sErp
total
Present value of obligations
Fair value of plan assets
2,763
(1,924)
33,320
(46,949)
36,083
(48,873)
2,407
(1,930)
31,529
(45,490)
33,936
(47,420)
liability (asset) on balance sheet
839
(13,629)
(12,790)
477
(13,961)
(13,484)
The movement in the defined benefit obligation over the year is as follows:
$
2014
2013
pension plan
sErp
total
pension plan
sErp
total
Balance at January 1,
Current service cost
Interest cost
Actuarial loss (gain)
Benefit payments
Exchange gain
2,407
172
114
280
–
(210)
31,529
2,076
1,487
940
(156)
(2,556)
33,936
2,248
1,601
1,220
(156)
(2,766)
2,585
190
101
(302)
–
(167)
35,903
2,466
1,397
(5,781)
(167)
(2,289)
38,488
2,656
1,498
(6,083)
(167)
(2,456)
Balance at december 31,
2,763
33,320
36,083
2,407
31,529
33,936
The movement in the fair value of plan assets of the year is as follows:
$
2014
2013
pension plan
sErp
total
pension plan
sErp
total
At January 1,
Interest income on plan assets
Actuarial gain (loss)
Contributions by employer
Benefit payments
Exchange loss
1,930
88
66
–
–
(160)
45,490
2,141
558
2,700
(156)
(3,784)
47,420
2,229
624
2,700
(156)
(3,944)
1,969
77
(113)
123
–
(126)
41,090
1,600
2,784
2,835
(167)
(2,653)
43,059
1,677
2,671
2,958
(167)
(2,779)
At december 31,
1,924
46,949
48,873
1,930
45,490
47,420
84
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
16. defined Benefit plans (continued)
The amounts recognized in the income statement are as follows:
$
2014
2013
pension plan
sErp
total
pension plan
sErp
total
Current service cost
Interest cost
Expected return on plan assets
defined benefit plans expense
172
114
(88)
198
2,076
1,487
(2,141)
1,422
2,248
1,601
(2,229)
1,620
190
101
(76)
2,466
1,397
(1,600)
215
2,263
2,656
1,498
(1,676)
2,478
The actual return on plan assets was $3,124 (2013 – $4,582).
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
pension plan
4.0
4.8
4.0
2.5
7.2 years
2014
sErp
4.0
4.8
4.0
2.5
7.2 years
2013
pension plan
sErp
4.8
3.9
4.8
–
4.8
3.9
4.8
–
7.6 years
7.6 years
The assumption used to determine the interest income on plan assets is equal to the discount rate, as per IAS 19.
plan Assets
The assets of the Pension Plan and the amounts deposited in the SERP account are managed by a major investment man-
agement 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:
Investment funds
Money market
Canadian fixed income
Canadian equities
US equities
International equities
Other (1)
total
december 31, 2014
december 31, 2013
pension plan
sErp
pension plan
sErp
1%
99%
–
–
–
–
8%
4%
20%
16%
7%
45%
1%
99%
–
–
–
–
7%
4%
20%
17%
7%
45%
100%
100%
100%
100%
(1) Assets held by the Canada Revenue Agency in the refundable tax account.
Eldorado Gold Annual Report 2014
85
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
16. defined Benefit plans (continued)
The sensitivity of the overall pension liability to changes in the weighted principal assumptions is:
Discount rate
Salary escalation rate
Increase by 0.5%
Decrease by 0.5%
Increase/decrease by 0.5%
Decrease by $2,352
Increase by $2,606
Increase/decrease by $100
change in assumption
impact on overall liability
17. income tax Expense and deferred taxes
Total income tax expense consists of:
$
Current tax expense
Deferred tax expense
december 31, 2014
december 31, 2013
93,474
27,795
121,269
2014
74,959
37,263
5,005
2,761
–
201
1,080
121,269
2014
227,813
26.00%
59,231
(17,307)
–
24,470
13,481
–
16,914
4,350
(517)
20,647
121,269
116,846
27,516
144,362
2013
109,195
(90,177)
122,657
3,202
51
(889)
323
144,362
2013
(505,253)
26.00%
(131,366)
(9,074)
125,102
20,434
14,636
78,354
23,807
762
(12,381)
34,088
144,362
Total income tax expense attributable to geographical jurisdiction is as follows:
$
Turkey
China
Greece
Brazil
Canada
Romania
Other jurisdictions
Factors affecting income tax expense for the year:
$
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
Increase in Greek tax rates
Non-tax effected operating losses
Non-deductible expenses and other items
Non-deductible goodwill impairment
Foreign exchange and other translation adjustments
Amounts under (over) provided in prior years
Investment tax credits
Withholding tax on foreign income
income tax expense
86
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
17. income tax Expense and deferred taxes (continued)
The change for the year in the Company’s net deferred tax position was as follows:
$
2014
2013
net deferred tax asset (liability)
Balance at January 1,
Deferred income tax (expense) recovery in the income statement
Adjustments related to acquisitions
Other
(841,308)
(27,795)
–
–
(813,792)
(27,516)
–
–
net balance at december 31,
(869,103)
(841,308)
The composition of the Company’s net deferred income tax asset and liability and deferred tax expense is as follows:
type of temporary difference
deferred tax assets
deferred tax liabilities
Expense on
the income statement
$
2014
2013
2014
2013
2014
2013
Property, plant and equipment
Loss carryforwards
Liabilities
Investment tax credits
Other items
2,735
17,590
28,082
1,078
6,729
4,687
12,059
18,226
7,795
4,054
913,383
–
51
–
11,883
878,725
–
2,784
–
6,620
36,610
(5,531)
(12,589)
6,717
2,588
23,910
(813)
(4,997)
3,255
6,161
Balance at december 31,
56,214
46,821
925,317
888,129
27,795
27,516
unrecognized deferred tax Assets
$
Tax losses
Other deductible temporary differences
total unrecognized deferred tax assets
2014
128,169
6,733
134,902
2013
108,125
1,800
109,925
unrecognized tax losses
At December 31, 2014 the Company had losses with a tax benefit of $128,169 (2013 – $108,125) which are not recognized
as deferred tax assets. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable in-
come that can be reduced by the tax losses. The gross amount of the tax losses for which a tax benefit has not been recorded
expire as follows:
Eldorado Gold Annual Report 2014
87
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
17. income tax Expense and deferred taxes (continued)
Expiry date ($)
canada
Brazil
greece
Australia
total
2015
2016
2017
2018
2019
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
No expiry
–
–
–
–
–
7,884
14,858
10,717
25,987
23,451
7,411
45,364
75,458
64,889
63,902
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,520
8,552
553
1,895
8,575
26,868
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31,690
8,552
553
1,895
8,575
26,868
7,884
14,858
10,717
25,987
23,451
7,411
45,364
75,458
64,889
63,902
36,210
339,921
4,520
46,443
31,690
422,574
capital losses with no expiry
128,250
–
–
–
128,250
tax effect of total losses not recognized
105,052
1,535
12,075
9,507
128,169
dEductiBlE tEmp Or Ary diffErEncEs
At December 31, 2014 the Company had deductible temporary differences for which deferred tax assets of $6,733
(2013 – $1,800) 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.
tEmp Or Ary diffErEncEs AssOciA tEd 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, 2014, these earnings amount to $1,803,336 (2013 – $1,463,262). Substantially all of these earnings would
be subject to withholding taxes if they were remitted by the foreign subsidiaries.
tAx crEdits
The Company has $396 (2013 – $2,450) of tax credits that have not been recognized.
OthEr fA ctOrs AffEcting t AxAtiOn
During the year the Turkish Lira has weakened, causing a deferred income tax expense during the year of $10,256 due to the
decrease in the value of the future tax deductions associated with the Turkish operations. The Company expects that in the
future significant foreign exchange movements in the Turkish Lira, Euro or Chinese Renminbi in relation to the US dollar will
cause significant volatility in the deferred income tax expense or recovery.
88
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
18. share capital
Eldorado’s authorized share capital consists of an unlimited number of voting common shares without par value and an
unlimited number of non-voting common shares without par value. At December 31, 2014 there were no non-voting common
shares outstanding (December 31, 2013 – none).
voting common shares
number of shares
At january 1, 2013
Shares issued upon exercise of share options, for cash
Estimated fair value of share options exercised
Shares issued for acquisition of subsidiary
Common shares issued for deferred phantom units
At december 31, 2013
Shares issued upon exercise of share options, for cash
Estimated fair value of share options exercised
Common shares issued for deferred phantom units
At december 31, 2014
19. share-Based payments
(a) share Option plans
714,344,476
1,403,152
–
–
469,062
716,216,690
315,914
–
31,920
716,564,524
total ($)
5,300,957
7,003
2,934
–
3,695
5,314,589
1,996
2,141
224
5,318,950
The Company has two share option plans (“Plans”) approved, as amended, by the shareholders on May 1, 2014 under which
share purchase options (“Options”) can be granted to directors, officers, employees and consultants.
The Company’s Employee, Consultant and Advisor Plan (“Employee Plan”) consists of Employee Plan Options subject to a
10-year maximum. Currently all Employee Plan Options have a five-year term. Employee Plan Options vest at the discretion
of the Board of Directors at the time an option is granted. Currently all Employee Plan Options vest in three separate
tranches over two years. As at December 31, 2014, a total of 18,287,530 options (2013 – 3,622,780) were available to grant
to employees, consultants or advisors under the Employee Plan.
The Company’s Directors and Officers Plan (“D&O Plan”) consists of D&O Plan Options subject to a 10-year maximum.
Currently all D&O Plan Options 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. Currently all D&O Plan Options vest in three separate tranches over two years. As at
December 31, 2014, a total of 9,033,015 Options (2013 – 6,086,250) 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:
2014
2013
weighted average
exercise price cdn$
number
of options
weighted average
excercise price cdn$
number
of options
At January 1,
Regular options granted
Exercised
Forfeited
At december 31,
13.20
7.78
7.23
12.01
16,753,421
6,365,824
(315,914)
(1,807,339)
11.75
20,995,992
13.68
10.28
5.14
13.81
15,074,444
5,792,130
(1,403,152)
(2,710,001)
13.20
16,753,421
Eldorado Gold Annual Report 2014
89
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
19. share-Based payments (continued)
At December 31, 2014, 15,199,444 share purchase options (December 31, 2013 – 11,278,478) with a weighted average
exercise price of CDN$12.97 (December 31, 2013 – CDN$13.93) had vested and were exercisable. Options outstanding
are as follows:
range of
exercise price
cdn$
$6.00 to $6.99
$7.00 to $7.99
$8.00 to $8.99
$10.00 to $10.99
$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 $18.99
shares
282,227
5,935,900
45,405
5,142,441
541,452
1,967,410
212,289
4,208,045
2,636,823
24,000
20,995,992
december 31, 2014
total Options Outstanding
Exercisable Options
weighted average weighted average
exercise price
cdn$
remaining contractual
life (years)
weighted average
exercise price
cdn$
shares
4.6
4.1
3.3
3.1
2.2
0.1
2.7
2.1
1.4
0.9
2.7
6.41
7.82
8.19
10.43
12.75
13.23
14.47
15.22
16.62
18.81
11.75
94,075
2,002,519
30,270
3,482,562
541,452
1,967,410
212,289
4,208,045
2,636,823
24,000
15,199,444
6.41
7.81
8.1
10.44
12.75
13.23
14.47
15.22
16.62
18.81
12.97
Share based payments expense related to share options for the year ended December 31, 2014 was $11,123
(2013 – $13,269)
The assumptions used to estimate the fair value of options granted during the years ended December 31, 2014 and
2013 were:
Risk-free interest rate
Expected volatility (range)
Expected life (range)
Expected dividends
Forfeiture rate
2014
2013
1.01%
45%–50%
0.83–2.83 years
CDN$0.12
6%
1.08%
47%–57%
0.8–2.8 years
CDN$0.15
6%
The weighted average fair value per stock option was CDN$1.83 (2013 – CDN$2.00). Volatility was determined based on the
historical volatility over the estimated lives of the options.
(b) restricted share unit plan
The Company has 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. One third of the RSUs granted vest on June 30 of the grant year, a second third vest on
the first anniversary of the date of grant and the last third vest on the second anniversary of the date of grant. The current
maximum number of common shares authorized for issue under the RSU plan is 5,000,000.
A total of 877,753 RSUs (2013 – 657,151) at a grant-date fair value of CDN$7.84 per unit were granted during the year ended
December 31, 2014 (2013 – CDN$10.43) under the Company’s RSU plan and 292,585 were exercisable at December 31, 2014
(2013 – 219,051).
The fair value of each RSU issued is determined as the closing share price at grant date.
90
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
19. share-Based payments (continued)
A summary of the status of the RSU plan and changes during the year is as follows:
At january 1,
Granted
Redeemed
At december 31,
2014
774,845
877,753
(566,075)
1,086,523
2013
465,832
657,151
(348,138)
774,845
As at December 31, 2014, 1,086,523 common shares purchased by the Company remain held in trust in connection with this
plan (2013 – 774,845). At the end of the period, 282,314 RSUs were fully vested and exercisable (2013 – 179,807). 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, 2014 was $7,380 (2013 – $6,578).
(c) deferred share units plan
The Company has an Independent Directors Deferred Share Unit (“DSU”) plan under which DSU’s are 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, 2014, 259,037 DSUs were outstanding
(2013 – 216,073 DSUs) with a value of $1,581 (2013 – $1,322), which is included in accounts payable and accrued liabilities.
Compensation expense related to the DSUs was $272 for the year ended December 31, 2014 (2013 – reversal of $355).
(d) performance share units plan
The Company has a Performance Share Unit (“PSU”) plan whereby performance share units may be granted to senior
management of the Company. Once vested, a PSU is redeemable into one common share entitling the holder to receive the
common share for no additional consideration. PSUs are cliff vested three years from the date of grant. The current maximum
number of common shares authorized for issuance from treasury under the PSU plan is 3,130,000. No PSUs have been
granted as of December 31, 2014.
(e) deferred phantom units
In accordance with the acquisition agreement of European Goldfields Ltd. in February 2012, deferred phantom units (“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, the remaining
31,920 DPUs under this plan were exercised.
20. supplementary cash flow information
$
december 31, 2014
december 31, 2013
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
(34,206)
13,184
(35,480)
(56,502)
88,150
34,536
17,705
(24,705)
(18,669)
(25,669)
101,058
34,686
Eldorado Gold Annual Report 2014
91
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
21. financial risk management
21.1 finAnciAl risk fA ctOrs
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
Euro
turkish
lira
chinese
renminbi
swedish romanian great British
pound
krona
lei
Brazilian
real
Cash and cash equivalents
Marketable securities
Accounts receivable and
other
Accounts payable and
accrued liabilities
Debt
14,196
4,933
865
–
3,734
–
12,731
–
482,898
–
1,774
–
27,466
–
136
–
32,966
–
4,632
1
28,735
21,642
228,055
(12,505)
–
(99)
–
(36,571)
–
(6,973)
–
(503,392)
(100,000)
–
–
–
13,092
(18,047)
–
–
–
–
25,875
(4,430)
–
net balance
11,256
767
(4,102)
27,400
107,561
1,774
22,511
136
54,411
Equivalent in US dollars
9,703
628
(4,932)
11,816
17,577
227
6,106
212
20,480
Based on the balances as at December 31, 2014, a 1% increase/decrease in the US dollar exchange rate against all of the
other currencies on that date would have resulted in a decrease/increase of approximately $618 in profit (loss) before taxes.
There would be no effect on 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 eco-nomic 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.
92
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
21. financial risk management (continued)
Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices.
Eldorado’s other price risk includes equity price risk, whereby the Company’s investments in marketable securities are subject
to market price fluctuation.
(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, 2014 the average interest rate in Eldorado’s debt was 6.11% (2013 – 6.11%). A 10% increase or decrease in the
interest rate on floating rate debt held at December 31, 2014 would result in a $92 decrease or increase (2013 – $92) 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, 2014, approximately
57% (2013 – 53%) 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, 2014.
(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 14.
21.2 cApitAl risk mAnA gEmEnt
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, deficit 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, 2014, our debt to capital ratio was 10.8% (2013 – 10.9%) and our debt to EBITDA ratio was 1.3:1
(2013 – 1.2:1).
These policy targets are managed through the repayments and issuances of debt as well as the continuing management
of operations and capital expenditures.
Eldorado Gold Annual Report 2014
93
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
21. financial risk management (continued)
21.3 fAir v AluE EstimA tiOn
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).
The only assets measured at fair value as at December 31, 2014 are marketable securities. No liabilities are measured at fair
value on a recurring basis as at December 31, 2014.
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.
22. commitments
The Company’s contractual obligations, not recorded on the balance sheet, at December 31, 2014, include:
$
2015
Operating leases and capital expenditures
Purchase obligations
6,361
73,103
totals
79,464
2016
5,153
931
6,084
2017
2018 and later
2,845
249
3,094
12,114
496
12,610
Purchase obligations in 2015 relate primarily to sustaining capital expenditures at Kişladağ, mine development projects at
Greece as well as operating and maintenance supply contracts at our operating mines.
23. contingencies
The Company is involved in legal proceedings from time to time, arising in the ordinary course of its business. As at
December 31, 2014, 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.
94
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
24. 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
Defined benefit pension plan
Share based payments
25. financial instruments by category
2014
13,199
1,620
12,514
27,333
2013
11,660
2,478
11,766
25,904
Fair Value
The following table provides the carrying value and the fair value of financial instruments at December 31, 2014 and
December 31, 2013:
$
december 31, 2014
december 31, 2013
carrying amount
fair value
carrying amount
fair value
financial assets
Available-for-sale
Marketable securities
Loans and receivables
Cash and cash equivalents
Term deposit
Restricted cash
Accounts receivable and other
Other assets
financial liabilities at amortized cost
Accounts payable and accrued liabilities
Debt
Other non-current liability
26. production costs
$
Labour
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
4,251
4,251
4,387
4,387
498,514
2,800
262
77,617
21,893
498,514
2,800
262
77,617
21,893
184,712
603,544
49,194
184,712
600,221
49,194
589,180
34,702
262
78,502
20,287
589,180
34,702
262
78,502
20,287
211,406
601,408
–
211,406
593,530
–
2014
104,118
51,152
48,570
34,865
46,745
144,281
28,664
3,238
46,647
508,280
2013
110,048
42,038
48,983
40,694
63,532
104,915
31,518
(3,737)
43,901
481,892
Eldorado Gold Annual Report 2014
95
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
27. interest and financing costs
$
Interest expense
Financing fees
total interest and financing costs
28. Earnings per share
2014
23,039
5,740
28,779
2013
34,101
6,311
40,412
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, 2014
december 31, 2013
Weighted average number of ordinary shares used in the calculation
of basic earnings per share
Diluted impact of stock options
716,288
12
715,181
–
weighted average number of ordinary shares used in the calculation
of diluted earnings per share
716,300
715,181
The earnings used to calculate basic and diluted earnings per share for the year ended December 31, 2014 was $102,607
(2013 – loss of $653,329).
29. segment information
idEntific AtiOn Of rEp OrtABlE 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, 2014, Eldorado had six reportable segments based on the geographical location of mining and exploration and
development activities.
29.1 gEOgr Aphic Al 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 TJS mine, Jinfeng and White Mountain mines, the Eastern Dragon development
project and exploration activities in China.
96
Eldorado Gold Annual Report 2014
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
29. segment information (continued)
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. The mines in each
of the different segments share similar economic characteristics and have been aggregated accordingly.
2014
$
turkey
china
Brazil
greece
romania
Other
total
information about profit and loss
Metal sales to external customers
Production costs
Inventory write-down
Depreciation
524,919
207,809
460,343
227,958
–
–
55,420
107,365
31,619
29,926
13,469
4,928
51,018
42,587
–
8,782
–
–
–
1
– 1,067,899
508,280
–
13,469
–
177,227
731
gross profit (loss)
261,690
125,020
(16,704)
(351)
(1)
(731)
368,923
Other material items of income and expense
Exploration expenses
Income tax expense
Additions to property, plant and
equipment during the year
information about assets and liabilities
Property, plant and equipment (1)
Goodwill
3,415
74,959
2,682
37,263
3,796
2,761
1,395
6,085
2,092
201
2,850
–
16,230
121,269
88,844
50,410
5,399
253,685
18,730
404
417,472
895,035
–
1,407,558
52,514
205,091 2,817,855
– 473,782
636,134
–
1,938 5,963,611
526,296
–
895,035
1,460,072
205,091 3,291,637
636,134
1,938 6,489,907
Debt
–
16,343
–
–
–
587,201
603,544
(1) Net of revenues from sale of production from tailings retreatment
Eldorado Gold Annual Report 2014
97
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
29. segment information (continued)
2013
$
turkey
china
Brazil
greece
romania
Other
total
information about profit and loss
Metal sales to external customers
Production costs
Depreciation
608,117
188,800
42,373
418,810
218,438
89,996
46,445
29,604
4,518
50,620
45,050
10,592
–
–
1
– 1,123,992
481,892
–
149,068
1,588
gross profit (loss)
376,944
110,376
12,323
(5,022)
(1)
(1,588)
493,032
Other material items of income and expense
Impairment loss on property, plant and
and equipment and goodwill
Exploration expenses
Income tax expense
Additions to property, plant and
equipment during the year
information about assets and liabilities
Property, plant and equipment (1)
Goodwill
–
13,377
109,256
808,414
5,337
(90,177)
–
–
–
–
7,012
3,202
1,307
121,904
1,624
122
6,029
55
808,414
34,686
144,362
196,332
97,172
10,370
164,122
22,839
1,717
492,552
854,893
–
1,461,592
52,514
201,791 2,546,935
– 473,782
616,906
–
2,265 5,684,382
526,296
–
854,893
1,514,106
201,791 3,020,717
616,906
2,265 6,210,678
Debt
–
16,402
–
–
–
585,006
601,408
(1) Net of revenues from sale of production from tailings retreatment
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.
29.2 EcOnOmic dEpEndEncE
At December 31, 2014, 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.
China National Gold Group
Refinery of Shandong Humon Smelting Co. Ltd.
29.3 sEAsOnAlity/cyclic Ality Of OpEr AtiOns
Management does not consider operations to be of a significant seasonal or cyclical nature.
98
Eldorado Gold Annual Report 2014
bOARD OF DIRECTORS, OFFICERS
AND SENIOR MANAGEMENT TEAM
BOArd Of dirEct Ors
ExEcutivE OfficErs
sEniOr mAnA gEmEnt
paul wright
Chief Executive Officer
norman pitcher
President
fabiana chubbs
Chief Financial Officer
paul skayman
Chief Operating Officer
dawn moss
Executive VP Administration
and Corporate Secretary
jason cho
VP, Corporate Development
dale churcher
VP, Engineering
doug jones
Senior VP, Operations
peter lewis
VP, Exploration
krista muhr
VP, Investor Relations
david Bickford
VP and General Manager, Turkey
Eduardo moura
VP and General Manager, Greece
lincoln silva
VP and General Manager, Brazil
nicolae stanca
VP and General Manager, Romania
robert gilmore (1) (2)
Non-executive Chairman of the Board
and Independent Director
k. ross cory (1) (3)
Independent Director
pamela gibson (3) (4)
Independent Director
geoffrey handley (2) (4)
Independent Director
michael price (1) (4)
Independent Director
steven reid (2) (4)
Independent Director
jonathan rubenstein (2) (3)
Independent Director
donald shumka (1) (3)
Independent Director
john webster
Independent Director
paul wright
Chief Executive Officer
committees of the Board of directors
(1) Audit Committee
(2) Compensation Committee
(3) Corporate Governance and Nominating Committee
(4) Sustainability Committee
Eldorado Gold Annual Report 2014
99
MINERAL RESERVES
as of december 31, 2014
proven mineral reserves
probable mineral reserves
total proven & probable
gOld
Certej
Eastern Dragon
Efemçukuru
Jinfeng
Kişladağ
Olympias
Perama
Skouries
Tanjianshan
Tocantinzinho
White Mountain
total gold
silvEr
Certej
Eastern Dragon
Olympias
Perama
Stratoni
total silver
cOppEr
Skouries
total copper
lEAd
Olympias
Stratoni
total lead
zinc
Olympias
Stratoni
total zinc
irOn
Vila Nova
total iron
tonnes
(x1000)
in-situ oz
(x1000)
g/t
tonnes
(x1000)
20,441
1.91
837 11.07
8.54
863
3.91
7,166
0.84
66,561
7.59
6,081
4.44
2,477
0.87
68,762
2.71
2,252
1.51
17,514
3.11
3,394
1,255
297
237
900
1,795
1,484
354
1,928
196
850
339
26,543
2,168
3,503
9,362
295,686
11,236
7,220
81,311
1,061
24,798
2,291
g/t
1.41
6.46
6.91
3.73
0.66
7.54
2.68
0.67
2.70
1.32
3.15
in-situ oz
(x1000)
tonnes
(x1000)
1,203
447
778
1,122
6,294
2,724
621
1,752
92
1,052
232
46,984
3,005
4,366
16,528
362,247
17,317
9,697
150,073
3,313
42,312
5,685
in-situ oz
(x1000)
2,458
744
1,015
2,022
8,089
4,208
975
3,680
288
1,902
571
g/t
1.63
7.70
7.23
3.81
0.69
7.56
3.13
0.76
2.70
1.40
3.13
196,348
1.53
9,635
465,179
1.09
16,317
661,527
1.22
25,952
20,441
837
4,851
2,477
524
10
81
124
3
174
6,283
2,178
19,339
254
2,931
26,543
2,168
11,236
7,220
263
12
67
130
4
182
9,967
4,628
46,962
897
1,539
46,984
3,005
16,087
9,697
787
11
70
128
4
177
16,250
6,806
66,301
1,151
4,470
29,130
33
30,985
47,430
42
63,993
76,560
39
94,978
tonnes
(x1000)
in-situ t
(x1000)
%
tonnes
(x1000)
in-situ t
(x1000)
%
tonnes
(x1000)
in-situ t
(x1000)
%
68,762
0.53
68,762
0.53
362
362
81,311
0.50
81,311
0.50
405
405
150,073
0.51
150,073
0.51
4,851
524
5,375
4.1
6.6
4.4
4,851
524
5.1
10.1
5,375
5.6
199
35
234
247
53
300
11,236
263
11,499
4.4
7.2
4.5
11,236
263
6.0
10.2
11,499
6.1
494
19
513
674
27
701
16,087
787
16,874
4.3
6.9
4.4
16,087
787
16,874
5.7
10.2
5.9
921
80
1,001
2,180
59.3
2,180
59.3
6,791
58.5
6,791
58.5
8,971
8,971
58.7
58.7
767
767
693
54
747
notes on mineral resources and reserves:
1. Mineral reserves and mineral resources are as of
December 31, 2014.
2. Mineral reserves are included in the mineral resources.
3. The mineral reserves and mineral resources are disclosed
on a total project basis.
4. The Olympias mineral reserves and mineral reasources
include 1.230 million tonnes of economically recoverable
old tailings that grade 3.4 g/t Au. These are added
into the gold Proven reserve and Measured resource
categories, respectively.
mineral reserve notes:
1. Gold price used was $1,250/oz except for the Skouries
underground project which used $1,000. Silver price
was $16.50/oz; Copper price was $3.00/lb; Pb and Zn prices
were $2,100/t and $2,100/t, respectively.
2. Cut-off grades (gold g/t): Kişladağ: 0.27 to 0.32 g/t
sulphide; Efemçukuru: 3.5 g/t; Perama: 0.8 g/t; Tanjianshan:
1.53 g/t JLG sulphide, 1.33 g/t JLG transition, 1.36 g/t QLT
South; Jinfeng: 0.6 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: 0.41 g/t sulphide, 0.43 g/t oxide;
100
Eldorado Gold Annual Report 2014
Skouries: $10.00 NSR open pit, $24.87 NSR underground;
Olympias: $76.00 NSR. Cut-off grade for Stratoni is based on a
18.02% Zn Equivalent grade (=Zn%+Pb%*1.39+Ag%*85). Cut-
off grade for Certej is based on a 0.90 g/t Au Equivalent grade
(=Au(g/t)+Ag(g/t)*0.00811).
MINERAL RESOURCES
as of december 31, 2014
measured resources
indicated resources
total measured & indicated
inferred resources
gOld
Certej
Eastern Dragon
Efemçukuru
Jinfeng
Kişladağ
Olympias
Perama
Piavitsa
Sapes
Skouries
Tanjianshan
Tocantinzinho
White Mountain
tonnes
(x1000)
in-situ oz
(x1000)
g/t
tonnes
(x1000)
in-situ oz
g/t (x1000)
tonnes
(x1000)
in-situ oz
g/t (x1000)
tonnes
(x1000)
in-situ oz
(x1000)
g/t
25,680 1.75
800 12.48
2,069 9.12
8,070 4.09
70,750 0.80
5,694 8.55
3,064 4.30
99,135 0.80
2,410 2.60
17,530 1.51
3,976 3.41
1,448
322
607
1,061
1,827
1,565
424
2,552
202
851
436
85,435 1.23
2,700 6.04
3,286 7.82
13,398 3.77
456,824 0.59
10,644 8.55
9,375 3.18
0 0.00
2,423 6.08
184,493 0.49
2,903 3.13
31,202 1.26
3,450 3.43
3,368
530
827
1,623
8,607
2,926
958
0
474
2,853
292
1,264
381
111,115
3,500
5,355
21,468
527,574
16,338
12,439
0
2,423
283,628
5,313
48,732
7,426
1.35
7.50
8.32
3.89
0.62
8.55
3.46
0.00
6.08
0.60
2.89
1.35
3.41
4,816
852
1,434
2,684
10,434
4,491
1,382
0
474
5,405
494
2,115
817
29,002 1.08
2,200 2.67
5,404 4.99
8,080 3.78
380,719 0.40
3,955 8.34
8,766 1.96
10,542 5.70
1,011 10.65
168,063 0.31
5,890 3.15
2,395 0.90
2,558 7.50
1,010
190
867
982
4,921
1,060
554
1,932
347
1,673
597
69
617
total gold
239,178 1.47 11,295
806,133 0.93 24,103 1,045,311 1.05 35,398
628,585 0.73
14,819
silvEr
Certej
Eastern Dragon
Olympias
Perama
Piavitsa
Stratoni
25,680
800
9
91
4,464 142
3
3,064
7,150
2,400
20,380
335
689 206
4,563
85,435
2,700
10,644
9,375
0
434
9 24,611
5,900
67
147 50,305
2,833
0
3,014
9
0
216
111,115
3,500
15,108
12,439
0
1,123
9
73
146
8
0
210
31,761
8,300
70,685
3,168
0
7,577
29,002
2,200
3,955
8,766
10,542
490
6
20
118
7
57
169
5,268
1,500
15,050
1,860
19,156
2,662
total silver
34,697
31 34,828
108,588
25 86,663
143,285
26 121,491
54,955
26
45,496
cOppEr
Skouries
total copper
lEAd
Olympias
Stratoni
total lead
zinc
Olympias
Stratoni
total zinc
irOn
Vila Nova
total iron
tonnes
(x1000)
in-situ t
(x1000)
%
tonnes
(x1000)
in-situ t
% (x1000)
tonnes
(x1000)
in-situ t
% (x1000)
tonnes
(x1000)
in-situ t
(x1000)
%
99,135 0.49
99,135 0.49
484
484
184,493 0.41
184,493 0.41
750
750
283,628
0.43
1,234
168,063 0.34
283,628 0.43
1,234
168,063 0.34
4,464
689
4.7
7.8
5,153
5.1
4,464
5.8
689 10.5
5,153
6.4
2,212 59.3
2,212 59.3
210
54
264
259
72
331
10,644
434
5.0
8.0
11,078
5.1
10,644
6.8
434 10.7
11,078
7.0
532
35
567
724
46
770
15,108
1,123
16,231
4.9
7.9
5.1
742
89
831
3,955
490
3.9
6.4
4,445
4.1
15,108
1,123
6.5
10.5
983
118
3,955
490
4.3
8.8
16,231
6.8
1,101
4,445
4.8
10,982 58.5
10,982 58.5
13,194
58.7
13,194 58.7
9,519 59.7
9,519 59.7
575
575
153
31
184
171
43
214
3. Qualified Persons: Richard Miller, P.Eng., General Manager,
Kişladağ Mine, is responsible for the Kişladağ and Perama
reserves; John Nilsson, P.Eng., of Nilsson Mine Services, is
responsible for the Skouries open pit and Certej reserves;
Doug Jones (Registered Member - SME), Senior Vice
President, Operations for the Company, is responsible for
the Tanjianshan, Jinfeng, White Mountain, Eastern Dragon,
Efemçukuru, Olympias, and Stratoni reserves; Norm Pitcher,
P.Geo., President for the Company, is responsible for the
Tocantinzinho and Skouries underground reserves; Roberto
Costa, principal of Roberto Costa Engenharia Ltda, is
responsible for the Vila Nova reserves.
mineral resource notes:
1. Cut-off grades (gold g/t): Kişladağ: 0.25 g/t; Efemçukuru:
2.5 g/t; Perama: 0.5 g/t; Jinfeng: 0.5 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 (AuEQV=Au g/t + 1.6*Cu%);
Piavitsa: 3.5 g/t; Sapes: 2.5 g/t underground, 1.0 g/t ope pit.
Resource cut-offs for Olympias and Stratoni are geological
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 except for those associated with
Vila Nova and Sapes. Peter Lewis, P.Geo. is responsible for the
Sapes resources and Roberto Costa, principal of Roberto Costa
Engenharia Ltda, is responsible for the Vila Nova resources.
Eldorado Gold Annual Report 2014
101
SHAREHOLDER INFORMATION
stOck ExchAngEs
Eldorado is traded on the Toronto Stock
Exchange (TSX: ELD) and on the New
York Stock Exchange (NYSE: EGO)
AnnuAl shArEhOldErs
mEEting
April 30, 2015
3:00pm Pacific Time
invEst Or c OntAct
infOrmA tiOn
For inquiries related to Eldorado Gold’s
operating activities and financial
performance:
Krista Muhr
Vice President Investor Relations
604 601 6701
kristam@eldoradogold.com
For inquiries related to shares,
dividends or change of address:
Valiant Trust Company
Shareholder Inquiries Line:
1 866 313 1872
inquiries@valianttrust.com
Vancouver Club
915 West Hastings Street
Vancouver, BC V6C 1C6
trAnsfEr AgEnt And
rEgistr Ar
Valiant Trust Company
600-750 Cambie Street
Vancouver, BC V6B 0A2 Canada
Audit Ors
KPMG LLP
Vancouver, BC
lEgAl c OunsEl
Fasken Martineau DuMoulin LLP
Vancouver, BC Canada
Dorsey & Whitney LLP
Denver, CO USA
102
Eldorado Gold Annual Report 2014
sOurcEs Of shArEhOldEr
infOrmA tiOn
This Annual Report is one of several
sources of information for shareholders
of Eldorado Gold Corporation. Other
sources include:
■ The audited comparative financial
statements published annually.
■ The comparative interim financial
statements published quarterly.
■ The Management Proxy Circular
describing the matters to be
considered at the Annual Meeting
of Shareholders.
■ The Annual Information Form,
Form 40-F and other corporate and
continuous disclosure documents
available on the Company’s website,
CDS SEDAR website (www.sedar.com)
and the US Securities and Exchange
Commission EDGAR website
(www.edgar-online.com).
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.
cOmpAny filings
www.sedar.com
www.sec.gov
CORPORATE INFORMATION
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
No. 9 Dragos Voda Street
BL. 28, SC. A-B
Deva, Hunedoara County
330034 Romania
Tel: 40 25 423 3680
Fax: 40 25 423 3682
cAnAd A (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 Sanayive
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
Eldorado Gold Annual Report 2014
103
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 is no assurance that the forward-looking statements or information will
prove to be accurate. By their nature, forward-looking statements and information are based on assumptions and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements, or industry results, to be materially different from future results, performance or achievements expressed or implied
by such forward-looking statements or information. Such risks, uncertainties and other factors include, among other things, the following:
• regulatory restrictions, including environmental regulatory restrictions and liability, including actual costs of reclamation;
• risks of operating in foreign countries, including controls, regulations, changes in mining regimes or governments and political or economic developments in the countries
in which we currently or may in the future conduct business;
• changes in law and regulatory requirements, including permitting, foreign investment, environmental, tax and health and safety laws and regulations;
• title, permitting and licensing 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;
• competition for mineral properties and merger and acquisition targets;
• environmental risks, including use and transport of regulated substances;
•
infrastructure, water, energy, equipment and other input availability and durability, and their cost and impact on capital and operating costs, exploration, development and
production schedules;
• volatility of global and local economic climate;
• community and non-governmental actions and regulatory risks, including the possibility of a shutdown at any of our operations;
• ability to maintain positive relationships with the communities we operate in and loss of reputation;
• gold and other metal price volatility and the impact of any related hedging activities;
• subjectivity of estimating mineral resources and reserves and the reliance on available data and assumptions and judgments used in interpretation of such data and depletion
of grades or quantities of reserves;
• discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries;
• speculative and uncertain nature of gold and other mineral exploration;
• development, mining and operational risk, including timing, hazards and losses that are uninsured or uninsurable;
• risks of not meeting production and cost targets or estimates;
• the loss of key employees and our ability to attract and retain qualified personnel and labour disputes;
• prices for energy inputs, labour, material costs, supplies and services (including shipping) remaining consistent with expectations;
• risk associated with joint ventures;
•
• currency exchange fluctuations and the impact of any related hedging activities;
• risks associated with maintaining substantial levels of indebtedness, including potential financial constraints on operations;
• the risks that the integration of acquired businesses may take longer than expected, the anticipated benefits of the integration may be less than estimated or the costs
increased capital requirements and the ability to obtain financing;
of acquisition may be higher than anticipated;
• the impact of acquisitions and dispositions, including effect of expanded portfolio of projects on our operations, capital requirements, and financial condition and ability
to complete acquisitions;
litigation risks, including the uncertainties inherent in current and future legal challenges we are, or may become, a party to;
•
• share capital dilution and share price volatility;
• taxation, including change in tax laws and interpretations of tax laws;
•
• risks related to natural disasters and climate change.
failure, security breaches or disruption of our information technology systems; and
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 is 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.
104
Eldorado Gold Annual Report 2014
Eldorado Gold Corporation
1188 Bentall 5
550 Burrard Street
Vancouver, BC V6C 2B5 Canada
Tel: +1 604 687 4018
fax: +1 604 687 4026
Toll-free: +1 888 353 8166
eldoradogold.com
Tsx : eld
nYse : eGo