Eldorado Gold Corp
Annual Report 2015

Plain-text annual report

BALANCING our RESPONSIBILITIES Eldorado Gold Year in Review and Financials 2015 TABLE OF CONTENTS YEAR IN REVIEW Eldorado Gold at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Our Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Where we Operate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Letter from the President and CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2015 Highlights & Year in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Our Performance and Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Our Approach to Responsible Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Contributing to Sustainable Development . . . . . . . . . . . . . . . . . . . . . . . . 14 Our Value Chain and Local Procurement . . . . . . . . . . . . . . . . . . . . . . . . . 16 Governance and Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Stakeholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Materiality Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Our Communities – Building Opportunities . . . . . . . . . . . . . . . . . . . . . . . 24 Managing our Environmental Footprint . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Managing our Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Managing our Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Biodiversity and Reclamation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Our People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Keeping our People Safe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 GRI Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Mineral Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Mineral Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Cautionary Note about Forward-Looking Statements and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 FINANCIALS Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1 Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 ABOUT THIS REPORT This Report includes data on the operational, economic, environmental, and social performance of our six producing mines . While we discuss construction and development projects in relevant sections of this Report, our performance data is focused on our producing assets . Data represents the full 2015 calendar year, and all costs are reported in US dollars unless otherwise noted . This Report has been prepared in accordance with the “Core” Global Reporting Initiative (GRI) fourth-generation (G4) Sustainability Reporting Guidelines (www .globalreporting .org/reporting/g4) . We currently do not externally verify the Sustainability Report, but the content has been prepared and reviewed internally . Where applicable, restatements of prior-year data have been highlighted throughout the Report . Restatements occur as a result of updated or more accurate data becoming available after our previous 2014 Sustainability Report publication date . Other In-Country Sustainability Reporting ■ Greece – Our Greek subsidiary, Hellas Gold publishes an annual Corporate Social Responsibility (CSR) report that is aligned with the GRI . ■ China – Our Jinfeng operation in China voluntarily publishes an annual CSR report in accordance with various Chinese reporting guidelines . We welcome feedback from stakeholders regarding our sustainability reporting . Please direct comments or requests for further information to: sustainability@eldoradogold .com . Rehabilitated areas of the Olympias tailings facility, Greece ELDORADO GOLD at a GLANCE Headquartered in Vancouver, Eldorado Gold is one of Canada’s leading mid-tier public gold companies, with shares trading on the Toronto (TSX: ELD) and New York (NYSE: EGO) stock exchanges. Eldorado’s operations are global and we have assets in Turkey, China, Greece, Romania and Brazil . Our activities involve all facets of mining, including exploration, development, production and reclamation . In 2015, we produced 723,532 ounces of gold and had proven and probable gold reserves of approximately 25 million ounces . Eldorado is the largest foreign gold producer in China and operates the largest gold mine in Turkey . Our 33 offices, operations and projects employ approximately 7,300 people worldwide . We operate as a decentralized business, with the majority of employees and management being nationals of the countries where our operations and offices are located . Our success 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 . Eldorado has a market capitalization of over $2 billion and revenues of approximately $0 .9 billion per year . For more information on Eldorado Gold, our entities, and financial performance, please see our 2015 Annual Information Form on our website: www .eldoradogold .com/investors/financial- information/filings . DID YOU KNOW? Eldorado operates Turkey’s largest gold mine: Kişladağ Eldorado’s assets in Greece have the potential to make the country a leading European gold producer KEY FACTS 7,300 employees & contractors worldwide 5 countries of operation 6 producing mines 25 years’ experience in building and operating mines globally 724,000 oz gold produced in 2015 25 Moz gold reserves Production from our two Turkish mines accounts for more than 40% of Turkey’s total annual gold production Eldorado was the first Western company to build and operate a gold mine in China Crushed ore being transported via conveyor at Kişladağ, Turkey Eldorado Gold Year in Review 2015 1 OUR STRATEGY We aim to build value for all those invested in us – from our employees to our neighbours and shareholders. We do this by discovering, acquiring, and developing quality gold assets in prospective jurisdictions. This has been our strategy for the past 20 years and underpins our vision to build a sustainable, high-quality business in the gold sector. Kişladağ open pit at dusk, Turkey 2 Eldorado Gold Year in Review 2015 OUR STRATEGIC PRIORITIES Our success to date stems from a commitment to the following four strategic priorities . 1. Quality Assets Our business is based on a portfolio of long-life, low- cost assets in prospective jurisdictions . The quality of our asset base allows us to achieve long-term growth with high margins, enhancing our ability to generate free cash flows and earnings per share . 2. Operational Excellence We invest in new technologies and training our people in order to increase productivity, reduce risk and operate to guidance year-on-year . 3. Capital Discipline Capital discipline underpins every business decision we make . We consider all competing uses of cash and prioritize capital for sustaining our operations and developing our key projects . Our balance sheet strength is a key competitive advantage, as it positions us to develop our assets, take advantage of opportunities and withstand market pressures . 4. Accountability We are committed to doing business honestly, respecting our neighbours, minimizing our environmental impacts and keeping our people safe . Operating this way is essential to the sustainability of our business . “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.” Paul Wright President and CEO WHERE we OPERATE Our activities span three continents: Europe, Asia and South America. We have strategically built our portfolio in under-explored, highly prospective areas that offer the potential for long-term growth and access to high-quality assets. The maps below show the locations of our operations, along with Eldorado’s percentage ownership of each asset. EUROPE LEGEND Deva 11 ROMANIA 7 3 10 GREECE Ankara TURKEY Athens 1 2 8 ASIA 9 6 4 Beijing CHINA 5 SOUTH AMERICA 13 12 BRAZIL Belo Horizonte OPERATING MINES 1 2 3 4 5 Efemçukuru, Turkey (Gold – 100%) Kişladağ, Turkey (Gold – 100%) Stratoni, Greece (Silver, Lead, Zinc – 95%) Tanjianshan, China (Gold – 90%) Jinfeng, China (Gold – 82%) White Mountain, China (Gold – 95%) 6 CONSTRUCTION PROJECTS 7 8 9 Olympias, Greece (Gold, Silver, Lead, Zinc – 95%) Skouries, Greece (Gold, Copper – 95%)(1) Eastern Dragon, China (Gold, Silver – 75%) EVALUATION & DEVELOPMENT PROJECTS 10 11 12 Perama Hill, Greece (Gold, Silver – 100%)(1) Certej, Romania (Gold, Silver – 81%) Tocantinzinho, Brazil (Gold – 100%) CARE & MAINTENANCE 13 Vila Nova, Brazil (Iron Ore – 100%) • Country Office (1) Both Skouries and Perama Hill were put on care and maintenance in January 2016. Eldorado Gold Year in Review 2015 3 LETTER from the PRESIDENT and CEO Paul Wright, President and CEO Over the past 20 years, Eldorado Gold has built more than just mines. In that time, we have helped establish Turkey’s gold mining industry, brought leading safety and environmental standards to new mining jurisdictions, and helped local communities achieve a better standard of living. Patience, dedication and dialogue have allowed us to enter six new countries, build and expand eight mines and develop Eldorado into a leading mid-tier gold producer. Paul N. Wright President and Chief Executive Officer 4 Eldorado Gold Year in Review 2015 “Our six mines continued to outperform in 2015, exceeding our initial production guidance by nearly 10%.” “Our teams’ efforts resulted in a 25% improvement in accident rates across our global operations.” 1.03 Total Lost-Time Injury Frequency Rate “We will continue to invest in our people, our operations and our communities to ensure that we remain welcome partners in the areas where we operate.” The integrity of our teams and their ability to build relationships, trust and mutual respect with key stakeholders underpins our history of successful operations . We are guided by the values of honesty, openness and accountability and we continue to measure our performance beyond the balance sheet . This report outlines our operational and sustainability performance for 2015 . We use a wide range of metrics to track our progress from year to year, noting areas where we have improved and identifying areas where we can improve further . This data-driven approach helps us set targets for subsequent years and focus our resources on areas of mutual importance to our operations and stakeholders . Exceeding Our Guidance From an operational standpoint, our six mines continued to outperform in 2015 . We produced a total of 723,532 ounces of gold, exceeding our initial guidance of 640,000 to 700,000 ounces . Cash operating costs were at the low end of our forecasts, finishing the year at $552 per ounce, and all-in sustaining costs were $842 per ounce . Accounting for depletion, our reserves and resources for the year were down slightly; however, we have an impressive total proven and probable gold reserve base of nearly 25 million ounces of gold and a leading reserve life in comparison to our peer group in the gold industry . With the price of gold significantly down from its 2011 high of over $1,900 per ounce, we remain disciplined in allocating funds prudently to our growth projects so that we can maintain the financial flexibility that will enable us to sustain and grow our business . Focusing on Safety From our commitment to health and safety, I am proud to report that our teams’ efforts resulted in a 25% improvement in accident rates across our global operations, achieving a total Lost-Time Injury Frequency Rate of 1 .03 . We had no fatalities in 2015, but I am deeply saddened to report the tragic death of Mr . Konstantinos Strounis, an experienced underground miner at our Stratoni mine in Greece, in February 2016 . A mines inspector examined the scene immediately following the fatal accident and found no substandard operating conditions . We are waiting on the inspector’s final report; however, we do not rest on that and are ensuring we do everything we can to prevent further incidents . Our internal investigation has resulted in findings that we have acted upon immediately, in order to reduce the likelihood of a similar accident occurring again . Committed to Environmental Best Practices On the environment side, we are proud to have achieved another year with no reportable environmental incidents . With Efemçukuru receiving ISO 14001 certification in 2015, all of our operations in Turkey and Greece are now certified to this global standard . We demonstrated our commitment to implementing best practices at our mine sites by completing International Cyanide Management Code (ICMC) certification at our Jinfeng and Tanjianshan mines . This is an enormous accomplishment for our site teams and I am proud to report these are the first two gold mines in China to be ICMC certified . As a member of the Mining Association of Canada, we achieved our 2015 target of assessing our operations’ conformance to the protocols outlined in the Towards Sustainable Mining framework . All sites completed full reviews, and while each identified gaps at various stages of the protocols, we are working to further improve our internal processes and standards over the next two years as we move towards formal implementation of the framework at each of our operations . Engaging to Build Trust Our track record of building long-term relationships with local communities and all levels of government in Turkey, China and Brazil has set the bar for how we engage with our stakeholders in Greece . Despite the Greek courts upholding the legality of our permits for our Skouries and Olympias projects on numerous occasions, we continue to face permitting challenges with the current Greek Ministry of Environment and Energy . We strive to operate to the highest environmental, health, safety and community standards and we continue to work hard to demonstrate this responsible approach to the Greek government . We made a commitment to these projects when we acquired them back in 2012, and we remain dedicated to their development over the long term . Looking Ahead Our consistent production, organic exploration potential, financial stability and low debt, an enviable project pipeline and the long lives of our assets place us in a strong position for sustainable growth . Looking ahead, we have set ambitious targets for our operations in 2016 that encompass economic, health, safety, environmental and community aspects . Of note, we aim to become a signatory to the UN Global Compact and to strengthen the existing grievance mechanisms at sites . We will continue to invest in our people, our operations and our communities so that we remain welcome partners in the areas where we operate . It is the passion and dedication of our global team that has built Eldorado into the company that it is today . I am honoured to work with people who exhibit quality and integrity in all that they do . Eldorado Gold Year in Review 2015 5 2015 HIGHLIGHTS & YEAR in REVIEW $6.05 million ($11.1 million in 2014)(1) The amount we invested in social responsibility projects in the communities where we operate . NaCN Three of Eldorado’s four sites using cyanide have achieved certification under the International Cyanide Management Code . 305% (433% in 2014) The total volume of water processed by our water treatment plants as a percentage of total water use across all of our sites . At Kişladağ, we recycled and reused nearly 35 times more water than we withdrew from local water sources . 4.59 TRIFR (6.69 in 2014) A 31% reduction in our company-wide 2015 Total Recordable Injury Frequency Rate (TRIFR) per million hours worked . This reflects a company-wide reduction of lost- time injuries, medical-treatment injuries, and restricted-work injuries in 2015 . 1.03 LTIFR (1.38 in 2014) 99% The percentage of employees at each of our sites who are from that country . A 25% reduction in our company-wide 2015 Lost-Time Injury Frequency Rate (LTIFR) per million hours worked . This is the fourth year that Eldorado has achieved an annual reduction in its LTIFR . 4,703 m3 The number of cubic metres of topsoil stockpiled for reclamation at Jinfeng in 2015 . 23 ha The number of hectares of rehabilitated land at our sites in 2015 . 0 The number of reportable spills that occurred at Eldorado’s sites in 2015 . 2 million plants and 250 species The number of plants growing in our Olympias Plant Nursery – one of the largest nurseries in northern Greece – as part of Eldorado’s rehabilitation and landscaping efforts in the region . 6 Eldorado Gold Year in Review 2015 (1) Two large community projects (funding for a new elementary school and university buildings in Turkey) were completed in 2014, hence a decrease in 2015 community spend . YEAR IN REVIEW Q1 2015 Q4 2015 ■ Jinfeng: Became the first operating mine in China to achieve International Cyanide Management Code (ICMC) certification ■ Vila Nova: Was placed on care and maintenance pending a recovery in iron ore prices; unfortunately, this resulted in the termination of ~200 full-time positions Q2 2015 ■ Kişladağ: Completed the recertification of the ISO 14001 environmental management system ■ All operations in China began implementing the Country Strategic Occupational Health and Safety Plan ■ Jinfeng: A $444 fine was issued to our Jinfeng operation, related to two minor non-compliances of effluent discharge that occurred in Q1 and Q3 2014 ■ Eastern Dragon: Received Project Permit Approval from the National Development and Reform Commission, which included a review and verification of previous permits granted, including the Environmental Protection Assessment, the Social Risk Management Licence and all relevant business licences ■ Tocantinzinho: Completed a positive feasibility study ■ Certej: Completed a positive feasibility study Q3 2015 ■ Efemçukuru: Successfully completed the ISO 14001 and OHSAS 18001 (Occupational Health and Safety) external audits ■ Kişladağ: Received an award from the Marmara region industrial zone recognizing the site’s environmental management systems and performance ■ Jinfeng: Invited to attend the 2015 Guizhou Provincial Corporate Social Responsibility Release Conference with Jinfeng’s Corporate Social Responsibility Report ■ Tanjianshan: Completed the raise of the tailings dam 4 without any significant health, safety or environmental incidents ■ Hellas Gold: Greece’s Ministry of Environment and Energy revoked approved technical studies, preventing the company from progressing its development plans in Halkidiki . In January 2016, Greece’s top administrative court ruled that the decision to revoke Eldorado’s mining licence was baseless ■ Hellas Gold: Provided opportunities to 266 local summer student trainees from the Aristotle Municipality ■ Certej: Romanian court ruled that our environmental permit for Certej is valid ■ All operations in Turkey, China and Greece completed a gap assessment against the Mining Association of Canada’s Towards Sustainable Mining framework, to prepare for implementing this framework ■ Kişladağ: Completed a biodiversity conservation site study; no impacts were found outside the mine site boundary ■ Kişladağ: Delivered environmental management refresher training to over 1,000 employees and contractors ■ Tanjianshan: Achieved ICMC certification in December ■ White Mountain: Achieved 98% compliance with the ICMC . Full certification with the Code cannot be achieved until cyanide jurisdictional, manufacture and transport arrangements are agreed to and amended with the local government ■ New site records of 543 days (Jinfeng) and 298 days (White Mountain) without a lost-time injury, as at December 31, 2015 ■ All of our China sites achieved zero lost-time injuries in 2015 ■ Hellas Gold: Received prizes in all four categories entered at the national HR Awards, including: Excellence in Workplace Well-being; Excellence in Performance Management Strategy; Best Performance Management Tools / Practices; and Best Local Recruitment Practices ■ Tocantinzinho: Submitted our application for the installation licence to local authorities Gold Production 2015 Gold production of 723,532 ounces (1) 2% 53% 45% Gold Reserves 2015 Gold reserves of ~25 million ounces Turkey China Greece Romania Brazil 7% 10% 34% 35% 14% (1) Production is from tailings retreatment at Olympias . Eldorado Gold Year in Review 2015 7 OUR PERFORMANCE and TARGETS Our focus on building value for all those invested in us and our commitment to operating to the highest health, safety, and environmental standards continues to drive our performance targets each year. 2015 PERFORMANCE Achieved Partially Achieved Not Achieved Area Economic/ Operations Target Result Comment Produce between 640,000–700,000 ounces of gold Deliver cash operating costs between $570–$615 per ounce Produced 723,532 ounces of gold Cash operating costs of $552 per ounce Deliver AISC between $960–$995 per ounce AISC of $842 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 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% Gold reserves of ~25 million ounces, over 30 times the production rate Phase I at Olympias was completed in early 2016; while Skouries was put on care and maintenance in January 2016, development progressed throughout 2015 Our flat cash costs year-on-year continues to place us in the lowest quartile of industry cash costs Total liquidity of ~$668 million at year-end 2015 and rigorous planning, budgeting and forecasting processes in place Debt-to-capital ratio of 10 .8% Pay a semi-annual dividend Paid dividends of CDN$0 .02/share Health, Safety, Environment Zero fatalities Reduce our LTIFR Identify and mitigate safety risks Align sites’ management processes with MAC’s TSM Health and Safety protocol Work to align our site, regional and corporate-level crisis management communication plans with MAC’s TSM Crisis Management protocol Have no reportable environmental incidents Become ICMC compliant at all our Chinese operations (Jinfeng, Tanjianshan and White Mountain) 8 Eldorado Gold Year in Review 2015 No fatalities in 2015 Reduced LTIFR to 1 .03 from 1 .38 in 2015 30% reduction in accident rates at our Chinese operations All sites completed a full review throughout the year and found the existing safety management to be aligned with TSM at levels B and above All sites reviewed and updated crisis management plans accordingly . Plans reflect TSM protocols No reportable environmental incidents occurred in 2015 Jinfeng and Tanjianshan received ICMC certification in January and December 2015 respectively . White Mountain made significant improvements in safe cyanide management and continues to benchmark its activities against the Cyanide Code protocols, but is currently prevented from achieving compliance because its cyanide supplier and transporter have opted not to become a signatory to the Code 2015 PERFORMANCE Area Governance Target Result Comment Align sites’ management processes with MAC’s TSM Tailings Management protocol Gap assessments were completed; all sites have undergone third-party review Improve the transparency of our commitment to health, safety and the environment by updating existing policies Improve the transparency of our commitment to human rights by formalizing a corporate policy Adhere to the World Gold Council’s Conflict-Free Gold Standard Continue to be transparent by publishing annual reports to GRI guidelines 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 Align sites’ management processes with MAC’s TSM Aboriginal and Community Outreach protocol Published updated policies in January 2016 Published and distributed a human rights policy in January 2016 All our operations continue to meet the Conflict- Free Gold Standard This is our fifth report which aims to incorporates elements of the Annual Reports as well Exploration of listing assets on Hong Kong Stock Exchange or sale of assets ongoing Donations and community spending totalled $6 .5 million in 2015 Development of our sustainability blog and social media platforms All sites have management processes for community outreach and completed assessments of these processes against the TSM protocol with results indicating a B or better rating Community 2016 TARGETS Area Target Economic/Operations Produce between 565,000–630,000 ounces of gold Deliver cash operating costs between $585–$620 per ounce Maintain gold reserves between 20 and 25 times the production rate Maintain a debt-to-capital ratio of less than 30% Health, Safety, Environment Zero fatalities Achieve a minimum 10% year-on-year improvement in the Reportable Injury Frequency Rate Implement a Corporate Safety Directive across all regions Improve scores at sites for MAC’s Health and Safety protocol Conduct review for alignment with the Voluntary Principles on Security and Human Rights; implement plans to close any gaps Have no reportable environmental incidents Continue ICMC compliance at current operating sites, design new projects to standards upon start-up Increase availability and transparency of environmental data collected at sites Governance Review plans for an employee diversity policy Become a signatory to the UN Global Compact Develop reporting systems compliant with the Extractive Sector Transparency Measures Act guidelines to enhance transparency of payments in the countries where we operate . Initial reporting under the act is due by May 2017 Community Implement formal grievance mechanisms at sites that do not already have one Eldorado Gold Year in Review 2015 9 OUR BUSINESS CREATING VALUE THROUGHOUT THE MINING LIFE CYCLE We find, mine and produce gold. At each stage of the mining process, we aim to create value for all of our stakeholders while operating responsibly. For us, this means developing strategies to mitigate our risks and impacts while also building opportunities for those whose lives our operations touch, either directly or indirectly. Exploration Development Construction Mining & Processing Reclamation, Care & Maintenance, & Closure Exploration Our exploration and business development teams actively look for new resources within our focus jurisdictions and in new regions . They assess early and advanced stage exploration projects and conduct near-mine and grassroots exploration programs with the aim of adding value through discovery in order to increase our resources and reserves . During grassroots exploration, small teams visit prospective areas to conduct geological surveys and sampling . If results indicate a possible mineralized deposit, we drill exploration holes to determine whether economically viable concentrations of metals exist . During this phase, we engage with local community members to identify their social and environmental concerns . We also begin conducting environmental baseline studies . These studies give us a picture of the capital costs required for development and the longer-term economics of the project . We are then able to decide if a capital investment makes economic sense, in order to begin construction . We also conduct extensive environmental testing during this phase to establish baseline data for air, water, soil and biodiversity . This information becomes part of the Environmental Impact Assessment (EIA) (also known as an Environmental Impact Study) that must be completed and approved by the relevant authorities before a mine can be developed . The environmental permitting process also enables us to consult with the community to obtain input and commentary . Infrastructure development initiatives – such as improving roads, building sewage systems and drilling water wells – may also commence, according to local community needs . Development During the development stage, we complete feasibility studies to determine: ■ The optimal mining methods and mineral recovery processes for a project ■ The required infrastructure ■ The best placement of facilities, based on thorough impact and mitigation assessments ■ The required monitoring, closure and reclamation plans 10 Eldorado Gold Year in Review 2015 Construction Once our EIA is approved and we have received any other relevant permits, we can begin construction . The risk mitigation measures identified in the EIA guide all of our activities . Construction employs the greatest number of people in the mining life cycle and we add significant value to local economies through this job growth . We aim to hire local residents and we train all of our employees and contractors in the industry’s leading environmental, health and safety practices, procedures and controls . Based on our dialogue with local communities, we identify gaps in skills and capacity, provide on-the-job training and if needed work with local technical schools and universities to enhance their mining-specific and trades programs so that local residents can increase their prospects of employment with us . Mining and Processing During production, ore is extracted from underground and/or open pit mines . It is then processed to extract metals such as gold and silver . The leftover waste is placed in an engineered facility or placed back underground as backfill . An ongoing monitoring plan – to test air, water and soil quality, and noise, blast vibration and dust levels – enables us to comply with environmental regulations . We add value during the production phase through a commitment to operational excellence and community engagement . New equipment and technologies, continuous improvement projects, low accident rates, good environmental stewardship, and effective internal procedures all combine to deliver productivity benefits . Consultation with local communities helps us identify where we can help create new opportunities for sustainable economic development . Reclamation, Care and Maintenance, and Closure Restoring the land so it is compatible with the surrounding landscape is a priority for us and our communities . How we conduct our rehabilitation in one jurisdiction impacts our welcome in another jurisdiction . Prior to and throughout a mine’s operation, we develop plans for mine closure . These address: ■ Decommissioning – dismantling project infrastructure such as facilities and buildings ■ Reclamation – revegetating disturbed areas ■ Ongoing monitoring – long-term monitoring of environmental parameters ■ Closure costs – provisions are made and updated regularly Whenever possible, remediation is done during the mine’s operation, and topsoil from mining and construction areas is stored for later use in reclamation activities . We investigate different plant, shrub and tree species suitable for local propagation in studies that are typically done in onsite greenhouses . When we close a mine site, we conduct further reclamation activities as required in our EIA so that the environment can successfully transition to a productive ecosystem . Tocantinzinho gold project, Brazil SPOTLIGHT: RESPONSIBLE FROM THE START: OUR TOCANTINZINHO PROJECT As we advance our Tocantinzinho project in Brazil through the permitting process, an environmental consulting company has been conducting baseline assessments on the water, soil, air, archaeological, flora and fauna conditions of the project area . At the same time, we are complying with 60 conditions of environmental monitoring, as set out in our environmental licences, and are reporting the results to the relevant local, state and national environmental agencies . For example, we monitor surface and groundwater to analyze 19 physicochemical parameters, and we present this data in a monthly environmental monitoring report to the environmental agencies of the state . We are also looking ahead to identify opportunities to share the economic benefits associated with the project . In 2016, we will conduct a capacity assessment of local stakeholders to establish a baseline understanding of the skills and education levels in the project area . We plan to establish two training centres to offer vocational training aligned with the project’s skills requirements . Vila Nova iron ore mine, Brazil SPOTLIGHT: MAINTAINING ENVIRONMENTAL RESPONSIBILITIES DURING CARE AND MAINTENANCE AT VILA NOVA In January 2015, we put our Vila Nova iron ore mine in Brazil on care and maintenance . Environmental monitoring at the operation continues, and we report to state and federal environmental agencies on a monthly, quarterly and bi-annual basis . Although no mining or processing activities are occurring at the site, our compliance with legal conditions and reclamation activities remains unchanged, and no notices of violations were issued by environmental agencies in 2015 . We also continue to support our community outreach activities – for example, we maintain our support for the Athlete of the Future Program, which was launched in 2013 in partnership with local schools to stimulate interest in academics and sports . For more information on our Athlete of the Future program, view our video: www .eldoradogold .com/news-and-media/video-library/ . Eldorado Gold Year in Review 2015 11 OUR APPROACH to RESPONSIBLE MINING For Eldorado, operating responsibly means protecting the environment, providing safe workplaces for our people, maintaining good relationships with our stakeholders, and investing in infrastructure, economic development, health and education in the communities where we operate. From exploration to reclamation, we anticipate our impacts and monitor our progress in order to achieve the high standards we have set for ourselves. This commitment to excellence is our approach everywhere we do business. OUR GUIDING PRINCIPLES Our guiding principles underpin all that we do . ACT WITH INTEGRITY We are committed to being honest, straightforward and accountable in all our business practices. BEHAVE RESPONSIBLY We strive to demonstrate that mining can be done responsibly. We do this by emphasizing environmental stewardship at every stage of the project life cycle. ENRICH LIVES We aim to create real, lasting and tangible benefits for the people whose lives our operations touch. OPERATE SAFELY People come first. We implement industry best practices, adhere to all safety regulations and have strict management systems in place to promote a culture of safety wherever we operate. ENGAGE OPENLY We believe that clear, comprehensive disclosure, high standards of corporate governance and ethical business practices are the only way to do business. 12 Eldorado Gold Year in Review 2015 OUR GUIDING FRAMEWORKS To support our internal policies and rigorous controls on ethical conduct, health and safety, and environmental and social responsibility, we participate in several global initiatives that establish standards and guidelines for best practice in these areas . Many of these frameworks have been developed in consultation with non-governmental organizations, academics, regulators and other stakeholder groups, and provide a means to verify, measure and report on our performance . These include: ■ World Gold Council’s Conflict-Free Gold Standard ■ United Nations Guiding Principles on Business and Human Rights ■ Voluntary Principles on Security and Human Rights ■ ISO 14001 Environmental Management Systems Standard ■ OHSAS 18001 Occupational Health and Safety Management Systems Standard ■ International Cyanide Management Code ■ Mining Association of Canada’s Towards Sustainable Mining (TSM) Framework ■ Global Reporting Initiative (GRI) G4 ■ Carbon Disclosure Project Please see page 30 for a case study on how we have implemented the International Cyanide Management Code at our sites, and visit our website to view a copy of our Conflict-Free Gold Report: www .eldoradogold .com/ responsibility/our-approach/accountability . Reclaimed areas at Kişladağ, Turkey SPOTLIGHT: IMPLEMENTING MAC’S TOWARDS SUSTAINABLE MINING FRAMEWORK In 2015, we advanced our implementation of the Mining Association of Canada’s (MAC) Towards Sustainable Mining (TSM) framework . Specifically, we identified four of the six TSM protocols as priorities for implementation: Tailings Management, Community Outreach, Safety and Health, and Crisis Management . In 2015, all operations conducted gap assessments against the management system requirements in each of the six protocols . As expected, we found that our sites’ existing practices already reflected many of the guidelines suggested by the TSM framework, particularly in the areas of Safety and Health and Community Outreach . For Crisis Management and Tailings Management, while existing practices and maintenance were deemed robust, we identified opportunities to further improve our alignment with the TSM protocols and have started taking action on these opportunities . Our development projects are also incorporating the TSM protocols into their management programs . Water collection and reclamation in progress at Kişladağ, Turkey Eldorado Gold Year in Review 2015 13 CONTRIBUTING to SUSTAINABLE DEVELOPMENT Our operations contribute to the broader social and economic development of the communities and countries where we operate. BUILDING OPPORTUNITIES AND ENRICHING LIVES 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 Creates Employment Our mining projects create significant job opportunities for local communities and beyond . Direct jobs are created at the mine itself and indirect jobs are created throughout the industry supply chain . Jobs in the wider economy are created as demand increases for local services, such as shops, restaurants, hotels, schools and hospitals . The International Council on Mining and Metals (ICMM) estimates that for every one direct mining employee, three to five people may be employed indirectly elsewhere in the host nation’s economy . Our emphasis on ongoing training provides our employees with opportunities to develop their skills while they work with us and enables them to pursue new opportunities once our operations end . Mining Generates 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 . Depending on metal prices, production from our assets can contribute significantly to a country’s trade balance . Studies by the ICMM indicate that for every $1 of economic activity invested by a mining project, an additional $3 or more is generated elsewhere in the host economy . Primary school in Uşak province, Turkey Mining Builds Communities The infrastructure we build for new mining projects, such as power, water and road development, also benefits 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 . Our projects have also directly contributed to the well-being of communities through donations to health centres and sports facilities and by funding tuition costs and educational initiatives for local students, including at the university level . In Turkey, we helped construct a 42-classroom building for Uşak University and a primary school for 480 students, in addition to having worked with local farmers to develop agricultural co-ops . Improving educational outcomes for children and the ability to access better markets for farmers helps generate local economic capacity and a growing regional tax base . “Mining is one of the few industries that can still transform societies and provide quality of life for people in remote places around the world that other industries don’t necessarily reach.” Paul Wright President and CEO 14 Eldorado Gold Year in Review 2015 ECONOMIC IMPACTS OF A MINING PROJECT Increased need for municipal services (police, fire, transport) Development of local goods and services (shops, grocers, restaurants, leisure activities) Development of municipal facilities (schools, universities, hospitals, sport centres) Job creation (wider economy) INDUCED impacts result from employees of both the mine and the supply chain relocating to, and spending their wages in, the local community. BANK H Utilities Accounting and legal services Transport Mining fleet (trucks and loaders) Parts, equipment and machinery Industrial materials Engineering and environmental services Job creation (supply chain) INDIRECT impacts result from suppliers purchasing goods and services to meet mine demand. MINING PROJECT Payments for land use Infrastructure development (installation of power, water, roads) Lodging for mine personnel Salaries Community projects Skill development Royalties Sales of metals Export revenues Payments to suppliers Job creation (mining company) Government taxes (personal & corporate) DIRECT impacts result from the development and operation of a mine. Eldorado Gold Year in Review 2015 15 OUR VALUE CHAIN and LOCAL PROCUREMENT As a key source of employment and raw materials, mining is connected to almost all industries and their value chains. We recognize that our operations and investments have a profound impact locally, regionally and nationally. With operations and development projects in diverse jurisdictions across three continents, our value chain directly impacts numerous sectors and industries, including: ■ Retail and consumer ■ Financial and investment ■ Manufacturing ■ Infrastructure and urban development OUR VALUE CHAIN ■ Mobility ■ Power and electricity The diagram below illustrates examples of Eldorado Gold’s own value chain, and industry and end-user demand for our products . Suppliers Contractors Refiners End-Users Suppliers Refiners Suppliers provide the materials and goods needed at our operations, such as mining equipment, fuel, explosives and chemicals . Where possible, we try to purchase goods and services from local suppliers in surrounding communities or within the host country . In those cases where we can’t procure specialist goods or services locally, we work within our jurisdictions to improve capacity or, on occasion, import from external suppliers . Contractors Contractors are hired for numerous activities across all stages of the mining life cycle . They provide access to specialized technical knowledge and skills, cost efficiencies, and satisfy short-term capacity demands such as during shutdowns or routine maintenance . Refiners purchase gold doré bars in order to further process and purify the metal . Once purified, gold bullion is registered on a commodities exchange such as CME Group, or traded in markets such as the London Bullion Market . End-Users End-users of gold are widespread and include individuals, investors, scientists, manufacturers and central banks . The value of gold has been recognized for centuries and its unique properties (it is malleable, conductive, does not tarnish and alloys well) mean that the precious metal is used in a variety of applications, including jewelry, electronics and computers, dentistry and medicine, aerospace, and medals and awards . 16 Eldorado Gold Year in Review 2015 LOCAL PROCUREMENT The purchase of goods and services typically makes up 50-60% of the production cost of mining . Increasing the share of procurement that is captured by local firms can have a significant impact on the domestic economy in our operating jurisdictions . While we do not have a formal policy, we encourage the purchasing departments at all of our sites to hire locally and use local suppliers wherever possible . We take action at our sites to identify and work with local suppliers to improve their capacity and ability to work with us . This maximizes our positive economic contribution in the regions where we operate and creates an effective network of suppliers close to operations, improving our operational efficiency . Our broad target is to increase the percentage of the materials purchased from companies near our operations and projects every year . Local suppliers are developing their businesses and are increasingly capable of providing a larger proportion of the products and services required at our sites . Domestic suppliers of goods and services were the biggest recipients of our supplier expenditure in 2015, accounting for 84% of our host- country investment . LOCAL PROCUREMENT: ■ Creates jobs ■ Promotes skill development and technology transfer ■ Increases integration into global value chains ■ Formalizes local economies ■ Lowers procurement costs ■ Strengthens our social licence to operate Local electricians work at Efemçukuru, Turkey SPOTLIGHT: LOCAL PROCUREMENT IN TURKEY After five years in operation, there are now nine local independent companies that provide services such as transport, welding, maintenance or electrical to our Efemçukuru mine site in Turkey . These contractors employ just over 100 people from the immediate local villages . The companies started by completing small pieces of work during the mine construction phase and have now gained the skills, certificates and licences needed to work on larger projects at the mine site . The Efemçukuru Construction Department works with local suppliers, helping them obtain the necessary permits and licences or gain additional skills needed to continue to work at the operation . One such company is the Kizildaglilar Nakliyat Transport Service . Established in 2010 by 25 local community members, the company initially operated a single tank truck that was contracted to provide dust control on the mine access road at Efemçukuru . Today, the firm has just under 50 employees and a fleet of 20 vehicles . In addition to site services, the company also provides transport for Eldorado employees and visitors to and from site, and transfers for local high school and junior high school students . TABLE 1: PAYMENTS TO SUPPLIERS ($ Millions) Turkey China Greece Romania Brazil Payment to domestic suppliers Payment to international suppliers Total 193 51 244 140 0 140 % Spend on domestic versus international suppliers 79% 100% 164 37 201 81% 20 8 28 6 0 6 70% 97% Total All Juristictions 523 97 620 84% We define “local” as procurement from contractors and suppliers located within the neighbouring villages and communities of our sites . However, for data-reporting purposes, we report on “payments to suppliers” within the categories of domestic and international suppliers only . Domestic suppliers include both local and national suppliers . If the money is spent within the country (even if the company is a multinational), we categorize it as an in-country or domestic spend . Eldorado Gold Year in Review 2015 17 GOVERNANCE and TRANSPARENCY Central to Eldorado’s record as a trusted operator is a commitment to ethical business practices and high standards of corporate governance. We recognize the importance of having an integrated approach to managing our operations, risks and relationships. Efemçukuru processing plant, Turkey 18 Eldorado Gold Year in Review 2015 BOARD OF DIRECTORS Governance at Eldorado is headed by our Board of Directors . The Board provides senior management with independent and objective advice . Our corporate governance policies explicitly require the Chairman of our Board and all members of our Board committees to be independent . Together, the Board works with senior management to set long-term goals, develop strategy and monitor Eldorado’s progress toward achieving its goals . The Board also regularly evaluates our principal business risks and monitors the effectiveness of our risk management process . Our Board is composed of the following committees: Audit, Compensation, Corporate Governance and Nominating, and Sustainability . Sustainability Committee The Sustainability Committee oversees our policies, programs and practices in the areas of environment, health, safety, community relations and security . The Committee seeks to be assured that Eldorado consistently promotes ethical, transparent and responsible behaviour, and meaningfully engages its stakeholders . The Sustainability Committee receives detailed quarterly reports from all sites and works with Eldorado leadership to suggest directives for senior management to pursue . The Committee receives a briefing within 24 hours if a fatality, serious lost-time injury, significant environmental incident or anything that is legally reportable occurs . The Committee periodically visits our sites for first-hand validation and interaction with our operations personnel . For more information on our Board committees, visit www .eldoradogold .com/about-us/leadership/board-committees . SENIOR MANAGEMENT OVERSIGHT Eldorado operates with a decentralized, yet coordinated business infrastructure . Our senior management team in Vancouver works closely with management teams in each of our operating jurisdictions, ensuring a clear line of sight to each operation . Ultimate accountability for social and environmental performance rests with our President and Chief Executive Officer, while day- to-day responsibility is shared at the corporate level by the Chief Operating Officer, the Senior Vice President, Operations, and the Vice President, Investor Relations and Corporate Communications . In addition to frequent site visits, our senior management team aims for open communication and appropriate oversight through weekly reporting on safety, health, environment and community performance from site general managers and country managers . CORPORATE DISCLOSURE AND TRANSPARENCY Revenue Transparency Our governance systems are designed so that we consistently evaluate and effectively manage our risks; this, in turn, helps us stay focused on our long-term planning, decision-making and communication . We believe that clear, comprehensive disclosure and open communication with our stakeholders will continue to encourage confidence in the legitimacy and honesty of our business practices . Governance Policies Our Code of Business Conduct and Ethics, Anti-Bribery and Corruption Policy, and Insider Trading Policy reinforce our standards and values and outline our expectation that our employees and suppliers will operate in accordance with the highest standards of legal and ethical behaviour . We also outline our commitments to protecting the environment and the safety of our people and neighbours in our Environmental and Health and Safety policies . These were updated in 2015 . In early 2016, we published a Human Rights Policy . For more information, visit www .eldoradogold .com/about-us/governance . Sustainability Factors in Compensation Regular performance reviews are performed at our sites, typically on an annual basis, although some sites conduct monthly performance reviews . Health, safety and environmental key performance indicators are embedded into performance reviews that are linked to compensation decisions . Revenue transparency is critical to our investors and stakeholders . Beyond public financial reporting, we aspire to further increase the level of disclosure we make with respect to payments made to governments as part of a broader industry mandate to fight corruption . We recognize the importance of initiatives such as the Extractive Industries Transparency Initiative (EITI) in improving revenue transparency, as well as in strengthening government and company systems, informing public debate, and enhancing stakeholder trust . While we do not operate in any EITI signatory countries, both Canada and the European Union (EU) have passed laws that require mandatory public reporting of payments to governments by the extractive sector . The respective laws are: ■ Canada’s Extractive Sector Transparency Measures Act (ESTMA), which came into force on June 1, 2015 ■ EU’s Transparency and Accounting Directives (EU Directives), introduced in 2013 Eldorado’s first report under ESTMA – covering payments made to foreign and domestic governments at all levels during the 2016 fiscal year – will be published by the May 29, 2017 deadline prescribed by the Act . Reporting will be publicly available and will summarize Eldorado’s payments of taxes, royalties, fees, bonuses, production entitlements, dividends, and other categories of payment prescribed by the Act . Under the EU Directives, member states were required to adopt the requirements into domestic law in 2015, becoming effective as of January 1, 2016 . Currently, Romania has implemented this legislation, while legislation in Greece is not yet in effect . We do not have mining operations in the Netherlands, therefore our Dutch subsidiaries fall outside the scope of the EU Directives . TABLE 2: PAYMENTS TO GOVERNMENTS(1) ($ Millions) Royalties and land-use payments Income and other corporate tax Employee taxes Other(2) Total Turkey China Greece Romania Brazil 2 .41 44 .60 15 .56 34 .00 96.57 3 .01 19 .40 2 .50 30 .69 55.60 0 .60 0 .44 9 .14 36 .65 46.82 0 .00 0 .00 0 .51 0 .57 1.08 0 .00 0 .00 0 .97 0 .40 1.37 Total All Juristictions 6 .02 64 .43 28 .69 102 .31 201.45 (1) In future reporting, payments to Governments will be calculated and presented in a manner consistent with requirements outlined by the Extractive Sector Transparency Measures Act . (2) Payments of taxes related to procurement of goods and services including withholding taxes, import and fuel duties . Also includes indirect taxes (such as value-added tax) where these are not repaid to the company during the period . Eldorado Gold Year in Review 2015 19 STAKEHOLDER ENGAGEMENT We build trust through our ongoing collaboration with a broad range of stakeholders, which involves listening and responding to stakeholder interests and concerns. OUR STAKEHOLDERS We define our core group of stakeholders as employees, contractors, suppliers, investors, local community members, governments, non- governmental organizations (NGOs) and industry groups . Each stakeholder group has unique expectations, and we therefore tailor our engagement practices to best meet their needs . Talking with local communities near Jinfeng, China HOW WE INTERACT WITH OUR STAKEHOLDERS Stakeholder Group Employees Shareholders Ways We Interact ■ Corporate, regional and site personnel engagement ■ Employee newsletters, social media and email ■ Workplace health and safety committees ■ Performance and development reviews ■ Perception studies ■ Annual shareholder meeting ■ Quarterly conference calls to discuss results ■ Frequent meetings Government ■ Ongoing communication and dialogue with government officials at the municipal, regional and Suppliers and contractors Industry associations NGOs Communities national levels ■ Ongoing communication and dialogue between representatives ■ Performance reviews ■ Membership in industry associations such as the International Cyanide Management Institute, the World Gold Council, the Mining Association of British Columbia, and the Mining Association of Canada (MAC) . We also participate in several working committees, such as MAC’s International Social Responsibility Committee ■ At Kışladağ, we established an independent environmental committee, which includes representatives from NGOs ■ Ongoing community engagement activities, including collaborative community projects ■ Neighbourhood meetings ■ Site tours for local residents and students ■ Regional newsletters, local media and social media 20 Eldorado Gold Year in Review 2015 COMMUNITY ENGAGEMENT GOVERNMENT RELATIONS Effective communication with our local stakeholders is important to Mining is a heavily regulated industry and our operations are subject our continued success and we have made this integral to our operating to the laws and policies of the countries in which we operate . Our approach for decades . We have established various methods for in-country teams maintain regular dialogue with government authorities communicating with local stakeholders that emphasize two-way dialogue at the local, regional and national levels in order to better understand and provide opportunities for local stakeholders to submit anonymous government objectives and policies, provide information about our feedback to our site personnel . Please see Table 3 for details on the projects, discuss relevant issues, and advance our permits . At the various communication methods currently established at our operations . corporate level, we work with ministerial offices and diplomats, both in Canada and abroad, to communicate our development successes Moving forward, Eldorado has committed to implementing a framework consistent with the Voluntary Principles on Security and Human and challenges . Rights, and we are reviewing our approach to monitoring, documenting We advocate for clear, fair and transparent regulation and proactively and reporting on community feedback – including grievances – at share our experience as a global operator to help governments develop each operation in order to improve the way we track and respond and maintain appropriate legislation . We do not participate in any party to stakeholder concerns . politics or make payments to any political parties . TABLE 3: COMMUNICATION WITH LOCAL STAKEHOLDERS Turkey Kişladağ Efemçukuru Jinfeng China White Mountain Greece Tanjianshan (1) Stratoni, Skouries, Olympias Local site grievance mechanism Email feedback Site office – Open door policy Informal engagement (daily interaction in communities) Formal engagement Y N Y Y Y Y N Y Y Y Y N Y Y Y Y N Y Y Y N N Y N N N(2) Y Y Y Y (1) Tanjianshan is in a remote location, over 40 km from the nearest local community . (2) A local site grievance mechanism is planned but not implemented . Feedback through other mechanisms (e .g . email, meetings, website, etc .) are forwarded to the responsible departments, investigated and responded to . TABLE 4: REQUESTS AND COMPLAINTS RECEIVED Number received Predominant topics Turkey Kişladağ Efemçukuru Jinfeng China White Mountain Greece Tanjianshan (1) Stratoni, Skouries, Olympias 3 71 18 133 Blasting vibration; dust Dust; road maintenance Community investment; local procurement Blasting vibration; dust; water-related; employment – – 10 Desire for employment (1) Tanjianshan is in a remote location, over 40 km from the nearest local community . Eldorado Gold Year in Review 2015 21 MATERIALITY ASSESSMENT This Report is an important tool we use to communicate with our various external stakeholders and we conduct an annual materiality assessment to identify the key topics and aspects that should receive attention in this Report. Although we have a clear understanding of what is important from an internal perspective, the annual materiality assessment process enables us to consider external views when we are identifying and selecting the sustainability topics to report on. We use the Global Reporting Initiative’s definition of materiality to determine the material topics to include in our Report. A topic is material if, in the view of senior management and/or key stakeholder groups, it is of such importance that it could in the short, medium or long term: ■ Have a substantive influence on the assessments and decisions of our stakeholders, or ■ Significantly impact Eldorado’s economic, environmental and social performance IDENTIFICATION Principles that guide our identification of material issues include: As part of our formal process to identify material topics, we analyzed the prominent internal and external trends and events of 2015 . ■ Stakeholder Inclusiveness: Have we identified and engaged with our key stakeholders? Tending to saplings in our plant nursery at Kişladağ, Turkey External Analysis The mining industry engages with many interest groups, including governments, investors, contractors and suppliers, service providers, mining-affected communities, civil society organizations, organized labour, academia, research institutions and downstream users . When thinking about the most important topics of 2015, we considered the various perceptions that external stakeholder groups hold regarding the performance of Eldorado and the mining industry in general . We relied on stakeholder engagement records and other internal communications, as well as external resources such as media and industry reports to identify the material topics of greatest concern to external stakeholder groups . Internal Analysis Building on the comprehensive materiality assessment conducted by a third party for the 2014 Sustainability Report, we asked key internal stakeholders across our offices, operations and projects to identify the key achievements, challenges and trends of 2015 . The results of this survey were then analyzed in the context of the wider trends and events in the mining industry; global economic, social and environmental conditions; political landscapes; and popular opinion . 22 Eldorado Gold Year in Review 2015 ■ Relevance: Have we considered the relevance of all identified issues? ■ Significance: How important is the topic to our stakeholders? ■ Control: How much do we own or control the issue? ■ Influence: How do we influence the issue? ■ Transparency: Are we clearly and openly reporting on the issue? PRIORITIZATION Over 40 topics were identified during the materiality assessment process . We assessed the relative importance of each topic to inform how much coverage we should allocate to the topic in our Report . If a topic is of greater importance, we include greater analysis of and commentary on the issue to explain how it impacts or could potentially impact Eldorado or its stakeholder groups, and how we manage the topic . The top 13 material topics are outlined in the matrix on the next page based on the significance of their economic, environmental and social impacts, as well as their influence on the assessments and decisions of stakeholders . RESULTS AND ANALYSIS Our stakeholders are interested in the issues and risks that affect Eldorado’s long-term business performance and sustainable development . The most significant trend identified in 2015 is the strong desire for more complete, comprehensive and transparent communication on environmental, social and governance performance . This has informed our approach to reporting on all of our material topics this year . HIGHER s r e d l o h e k a t S o t e c n a t r o p m I Community Investment Localization of Goods & Services Social Licence to Operate Water Use Biodiversity & Reclamation Waste Management (including Tailings) Overall Environmental Performance H I G H E R M A T E R I A L I T Y Permits & Licences Emergency Preparedness Health & Safety Economic Performance Workforce Skills Development Energy Use LOWER HIGHER MOST MATERIAL TOPICS IN 2015 Issue Relevance Impact on Eldorado Economic/ Operations Economic performance Our ability to operate at a profit and return value to all our stakeholders is central to our contribution to sustainable development. Health, safety, environment Overall environmental performance Improving our environmental performance and reducing our footprint improves our stakeholder interactions, credibility and reputation. Waste management Water Health and safety Biodiversity and reclamation Energy use Governance Permits and licences Emergency preparedness Workforce skills development Community Social licence Localization of goods and services Community investment Effective management of tailings and waste reduces the environmental risks and impacts associated with unplanned discharges. Water management and recycling practices limit our reliance on water sources and prevents the release of contaminated water. Protecting the health and safety of employees, contractors and communities is our biggest priority and a cornerstone of our company. Identifying and protecting high value species and habitats, and returning landscapes to conditions similar to pre-disturbance, is critical to our social licence to operate and ability to advance new projects. Reducing our energy use and associated greenhouse gas emissions is essential to improve our efficiency, lower operating costs, improve air quality and reduce our contribution to human-induced climate change. Obtaining permits and licences in a timely fashion is critical for our project development and continued ability to operate. By planning for emergencies, we identify, prioritize and implement controls for potential hazards at each of our sites, which help to minimize their impact while safeguarding our employees and the environment. Investing in training and education can empower our workforce, raise productivity, boosts innovation, encourage broader investment and expand labour market opportunities. Government and community support for our activities remained our most material issue in 2015, in order to maintain our social licence to operate. Local employment and procurement provides significant direct and indirect benefits in the regions where we operate. Investing in our communities helps to improve the education, health and sustainable development of local economies, both during and after mine life. Eldorado Gold Year in Review 2015 23 OUR COMMUNITIES – BUILDING OPPORTUNITIES Everywhere we operate we aim to enrich lives by developing lasting opportunities for local communities. For the past 20 years, we have built partnerships with our stakeholders to improve infrastructure, health, education and support projects that will endure beyond the life of our operations. 24 Eldorado Gold Year in Review 2015 Children play in the streets of Efemçukuru village, near Efemçukuru mine, Turkey UNDERSTANDING HOW WE CAN CONTRIBUTE We have conducted studies to anticipate and manage the social and economic impacts of our operations . Social Impact Assessments (SIAs) represent a best-practice approach to identifying local stakeholders and their social, cultural and economic characteristics . The purposes of an SIA are to analyze how a mining project may affect communities and define strategies to minimize negative impacts and maximize positive benefits . In addition to the operations listed in Table 5, our Certej and Eastern Dragon projects have also completed SIAs . Donating clothes to local Buyi women near Jinfeng, China TABLE 5: LOCAL IMPACT ASSESSMENT AND MANAGEMENT TOOLS Formalized stakeholder mapping Social impact assessment Public disclosure of impact assessments Local community development programs Turkey Kişladağ Efemçukuru Jinfeng China White Mountain Greece Tanjianshan (1) Stratoni, Skouries, Olympias N Y Y Y Y Y Y Y N N N Y N N N Y N N N N Y In progress Y Y (1) Tanjianshan is in a remote location, over 40 km from the nearest local community . LOCAL COMMUNITY INVESTMENT Our operations are located in diverse jurisdictions, each with their own cultural and social characteristics . As a result, we have adopted site- specific approaches to community investment that are appropriate to the local customs, values, and needs, yet are based on the same core principles of community inclusion and transparency in decision-making . TABLE 6: PAYMENTS TO COMMUNITIES AND COMMUNITY INVESTMENTS ($ Millions) Turkey China Greece Romania Payments to communities and community investments 0 .96 2 .33 2 .63 0 .11 Brazil 0 .02 Total 6.05 Eldorado Gold Year in Review 2015 25 Community Investment by Operation Kişladağ, Turkey Community relations personnel meet with stakeholders, local leaders, village mukhtars, mayors and sub-governors on an ongoing basis . There is a community interest group that meets every six months to determine investment priorities . 2015 Highlights: ■ Maintaining potable water sources for nine villages ■ Maintaining a sewage system for five villages ■ Maintaining village halls for three villages Girls play in Gümüşkol village near Kişladağ mine, Turkey Efemçukuru, Turkey Jinfeng, China Each quarter, community relations personnel engage with local communities through defined communication channels to collaboratively evaluate, prioritize and select community projects to be completed . Community investment projects are generally focused on health, education, agriculture and infrastructure . At the beginning of each year, the Four-Party Coalition (see case study on page 27) creates a list of agreed-upon community development projects . Benefits from the projects are aligned with stakeholder needs and implementation progress is monitored throughout the year . 2015 Highlights: 2015 Highlights: ■ Promoting education by providing vehicles and transportation for 44 students from local villages to and from their schools . In 2004, there was only one high school graduate in Efemçukuru Village . There are now 51 high school students and 7 university students from Efemçukuru . School uniforms and stationary were also provided to students in 2015, and general insurance costs for the local elementary school are paid by the mine ■ Investing in infrastructure including roads, the sewage system, a health clinic, an ambulance service, and weekly visits to local villages by the company doctor ■ Continuing to support the Efemçukuru Agriculture Development Cooperative, an initiative to promote modern agricultural techniques to increase crop quality and yields ■ Career training program for 25 female college students of Zhenfeng county ■ House-to-house footpath cementing in Bainitian sub-village ■ Sugar cane plantation ■ Sponsorship for four college entrants and 48 high school students in the community ■ Ongoing Magazine-Lannigou Road upgrading White Mountain, China Water supply and road improvements were identified as top infrastructure priorities by the communities near our White Mountain operations . 2015 Highlights: ■ Water supply improvements ■ Continued road upgrades – 938 metres of public road through the community were paved by a local contractor ■ Education initiatives ■ Other public welfare investments, including the installation of solar street lighting and opening a new medical clinic Annual income per capita in Diaoshuihu village has nearly tripled since 2009, when Eldorado first acquired White Mountain . 26 Eldorado Gold Year in Review 2015 Tanjianshan, China Our Tanjianshan operation does not have local communities nearby . However, in 2015 we made donations to schools in the nearest community, which is approximately 40 kilometres away . Greece At our operations and development projects in Greece, community investment priorities are set after discussions with representatives of the local villages . They are also based on the annual materiality analysis Hellas Gold conducts as part of its Greek Corporate Social Responsibility reporting . Most community investments are for ongoing needs and infrastructure projects that are shared equally among community stakeholders . We also hold monthly meetings with the heads of the villages to discuss adjustments and evaluate the success of the infrastructure investments to date . 2015 Highlights: ■ Continued to support the local health centre in Paleohori ■ Maintained local roads ■ Maintained local monuments ■ Donated to schools Over the past four years, we have provided over $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 continue to focus on community initiatives that develop sustainable social capital such as infrastructure development, educational initiatives and health care . Cemented footpaths in local villages near Jinfeng, China A Four-Party meeting in session at Jinfeng, China SPOTLIGHT: THE FOUR-PARTY COALITION: COLLABORATIVE COMMUNITY ENGAGEMENT IN CHINA At all of our locations, we collaboratively engage with local communities to help their members build opportunities . In China, where Eldorado is the largest foreign gold producer, our community relations teams work closely with local stakeholders to better understand their concerns and find solutions to the issues that matter the most to them . At two of our three mines in China, we have a Four-Party Coalition model in place to promote positive community relations and development . Set up in 2009 at White Mountain and in 2012 at Jinfeng, the coalition is made up of representatives from our mines, local government, host communities and academic institutions . The group meets monthly to discuss community issues and to identify and prioritize programs and activities that improve living standards and build local capacity . These include infrastructure development, improved access to education and health care, and agricultural initiatives . Both mines promote the development of local businesses by providing them with opportunities to undertake contracts for the mines . For example, at both locations, local community members have started businesses that manufacture bricks from process tailings . By involving local stakeholders in collective planning, decision- making and implementation, the Four-Party Coalition represents a best-practice approach to rural community development in China . The Coalition has received praise from all levels of government in China and has gained state-wide media attention . Eldorado Gold Year in Review 2015 27 MANAGING our ENVIRONMENTAL FOOTPRINT We are committed to protecting our air, water and soil – resources that we all share. This is why we carefully plan, design and build our operations to limit their environmental footprint only to what is absolutely necessary. It is why we implement new technologies to get the best efficiency out of the resources and materials we use, strictly adhere to safety and environmental regulations, and reclaim areas no longer needed for mining use. And it is why we maintain systems to identify, manage, monitor and mitigate our potential impacts from project inception through to closure. 28 Eldorado Gold Year in Review 2015 Efemçukuru vineyard, Turkey We are focused on maintaining sound environmental practices in all of our activities with the aim of developing and operating our mines in a responsible manner . Across all our operations and development sites, our actions are guided by the following principles for environmental excellence: ■ Ensuring that the protection of human health and the natural environment is accomplished at the same time as benefits are derived from economic and social development ■ Providing necessary training on environmental matters to contribute to greater environmental awareness in our operating jurisdictions ■ Protecting environment-related social and cultural assets ENVIRONMENTAL MANAGEMENT SYSTEMS We have achieved certification under the International Standards Organization 14001 (ISO 14001) Environmental Management System at several of our operations . The overall aim of ISO 14001 is to support environmental protection and prevent pollution . ISO 14001 represents a stringent guideline created to help organizations achieve environmental goals, using a structured approach that enables consistent environmental performance over time . Establishing environmental management systems at our operations has involved: ■ Developing site-specific environmental policies ■ Establishing objectives and processes to achieve the ■ Making sure that all environmental legislation is strictly observed policy commitments and complied with ■ Keeping all concerned parties – including employees, suppliers, contractors, and local communities – informed of technical subjects and legal arrangements regarding the environment ■ Informing the public, relevant government institutions and other stakeholders of our environmental performance in a fully transparent manner ■ Continuously taking action as needed to improve performance ■ Demonstrating our performance through regular audits and reporting Our two mines in Turkey (Efemçukuru and Kişladağ) as well as our Halkidiki assets in Greece (Stratoni, Olympias and Skouries) are ISO 14001 certified . In 2015, Efemçukuru and Kişladağ passed interim external audits to confirm their conformance with the ISO 14001 standard . Our Chinese assets have developed environmental management systems that are based on the ISO 14001 standard, but have not sought certification . Certification under the ISO 14001 standard is an exceptionally rigorous process, and our Chinese assets have instead focused on achieving certification under the International Cyanide Management Code, which in itself, requires a rigorous environmental management system to be in place to achieve certification . Every newly recruited employee, including the personnel of suppliers and contractors, must complete environmental training, and all existing employees are provided with ongoing environmental training to keep their environmental knowledge up to date . “We take our responsibility of preparing for and managing the mineral extraction process very seriously. We do all that we can to ensure that our activities have the least possible impact on our environment.” Paul Skayman Chief Operating Officer Eldorado Gold Year in Review 2015 29 The ICMC audit at Tanjianshan, China Informing local community members about our cyanide safety procedures near Jinfeng, China SPOTLIGHT: RAISING THE BAR: ACHIEVING ICMC CERTIFICATION IN CHINA Cyanide management is a core focus of our operating and monitoring activities at our sites that use cyanide to separate gold from ore . We use very dilute solutions, in the range of 0 .01-0 .05% sodium cyanide, and we have strict protocols and procedures in place for cyanide storage, handling and disposal . 5. Decommissioning. When our operations end, we have stringent decommissioning plans in place to protect human health and wildlife . 6. Worker safety. From contractors to employees, we consider the exposure risk to everyone on our sites, and work to minimize or eliminate this risk . To ensure that our operations are implementing global best practices in cyanide management, we applied to become a Cyanide Code signatory in 2012 . The International Cyanide Management Code is a voluntary initiative for gold mining companies aimed at protecting human health and preventing adverse environmental impacts . The Code provides guidance on the safe management of cyanide before, during and after the gold recovery process . Certification involves an independent audit of mining operations to verify that sites’ policies and procedures meet the Code’s rigorous standards . Audit results are made public to inform stakeholders of the status of cyanide management practices at the certified operation . Our flagship mine, Kişladağ in Turkey, was certified in 2013, and our Jinfeng and Tanjianshan mines became the first two gold mines in China to be certified, in 2015 . As part of certification, we developed and implemented additional health, safety and environmental management systems and procedures in order to fully comply with all nine of the Code’s principles: 1. Production. Our mines use suppliers who limit their workers’ and the environment’s exposure to cyanide . 2. Transportation. Our cyanide transporters have rigorous emergency response plans and cyanide management practices . 3. Handling and storage. Our unloading, storing and mixing facilities comply with the Code, with effective ventilation and measures to prevent cyanide from leaching . 4. Operations. Updated policies and emergency procedures that govern sites’ management and control of cyanide help facilitate its safe use . 30 Eldorado Gold Year in Review 2015 7. Emergency response. In the event of an emergency, our sites are prepared to protect human health and minimize environmental impacts through training and investment in appropriate response equipment . 8. Training. Cyanide management is the responsibility of our employees and contractors, and their competency, skill and awareness begin with the training we provide them to safely operate with and respond to any issues with cyanide . 9. Dialogue. We’ve successfully maintained communications with local populations and communities, informing them about our plans and the safety of our facilities . Despite making significant improvements to cyanide management procedures at our White Mountain mine in China, the site does not currently comply with Cyanide Code Principles 1 and 2 because our cyanide supplier and transporter are not yet signatories to the Code . Rather than switch to a certified supplier, which would result in longer transport times and increased hazards associated with moving dangerous materials over significantly greater distances, our risk assessment resulted in our decision to continue working with our current close-proximity supplier and encourage its improved procedures and adoption of the Code over time . For more information on the Cyanide Code, please visit: www .cyanidecode .org . ENVIRONMENTAL IMPACT ASSESSMENTS Environmental Impact Assessments (EIAs) are conducted to evaluate the potential impacts a proposed project may have on environmental resources and the people who depend on them . As part of permitting during project development, we comprehensively identify potential impacts and submit mitigation plans to regulators . Once completed, EIAs are comprehensive documents that include baseline studies to assess the current state of the environment at the proposed mine site . They also identify potential effects of our planned activities and outline steps to minimize any identified risks . EIAs require extensive consultation with local communities, as well as considerable input from technical and environmental experts . ENVIRONMENTAL MONITORING In line with international best practices, Eldorado regularly monitors air, soil and water quality, as well as noise levels and energy use at our operations . This not only confirms that we are operating within regulations but also provides us with a benchmark upon which we can implement programs to further minimize our use of water, energy and chemicals . As part of our commitment to transparency and accountability, we helped establish Independent Environmental Committees at Kişladağ and Efemçukuru in Turkey, and at Stratoni, Olympias and Skouries in Greece . These external groups include academics, scientists and representatives from the local authorities . Committee members collect environmental data from our sites and submit it to a third-party laboratory for testing, to ensure independence and accuracy . This approach has helped us develop our credibility by providing our stakeholders with third-party information they can trust . To further promote transparency, we are close to finalizing an online database where all of the environmental data from Stratoni, Skouries and Olympias will be publicly available in 2016 . ENVIRONMENTAL FINES AND PENALTIES We incurred one fine in 2015 associated with an environmental non- compliance in 2014 . A $444 fine was issued to our Jinfeng operation for a permit non-compliance related to effluent discharge that occurred the prior year . In Q1 2014, the site reported total suspended solids 0 .9 times above standard, and in Q3 2014 ammonia nitrate was 1 .2 times above standard . No fines or penalties related to an environmental non-compliance in 2015 were received . In early 2016, the Ministry of Environment and Energy in Greece issued two decisions imposing fines to Hellas Gold regarding alleged environmental non-compliances that occurred between 2012 and 2014 at Olympias and Stratoni . Site inspections were carried out during this period by the environmental inspectors, and in response to their findings, Hellas Gold prepared and submitted detailed answers . Despite the responses, the Ministry imposed the fines totaling €1 .7 million, and Hellas Gold has filed respective appeals for the cancellation of the fines before the Administrative Court in Athens . Flowers blooming on the reclaimed tailings area at Olympias, Greece SPOTLIGHT: HELPING CONTRACTORS MANAGE THEIR ENVIRONMENTAL PRACTICES IN GREECE Our Hellas Gold Procurement Department has been working to incorporate environmental practices into supply chain planning, in direct partnership with the company’s Environment Division and Internal Environmental Management . Hellas Gold has developed a Contractor Environmental Management Handbook that is included in all tender notices . It forms an integral part of the contracts awarded at our mining and project facilities . The Handbook’s primary objective is to facilitate environmental protection and prevent environmental degradation . Contractors are required to train their staff about environmental issues at regular intervals, and our Handbook forms part of their training materials . “Environmental monitoring is just like other tracking systems – such as weather forecasts and traffic reports. It helps us to understand our natural environment so we can make better decisions on how we manage and protect it.” Doug Jones Senior VP of Operations Eldorado Gold Year in Review 2015 31 MANAGING our INPUTS Water and energy are fundamental mining inputs, and we recognize the many economic, environmental and social benefits to improving efficiency when using these resources. In this section, we summarize our management approach and 2015 performance related to water and energy use. 32 Eldorado Gold Year in Review 2015 Water treatment plant at Kişladağ, Turkey WATER USE Availability and access to water is critical for our mining operations . We use water for mineral processing, dust suppression, slurry transport, and personal consumption; therefore, responsibly managing water is essential to our sustainable development over the long term . While we do not set quantitative targets regarding water consumption, our water use is strictly controlled across all of our sites, and each operation has implemented practices that reduce, reuse and recycle water . Monitoring Water Resources Across our operations, we withdrew nearly 12 million cubic metres of water during the mining process in 2015 . This includes water removed from our mines following precipitation as well as groundwater that must be continuously pumped out from our underground mines . Overall, we experienced an 8% increase in total water withdrawals in 2015 compared to 2014 volumes, largely attributable to mine dewatering . WATER FLOW THROUGH A MINE SITE Water use is continuously monitored using flow meters, and we regularly take water quality samples from groundwater and surface water sources within and around our sites . We compare water quality results with the limit values set out in pertinent regulations and our operating permits, and we share these detailed results with regulators and government, typically on a quarterly basis . Water availability varies by site . For operations that have limited access to water, such as Kişladağ and Tanjianshan, we have implemented extensive water conservation and recycling programs to reduce our need to withdraw water . At Jinfeng, where precipitation is higher, we capture rainwater run-off from our land and buildings, which we then treat and use in production . All water that comes into contact with our sites is treated and tested before being used or discharged back into the environment (e .g . rivers, lakes and reinjection into groundwater) . WATER INPUTS A Precipitation (rainfall and snow) B Surface water (lakes, rivers, oceans) C Ground water (wells, mine dewatering) D Wastewater from another organization E Municipal water WATER USE F Potable water, fire suppression G Drilling H Dust suppression I Processing (ore preparation, solids/water preparation, mineral extraction) J Leach pad K Tailings slurry WATER TREATMENT L Wastewater treatment ponds M Water treatment plant WATER OUTPUTS N Releases to aquatic environment (treated water) O Water diversion of non-contaminated water P Evaporation I J K M L H N B & C A P F B O G C D E Eldorado Gold Year in Review 2015 33 TABLE 7: TOTAL WATER WITHDRAWAL Turkey China Greece 2015 Total 2014 Total (1)(2) Kişladağ Efemçukuru Jinfeng White Mountain Tanjianshan Stratoni, Skouries, Olympias (3) 0 836 0 0 0 836 3 .0 0 2,041 0 656 0 2,697 2,613 713 0 944 0 0 0 713 7 .1 384 0 0 2,425 16 .2 0 0 22 966 12 .4 0 0 0 1 657 6 .7 6,250 8,743 8,232 0 0 0 384 3 23 84 – 3 6,250 11,850 10,932 (Thousands m3) Surface water (rivers, lakes, and oceans) Ground water (wells, underground mine water) Rainwater collected/stored Wastewater from another organization Municipal water Total Water efficiency (m3/oz) (1) No data was collected on wastewater used from other organizations in 2014 . As a result, total water withdrawals may have been slightly higher than presented in the total for 2014 . (2) A correction was made to White Mountain’s reported groundwater withdrawals in 2014, from 226,000 m3 to 1,159,000 m3 . The previously stated value was total production water used by the site’s processing plant in 2014 . (3) Water efficiency was not calculated for our Greece assets . Gold recovered at Olympias is from tailings retreatment, and does not offer a reasonable basis for comparability . Our reported water efficiency is not a true reflection of site water use or data collection and reporting, we are investigating new data sources in its correlation to production . In reality, due to the need to dewater our order to improve our understanding of water balances and to calculate our mines, we withdraw far more water than we use and consequently our water efficiency as a relationship of water used in production per ounce of actual water efficiency is much higher . As we continue to improve our gold produced . TABLE 8: VOLUME OF WATER PROCESSED BY WATER TREATMENT PLANTS Turkey (Thousands m3) Kişladağ Efemçukuru Jinfeng China White Mountain Greece 2015 Total Tanjianshan Stratoni, Skouries, Olympias Volume of water processed 29,141 713 2,127 1,075 941 2,204 36,201 Our site water treatment plants operate continuously year-round to reduce our reliance on external water sources . Kişladağ uses a leach pad to extract gold from ore, treating and circulating approximately 14,000 gallons of water per minute through a closed system, with minor losses attributable to evaporation . Approximately 35 times more water is recycled and reused by the site compared to new water withdrawals . Other sites, like Tanjianshan, do not allow any water to be openly discharged back into the environment . All water is reused through process plants, including grey water from sewage . 34 Eldorado Gold Year in Review 2015 ENERGY USE Energy use at our operations is a significant operating cost, and related air emissions are one of our major environmental impacts . In 2015, international stakeholders and governments continued to express increasing concern about the risks and potential impacts associated with climate change . The general trend across most jurisdictions, including where we operate, is emphasis on regulation that may penalize heavy greenhouse gas (GHG) emitters . As a result of both the upfront costs associated with energy use at our operations and the potential for our operating jurisdictions to impose GHG emission levies, improving the energy efficiency of our operations is important for us . In some of our operating jurisdictions, energy efficiency and GHG emission reduction goals are already represented in regulations . For example, in Turkey each year, an energy usage declaration is made to the government, and every four years, an energy-efficiency study must be performed and submitted to the government . At Jinfeng, in accordance with the government energy reduction policy issued by the National Development and Reform Commission in 2011, a five-year target was set to reduce energy consumption by 2,100 tons of standard coal between 2011 and 2015 . During this time, Jinfeng reduced energy consumption by 3,325 tonnes of standard coal, exceeding performance by 58% . See Table 10 below for further information on the energy intensity performance achieved at our gold mining operations . TABLE 9: ENERGY CONSUMPTION Turkey (GJ) Kişladağ Efemçukuru Jinfeng China White Mountain Greece Company Total Tanjianshan Stratoni, Skouries, Olympias Purchased electricity 330,042 143,201 528,000 238,140 320,000 190,000 1,749,383 Liquefied petroleum gas 715(1) 0 0 Diesel for mobile equipment 995,663 66,615 91,500 Gasoline for mobile equipment 0 Diesel for generators 16,466 0 0 1 0 4 92,749 2,800 0 2015 Totals 2014 Totals 1,342,886 209,816 619,501 333,693 1,329,114 197,062 658,195 362,753 0 66,660 5,175 16,230 408,065 430,623 0 54,543 18,271 24,084 286,898 267,059 719 1,367,730 26,247 56,780 3,200,859 3,244,806 (1) Liquefied Petroleum Gas (LPG) was not used in 2015 . The amount reported reflects Liquefied Natural Gas (LNG) used at the Kişladağ site . Between 2015 and 2014, we reduced company-wide energy consumption by 1% . However, with reduced gold production our overall energy efficiency actually decreased to 4 .53 GJ/oz . With the exception of Jinfeng, we saw lower grades of material across each of our sites, which means that we mined and processed more ore to maintain production levels . Kişladağ experienced the biggest drop in ore grade, and saw the largest increase in total material moved per ounce . Jinfeng’s gold production was lower, so even though the site used less energy in 2015, there was a net increase in energy intensity . Haulage fleet vehicle diesel use and electricity consumption are the company’s primary energy sources . Kişladağ remains our largest energy user, with the site’s vehicle fleet consuming more diesel than the rest of the company combined . With a deepening pit, Kişladağ’s haul trucks are having to travel further each year to transfer material to our crushing system and the waste dump . Jinfeng’s mill is the largest amongst Eldorado’s operations, with an annual capacity of 1 .5 million tonnes of ore, and is therefore our largest electricity user . Tanjianshan and White Mountain have the second and third largest mills respectively, capable of processing 1 .1 million and 800 thousand tonnes of ore . Kişladağ’s crushing circuit is the final major energy user at our sites . TABLE 10: ENERGY INTENSITY Turkey (GJ/oz Au Produced)(1) Kişladağ Efemçukuru Jinfeng China White Mountain Greece Company Total(1) Stratoni, Skouries, Tanjianshan Olympias (2) 2015 2014 (1) Weighted average . 4 .77 4 .27 2 .09 1 .99 4 .14 3 .91 4 .27 4 .25 4 .18 4 .00 _ _ 4 .12 3 .86 (2) Gold is not produced at Stratoni and our Skouries and Olympias gold assets are in development . Eldorado Gold Year in Review 2015 35 MANAGING our OUTPUTS The activities and outputs of our activities can have a significant and lasting impact on the natural environment surrounding each of our mines. Waste management, protecting biodiversity and reclamation are important activities at our mines and were highlighted in our 2015 materiality analysis as important environmental aspects. In this section, we summarize our management approach and 2015 performance, and highlight some example case studies of broader initiatives being undertaken at our sites to limit any negative impacts from our activities. 36 Eldorado Gold Year in Review 2015 Tanjianshan roaster complex at dawn, China WASTE MANAGEMENT Different forms of waste are generated through our mining activities, including overburden, waste rock, tailings, slag, mine water, sludge and refuse . Across all our sites, waste rock is the primary form of waste generated, which has been extracted from the mining areas in order to access ore . Waste rock contains no economically valuable material . Waste generated at our operations is sorted and classified as hazardous or non-hazardous waste, in line with regulations . All types of waste, including hazardous waste, are stored and disposed of with consideration for their potential environmental impacts . Management programs are developed and implemented on a site-by-site basis, depending on the characteristics of the waste being generated . For example, at Efemçukuru, where waste rock has acid rock drainage potential, storage areas are lined and seepage is collected and treated before disposal . Where waste rock does not pose any toxicity risk, such as at White Mountain, it is partially reused for mine backfill . Waste management activities and objectives represent significant elements of our ISO 14001 environmental management systems . As per local regulations in each of our operating jurisdictions, all disposed waste types and quantities are recorded in legal disposal documents that are periodically submitted to host governments . We conduct due diligence on our waste disposal contractors, and periodically visit disposal and recycling contractors to evaluate their environmental practices . DUST CONTROL AND MANAGEMENT The creation of dust is one of our impacts that we manage closely and actively . Major sources of dust emissions include: ■ Blasting operations in the open pit area ■ Loading, haulage and offloading of ore and waste rock ■ Operation of crushing units ■ Traffic on roads that are in general use Where our operations have the potential to create significant dust, we ensure that water tank trucks continuously perform on-site watering activities to suppress dust . In dry seasons, materials are dampened before we conduct blasting operations . Water spraying and closed dust collecting systems are provided around our operations, and particularly at the primary crusher and the fine ore stockpile areas . Water sprayers are also used on conveyor belts at certain intervals . With a view to measuring the results of these mitigation activities, regular dust measurements are taken around our operations and in neighbouring villages on daily and monthly bases . SPOTLIGHT: MANAGING OUR TAILINGS Tailings management is a core activity at our operations and is embedded in our daily monitoring and management practices . Tailings are the material that remains after the mineral extraction process is completed, and are primarily a mixture of ground rock and water . Tailings are typically stored in a specially designed tailings storage facility and can contain trace amounts of chemicals from the extraction process, making them acidic or alkaline . Their safe management and disposal is a priority for us in order to protect the nearby environment and communities . We manage our tailings facilities consistent with robust government regulations, accepted international standards and best practices . Our tailings facilities are all site-specific and have been carefully designed and constructed by specialized engineering consulting firms, in line with regulations, in order to minimize environmental risks . At each of our facilities we have: ■ Conducted extensive studies to locate the facility away from sensitive environmental areas such as lakes, streams, wetlands and key biodiversity zones ■ Designed the extraction process so that tailings contain as few impurities as possible and are environmentally stable ■ Constructed the facilities to be able to withstand extreme weather and seismic events ■ Installed upstream and downstream monitoring facilities to measure water quality We also have comprehensive tailings management systems in place at each of our operations . These include: ■ Plans and procedures that identify clear roles, responsibilities and communication channels for personnel responsible for tailings management ■ Ongoing training of personnel responsible for tailings management ■ Operational controls such as real-time monitoring of tailings facilities, routine inspections and risk assessments, and regular maintenance programs ■ Emergency preparedness and response plans, ■ Periodic review of tailings facility design, construction, operation and closure plans to facilitate ongoing relevance and alignment with current best practices ■ Oversight from corporate head office to verify completion of any updates or corrective actions and to identify opportunities for shared learning across company operations As part of our commitment to continuous improvement of our tailings management practices, our site teams conduct daily monitoring of the tailings facilities, and our were recently audited by an internationally recognized expert in tailings management and dam safety . Our most recent external audit did not identify any major deficiencies in our tailings management practices . We will look to strengthen our management approach by further aligning our operating practices with MAC’s TSM Tailings Management Protocol . This is based on a Plan, Do, Check, Act system of continuous improvement . Eldorado Gold Year in Review 2015 37 BIODIVERSITY and RECLAMATION We implement programs to preserve biodiversity at and near our operations. These programs have been developed through engagement with experts and local communities, and are focused on implementing conservation strategies consistent with the mitigation hierarchy (avoidance, minimization, rehabilitation and/or offset). BIODIVERSITY There are areas of rich biodiversity near several of our operations and development projects . The identification and classification of protected areas vary by jurisdiction . As a result, jurisdiction-specific and international protected areas are taken into account during baseline assessment studies that feed into the EIA . Baseline assessments of flora and fauna are conducted to identify all species present, as well as their population and habitat characteristics . As a condition of receiving the necessary permits to proceed with building a project, we must outline impact avoidance or remediation plans that are specific to each project site . Our biodiversity management plans at each site represent the criteria by which state authorities evaluate our performance . Biodiversity objectives and management plans are critical components of our site-specific environmental management systems . In 2015, an additional in-depth study of biodiversity impacts was completed at our Kişladağ operation in partnership with Hacettepe University . Professionals from the University conducted similar studies in the region of the mine and were retained to update our evaluation of biodiversity impacts near Kişladağ . A report was delivered in January 2016, and no perceptible impacts on biodiversity outside of the direct mining area were detected . RECLAMATION Our approach to reclamation is centred on: ■ Designing mine closure and reclamation plans, before we even begin mine construction ■ Ensuring sufficient funds are allocated to carry out our reclamation obligations ■ Continuously reclaiming land during operation ■ Engaging with all relevant stakeholders to understand land-use objectives for reclaimed land Before we begin production at our operations, we strip vegetal soil (topsoil and subsurface soil) from the areas where the ore will be extracted or facilities will be erected . This stripped vegetal soil is stored in designated areas and it is used later in rehabilitation activities . In areas where we have completed mining activities, rehabilitation activities are conducted in a progressive manner over several years . We develop rehabilitation plans based on research conducted as part of baseline assessments . By starting rehabilitation efforts during the operating phase of the mine, we can improve the visual appearance of landscaping, minimize dust and help expedite the completion of mine closure . Flowers at Jinfeng, China ■ In 2015, 23 hectares of land were reclaimed to the agreed end use at our operations. 38 Eldorado Gold Year in Review 2015 PLANNING NOW FOR MINE CLOSURE Our stakeholders have made it clear that mine closure is a critical component of the mining life cycle . Mine closure planning for each of our operations begins during the project development stage, with extensive preparation going into the site’s EIA submission document . Each EIA includes a fully detailed mine closure plan to be used in the event of a planned closure, a sudden or unplanned closure, or a temporary closure (suspension) . These plans begin as a concept and evolve throughout the mine’s life, through regular and critical reviews conducted both internally and externally . Using the Mining Association of Canada’s TSM Mine Closure Framework as a guide, we consider the following areas while planning for a future mine closure: 1. Natural Environment We strive to return disturbed areas to a stable state for post-mining land use . This includes removing all equipment, closing pits and shafts, treating all water sources as required, and revegetating waste rock facilities, tailings dams and leach pads . Wherever possible, we aim to conduct concurrent revegetation of land during the operating phase . 2. Socioeconomic Impacts We work with local communities and host governments to implement and support strategies that mitigate impacts associated with the mine’s closure . This includes local capacity-building though economic diversification programs, education and skills development for both the local communities and our employees, and the development of subcommittees to help manage the reclamation and closure process . 3. Health and Safety We take into account numerous health and safety considerations during both operations and the closure process . Many of our mine sites use hazardous substances, such as diesel and toxic heavy metals, or produce hazardous wastes that must be controlled to prevent exposure to the environment and public . Further, there are often vertical or near-vertical faces in the open pits following operation . Our Mine Closure Plans are designed to remove health and safety risks after a mine’s closure . 4. Financial Obligations The aim of thorough closure planning and cost estimating is to ensure that investment, development and operating decisions take into account any potential future financial impacts . Working with our lead closure consultants, The Mines Group, we annually review the total estimated cost for closing, decommissioning, demolishing, rehabilitating and post-closure monitoring at each of our projects while complying with industry best practices and all applicable laws . Consistent with Canadian securities requirements, the accounting obligations are defined by the Financial Accounting Standards Board (FAS 143) and adhere to all legal obligations and compliance requirements within each of our operating jurisdictions . Close collaboration between the finance and operations teams allow for annual reports on adjustments to this “Asset Retirement Obligation .” Reclaimed arable land at Jinfeng, China SPOTLIGHT: RECLAMATION PLANNING AT JINFENG In order to improve the living standards of local people by increasing the quantity of arable land surrounding our Jinfeng operation, we have been working with the state and county on Eldorado-funded plans to implement a land reclamation project . At a former rock dump, we are planting shrubs in slope areas and transforming flat surfaces into fertile farmland . Over two years, the land is cultivated so that the soil has enough phosphorus, available potassium and total nitrogen to support crop growth . For a region that has very little flat land, this project will result in approximately 324 hectares of arable land for farming, which will be handed over to the government upon completion . Fruit trees grow on rehabilitated land at Jinfeng, China Eldorado Gold Year in Review 2015 39 OUR PEOPLE Our success is a result of the dedicated employees and contractors who work for us and our global subsidiaries. It is our people’s motivation and commitment to excellence that drives our performance and helps us achieve our corporate objectives. As such, we aim to ensure that all of our employees and contractors are working in safe and effective environments. 40 Eldorado Gold Year in Review 2015 Employees on site at Efemçukuru, Turkey Fostering an Effective Work Environment ■ Undertaking transparent employment practices ■ Providing professional training to facilitate lifelong learning ■ Emphasizing in-house staff development based on professional skills and personal abilities, and promoting staff internally OUR WORKFORCE We aim to hire workers from nearby communities whenever possible . At the operation and project level, 99% of employees and contractors are nationals . We believe in training local employees for senior roles . Turkish, Greek, Brazilian, Chinese and Romanian employees form part of the management teams working in their respective home countries, alongside a small number of expatriate employees . Please see Tables 11 and 12 for a detailed breakdown of our employee and contractor numbers . In accordance with the relevant law and regulations, we uphold strong and fair labour practices . We believe in equal opportunities and base our hiring practices on skills and experience . We strive to ensure that male and female employees are paid equally for equivalent jobs . As outlined in our Code of Business Conduct and Ethics, everyone at Eldorado is expected to maintain a safe and healthy work environment, and promote a workplace that is free from discrimination and harassment on any basis, including race, colour, religion, gender, age, national origin, disability or sexual orientation . We aim to maintain the best possible relations with our workforce . Our human resources approach is based on a series of principles and values that include: ■ Employing people from local communities ■ Promoting a culture that builds a common identity for staff in all workplaces TABLE 11: OUR EMPLOYEES Total Employees Percentage Female Percentage Nationals (1) Percentage from Local Communities (2) Kişladağ Efemçukuru Turkey – Other Jinfeng Tanjianshan White Mountain Eastern Dragon China – Other Halkidiki assets (Olympias, Skouries, Stratoni) Perama Hill site & Sapes office Greece – Other Tocantinzinho Brazil – Other(3) Romania (Certej site & Deva office) Canada Netherlands Barbados Total 785 433 60 826 419 620 31 33 1,011 10 41 9 19 221 45 5 3 4,571 5% 5% 25% 13% 15% 16% 13% 48% 9% 40% 39% 11% 26% 15% 36% 40% 67% 12% 99% 99% 98% 99% 99% 99% 100% 91% 99% 100% 98% 100% 100% 99% 76% 20% 100% 99% 82% 48% N/A(4) 19% 78% 84% 77% 0% 87% 10% 2%(5) 11% 100% 62% 62% 0% 100% 65% (1) We define “nationals” as citizens of the host country . (4) Information not available . (2) We define “local” as national employees from the closest neighbouring villages and (5) “Local employee” refers to residents of Halkidiki region only . communities to our sites . (3) The numbers above are for Eldorado’s Belo Horizonte office and do not include Vila Nova, which went on care and maintenance in early 2015 . Eldorado Gold Year in Review 2015 41 TABLE 12: OUR CONTRACTORS (1) Total Percentage female Percentage nationals Percentage from local communities Turkey Kişladağ Efemçukuru Jinfeng 473 1% 100% 60% 324 6% 100% 35% 205 15% 100% 25% China White Mountain 329 5% 100% 70% Greece Tanjianshan Stratoni, Skouries, Olympias 219 10% 100% 68% 1,005 8% 100% 61% (1) Contractor numbers fluctuate over the course of a given year . The data displayed in Table 12 represents the average of the number of contractors as at January 31, 2016 and December 31, 2015 . The contractor numbers above do not include contractors we hire elsewhere in Greece, Brazil, Romania and Canada . TABLE 13: NEW EMPLOYEE HIRES Total number of new hires Percentage new hires female Percentage new hires nationals Percentage new hires from local communities Turkey China White Kişladağ Efemçukuru Jinfeng Mountain (1) Tanjianshan 74 1% 99% 74% 46 0 .2% 100% 48% 18 56% 100% 56% 100 9% 100% 30% 18 55% 100% 55% Greece Stratoni, Skouries, Olympias 41 12% 100% 41% (1) 70 temporary workers were hired at White Mountain as boiler workers in 2015 . TABLE 14: EMPLOYEE TURNOVER (VOLUNTARY & INVOLUNTARY) Male turnover Female turnover Turkey Kişladağ Efemçukuru Jinfeng 4% 8% 7% 5% 8 .5% 0 .6% China White Mountain 2 .4% 0 .3% Greece Tanjianshan Stratoni, Skouries, Olympias 8 .5% 0 .6% 2 .6% 11 .6% TABLE 15: EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS Percentage employees covered by collective bargaining agreements Turkey Kişladağ Efemçukuru 71% 69% Jinfeng 100% China White Mountain Greece Tanjianshan Stratoni, Skouries, Olympias 100% 0%(1) 66% (1) Union membership at Tanjianshan is voluntary, though most hourly workers use individual Bargaining Agreements . 42 Eldorado Gold Year in Review 2015 Monitoring the floatation process at Olympias, Greece Sample testing at Efemçukuru, Turkey DEVELOPING OUR PEOPLE Training and Up-Skilling Developing workforce capacity and conducting regular training across all of our sites is an ongoing priority . The majority of our workforce comes from local communities and regions, and often have no prior mining experience . We see the social and economic benefits of fostering a local workforce and economy, and we invest in relevant training and development to improve the productivity and safety of our employees . We are proud of the low turnover rates across each of our sites, as the retention of personnel is a great indicator of both our company performance and employee satisfaction . All new recruits and interns at our facilities undergo training on safety, accident prevention, environmental issues and company procedures, among other topics . Ongoing training priorities are defined based on job requirements, performance evaluation notes and legal requirements, and consist of occupational, leadership, technical, and safety and environment training . Even at sites with a long mining history and well-established workforce, such as Tanjianshan, we see the benefits of training to improve employee capacity, productivity, and health and safety performance . TABLE 16: EMPLOYEE TRAINING HOURS Average number of hours training per employee Turkey Kişladağ Efemçukuru Jinfeng China White Mountain Greece Tanjianshan Stratoni, Skouries, Olympias 41 52 27 58 10 9 Eldorado Gold Year in Review 2015 43 KEEPING our PEOPLE SAFE Safety is a core value at Eldorado and is fully ingrained in the way we do business. From design criteria through to operations, we strive to reduce risk through elimination, substitution, engineering controls, procedures, training and protective equipment. Our managers are expected to lead by example, and prioritize and implement safe attitudes and initiatives to promote a culture of safety. 44 Eldorado Gold Year in Review 2015 Employees underground at Efemçukuru, Turkey CREATING A SAFETY CULTURE Our approach to health and safety is a balance between equipping individuals with the skills to recognize hazards and the values to make the right decisions, and ensuring that strong policies, procedures and systems are in place to safeguard workplaces . We continue to strengthen our safety culture by taking a holistic view towards safety leadership that incorporates psychological aspects (how our people feel), behavioural aspects (what our people do) and situational aspects (our policies, procedures and systems) . Through a global commitment to leadership and training, identification of risks, management and mitigation of risks, being prepared for incidents, and learning from incidents, we are succeeding at making our workplaces safer . Core principles of our health and safety approach include: ■ That safe work practices and productivity go hand in hand ■ Risk identification and control ■ Education and training ■ Empathy in leadership ■ Continuous improvement through the review of safety performance HEALTH AND SAFETY MANAGEMENT SYSTEMS Each of our operations has established a site-specific Occupational Health and Safety policy that is aligned with our corporate policy, to monitor and report lead and lag indicators . We have found site-specific approaches to be particularly successful as they account for cultural attitudes towards safety and can be targeted at areas of priority . Site-specific health and safety targets are defined annually as part of the management review element of our health and safety management systems . Weekly health and safety incident reports are prepared by each site and region outlining weekly, month-to-date and year-to-date statistics, including: ■ Near misses – an event which, in different circumstances, could have resulted in harm to people, damage to property or loss to a process ■ First aid incidents – care is provided to a person who is injured or who suddenly becomes ill (e .g . disinfecting a cut, applying a bandage, helping someone who is choking, etc .) ■ Medically treated injuries – an injury or disease that resulted in a certain level of treatment (not first aid treatment) given by a physician or other medical personnel (e .g . prescription medication, sutures, therapeutic treatment) ■ Restricted work injuries – an injury or disease that resulted in the restriction of work or motion, including temporary or permanent transfer to another job ■ Lost-Time Injuries – a work-related injury or disease that resulted in time lost from work of at least one day or shift, a permanent disability, or a fatality ■ Fatalities – death resulting from an accident Health and safety reporting is reviewed during weekly operational calls between site General Managers and Eldorado’s Corporate office, including the Chief Operating Officer and Senior Vice President of Operations . All reported incidents are discussed, and the results of any investigations are provided during these calls . To complement our internal systems, we use the internationally recognized OHSAS 18001 Occupational Health and Safety management framework to help us better identify and manage safety risks and improve our safety performance . Our Kişladağ and Efemçukuru mines in Turkey and our Halkidiki assets in Greece are certified to OHSAS 18001 . Our Chinese operations have established Occupational Health and Safety management systems that are consistent with OHSAS 18001 . However, they have not yet sought certification, for the same reasons that they have not sought certification for their environmental management systems: the decision was made to focus on achieving and maintaining certification under the International Cyanide Management Code (ICMC), a component of which includes an assessment of health and safety management practices . We have now achieved ICMC certification at our Jinfeng and Tanjianshan operations, with our White Mountain operation passing all operational aspects of the ICMC compliance audit . Eldorado Gold Year in Review 2015 45 Ensuring Contractor Safety We communicate our minimum expectations regarding contractor health and safety practices within all tender notices and project assignments at Eldorado’s mining facilities . They form an integral part of the contracts Eldorado signs with each consultant . The objective of these rules is to ensure that contractors carry out work safely and in-line with Eldorado’s standards; prevent accidents among their staff, our staff or third parties; and avoid damage or harm to facilities and equipment belonging to the contractor, Eldorado or third parties . Tagging in at Efemçukuru, Turkey SAFETY PERFORMANCE We accomplished very strong health and safety performance in 2015, with a 25% reduction to our Lost-Time Injury Frequency Rate compared to the prior year – the fourth consecutive year of reduction . Unfortunately, we were deeply saddened to have had a fatal accident in February 2016 at our Stratoni mine in Greece . Employee health and safety is our highest priority and we continue to review and reinforce our safety practices across each of our sites and projects to prevent similar incidents from occurring . ■ We are constantly modernizing infrastructure, procedures and equipment ■ We inform, train, listen to, mobilize and actively engage with all employees about Occupational Health and Safety issues ■ We prevent accidents by carrying out constant checks, assessing occupational risks and immediately taking suitable measures ■ We strive for our policy to be consistently applied in every partnership we build TABLE 17: FATALITIES, LTIFR AND TRIFR PER MILLION HOURS WORKED (1) Turkey China Greece 2015 Total 2014 Total Kişladağ Efemçukuru Jinfeng White Mountain Tanjianshan (1) 0 2 0 0 .7 0 0 5 .49 14 .21 1 .79 0 0 .4 1 .35 0 0 0 .51 Stratoni, Skouries, Olympias 0 2 .1 6 .97 0 1 .03 4 .59 0 1 .38(4) 6 .68 Fatalities(2) LTIFR TRIFR(3) (1) Data by gender is not available . (2) Reported performance is for the 2015 calendar year; however, we are deeply saddened to report a fatality on February 29, 2016 at our Stratoni mine in Greece . (3) TRIs include medically treated injuries, restricted work injuries, and lost-time injuries . (4) An adjustment to the reported LTIFR in 2014 occurred following updated site data for total working hours, falling from 1 .44 to 1 .38 . 46 Eldorado Gold Year in Review 2015 EMERGENCY RESPONSE Emergency response programs are in place at all of our operations . Our emergency response teams are made up of employees who have received additional training in emergency protocols, procedures and equipment . The emergency response programs include extensive emergency drills and emergency training, such as mine rescue drills, fire drills, CPR and first aid training, and training in the use of hazardous materials suits and other safety equipment . Our emergency response teams maintain close working relationships with community-based emergency responders . SAFETY BEYOND THE MINE Making a safety commitment board at Tanjianshan, China Our commitment to health and safety does not end with our employees and contractors . We also consider local stakeholders’ health and safety in all of our activities . To promote health and safety in the communities near our operations, all of our sites have informal or formal mutual aid assistance programs in which Eldorado’s emergency response teams help in community emergencies, if requested . At our Chinese mines, clinics offer both Western and traditional Chinese medicine . Employees and community members may choose between the two when seeking treatment . Health programs at our sites provide basic medical treatments and services for employees, contractors, including immunizations and medical checkups . SPOTLIGHT: IMPROVING WORKER SAFETY AT TANJIANSHAN: HANDS UP FOR SAFETY INITIATIVE In 2013 our Tanjianshan mine noticed a number of incidents related to preventable hand injuries . To raise awareness of the hazards and to remind employees of the importance of their hands, the Hands Up for Safety initiative was introduced . Employees participated in games and exercises that provided a fun yet powerful demonstration of the difficulties of conducting simple tasks while dealing with a hand injury . Hand safety statistics and safety practices were also discussed, and employees signed pledges of their commitment to safety . After the Hands Up for Safety group session, hand injuries at Tanjianshan decreased from 64% of all site injuries in 2013 to 31% of all site injuries in 2014 . In 2015, there was only one minor hand injury at Tanjianshan, and it did not result in a lost-time injury . In fact, Tanjianshan has not had a lost-time injury for over two years . Welding at Tanjianshan, China Eldorado Gold Year in Review 2015 47 G4–3 G4–4 G4–5 G4–6 G4–7 G4–8 G4–9 G4–10 G4–11 G4–12 G4–13 G4–14 G4–15 GRI G4 ‘CORE’ CONTENT INDEX General Standard Disclosures Description of Indicator Page Number, Link, or Location of Information STRATEGY AND ANALYSIS G4–1 Letter from CEO ORGANIZATIONAL PROFILE Organization name 4–5 53 Primary brands, products, and services 1, 10, 11, 53 Location of headquarters Number of countries where the organization has significant operations Nature of ownership Markets served Scale of the organization: employees, operations, net revenues, production Employee numbers (by region, type and gender) 1, 53 3 1, 3 3, 10, 11, 15–17 1, 3, 10–11 41–42 Percentage of employees covered by collective bargaining agreements 42 Organization’s supply chain Significant changes during the reporting period Precautionary principle Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses 14–17 7 10–11, 25, 31 . We recognize there are environmental and social impacts from our operations . Eldorado Gold is committed to using a precautionary approach throughout the lives of our mines, and before any activities commence we assess the potential environmental and social impacts, and evaluate how to avoid, control, or mitigate these, even when impacts are not scientifically certain . 13 20 G4–16 Memberships of associations IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4–17 G4–18 G4–19 G4–20 G4–21 G4–22 G4–23 All entities included in the organization’s consolidated financial statements Please see Eldorado Gold’s 2015 Annual Information Form – www .eldoradogold .com/investors/financial-information/filings/ Process for defining report content and aspect boundaries 22–23 List all Material Aspects Which Aspects are material within the organization Which Aspects are material external to the organization 23 23 23 Restatements of information 0 (“About This Report”), 46 Significant changes from previous reporting periods in the Scope and Aspect boundaries The scope of the report has not changed . Material aspects were determined in our formal materiality assessment undertaken in 2015, per pages 22–23 . 48 Eldorado Gold Year in Review 2015 General Standard Disclosures Description of Indicator Page Number, Link, or Location of Information STAKEHOLDER ENGAGEMENT G4–24 G4–25 G4–26 G4–27 REPORT PROFILE G4–28 G4–29 G4–30 G4–31 G4–32 G4–33 GOVERNANCE List of stakeholder groups Basis for identification and selection of stakeholders with whom to engage Organization’s approach to stakeholder management Key topics and concerns raised through stakeholder engagement 20 20–22 20–21 21, 23 Reporting period 0 (“About This Report”) Date of most previous report 2014 Sustainability Report, published April 2015 . Reporting cycle Contact point GRI Reporting Level External assurance 0 (“About This Report”) 0 (“About This Report”) 0 (“About This Report”) 0 (“About This Report”) G4–34 Governance structure of the organization 18–19, www .eldoradogold .com/about-us/governance/ ETHICS AND INTEGRITY G4–56 Values, principles, standards and norms of behaviour of the organization 19, www .eldoradogold .com/about-us/governance/ Eldorado Gold Year in Review 2015 49 GRI G4 ‘CORE’ CONTENT INDEX Fully reported against the GRI G4 guidelines Partially reported against the GRI G4 guidelines MATERIAL ASPECTS Report Section Page Number Level of Reporting Identified Omission(s) and Reason(s) for Omission(s) Comments & Links ECONOMIC / OPERATIONS Economic Performance G4–DMA G4–EC1 CEO Letter, Our Business, Contributing to Sustainable Development, Our Value Chain and Local Procurement, Our Communities Our Performance and Targets, Payments to Suppliers, Payments to Governments, Local Community Investment 5, 10, 11, 14–15, 17, 25 1, 8, 17, 19, 25 HEALTH, SAFETY, ENVIRONMENT Overall Environmental Performance G4–DMA Year In Review, Our Performance and Targets, Our Approach to Responsible Mining, Managing our Inputs, Managing our Outputs, Biodiversity and Reclamation 7–9, 13, 32–39 Waste Management G4–DMA G4–EN24 Water G4–DMA Waste Management, Spotlight: Managing our Tailings The number of reportable spills that occurred at Eldorado’s sites in 2015 (0) 37 6 Managing our Environmental Footprint, Managing our Inputs 28–34 G4–EN8 Water Use G4–EN10 Volume of water treated as a percentage of total water use (305%), Water Use 33–34 6, 33–34 Health and Safety G4–DMA Letter from the CEO, Year In Review, Our Performance and Targets, Our Approach to Responsible Mining, Keeping our People Safe 4, 7–9, 13, 45–47 G4–LA6 Safety Performance 46 50 Eldorado Gold Year in Review 2015 Payments to Providers of Capital and Economic Value Retained has not been reported . This data is available within Eldorado's 2015 Financial Report . www .eldoradogold .com/ investors/financial-information/ annual-reports/ Water recycled and reused is currently not reported . We report on the total volume of water treated by our water treatment plants as a percentage of total water use . Safety performance is not broken down by employees and contractors or gender, as we do not internally track and report by these breakdowns . Site safety performance is reported in accordance with local government requirements . MATERIAL ASPECTS Report Section Page Number Level of Reporting Identified Omission(s) and Reason(s) for Omission(s) Comments & Links HEALTH, SAFETY, ENVIRONMENT (Continued) Biodiversity and Reclamation G4–DMA G4–MM1 Our Business, Biodiversity and Reclamation 2015 Highlights & Year in Review, Reclamation 10–11, 38–39 6, 38 G4–MM2 Biodiversity 38 Energy Use G4–DMA Managing our Environmental Footprint, Managing our Inputs 28–31, 35 G4–EN3 G4–EN5 Energy Consumption Energy Intensity 35 35 GOVERNANCE Permits and Licences G4–2 CEO Letter, Year In Review, Our Business, Stakeholder Engagement, Managing our Environmental Footprint 5, 7, 10–11, 21, 31 Emergency Preparedness G4–DMA Managing our Environmental Footprint, Emergency Response 30, 47 Workforce Skills Development G4–DMA Managing our Environmental Footprint, Emergency Response G4–DMA Our People G4–LA1 New Employee Hires, Employee Turnover G4–LA9 Employee Training Hours G4–LA11 Sustainability Factors in Compensation 30, 47 40–43 42 43 19 At this time, we do not report on the total land disturbed and not yet rehabilitated, or the total amount of new land disturbed . www .eldoradogold .com/ investors/financial-information/ annual-reports/ Energy intensity ratio calculated based on total energy consumption (scope 1 and scope 2 sources) . We do not monitor or report on new employee hires or employee turnover by age group . We do not track training hours by gender . We do not track our performance review information by gender or employment category . Training hours reflect Eldorado Gold employee training and does not include training hours provided to Contractors . We aim for all our employees (100%) to conduct regular (annual, if not more frequent) performance reviews . Eldorado Gold Year in Review 2015 51 GRI G4 ‘CORE’ CONTENT INDEX Fully reported against the GRI G4 guidelines Partially reported against the GRI G4 guidelines MATERIAL ASPECTS Report Section Page Number Level of Reporting Identified Omission(s) and Reason(s) for Omission(s) Comments & Links COMMUNITY Social Licence G4–24 G4–25 G4–26 G4–27 G4–DMA G4–SO1 G4–SO11 List of stakeholder groups Basis for identification and selection of stakeholders with whom to engage Organization’s approach to stakeholder management Key topics and concerns raised through stakeholder engagement Stakeholder Engagement, 2015 Materiality Assessment, Our Communities – Building Opportunities, Spotlight: The Four Party Coalition Stakeholder Engagement, Our Communities – Building Opportunities, Environmental Impact Assessments Requests and Complaints Received 20 20–22 20–21 21, 23 20–27 20–21, 24–27, 31 20–21 Localization of Goods and Services G4–DMA G4–EC6 Our Value Chain and Local Procurement, Our People Our Employees (Percentage Nationals, Percentage from Local Communities) 16–17, 40–43 41–42 G4–EC9 Payments to Suppliers 16–17 52 Eldorado Gold Year in Review 2015 At this time, we are unable to report the number of site stakeholder engagement plans based on stakeholder mapping . At this time, we do not track the number of grievances addressed and resolved during the reporting period . Our sites review and investigate all requests, complaints and grievances filed at our sites . As we review our current grievance mechanisms, we aim to improve the tracking of these grievances from filing to closure . We report on the total number of employees hired from local communities – not just Senior Management – as we believe this is more compelling statistic to demonstrate our local hiring preferences and influence . MATERIAL ASPECTS Report Section Page Number Level of Reporting Identified Omission(s) and Reason(s) for Omission(s) Comments & Links COMMUNITY (Continued) Community Investment G4–DMA G4–EC1 G4–EC7 CEO Letter, Our Business, Contributing to Sustainable Development, Our Value Chain and Local Procurement, Our Communities Our Performance and Targets, Payments to Suppliers, Payments to Governments, Local Community Investment 5, 10, 11, 14–15, 17, 25 1, 8, 17, 19, 25 Local Community Investment, Community Investment by Operation 25–27 Payments to Providers of Capital and Economic Value Retained has not been reported . This data is available within Eldorado’s 2015 Financial Report . www .eldoradogold .com/ investors/financial-information/ annual-reports/ Eldorado Gold Year in Review 2015 53 MINERAL RESERVES as of December 31, 2015 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 Tonnes (x1000) In-situ oz (x1000) g/t Tonnes (x1000) In-situ oz (x1000) g/t Tonnes (x1000) In-situ oz (x1000) g/t 22,788 1 .93 837 11 .07 8 .31 801 3 .94 5,360 0 .85 48,581 8 .65 4,851 4 .44 2,477 0 .91 73,474 2 .18 1,340 1 .53 16,699 3 .26 3,510 1,414 297 214 680 1,333 1,349 354 2,148 94 821 368 21,500 2,168 3,367 9,767 282,378 11,236 7,220 79,262 1,267 22,914 2,446 1 .43 6 .46 6 .84 3 .77 0 .67 7 .54 2 .68 0 .64 3 .83 1 .36 3 .10 988 447 740 1,183 6,065 2,724 621 1,643 156 1,003 244 44,288 3,005 4,168 15,127 330,959 16,087 9,697 152,736 2,607 39,613 5,956 180,718 1.56 9,072 443,525 1.11 15,814 624,243 22,788 837 4,851 2,477 428 10 81 124 3 172 7,004 2,178 19,339 254 2,367 21,500 2,168 11,236 7,220 227 12 67 130 4 184 8,551 4,628 46,962 897 1,343 31,381 31 31,142 42,351 46 62,381 44,288 3,005 16,087 9,697 655 73,732 1 .69 7 .70 7 .12 3 .83 0 .70 7 .87 3 .13 0 .77 2 .98 1 .43 3 .20 1.24 11 70 128 4 176 2,402 744 954 1,863 7,398 4,073 975 3,791 250 1,824 612 24,886 15,555 6,806 66,301 1,151 3,710 39 93,523 Tonnes (x1000) In-situ t (x1000) % Tonnes (x1000) In-situ t (x1000) % Tonnes (x1000) 73,474 0 .54 73,474 0.54 394 394 79,262 0 .48 79,262 0.48 382 382 152,736 152,736 % 0 .51 0.51 4,851 428 5,279 4 .1 6 .6 4.3 4,851 428 5 .1 10 .2 5,279 5.5 199 28 227 247 44 291 11,236 227 11,463 4 .4 7 .3 4.5 11,236 227 6 .0 10 .3 11,463 6.1 494 17 511 674 23 697 16,087 655 16,742 4 .3 6 .9 4.4 16,087 655 16,742 5 .7 10 .2 5.9 In-situ t (x1000) 776 776 693 45 738 921 67 988 Notes on Mineral Resources and Reserves Mineral Reserve Notes 1 . Mineral reserves and mineral resources are as of 1. Long Term Metal Price Assumptions: 3. Qualified Persons: December 31, 2015 . 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 resources now exclude the remaining old tailings material . 5 . Vila Nova mineral reserves have been removed from the Reserve tabulation due to not being economic at projected long term iron ore prices . 54 Eldorado Gold Year in Review 2015 Gold = $1,200/oz . Silver = $16 .00/oz (for Stratoni it was $7 .74/oz Ag as governed by a streaming agreement with Silver Wheaton (Caymans) Ltd .); Copper = $3 .00/lb; Pb price = $2,000/t and Zn price = $2,000/t . 2. Cut-off grades: Kişladağ: $7 .30 NSR; Efemçukuru: 3 .48 g/t Au; Perama Hill: 0 .8 g/t Au; Tanjianshan: 1 .30 g/t Au (JLG) , 1 .7 g/t Au (QLT South), 3 .80 g/t Au (QLT); Jinfeng: 0 .65 g/t Au (open pit), 2 .3g/t Au (underground); White Mountain: 1 .8 g/t Au; Eastern Dragon: 1 .0 g/t Au (open pit), 1 .7g/t Au (underground); Tocantinzinho: 0 .42 g/t Au; Skouries: $12 .00 NSR (open pit), $33 .33 NSR (underground); Olympias: $76 .00 NSR; Stratoni: 15 .54% Zn Equivalent grade (=Zn%+Pb%*1 .20+Ag%*165); Certej: 0 .90 g/t Au Equivalent grade (=Au(g/t)+Ag(g/t)*0 .0121) . Richard Miller, P .Eng ., General Manager,Kişladağ Mine, is responsible for the Kişladağ reserves . John Nilsson, P .Eng ., of Nilsson Mine Services, is responsible for the Skouries open pit, Certej and Tocantinzinho 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, Stratoni and Perama reserves . Colm Keogh, P .Eng, Principal Mining Engineer, AMC Mining Consultants (Canada) Ltd ., is responsible for the Skouries underground reserves . MINERAL RESOURCES as of December 31, 2015 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 g/t (x1000) 27,518 1 .80 800 12 .48 2,343 8 .82 6,887 4 .16 48,232 0 .82 4,464 9 .97 3,064 4 .30 – – – – 100,018 0 .79 2,007 2 .13 17,530 1 .51 4,206 3 .64 1,592 322 665 920 1,276 1,431 424 – – 2,534 137 851 491 62,463 1 .23 2,700 6 .04 2,573 7 .84 13,029 3 .78 441,134 0 .59 10,644 8 .55 9,375 3 .18 – – 2,423 6 .08 189,263 0 .47 3,384 3 .01 31,202 1 .26 2,678 3 .45 2,472 530 649 1,581 8,325 2,926 958 – 474 2,867 327 1,264 297 89,981 1 .40 3,500 7 .50 4,916 8 .31 19,916 3 .91 489,366 0 .61 15,108 8 .97 12,439 3 .46 – – 2,423 6 .08 289,281 0 .58 5,391 2 .68 48,732 1 .35 6,884 3 .56 4,064 852 1,314 2,501 9,601 4,357 1,382 – 474 5,401 464 2,115 788 12,228 0 .96 2,200 2 .67 5,524 4 .75 7,818 3 .83 372,643 0 .40 3,955 8 .34 8,766 1 .96 10,542 5 .70 1,011 10 .65 170,136 0 .31 4,341 3 .85 2,395 0 .90 1,685 6 .98 376 190 844 962 4,792 1,060 554 1,932 347 1,680 537 69 378 Total Gold 217,069 1.53 10,643 770,868 0.91 22,670 987,937 1.05 33,313 603,244 0.71 13,721 SILVER Certej Eastern Dragon Olympias Perama Piavitsa Stratoni 27,518 800 7,768 9 91 2,400 4,464 142 20,380 335 3 3,064 – – – 4,162 644 201 62,463 2,700 9 17,833 5,900 67 10,644 147 50,305 2,833 – 2,808 9 – 412 212 9,375 – 89,981 3,500 15,108 12,439 – 1,056 73 9 25,601 8,300 146 70,685 3,168 – 6,970 8 – 205 3 12,228 2,200 20 3,955 118 7 8,766 57 10,542 490 169 1,364 1,500 15,050 1,860 19,156 2,662 Total Silver 36,490 30 35,045 85,594 29 79,679 122,084 29 114,724 38,181 34 41,592 COPPER Tonnes (x1000) % In-situ t (x1000) Tonnes In-situ t (x1000) % (x1000) Tonnes (x1000) In-situ t % (x1000) Tonnes (x1000) In-situ t % (x1000) Skouries 100,018 0 .48 Total Copper 100,018 0.48 484 484 189,263 0 .40 189,263 0.40 289,281 0 .43 1,242 170,136 0 .34 289,281 0.43 1,242 170,136 0.34 578 578 153 31 184 171 43 214 3,955 490 4,445 3,955 490 4,445 3 .9 6 .4 4.1 4 .3 8 .8 4.8 9,519 59 .7 9,519 59.7 758 758 532 33 565 724 48 772 210 50 260 259 68 327 10,644 412 11,056 5 .0 7 .9 5.1 10,644 6 .8 412 11 .7 11,056 7.0 15,108 1,056 16,164 4 .9 7 .9 5.1 742 83 825 15,108 6 .5 1,056 11 .0 983 116 16,164 6.8 1,099 10,982 58 .5 10,982 58.5 13,194 58 .7 13,194 58.7 2. Qualified Persons: Stephen Juras, Ph .D ., P .Geo ., Director, Technical Services for the Company, is responsible for all of the Company’s mineral resources except for those associated with Sapes . Peter Lewis, Ph .D ., P .Geo ., Vice President, Exploration for the Company, is responsible for the Sapes mineral resources . LEAD Olympias Stratoni Total Lead ZINC Olympias Stratoni Total Zinc IRON Vila Nova Total Iron 4,464 644 4 .7 7 .7 5,108 5.1 4,464 5 .8 644 10 .6 5,108 6.4 2,212 59 .3 2,212 59.3 Mineral Resource Notes 1. Cut-off grades: Kişladağ: 0 .25 g/t Au; Efemçukuru: 2 .5 g/t Au; Perama Hill: 0 .5 g/t Au; Jinfeng: 0 .5 g/t Au (open pit), 2 .0 g/t Au (underground); Tanjianshan: 1 .0 g/t Au (JLG), 1 .0 g/t Au (QLT South), 2 .5 g/t Au (QLT); White Mountain: 1 .0 g/t Au; Eastern Dragon: 1 .0 g/t Au; Tocantinzinho: 0 .3 g/t Au; Certej: 0 .7 g/t Au; Skouries: 0 .20 g/t Au Equivalent grade (open pit), 0 .60 g/t Au Equivalent grade (underground) (=Au g/t + 1 .6*Cu%); Piavitsa: 3 .5 g/t Au; Sapes: 2 .5 g/t Au (underground), 1 .0 g/t Au (open 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 . Eldorado Gold Year in Review 2015 55 CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS AND INFORMATION Certain statements and information in this 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 operating performance, price of gold and other commodities, cash flow, cash costs, targets, production and expenditures; our mineral reserve and resource estimates; and our proposed mine development (including permitting), exploration, acquisitions, our expectation as to future performance at our mines 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 Report, we have made numerous assumptions, estimates and opinions that may prove to be incorrect, 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, dispositions, suspensions or delays 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, interest rate risk and credit rating risk; • the risks that the integration of acquired businesses may take longer than expected, the anticipated benefits of the integration may be less than estimated or the costs of acquisition may increased capital requirements and the ability to obtain financing; be higher than anticipated; • the impact of acquisitions and dispositions, monetization, mergers and other business combinations and transactions, including effect of changes in our 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; • failure, security breaches or disruption of our information technology systems; and • risks related to natural disasters and climate change . 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 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 other aspects of our 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 . 56 Eldorado Gold Year in Review 2015 FINANCIAL REVIEW TABLE OF CONTENTS Management’s Discussion and Analysis of Financial Condition . . . . . . . . . . . . . . . 2 and Results of Operations Management’s Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . . 27 Independent Auditors’ Report of Registered Public Accounting Firm . . . . . . . . . 28 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . 29 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Consolidated Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Board of Directors, Officers and Senior Management Team . . . . . . . . . . . . . . . . . 73 Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Cautionary Note About Forward-Looking Statements and Information . . . . . . . 76 Eldorado Gold Financials 2015 F1 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) for the year ended December 31, 2015 Throughout this MD&A, Eldorado, we, us, our and the Company mean Eldorado Gold Corporation. This year means 2015. All dollar amounts are in United States dollars unless stated otherwise. The information in this MD&A is as of March 23, 2016. You should also read our audited consolidated financial statements for the year ended December 31, 2015. We prepare our consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). We file them with appropriate regulatory authorities in Canada and the United States. You can find more information about Eldorado, including our Annual Information Form, on SEDAR at www.sedar.com. About Eldorado Based in Vancouver, Canada, Eldorado owns and operates mines around the world. Its activities involve all facets of the mining industry including exploration, development, production and reclamation. OPERATING GOLD MINES: ■ Kişladağ, in Turkey (100%) ■ Efemçukuru, in Turkey (100%) ■ Tanjianshan, in China (90%) ■ White Mountain, in China (95%) ■ Jinfeng, in China (82%) GOLD PROJECTS: ■ 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 MINES: ■ Stratoni – Lead and Zinc Concentrates, in Greece (95%) ■ Vila Nova – Iron Ore, in Brazil (100%) ELDORADO IS LISTED ON THE FOLLOWING EXCHANGES: ■ Toronto Stock Exchange (“TSX”) under the symbol ELD ■ New York Stock Exchange (“NYSE”) under the symbol EGO ELD is part of the S&P/TSX Global Gold Index. EGO is part of the AMEX Gold BUGS Index. 2 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 20152015 Overview SELECTED CONSOLIDATED FINANCIAL INFORMATION ■ Loss attributable to shareholders of the Company of $1,540.9 million or $2.15 loss per share, compared to net income attributable to shareholders of the Company of $102.6 million or $0.14 per share in 2014. ■ Dividends paid of $11.3 million in 2015, compared to $13.0 million in 2014. ■ Liquidity was $667.6 million at year end, including $292.6 million in cash, cash equivalents, and term deposits, and $375.0 million in unused lines of credit (2014 – $876.3 million of liquidity). ■ During 2015 the Company recognized non-cash impairment charges of $1,525.2 million, net of taxes. SELECTED PERFORMANCE MEASURES (1) ■ Gold production of 723,532 ounces, including production from Olympias tailings retreatment (2014 – 789,224 ounces). ■ Total cash costs averaged $606 per ounce (2014 – $557 per ounce). ■ All-in sustaining cash costs averaged $842 per ounce (2014 – $779). ■ Gross profit from gold mining operations of $230.0 million (2014 – $382.7 million). ■ Adjusted net earnings of $13.2 million ($0.02 per share) compared to adjusted net earnings of $138.7 million ($0.19 per share) in 2014. ■ Cash generated from operating activities before changes in non-cash working capital was $193.1 million (2014 – $342.9 million). IMPAIRMENT CHARGES During 2015 the Company recorded non-cash impairment charges totalling $1,049.2 million in property, plant and equipment (net of deferred income tax recovery), and $476.0 million in goodwill mainly related to Greece. The impairment of property, plant and equipment included $739.9 million related to Skouries, $214.1 million related to Certej, $31.2 million related to Stratoni, $35.8 million related to TJS, and $28.2 million related to Vila Nova. In addition to ongoing permitting issues at Skouries, higher estimated capital and operating costs affected projected cash flows from Skouries and Certej, leading to fair value estimates below these projects’ carrying values. Stratoni (lead and zinc) and Vila Nova (iron ore) were both affected by the continuing world-wide slump in base metals prices. (1) Throughout this MD&A we use cash operating cost per ounce, total cash costs per ounce, all-in sustaining cash costs, gross profit from gold mining operations, adjusted net earnings, and cash flow from operating activities before changes in non-cash working capital as additional measures of Company performance. These are non-IFRS measures. Please see page 14 for an explanation and discussion of these non-IFRS measures. Eldorado Gold Financials 2015 3 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015Summarized Annual Financial Results ($ millions except as noted) 2015 2014 2013 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) All-in sustaining cash cost ($/ounce sold) Gross profit from gold mining operations Adjusted net earnings Net profit (loss) attributable to shareholders of the Company Earnings (loss) per share attributable to shareholders of the Company – basic ($/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) Includes long-term debt net of deferred financing costs, other non-current liabilities, and asset retirement obligations. 863.3 823.8 705,310 1,168 1,159 552 606 842 230.0 13.2 (1,540.9) (2.15) (2.15) 193.1 396.0 0.02 292.6 1,067.9 980.9 774,522 1,266 1,266 500 557 779 382.7 138.7 102.6 0.14 0.14 342.9 410.7 0.02 501.3 1,124.0 1,020.0 725,095 1,407 1,411 494 551 n/a 481.1 192.9 (653.3) (0.91) (0.91) 382.0 482.0 0.12 623.9 5,464.6 698.5 7,393.6 745.5 7,235.2 670.3 REVIEW OF ANNUAL FINANCIAL RESULTS Gold sales volumes decreased 9% year over year, reflecting decreases in gold production at Kişladağ and the Company’s Chinese mines. Total cash costs per ounce increased 9% year over year, mainly due to increases in operating costs at Kişladağ and Tanjianshan. Gross profit from gold mining operations of $230.0 million fell 40% year over year on decreasing gross margins as a result of lower sales volumes, higher unit operating costs and lower realized gold prices. Loss attributable to shareholders of the Company was $1,540.9 million (or $2.15 per share), compared to a net profit attributable to shareholders of the Company of $102.6 million (or $0.14 per share) in 2014. The loss in 2015 was mainly due to impairment losses, net of tax, in the amount of $1,525.2 million ($1,423.0 million attributable to shareholders of the Company), a deferred income tax charge of $63.5 million related to a change in income tax rates in Greece, and lower gross profits from gold mining operations. Adjusted net earnings for the year was $13.2 million ($0.02 per share) as compared with $138.7 million ($0.19 per share) for 2014. The main factor in the decrease in adjusted net earnings was the decrease in gross profit from gold mining operations described above. Please see page 15 for a reconciliation between loss attributable to shareholders of the Company and adjusted net earnings. 4 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 Summarized Quarterly Financial Results 2015 ($ millions except as noted) Q1 Q2 Q3 Q4 2015 Revenues Gold revenues Gold sold (ounces) Average realized gold price ($/ounce) Cash operating costs ($/ounce) All-in sustaining cash cost ($/ounce sold) Gross profit from gold mining operations Adjusted net earnings (loss) Net profit (loss) attributable to shareholders of the Company Earnings (loss) per share attributable to shareholders of the 238.3 224.0 181,820 1,232 521 729 77.1 19.5 (8.2) 214.2 204.2 170,056 1,201 569 900 61.4 17.0 (198.6) 211.5 206.2 182,124 1,132 552 835 53.1 (4.0) (96.1) 199.3 189.4 171,310 1,105 567 914 38.4 (19.3) 863.3 823.8 705,310 1,168 552 842 230.0 13.2 (1,238.0) (1,540.9) Company – basic ($/share) (0.01) (0.28) (0.13) (1.73) Earnings (loss) per share attributable to shareholders of the Company – diluted ($/share) (0.01) (0.28) (0.13) (1.73) (2.15) (2.15) Cash flow from operating activities before changes in non-cash working capital 58.9 61.9 43.4 28.9 193.1 2014 ($ 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 ($/ounce sold) Gross profit from gold mining operations Adjusted net earnings Net profit (loss) attributable to shareholders of the Company Earnings per share attributable to shareholders of the Company – basic ($/share) Earnings 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 37.3 31.3 0.04 0.04 94.7 265.5 247.6 190,621 1,299 489 829 100.8 35.9 37.6 0.05 0.05 92.2 263.5 241.2 189,321 1,274 488 735 102.0 36.1 19.8 0.03 0.03 78.7 259.0 244.5 203,952 1,199 505 761 84.5 29.4 13.9 0.02 0.02 77.3 1,067.9 980.9 774,522 1,266 500 779 382.7 138.7 102.6 0.14 0.14 342.9 REVIEW OF QUARTERLY RESULTS Loss attributable to shareholders of the Company for the quarter was $1,238.0 million ($1.73 per share) as compared to net profit for the quarter ended December 31, 2014 of $13.9 million ($0.02 per share). Adjusted loss was $19.3 million as compared to 2014 adjusted net earnings of $29.4 million. The main factors that impacted earnings for the fourth quarter year over year was the impairment charge attributable to shareholders of the company, net of taxes, of $1,249.6 million recorded in the fourth quarter of 2015, and lower gold sales volumes and prices. Eldorado Gold Financials 2015 5 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 20152015 2014 2016 outlook 723,532 789,224 565,000 to 630,000 552 606 842 94.9 281,280 543 558 30.6 100,482 521 540 24.1 97,563 473 646 14.7 149,655 587 669 10.0 78,156 653 691 15.5 16,396 500 557 779 109.0 585 to 620 n/a 940 to 980 105.0 311,233 225,000 to 240,000 443 461 41.6 98,829 573 595 25.6 107,614 389 559 5.4 168,50 575 658 16.0 85,308 617 657 20.4 17,737 550 to 600 n/a 50.0 90,000 to 100,000 550 to 600 n/a 20.0 70,000 to 80,000 675 to 725 n/a 5.0 95,000 to 105,000 700 to 750 n/a 15.0 75,000 to 85,000 625 to 675 n/a 15.0 n/a Operations Review and Outlook GOLD OPERATIONS Total Operating Gold Mines Gold ounces produced Cash operating costs ($/ounce) Total cash costs ($/ounce) All-in sustaining cash costs ($/ounce) Sustaining capital expenditure ($ millions) Kişladağ 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 6 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 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 2015 2014 19,146,685 15,501,790 0.70 1.01 281,280 280,892 543 558 311,233 311,451 443 461 326.5 46.5 121.2 30.6 392.5 28.1 218.2 41.6 Gold production at Kişladağ was 10% lower year over year mainly as a result of lower ore grades, which were expected for this phase of the open pit. Lower ore grades were partly offset by an increase in ore tonnage and an inventory draw-down resulting from increased solution application to the leach pad. Kişladağ placed 24% more total tonnes on the leach pad at a 31% lower head grade than in 2014. Cash operating costs per ounce were higher year over year as a result of the lower grade of ore, partly offset by a decline in diesel fuel prices, and a weakening of the Turkish lira. Capital expenditures at Kişladağ in 2015 included capitalized waste stripping, equipment overhauls 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 2015 2014 454,863 7.82 91.7% 100,482 99,147 521 540 113.5 30.3 28.0 24.1 436,852 8.34 93.3% 98,829 101,717 $573 $595 128.8 26.9 40.2 25.6 Gold production at Efemçukuru increased 2% year over year due to favorable smelter settlement adjustments as well as an increase in mill throughput. Gold ounces sold were lower due to concentrate inventory movements. Lower cash operating costs were the result of both the impact of the weakening Turkish lira, cost reduction initiatives, and slightly higher gold production. Capital spending included costs related to capitalized underground development, mobile equipment, tailings dam construction, and process improvements. Eldorado Gold Financials 2015 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 TANJIANSHAN Operating Data Tonnes milled Average treated head grade (g/t Au) Average recovery rate Gold (ounces) – Produced – Sold Cash operating costs ($/ounce) Total cash costs ($/ounce) Financial Data ($ millions) Gold revenues Depreciation and depletion Gross profit from mining operations Sustaining capital expenditures 2015 2014 1,060,176 1,045,440 3.14 82.4% 97,563 97,563 473 646 115.5 25.3 26.8 14.7 3.69 81.7% 107,614 107,614 389 559 136.6 22.2 53.5 5.4 Gold production at Tanjianshan was 9% lower year over year mainly due to lower average treated head grade, and gold-in-circuit inventory movements. Cash operating costs per ounce were higher than 2014 mainly due to lower average treated head grade and higher ore and waste tonnes mined. Capital expenditures for the year included construction of a tailings dam lift and driving the Qinlongtan (“QLT”) Deep decline in order to evaluate the QLT resource. 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 2015 2014 1,303,863 1,470,824 4.13 86.2% 149,655 149,552 587 669 176.6 37.2 39.3 10.0 3.99 86.8% 168,503 168,432 575 658 214.5 52.2 51.5 16.0 Gold production at Jinfeng was 11% lower year over year mainly as a result of less ore milled, partially offset by higher average treated head grade. Ore production fell year over year with the completion of the open pit in April 2015. Cash operating costs per ounce were 2% higher year over year mainly due to lower gold production. Capital expenditures for the year included underground development, mining equipment and the construction of dry stacking facilities at the flotation and carbon in leach (“CIL”) tailings dams. 8 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 WHITE MOUNTAIN 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 2015 2014 849,335 3.30 86.5% 78,156 78,156 653 691 91.6 27.0 10.5 15.5 850,782 3.47 86.9% 85,308 85,308 617 657 108.6 33.1 19.2 20.4 Gold production at White Mountain was 8% lower year over year due to lower average treated head grade and gold-in-circuit inventory movements. Cash operating costs per ounce were 6% higher than in 2014 principally as a result of the lower average treated head grade. Capital expenditures for the year included underground electrical infrastructure, upgrades to the mill and backfill plant, and ongoing expansion of the tailings storage facility. STRATONI Operating Data Tonnes ore processed (dry) Pb grade (%) Zn grade (%) Tonnes of concentrate produced Tonnes of concentrate sold Average realized concentrate price ($/tonne) Cash Costs ($/tonne of concentrate sold) Financial Data ($ millions) Concentrate revenues Depreciation and depletion Gross profit (loss) from mining operations Sustaining capital expenditures 2015 2014 154,992 219,861 6.5% 8.5% 40,232 46,502 771(1) 774 35.9 8.6 (12.5) 3.2 5.9% 10.5% 58,375 57,719 884 714 51.0 8.4 0.6 5.0 (1) Average realized price included mark to market downward adjustments to accounts receivable in the amount of $48 per tonne. Stratoni produced 31% less concentrate than 2014 mainly due to lower mine output. Mine output was impacted by fewer available underground production faces as well as an extended mine shutdown related to Kassandra mines’ permitting issues. Stratoni reported a loss from mining operations of $12.5 million (2014 – gross profit $0.6 million). The loss included write down of inventory to net realizable value of $3.3 million. In addition to the shortfall in production, the profitability of mining operations was impacted by weak lead and zinc prices. Capital expenditures for the year included upgrades to health, safety and environmental equipment, and upgrades to the water treatment plant. Eldorado Gold Financials 2015 9 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 VILA NOVA Operating Data Tonnes processed Iron ore produced Average Grade (% Fe) Iron ore tonnes – Sold Average realized iron ore price(1) ($/tonne) Cash costs ($/tonne sold) Financial Data ($ millions) Iron ore revenues Depreciation and depletion Gross profit (loss) from mining operations Sustaining capital expenditures 2015 2014 20,017 16,038 63.7% 806,082 693,714 63.1% 47,815 524,645 (8) 33 (0.4) 1.0 (11.8) – 60 55 31.6 4.9 (16.7) 1.0 (1) Average realized price includes negative adjustments to prior shipments. A nominal amount of iron ore was processed and shipped in the first quarter of 2015 while preparing the plant for shutdown. No production was realized during the rest of the 2015 year, and sales and logistic activities remained suspended during the year due to low iron ore market prices. 10 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 Annual Review – Development Projects KIŞLADAĞ Design concepts were developed during 2015 for additional crushing and screening capacity to increase plant throughput at Kişladağ to 20 million tonnes per year. The crushing circuit was optimized with a change in crush size that is expected to improve gold recovery when it becomes operational in 2016. OLYMPIAS The Olympias plant treated 589,675 tonnes of tailings at a grade of 1.99 grams per tonne during 2015. A total of 16,396 ounces of gold were produced during the year. The Olympias plant is expected to cease treating tailings during the first quarter of 2016. During 2015 basic engineering for Phase II was completed, and full implementation began with detailed engineering and procurement of long lead items well advanced by year end. The construction phase is expected to begin in 2016 assuming the timely receipt of the required installation permit, with commissioning forecast by the end of the year. Underground mine development and refurbishment continued at Olympias during 2015, with underground ore production for Phase II projected to begin early in 2017. During 2015, 659 metres of underground access were rehabilitated and 1,901 metres of new development were completed. In addition, approximately 330 metres were advanced on the main Stratoni-Olympias decline, bringing total decline advance project-to-date to 1,950 metres. Capital costs incurred in 2015 were $97 million, consisting of $72 million in construction capital and $25 million in capitalized cost for tailings retreatment. SKOURIES Engineering design work for the processing plant and surface facilities progressed during 2015, with engineering at over 93% complete by year end. During the year a substantial amount of the equipment and various steel structures required to complete construction of the plant and facilities were delivered to the Skouries site, with over 80% of the procurement scope completed by the end of the year. Work continued on construction of the process plant and road access was completed to the base of the tailings dam. Work on the development of the Skouries underground mine design was advanced during 2015 from scoping level through prefeasibility level. The underground mine design is expected to be completed in 2016. The mine is projected to achieve a throughput rate of 4.5 million tonnes per year using shaft and ramp access with sub-level open stoping along vertical development intervals of 60 metres. The open pit is expected to be used for disposal of mill tailings during the life of the underground operation. The open pit is projected to operate for a period of eight years to be followed by 22 years of underground mining. During 2015 a total of $112.9 million was spent on Skouries, excluding capitalized exploration and capitalized interest. On January 11, 2016 the Company announced that construction and development activities at the Skouries project were being suspended due to delays in the issuance of routine permits and licences by the Greek permitting authorities. Environmental protection works and care and maintenance activities continued to be performed in order to safeguard the environment and the assets of the Company at site at a cost of approximately $1.0 million per month. CERTEJ In May 2015 the Company released the results of the feasibility study for the Certej project. The study included improvements in the mine design and further optimization of the flotation and oxidation processes for gold recovery. This study resulted in a decrease in projected capital investment and reduced life of mine operating costs, as compared with the previous feasibility study. Engineering work continued during 2015 on trade off studies with a focus on further opportunities to improve the project and increase the level of engineering confidence. Work began on amending the existing environmental permits to reflect the proposed changes, and will continue to be the focus of efforts in 2016. During 2015 a total of $15.8 million was spent on Certej, mainly on geotechnical and metallurgical testing, site preparation and engineering studies. Eldorado Gold Financials 2015 11 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015PERAMA HILL Project engineering was completed during the year on Perama Hill and the project was placed on care and maintenance pending receipt of the Environmental Impact Assessment approval. In 2015, a total of $1.0 million was spent on the Perama Hill project. EASTERN DRAGON A key milestone was achieved in June 2015 with the receipt of the Project Permit Approval (“PPA”). The PPA, which was approved by the National Development and Reform Commission (“NDRC”), provides verification of previous permitting steps including the Environmental Protection Assessment approval. The conversion of the Exploration Licence to a Mining Licence is progressing, evidenced by formal acceptance of the application by the Ministry of Land and Resources (“MLR”) on March 1, 2016. Mine personnel continue to be engaged with local, state and central government authorities to actively pursue all avenues to advance permitting while maintaining all existing agreements in good standing. TOCANTINZINHO The Company completed a feasibility study for the Tocantinzinho project during 2015. The project is projected to generate positive cash flows with a return rate of 13.5% after tax at a forecast gold price of $1,250 per ounce. Capital costs incurred at Tocantinzinho in 2015 totalled $4.1 million and were spent on engineering and site works to advance the installation of the access road to the site. 12 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015Annual Review – Exploration A total of $30.0 million was spent in 2015 on exploration, which included 58,000 metres of drilling. Exploration activities were conducted at 17 projects including early-stage, brownfields and in-mine programs in Turkey, China, Brazil, Greece, Serbia and Romania. TURKEY At the Efemçukuru mine 5,500 metres of drilling focused on establishing the grade and continuity of mineralized trends within the Kokarpinar vein system. Reconnaissance teams drill-tested porphyry-epithermal targets at the Dölek project in Northeast Turkey (1,900 metres), and conducted project generation work mainly in northern and western Turkey. Aeromagnetic data were acquired covering roughly 6,000 square kilometres in an area west of Kişladağ, which will form the basis of regional reconnaissance work in 2016, directed towards identifying new porphyry and epithermal targets. CHINA In China, brownfields and in-mine exploration programs were completed at Tanjianshan and White Mountain. At Tanjianshan, 4,700 metres of drilling, collared from the new underground development, defined along-strike and down-dip extensions to the high-grade Qinlongtan North deposit. Drilling was also completed at the nearby Xijingou deposit (2,200 metres), and the Dushugou and Qingshan prospects (800 metres total). At White Mountain, 14,200 metres of underground drilling were completed, focused mainly on expanding resources in the South, North, and Far North zones. Finally, a 600 metres drill program tested new exploration targets on the Anbao licence, north of Jinfeng. BRAZIL In Brazil, the KRB prospect in the Tocantinzinho project area was tested with 3,000 metres of drilling completed. Other exploration activities in Brazil were limited project generation, mainly in the Central Brazil gold belt and in the northeastern part of the country. In December an option agreement was signed with a private Brazilian company covering parts of the prospective Mara Rosa greenstone belt. The agreement includes the right to earn up to 100% in the subject licences. GREECE Exploration drilling in Greece totalled 900 metres of underground drilling that targeted extensions of the Mavres Petres deposit. Other exploration activities focused on mapping and sampling programs on our Halkidiki and Sapes licence areas, and project generation work in Northern Greece. Several new high- grade vein occurrences were identified peripheral to the Skouries deposit, and drilling targets were defined at the Tsikara and Fisoka prospects. ROMANIA In Romania, five exploration projects were drilled in the Certej area. A total of 5,100 metres of drilling were completed at the Muncel VMS deposit aimed at identifying gold-rich areas within the base metal system. At Magura, 8,900 metres of drilling targeted down-dip and along-strike extensions of high- grade veins that were historically explored in underground workings. At the newly acquired Certej North exploration licence, 4,700 metres of drilling were completed intersecting broad zones of peripheral porphyry and epithermal-style alteration/mineralization. Drilling programs also tested the P. Avram prospect (1,700 metres) and porphyry targets on the Deva exploration licence (650 metres). Eldorado Gold Financials 2015 13 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015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 2015 469.8 38.1 431.7 (4.2) 427 .5 2014 508.3 72.5 435.8 (4.4) 431 .4 (38.2) (44.1) 389 .3 705,310 606 552 387 .3 774,522 557 500 All-in Sustaining Cash Cost 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. 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 2015 427.5 94.9 10.4 61.4 594.2 705,310 842 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. 14 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 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) Q4 2015 2015 2014 Net (loss) earnings attributable to shareholders of the Company (1,238 .0) (1,540 .9) 102 .6 Transaction costs Losses (gains) 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)(1) Unrealized losses (gains) on foreign exchange translation of deferred income tax balances Deferred income tax charge for change in Greek tax rates(1) Total adjusted net earnings Weighted average shares outstanding Adjusted net earnings ($/share) (1) Attributable to shareholders of the Company. 1.2 0.2 0.0 0.0 0.0 15.2 1,208.9 (3.6) (3.2) (19 .3) 3.1 0.2 0.0 0.0 0.0 28.5 1,423.0 38.9 60.4 13 .2 0.0 1.9 2.4 0.1 0.0 16.5 0.0 15.2 0.0 138 .7 716,587 716,586 (0 .03) 0 .02 716,288 0 .19 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. Eldorado Gold Financials 2015 15 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 Financial Condition & Liquidity OPERATING ACTIVITIES Operating activities before changes in non-cash working capital generated $193.1 million in cash in 2015, compared to $342.9 million in 2014. INVESTING ACTIVITIES The Company invested $396.0 million in capital expenditures this year. Evaluation and development expenditures, including capitalized drilling programs and Olympias tailings retreatment, totalled $262.9 million, while sustaining capital spending at our producing mines totalled $98.1 million ($94.9 million at our producing gold mines and $3.2 million at Stratoni and Vila Nova). We also spent $5.0 million on land acquisitions in Turkey and Romania. A total of $27.2 million in bond interest was also charged to capital projects. The remaining $2.8 million related to fixed assets for our corporate offices in Canada, Brazil, Turkey, Greece, Romania and China. In addition, cash proceeds of $17.9 million related to gold concentrate sales proceeds from tailings retreatment were recorded as cash flows from investment activities. FINANCING ACTIVITIES The Company paid dividends of $10.9 million to non-controlling interests and $11.3 million to shareholders during 2015. The Company is suspending the cash payment of its semi-annual dividend payment effective the first quarter of 2016. The decision of the Board of Directors has been made in view of the low gold price, the terms and conditions of the Dividend Policy and the requirements of the Canada Business Corporations Act (“CBCA”). We continue to believe that a portion of funds from operations should be shared with our investors and look forward to resuming dividend payments in an environment of stronger gold prices. Capital Resources ($ millions) Cash, cash equivalents and term deposits Working capital Restricted collateralized accounts Debt – Current and long-term 2015 292.6 335.4 0.2 589.4 2014 501.3 646.2 0.3 603.5 Management believes that the working capital at December 31, 2015, 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 2016 and beyond. Within 1 year 2 to 3 years 4 to 5 years Over 5 years Total – 0.7 5.9 53.1 59 .7 – 0.7 6.0 2.5 9 .2 600.0 – 6.2 0.2 606 .4 – – 6.1 – 6 .1 600.0 1.4 24.2 55.8 681 .4 Contractual Obligations As at December 31, 2015 ($ millions) Debt Capital leases Operating leases Purchase obligations Totals The table does not include interest on debt. 16 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 As at December 31, 2015, Hellas Gold had entered into off-take agreements pursuant to which Hellas Gold agreed to sell a total of 17,280 dry metric tonnes of zinc concentrates, 9,860 dry metric tonnes of lead/silver concentrates, and 26,225 gold concentrate through the financial year ending December 31, 2016. In April 2007, Hellas agreed to sell to Silver Wheaton (Caymans) Ltd. (“Silver Wheaton”) all of the payable silver contained in lead concentrate produced within an area of approximately seven square kilometres around Stratoni. The sale was made in consideration of a prepayment to Hellas of $57.5 million in cash, plus a fixed price per ounce of payable silver to be delivered of the lesser of $3.90 and the prevailing market price per ounce, adjusted higher every April by 1%. For the period April 2015 through March 2016, this amount is equal to $4.14 per ounce. In October 2015 the agreement with Silver Wheaton was amended to provide an increase in the price per ounce of payable silver to be delivered to Hellas based on Hellas achieving certain exploration drilling milestones. 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 €50.0 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, 2015, 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 36,000 dry metric tonnes of gold concentrate through the financial year ending December 31, 2016. Debt JINFENG On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($15.4 million) working capital loan with China Commerce Bank (“CMB”). Each draw-down had a fixed interest rate of 5.6% and had a term of six months. 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 was unsecured. The proceeds were used to fund working capital obligations. As at December 31, 2015, Jinfeng repaid the full amount under this facility. REVOLVING CREDIT FACILITY The Company has a $375.0 million revolving credit facility with a syndicate of banks (“the credit facility” or “ARCA”). 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, 2015. Loan interest is variable depending on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately 1.99:1. 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 was deferred as pre-payments for liquidity services and was amortized to financing costs. No amounts were drawn down under the ARCA as at December 31, 2015. 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: a) 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; b) 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, 2015 is $526.9 million. Eldorado Gold Financials 2015 17 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 ENTRUSTED LOAN 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 ($110.9 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 draw-down bears interest fixed at the prevailing lending rate stipulated by the People’s Bank of China on the date of draw-down. Each draw-down has a term of one year and can be rolled forward at the discretion of QDML. The interest rate on this loan as at December 31, 2015 was 4.59%. As at December 31, 2015, RMB 667.1 million ($102.7 million) had been drawn under the entrusted loan. Subsequent to December 31, 2015, RMB 3.1 million ($0.5 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 available only 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, 2015 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, 2015. 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 $2.8 million (2014 – $2.7 million). Cash payments totalling $0.1 million were made directly to beneficiaries during the year (2014 – $0.2 million). The Company expects to contribute $0.04 million to the Pension Plan and $1.7 million to the SERP in 2016. Equity In 2015 the Company received net proceeds of $0.1 million for issuing 22,610 common shares related to stock options and warrants being exercised. Common Shares Outstanding – as of March 23, 2016 – as of December 31, 2015 Share purchase options – as of March 23, 2016 (Weighted average exercise price per share: CDN$7.67) Managing Risk 716,587,134 716,587,134 32,290,135 This section describes the types of risks we are exposed to and our objectives and policies for managing them (please read the Company’s Annual Information Form for additional information). We 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. 18 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 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 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, 2015, together with future cash flows from operations and, where appropriate, selected financing sources, is sufficient to support our planned and foreseeable commitments in 2016 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 15 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, 2015. 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. 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, 2015. We recognized a loss of $16.8 million on foreign exchange this year, compared to a loss of $7.2 million in 2014. (thousands) Canadian Australian dollar dollar Euro Turkish lira Chinese renminbi Swedish Romanian Great British Brazilian real pound krona lei 172 4,737 2,165 357,183 1,774 8,014 244 21,559 Cash and cash equivalents Marketable securities Accounts receivable and other Accounts payable and 4,705 25,369 2,261 – 1 – – – 6,143 54,785 182,288 accrued liabilities (12,111) (192) (58,596) (97,073) (434,573) Other non-current liabilities Debt – – – – (2,158) (11,116) – – – – – – – – – – 9,212 (6,027) – – – – – – – – 10,255 (3,953) – – Net balance 20,224 (19) (49,874) (51,239) 104,898 1,774 11,199 244 27,861 Equivalent in US dollars 14,614 (14) (54,143) (17,622) 16,155 210 2,700 360 7,112 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, 2015, a 10% increase/decrease in the exchange rates on that date would have resulted in a decrease/increase of approximately $3.1 million in profit before taxes. Eldorado Gold Financials 2015 19 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 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. All 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 Currency values against the US dollar Price of gold (based on the expectations and assumptions we used in our 2016 outlook) Interest rate on variable interest debt Price of diesel fuel 10% 10% 10% 10% (1) The Company did not have any variable interest debt outstanding at the end of 2015. OTHER RISKS AND UNCERTAINTIES $3.1 million $49.0 million N/A (1) $2.1 million 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. 20 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 Laws, Regulations and Permits Our activities are subject to extensive federal, provincial, state and local laws and regulations governing environmental protection and employee health and safety. We must obtain government permits and provide associated financial assurance to conduct certain activities. We are also subject to various conditions related to reclamation that are imposed under federal, state or provincial air, water quality and mine reclamation rules and permits. We have budgeted for future capital and operating expenditures to obtain such permits and maintain compliance with these environmental, health and safety laws; however, any changes to these laws in the future could have an adverse effect on our financial condition, liquidity or results of operations and could delay our ability to obtain such permits. If these laws are not complied with, we may face injunctions, damages and penalties, or our permits could be suspended or revoked. There is no assurance that we have been, or will be, in compliance with environmental, health and safety laws at all times, that our compliance will not be challenged, or that the cost of complying with current or future laws will not have a material and adverse effect on our future cash flow, results of operations and financial condition. Litigation All industries, including the mining industry, are subject to legal claims that are with and without merit. We are currently involved in various routine legal and regulatory proceedings. It’s unlikely that the final outcome of these routine proceedings will have a material and adverse effect on our financial condition or results of operations; however, defense and settlement costs can be substantial, even for claims that are without merit. Due to the inherent uncertainty of the litigation process and dealings with regulatory bodies, there is no assurance that any legal or regulatory proceeding will be resolved in a manner that will not have a material and adverse effect on our future cash flow, results of operations or financial condition. Political Risk We operate in five countries outside of North America: Turkey, China, Brazil, Romania and Greece. Our operations in these countries may be subject to political, economic and other risks that may affect our future operations and financial position. We review these and other risks related to the business in foreign countries on an ongoing basis. Such reviews may cause us to re-evaluate and realign our business objectives and strategic direction from time to time, including considering suspension of projects or disposition of certain assets. Other Information CRITICAL ACCOUNTING POLICIES AND ESTIMATES We are required to make estimates that affect the amount of assets, liabilities, contingent liabilities, revenue and expenses we report. We have identified the following critical accounting policies and estimates. You can find all of our significant accounting policies in note 3 of our 2015 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, 2015, the average cost of inventory was below its net realizable value. Eldorado Gold Financials 2015 21 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015Reserves and Resources Our estimates for Kişladağ, Efemçukuru, Tanjianshan, Jinfeng, White Mountain, Perama Hill, 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 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. 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 judgement with respect to which cash generating units (CGUs) 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 CGUs or operating segments to their carrying amounts. Calculating the estimated fair values of these CGUs 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, 2015, our consolidated balance sheet included $50.3 million in goodwill all pertaining to White Mountain. 22 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015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, 2015 December 31, 2014 Key assumptions – pension plans Pension Plan SERP Pension Plan 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 SERP 4.0% 4.8% 4.0% 2.5% 4.0% 4.0% 4.0% 2.0% 4.0% 4.0% 4.0% 2.0% 4.0% 4.8% 4.0% 2.5% 8.5 years 8.5 years 7.2 years 7.2 years Eldorado Gold Financials 2015 23 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015 Upcoming Changes in Accounting Standards The following standards have been published and are mandatory for Eldorado’s annual accounting periods no earlier than January 1, 2018: ■ ■ ■ 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 recognizing 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 judgemental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. This standard is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect this standard to have a material impact on its consolidated financial statements. IFRS 16 “Leases” – This standard was published in January 2016 and replaces the existing guidance in IAS 17, ‘Leases’. IFRS 16 introduces a single accounting model for lessees and for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee will be required to recognize a right-of-use asset, representing its right to use the underlying asset, and a lease liability, representing its obligation to make lease payments. The accounting treatment for lessors will remain largely the same as under IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. The Company is currently evaluating the extent of the impact of the adoption of this standard. 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 on its consolidated financial statements. 24 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015DISCLOSURE CONTROLS AND PROCEDURES Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the CEO and CFO, as appropriate to allow for timely decisions about public disclosure. Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as at December 31, 2015, 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 CONTROLS OVER FINANCIAL REPORTING Management, including the CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting, and used the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013) to evaluate the effectiveness of our controls in 2015. Based on this evaluation, management concluded that our internal control over financial reporting was effective as at December 31, 2015 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, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. QUALIFIED PERSON Except as otherwise noted, Paul Skayman, P. Eng., the Company’s Chief Operating Officer, 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 Financials 2015 25 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015FORWARD-LOOKING INFORMATION AND RISKS This MD&A includes statements and information about what we expect to happen in the future. When we discuss our strategy, plans and future financial and operating performance, or other things that have not yet happened in this review, we are making statements considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. We refer to them in this document as forward looking information. Key things to understand about the forward-looking information in this document: ■ It typically includes words and phrases about the future, such as: plan, expect, forecast, intend, anticipate, believe, estimate, budget, scheduled, may, could, would, might, will, as well as the negative of these words and phrases. ■ Although it represents our current views, which we consider to be reasonable, we can give no assurance that the forward-looking ■ ■ the changing price of gold and currencies and the impact of any hedging activities 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: ■ ■ actual and estimated production and cost of production ■ discrepancies between actual and estimated mineral reserves and resources ■ ■ ■ ■ acquisition risks ■ other risks that are set out in our Annual Information Form the speculative nature of gold exploration risks associated with mining operations and development regulatory, title, permitting and licensing risks If our assumptions prove to be incorrect or the risks materialize, our actual results and events may vary materially from what we currently expect. 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. The Company’s operations are subject to a number of risks and other uncertainties, including risks related to the Company’s foreign operations, government, environmental and other regulations and operating costs. Occurrence of various factors and uncertainties of risk cannot be accurately predicted and could cause actual results to differ significantly from our current expectations and result in a material adverse effect on the Company’s operations or profitability. A comprehensive discussion of the Company’s risks and uncertainties is set out in our Annual Information Form dated March 27, 2015. By this reference we hereby incorporate this discussion as a part of this MD&A. The reader is directed to carefully review this discussion for a proper understanding of these risks and uncertainties. 26 Eldorado Gold Financials 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)For the year ended December 31, 2015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 judgements. 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 (2013) in Internal Control – Integrated Framework. Based on this assessment, management has concluded that as at December 31, 2015, 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 their 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, 2015 has also been audited by KPMG, and their opinion is included in their report titled “Report of Independent Registered Public Accounting Firm”. Paul N . Wright President & Chief Executive Officer Fabiana E . Chubbs Chief Financial Officer March 23, 2016 Vancouver, British Columbia, Canada Eldorado Gold Financials 2015 27 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, 2015 and December 31, 2014, 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, 2015, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, 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, 2015 and December 31, 2014, and its consolidated financial performance and its consolidated cash flows for each of the years in the two-year period ended December 31, 2015, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Other Matter We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Eldorado Gold Corporation’s internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013), and our report dated March 23, 2016 expressed an unmodified (unqualified) opinion on the effectiveness of Eldorado Gold Corporation’s internal control over financial reporting. Chartered Accountants Vancouver, Canada March 23, 2016 28 Eldorado Gold Financials 2015 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, 2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). 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, 2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). 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, 2015 and December 31, 2014 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, 2015, and our report dated March 23, 2016 expressed an unmodified (unqualified) opinion on those consolidated financial statements. Chartered Accountants Vancouver, Canada March 23, 2016 Eldorado Gold Financials 2015 29 CONSOLIDATED BALANCE SHEETS (Expressed in thousands of US dollars) For the year ended December 31 Note 2015 2014 288,189 4,382 248 18,331 85,468 175,626 572,244 – 83,147 10,897 4,747,759 50,276 5,464,323 236,819 – 236,819 589,395 6,166 102,636 607,871 498,514 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 1,542,887 1,815,726 5,319,101 (10,211) 47,236 (20,572) (1,583,873) 3,751,681 169,755 3,921,436 5,464,323 5,318,950 (12,949) 38,430 (18,127) (31,721) 5,294,583 283,331 5,577,914 7,393,640 6 7 8 17 10 16 11 12 13 14 14 15 17 18 Assets Current assets Cash and cash equivalents Term deposits Restricted cash Marketable securities Accounts receivable and other Inventories 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 John Webster Director Date of approval: March 23, 2016 30 Eldorado Gold Financials 2015 Paul N . Wright Director CONSOLIDATED INCOME STATEMENTS (Expressed in thousands of US dollars except per share amounts) For the year ended December 31 Note 2015 2014 Revenue Metal sales Cost of sales Production costs Inventory write-down Depreciation and amortization Gross profit Exploration expenses Mine standby costs General and administrative expenses Defined benefit pension plan expense Share-based payments 26 16 19 Impairment loss on property, plant and equipment and goodwill 11, 12 Other write-down of assets Foreign exchange loss Operating profit (loss) Loss on disposal of assets Loss on marketable securities and other investments Loss on investments in associates Other income Asset retirement obligation accretion Interest and financing costs Profit (loss) before income tax Income tax expense (recovery) Profit (loss) for the year Attributable to: Shareholders of the Company Non-controlling interests Profit (loss) for the year 15 27 17 Weighted average number of shares outstanding (thousands) 28 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. 863,292 1,067,899 469,818 12,024 178,978 660,820 202,472 17,853 10,244 56,191 1,670 15,877 1,881,665 16,451 16,794 (1,814,273) 159 – – (5,661) 2,411 18,328 (1,829,510) (184,368) (1,645,142) (1,540,895) (104,247) (1,645,142) 716,586 716,590 (2.15) (2.15) 508,280 13,469 177,227 698,976 368,923 16,230 – 68,196 1,620 18,775 – 3,001 7,176 253,925 1,926 2,415 102 (9,436) 2,326 28,779 227,813 121,269 106,544 102,607 3,937 106,544 716,288 716,300 0.14 0.14 Eldorado Gold Financials 2015 31 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 gains on disposal of available-for-sale financial assets Actuarial gains on severance obligation Actuarial losses on defined benefit pension plans 16 Total other comprehensive loss for the year 2015 (1,645,142) (2,232) – 642 (855) (2,445) 2014 106,544 (2,353) 1,878 – (596) (1,071) Total comprehensive income (loss) for the year (1,647,587) 105,473 Attributable to: Shareholders of the Company Non-controlling interests The accompanying notes are an integral part of these consolidated financial statements. (1,543,340) (104,247) (1,647,587) 101,536 3,937 105,473 32 Eldorado Gold Financials 2015 CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of US dollars) For the year ended December 31 Note 2015 2014 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 (recovery) Loss on disposal of assets Loss on investment in associates Other write-down 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 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 Redemption of (investment in) term deposits Decrease (increase) in restricted cash Financing activities Issuance of common shares for cash Proceeds from contributions from non-controlling interest Dividend paid to shareholders Dividend paid to non-controlling interests Purchase of treasury stock Long-term and bank debt proceeds Long-term and bank debt repayments Net decrease in cash and cash equivalents Cash and cash equivalents – Beginning of year 20 5(a) (1,645,142) 2,411 178,978 2,250 (261,232) 159 – 16,451 1,881,665 – 15,877 1,670 193,087 (722) 29,393 221,758 – (396,027) 3,481 17,918 (16,312) – (1,582) (345) (392,867) 121 1,600 (11,257) (10,929) (2,394) 8,171 (24,528) (39,216) (210,325) 498,514 106,544 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 (13,010) (12,466) (6,413) 32,625 (32,622) 10,110 (90,666) 589,180 Cash and cash equivalents – End of year 288,189 498,514 The accompanying notes are an integral part of these consolidated financial statements. Eldorado Gold Financials 2015 33 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of US dollars) For the year ended December 31 Note 2015 2014 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 5,318,950 5,314,589 121 30 – 1,996 2,141 224 Balance – End of year 5,319,101 5,318,950 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 Transfer to share capital on exercise of options and deferred phantom units Balance – End of year Accumulated other comprehensive loss Balance – Beginning of year Other comprehensive loss for the year Balance – End of year 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 (loss) attributable to non-controlling interests Dividends declared to non-controlling interests Increase during the period Balance – End of year (12,949) (2,394) 5,132 (10,211) 38,430 16,258 (5,132) (2,290) (30) 47,236 (18,127) (2,445) (20,572) (31,721) (11,257) (1,540,895) (1,583,873) 3,751,681 283,331 (104,247) (10,929) 1,600 169,755 (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) (121,318) (13,010) 102,607 (31,721) 5,294,583 251,045 3,937 (11,651) 40,000 283,331 Total equity 3,921,436 5,577,914 The accompanying notes are an integral part of these consolidated financial statements. 34 Eldorado Gold Financials 2015 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”). Certain prior period balances have been reclassified to conform to current period presentation. The consolidated financial statements were authorized for issue by the Board of Directors on March 23, 2016. UPCOMING CHANGES IN ACCOUNTING STANDARDS The following standards have been published and are mandatory for Eldorado’s annual accounting periods no earlier than January 1, 2018: ■ ■ ■ 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 recognizing 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 judgemental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. This standard is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Company does not expect this standard to have a material impact on its consolidated financial statements. IFRS 16 ‘Leases’ – This standard was published in January 2016 and replaces the existing guidance in IAS 17, ‘Leases’. IFRS 16 introduces a single accounting model for lessees and for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee will be required to recognize a right-of-use asset, representing its right to use the underlying asset, and a lease liability, representing its obligation to make lease payments. The accounting treatment for lessors will remain largely the same as under IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. The Company is currently evaluating the extent of the impact of the adoption of this standard. 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 on its consolidated financial statements. Eldorado Gold Financials 2015 35 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 PRESENTATION AND PRINCIPLES OF CONSOLIDATION (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 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 recognized 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 projects owned Location Ownership interest Status Operations and development Tüprag Metal Madencilik Sanayi ve Ticaret AS (“Tüprag”) Turkey 100% Consolidated Kişladağ Mine Efemçukuru Mine 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”) Olympias Project Skouries Project 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% Consolidated Consolidated Consolidated Consolidated Consolidated TJS Mine Jinfeng Mine White Mountain Mine Eastern Dragon Project Stratoni Mine 100% Consolidated 100% Consolidated 100% Consolidated 100% Consolidated 81% Consolidated Perama Hill Project Sapes Project Vila Nova Iron Ore Mine Tocantinzinho Project Certej Project (ii) Investments in Associates (Equity Accounted for Investees) Associates are those entities where Eldorado has the ability to exercise significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20% and 50% 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. 36 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated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 TRANSLATION (i) Functional and Presentation Currency Items included in the financial statements of each of Eldorado’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in US dollars, which is the Company’s functional and presentation currency, as well as the functional currency of all significant subsidiaries. (ii) Transactions and Balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the income statement. 3 .3 PROPERTY, PLANT AND EQUIPMENT (i) Cost and Valuation Property, plant and equipment are carried at cost less accumulated depreciation and any impairment in value. When an asset is disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is recognized as a gain or loss in the income statement. (ii) Property, Plant and Equipment Property, plant and equipment include expenditures incurred on properties under development, significant payments related to the acquisition of land and mineral rights and property, plant and equipment which are recorded at cost on initial acquisition. Cost includes the purchase price and the directly attributable costs of acquisition or construction required to bring an asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management. Eldorado Gold Financials 2015 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) (iii) Depreciation Mine development costs, property, plant and equipment and other mining assets whose estimated useful life is the same as the remaining life of the mine are depreciated, depleted and amortized over a mine’s estimated life using the units-of-production method calculated based on proven and probable reserves. Capitalized development costs related to a multi-pit operation are amortized on a pit-by-pit basis over the pit’s estimated life using the units-of- production method calculated based on proven and probable reserves related to each pit. Property, plant and equipment and other assets whose estimated useful lives are less than the remaining life of the mine are depreciated on a straight-line basis over the estimated useful life of the assets. Where components of an asset have a different useful life and cost that is significant to the total cost of the asset, depreciation is calculated on each separate component. Depreciation methods, useful lives and residual values are reviewed at the end of each year and adjusted if appropriate. (iv) Subsequent Costs Expenditure on major maintenance or repairs includes the cost of replacement parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that further future economic benefit will flow to the Company, the expenditure is capitalized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that future economic benefit will flow to the Company and any remaining costs of previous overhauls relating to the same asset are derecognized. All other expenditures are expensed as incurred. (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 EXPLORATION, EVALUATION AND DEVELOPMENT 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 licences, 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 licences which are capitalized. 38 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) (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. 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 assesses 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. Eldorado Gold Financials 2015 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) Goodwill is carried at cost less accumulated impairment losses and tested annually for impairment. Impairment losses on goodwill are not reversed. The impairment testing is performed annually or more frequently if events or changes in circumstances indicate that it may be impaired. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash generating units (“CGUs”) 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 categorized 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. 40 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated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 recognized 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 recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized 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 amortized 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 recognized 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 recognized 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 Financials 2015 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) 3 .8 DERIVATIVE FINANCIAL INSTRUMENTS Derivatives are recognized initially at fair value on the date a derivative contract is entered into. Subsequent to initial recognition, derivatives are measured at fair value, and changes in fair value thereafter are recognized in profit and loss. Fair values for derivative instruments are determined using valuation techniques, using assumptions based on market conditions existing at the balance sheet date. Derivatives are not accounted for using hedge accounting. 3 .9 INVENTORIES Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: i) Product inventory consists of stockpiled ore, ore on leach pads, crushed ore, in-circuit material at properties with milling or processing operations, gold concentrate, other metal concentrate, iron ore stockpile awaiting shipment, doré awaiting refinement and unsold bullion. Product inventory costs consist of direct production costs including mining, crushing and processing; site administration costs; and allocated indirect costs, including depreciation and amortization of property, plant and equipment. Inventory costs are charged to production costs on the basis of quantity of metal sold. The Company regularly evaluates and refines estimates used in determining the costs charged to production costs and costs absorbed into inventory carrying values based upon actual gold recoveries and operating plans. Net realizable value is the estimated selling price, less the estimated costs of completion and selling expenses. ii) Materials and supplies inventory consists of consumables used in operations, such as fuel, chemicals, reagents and spare parts, which are valued at the lower of average cost and net realizable value and, where appropriate, less a provision for obsolescence. Costs include acquisition, freight and other directly attributable costs. 3 .10 TRADE RECEIVABLES Trade receivables are amounts due from customers for bullion, doré, gold concentrate, other metal concentrates and iron ore sold in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less a provision for impairment where neccesary. 3 .11 CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with maturities at the date of acquisition of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. 3 .12 SHARE CAPITAL Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares held by the Company are classified as treasury stock and recorded as a reduction of shareholders’ equity. 3 .13 TRADE PAYABLES Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. 42 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) 3 .14 DEBT AND BORROWINGS Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost, calculated using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized 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 recognized 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 capitalized as a pre-payment for liquidity services and amortized over the period of the loan to which it relates. 3 .15 CURRENT AND DEFERRED INCOME TAX Income tax expense comprises current and deferred tax. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized either in other comprehensive income or directly in equity, in which case it is recognized in other comprehensive income or in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings. The tax rate used is the rate that is substantively enacted. Deferred income tax is recognized, 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 realized 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. Past service costs are recognized immediately to the extent the benefits are vested, and otherwise are amortized on a straight-line basis over the average period until the benefits become vested. Eldorado Gold Financials 2015 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) (ii) Termination Benefits Eldorado recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing benefits as a result of an offer made to encourage voluntary termination. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value. (iii) Short-Term Benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if Eldorado has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 3 .17 SHARE-BASED PAYMENT TRANSACTIONS The Company applies the fair value method of accounting for all stock option awards and equity-settled restricted share units and performance 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. For equity-settled performance share units, compensation expense is recognized based on the fair value of the shares on the date of grant which is determined by a valuator. The fair value of the options, restricted share units and performance share units are expensed over the vesting period of the awards with a corresponding increase in equity. No expense is recognized for awards that do not ultimately vest. Deferred share units are liability awards recorded at the quoted market price at the grant date. The corresponding liability is marked to market at each reporting date. 3 .18 PROVISIONS A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. They are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (i) Rehabilitation and Restoration Provision is made for mine rehabilitation and restoration when an obligation is incurred. The provision is recognized as a liability with a corresponding asset recognized 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 recognized 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 recognized 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 recognized 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. 44 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated3 . Significant Accounting Policies (continued) 3 .19 REVENUE RECOGNITION Revenue from the sale of bullion, doré, gold concentrate, other metal concentrates and iron ore is recognized when persuasive evidence of an arrangement exists, the bullion, doré, metal concentrates and iron ore has been shipped, title has passed to the purchaser, the price is fixed or determinable, and collection is reasonably assured. Revenues realized from sales of pre-commercial production are recorded as a reduction of property plant and equipment. 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 change 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 ALLOCATION 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 Financials 2015 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 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 RECOVERABLE RESERVES AND RESOURCES Mineral reserve and resource estimates are based on various assumptions relating to operating matters, including, with respect to production costs, mining and processing recoveries, cut-off grades, as well as assumptions relating to long-term commodity prices and, in some cases, exchange rates, inflation rates and capital costs. Cost estimates are based on feasibility study estimates or operating history. Estimates are prepared by appropriately qualified persons, but will be impacted by forecasted commodity prices, inflation rates, exchange rates, capital and production costs and recoveries, amongst other factors. Estimated recoverable reserves and resources are used to determine the depreciation of property, plant and equipment at operating mine sites, in accounting for deferred stripping costs, in performing impairment testing and for forecasting the timing of the payment of decommissioning and restoration costs. Therefore, changes in the assumptions used could impact the carrying value of assets, depreciation and impairment charges recorded in the income statement and the carrying value of the decommissioning and restoration provision. CURRENT AND DEFERRED TAXES The Company calculates current and deferred tax provisions for each of the jurisdictions in which it operates. Actual amounts of income tax expense are not final until tax returns are filed and accepted by the relevant authorities. This occurs subsequent to the issuance of financial statements. Therefore, profit in subsequent periods will be affected by the amount that estimates differ from the final tax 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 judgements 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. Management is also required to make judgements with respect to the level at which goodwill is tested for impairment. Judgements 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. 46 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 5 . Acquisitions and Other Transactions A) ACQUISITION OF GLORY In March 2014, Eldorado completed the acquisition of all of the issued and outstanding common shares of Glory that it did not already own. 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 DRAGON AGREEMENT In March 25, 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 the 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, 2015 is $51,484 and is included in accounts payable and accrued liabilities in the balance sheet. As of December 31, 2014 this liability was included in other non-current liabilities. 6 . Cash and Cash Equivalents ($ thousands) Cash at bank and on hand Short-term bank deposits 7 . Accounts Receivable and Other ($ thousands) Trade receivables Value added and other taxes recoverable Other receivables and advances Prepaid expenses and deposits December 31, 2015 December 31, 2014 240,389 47,800 288,189 444,176 54,338 498,514 December 31, 2015 December 31, 2014 16,137 16,195 15,903 37,233 85,468 19,771 40,378 18,572 39,274 117,995 Eldorado Gold Financials 2015 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 8 . Inventories ($ thousands) Ore stockpiles In-process inventory and finished goods Materials and supplies December 31, 2015 December 31, 2014 30,897 36,841 107,888 175,626 44,195 64,314 114,903 223,412 The cost of materials and supplies consumed during the year and included in production costs amounted to $190,875 (2014 – $244,003). Inventory write-downs related to iron ore, zinc and lead inventories amounting to $12,024 (2014 – $13,469) were recognized during the year. 9 . Investment in Subsidiaries The following table summarizes the information relating to each of the Company’s subsidiaries that has non-controlling interests (“NCI”) with material impact on net profit. The amounts disclosed for each subsidiary are based on those included in the consolidated financial statements before inter-company eliminations. Disclosures related to Eastern Dragon and White Mountain have not been provided as these subsidiaries currently have no material impact on net profit. ($ thousands) NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets December 31, 2015 QDML Jinfeng Hellas Deva 10% 197,914 88,194 (24,131) (7,831) 18% 47,920 5% 37,563 588,335 1,777,369 (116,356) (30,581) (748,756) (288,772) 19% 4,279 396,280 (167,749) (43,688) 254,146 489,318 777,404 189,122 Carrying amount of NCI 21,013 16,572 33,682 56,521 Revenue Net profit (loss) Total comprehensive income (loss) Profit (loss) allocated to NCI Dividends paid to NCI Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities 115,762 176,641 35,869 23,367 (1,371,819) 23,367 (1,371,819) – (216,044) (216,044) 5,071 (69,476) (40,684) 5,634 30,874 (12,250) (21,991) – 249,719 (241,428) – – 14,805 (19,983) – 9,733 9,733 1,830 3,262 44,973 (17,934) (32,623) Net increase (decrease) in cash and cash equivalents (5,584) (3,367) 8,291 (5,178) 48 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 9 . Investment in Subsidiaries (continued) ($ thousands) NCI percentage Current assets Non-current assets Current liabilities Non-current liabilities Net assets December 31, 2014 QDML Jinfeng Hellas Deva 10% 215,370 96,011 (26,457) (7,886) 18% 59,570 5% 55,214 610,952 3,087,628 (146,685) (26,583) (509,296) (546,404) 19% 10,134 630,672 (151,183) (84,456) 277,038 497,254 2,087,142 405,167 Carrying amount of NCI 22,445 17,136 101,558 97,205 Revenue Net profit (loss) Total comprehensive income (loss) Profit (loss) allocated to NCI Dividends paid to NCI Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities 136,982 214,527 42,917 42,917 35,040 35,040 51,018 (35,284) (35,284) 4,231 5,155 (1,754) 3,898 46,481 (8,833) (38,978) 7,753 65,219 (15,956) (43,069) – 234,506 (240,279) – – 887 887 – – 23,307 (18,731) – Net increase (decrease) in cash and cash equivalents (1,330) 6,194 (5,773) 4,576 Significant Restrictions The Company cannot increase the draw-down limit of the entrusted loan described in note 14(d) without the consent of QDML’s non-controlling interest. 10 . Other Assets ($ thousands) 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, 2015 December 31, 2014 39 2,875 – 13,667 2,739 63,827 83,147 627 2,925 1,011 14,423 2,907 21,712 43,605 Eldorado Gold Financials 2015 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 11 . Property, Plant and Equipment ($ thousands) Cost Land and Buildings Plant and Equipment Capital Works in Progress Mineral Properties and Leases Capitalized Evaluation Total Balance at January 1, 2014 329,112 1,569,539 159,584 4,223,421 55,958 6,337,614 Acquisition of Glory Additions/transfers – 36,657 Proceeds on production of tailings retreatment – Other movements Disposals 15,955 (153) 268 93,527 – 535 (876) – 11,086 – (26,410) – 39,285 287,602 (26,599) 6,862 – – 13,122 – 360 – 39,553 441,994 (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 Balance at January 1, 2015 381,571 1,662,993 144,260 4,530,571 69,440 6,788,835 Additions/transfers 35,866 67,649 20,588 Proceeds on production of tailings retreatment Other movements Disposals – 20 (10,566) – 3,661 (2,237) – (455) (1) 263,183 (17,918) 1,751 (1,038) 4,674 391,960 – (3,094) – (17,918) 1,883 (13,842) Balance at December 31, 2015 406,891 1,732,066 164,392 4,776,549 71,020 7,150,918 Depreciation and impairment losses 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) Balance at January 1, 2015 Depreciation for the year Other movements Impairment losses Disposals (89,799) (32,877) (666) (15,883) 7,320 (569,136) (118,474) (2,648) (131,637) 922 – – – – – – – – (136,721) (23,698) (5,870) – (166,289) (166,289) (25,756) (112) (4,733) (1,253,392) – 1 Balance at December 31, 2015 (131,905) (820,973) (4,733) (1,445,548) – – – – – – – – – – – (653,232) (169,781) (3,098) 887 (825,224) (825,224) (177,107) (3,426) (1,405,645) 8,243 (2,403,159) Carrying amounts At January 1, 2014 271,752 1,110,388 159,584 4,086,700 55,958 5,684,382 At December 31, 2014 291,772 1,093,857 144,260 4,364,282 69,440 5,963,611 Balance at December 31, 2015 274,986 911,093 159,659 3,331,001 71,020 4,747,759 The amount of capitalized interest during the year ended December 31, 2015 included in property, plant and equipment was $27,215 (2014 – $14,450). 50 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 11 . Property, Plant and Equipment (continued) In accordance with the Company’s accounting policies each CGU is assessed for indicators of impairment, from both external and internal sources, at the end of each reporting period, which may suggest that the carrying values of its assets are impaired for accounting purposes. If such indicators of impairment exist to any or all CGUs, those CGUs are tested for impairment. The Company determined that indicators of impairment were identified in the CGUs of the Certej project, Skouries project, the Stratoni mine, the Vila Nova mine and the TJS mine. No other indicators of impairment were identified. For the Skouries project, the Company identified indicators of impairment from both internal and external sources of information. Those were comprised of delays in the permitting process, higher projected capital and operating costs and placement of the project on care and maintenance. For the Stratoni mine, the Company identified the sustained low prices of lead and zinc as indicators of impairment. For the TJS mine, changes in the mine plan resulted in an impairment. The assumptions and valuation method used in our asset impairment review for these assets are the same as those described for the annual impairment testing of goodwill (note 12). For the Vila Nova mine, the Company identified the sustained low price of iron ore as indicators of impairment. The key assumptions used for the calculation of Vila Nova were an iron price of $70 and a discount rate of 5%. For the Certej project, the Company completed a feasibility study which reflected higher capital and operating costs than had been assumed in the purchase price allocation used to record the Company’s acquisition of European Goldfields Inc. The key assumptions used for the calculations were as follows: Gold price ($/oz) Silver price ($/oz) Inflation rate Discount rate $1,300 $20 2% 7% As at December 31, 2015, the Company recorded impairment charges totalling $1,405,645 ($1,049,196 net of deferred income tax recovery), excluding the impairment of goodwill totalling $476,020 (note 12). Impairment charges comprised of $1,042,066 ($739,867 net of deferred income tax recovery) to the Skouries project, $43,974 ($31,222 net of deferred income tax recovery) to the Stratoni mine, $254,910 ($214,125 net of deferred income tax recovery) on our Certej project, $36,462 ($35,749 net of deferred income tax recovery) to the TJS mine and $28,233 to the Vila Nova 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, 2015 that were subject to impairment charges. At December 31, 2015, the carrying amount of our Skouries project, our Certej project and our TJS mine after impairment charges was $309,110, $396,279 and $50,497, respectively. The full value of the property, plant and equipment was impaired at the Stratoni mine and the Vila Nova mine; as a result the carrying amount of the Stratoni mine and Vila Nova mine is nil. The values assigned to the key assumptions represent management’s assessment of future trends in the gold mining industry and in the global economic environment. The assumptions used are management’s best estimates and are based on both current and historical information from external and internal sources. Eldorado Gold Financials 2015 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 12 . Goodwill ($ thousands) Cost Balance at January 1, Impaired during the year Balance at December 31, 2015 2014 526,296 (476,020) 50,276 526,296 – 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 CGU 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 recognized. 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 6 to 38 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 2015 1,100 – 1,300 16 – 18 2.59 – 2.86 0.82 – 0.91 0.91 2% 5% – 9% 2014 1,300 20 3.00 0.95 1.00 2% 7% – 9% Based on the goodwill impairment test performed on its CGUs, the Company concluded that the goodwill was recoverable in the CGU of White Mountain; however, goodwill was not recoverable in the CGU of TJS and the group of CGUs in Greece. The discounted cash flow model yielded an impairment of the full carrying value of goodwill of Greece ($473,782) and TJS ($2,238). 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. Permitting delays and increased capital and operating costs have negatively affected the cash flow at the Skouries project, which was the main contributor to the decline in the cash flows of the group of CGUs in Greece. As at December 31, 2015, the goodwill balance is allocated to the White Mountain CGU in the amount of $50,276. The recoverable amount of CGUs is sensitive to change in gold prices. A 27% decrease in the long-term gold price, in isolation, could cause the carrying value to exceed the recoverable amount of White Mountain’s CGU. 52 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 12 . Goodwill (continued) The Company believes that a long-term decline in the gold price environment would result in changes in operating cost inputs that may offset the impact of a lower gold price environment. The values assigned to the key assumptions represent management’s assessment of future trends in the gold mining industry and in the global economic environment. The assumptions used are management’s best estimates and are based on both current and historical information from external and internal sources. 13 . Accounts Payable and Accrued Liabilities ($ thousands) Trade payables Taxes payable Accrued expenses 14 . Debt ($ thousands) Current: December 31, 2015 December 31, 2014 97,345 5,857 133,617 236,819 83,566 6,230 94,916 184,712 December 31, 2015 December 31, 2014 Jinfeng China Merchant Bank (“CMB”) working capital loan (a) – 16,343 Non-current: Senior notes (c) Total debt 589,395 589,395 587,201 603,544 (a) Jinfeng CMB Working Capital Loan On January 16, 2013, Jinfeng entered into a RMB 100.0 million ($15,400) working capital loan with CMB. Each draw-down had a fixed interest rate of 5.6% and had a term of six months. 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 was unsecured. The proceeds were used to fund working capital obligations. As at December 31, 2015, Jinfeng has repaid the full amount under this facility. (b) Revolving Credit Facility The Company has a $375.0 million revolving credit facility with a syndicate of banks (“the credit facility” or “ARCA”). 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, 2015. Eldorado Gold Financials 2015 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 14 . Debt (continued) Loan interest is variable, dependent on a leverage ratio pricing grid. The Company’s current leverage ratio is approximately 1.99:1. 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 was deferred as pre-payments for liquidity services and was amortized to financing costs. As at December 31, 2015, the prepaid loan cost on the balance sheet was nil (2014 – $1,011) (note 10). No amounts were drawn down under the ARCA as at December 31, 2015. (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 103.063% December 15, 2017 101.531% 2018 and thereafter 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, 2015 is $526.9 million. Net deferred financing costs of $10,605 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 entered into an entrusted loan agreement, which currently has an approved limit of RMB 720.0 million ($110,878). 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 draw-down bears interest fixed at the prevailing lending rate stipulated by the People’s Bank of China on the date of draw-down. Each draw-down has a term of one year and can be rolled forward at the discretion of QDML. The interest rate on this loan as at December 31, 2015 was 4.59%. As at December 31, 2015, RMB 667.1 million ($102,735) had been drawn under the entrusted loan. Subsequent to December 31, 2015, RMB 3.1 million ($477) was drawn under this loan. The entrusted loan has been recorded on a net settlement basis. 54 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated15 . Asset Retirement Obligations ($ thousands) Greece Brazil China Turkey Romania Total At January 1, 2015 Accretion during the year Revisions to estimate of obligation Settlements At December 31, 2015 Estimated undiscounted amount 46,344 938 (7,037) (242) 40,003 68,372 3,110 66 911 – 4,087 4,113 23,709 480 (1,096) (171) 34,454 1,452 109,069 890 (881) (309) 37 (19) – 2,411 (8,122) (722) 22,922 34,154 1,470 102,636 28,795 50,349 2,323 153,952 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 decrease in the estimate of the obligation in 2015 in all countries was mainly due to favourable foreign exchange rates which lowered the unit costs of the reclamation activities. Additionally, slightly higher discount rates further contributed to a lower net present value of the reclamation obligation. These favourable movements in Greece were offset marginally by the increased disturbance at the Skouries project. 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, 2014 Inflation rate Discount rate At December 31, 2015 Inflation rate Discount rate 2.0 0.7 to 2.8 2.0 0.6 to 3.0 2.0 2.1 2.0 0.6 2.0 2.0 1.1 to 2.1 2.2 to 2.7 2.0 2.0 1.0 to 2.3 2.2 to 2.9 2.0 2.5 2.0 2.7 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). Additionally, the Company has 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. Eldorado Gold Financials 2015 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 16 . Defined Benefit Plans ($ thousands) Balance sheet obligations (asset) for: Pension Plan Supplemental Pension Plan December 31, 2015 December 31, 2014 554 (11,452) (10,898) 839 (13,629) (12,790) ($ thousands) December 31, 2015 December 31, 2014 Income statement charge for: Pension Plan Supplemental Pension Plan Actuarial losses (gains) recognized in the statement of other comprehensive income in the period (before tax) Cumulative actuarial losses recognized in the statement of other comprehensive income (before tax) 203 1,467 1,670 855 14,974 198 1,422 1,620 596 14,119 The Company operates defined benefit pension plans in Canada with two components: a registered pension plan (“the Pension Plan”) and a supplemental 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, 2015 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, 2015. The SERP is designed to provide supplementary pension benefits to qualifying employees affected by the maximum pen-sion limits under the Income Tax Act pursuant to the registered Pension Plan. Further, the Company is not required to pre-fund any benefit obligation under the SERP. Total Cash Payments The amount contributed to the Pension Plan and the SERP was $2,798 (2014 – $2,700). Cash payments totalling $135 were made directly to beneficiaries during the year (2014 – $156). The expected contribution to the Pension Plan is $37 and $1,746 to the SERP in 2016. 56 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 16 . Defined Benefit Plans (continued) The amounts recognized in the balance sheet are determined as follows: ($ thousands) December 31, 2015 December 31, 2014 Pension Plan SERP Total Pension Plan SERP Total Present value of obligations Fair value of plan assets 2,522 (1,968) 31,565 (43,016) 34,087 (44,984) 2,763 (1,924) 33,320 (46,949) 36,083 (48,873) Liability (asset) on balance sheet 554 (11,451) (10,897) 839 (13,629) (12,790) The movement in the defined benefit obligation over the year is as follows: ($ thousands) 2015 Pension Plan SERP Total Pension Plan SERP 2014 Total Balance at January 1, Current service cost Interest cost Actuarial loss (gain) Benefit payments Exchange gain 2,763 33,320 36,083 2,407 31,529 33,936 176 104 26 – (547) 1,972 1,246 1,300 (135) (6,138) 2,148 1,350 1,326 (135) (6,685) 172 114 280 – (210) 2,076 1,487 940 (156) (2,556) 2,248 1,601 1,220 (156) (2,766) Balance at December 31, 2,522 31,565 34,087 2,763 33,320 36,083 The movement in the fair value of plan assets of the year is as follows: ($ thousands) 2015 Pension Plan SERP Total Pension Plan SERP At January 1, Interest income on plan assets Actuarial gain (loss) Contributions by employer Benefit payments Exchange loss 1,924 46,949 48,873 1,930 77 (55) 334 – (312) 1,751 (416) 2,464 (135) (7,597) 1,828 (471) 2,798 (135) (7,909) 88 66 – – (160) 45,490 2,141 558 2,700 (156) (3,784) 2014 Total 47,420 2,229 624 2,700 (156) (3,944) At December 31, 1,968 43,016 44,984 1,924 46,949 48,873 The amounts recognized in the income statement are as follows: ($ thousands) 2015 Pension Plan SERP Total Pension Plan SERP Current service cost Interest cost Expected return on plan assets Defined benefit plans expense 176 104 (77) 203 1,972 1,246 (1,751) 2,148 1,350 (1,828) 1,467 1,670 172 114 (88) 198 2,076 1,487 (2,141) 1,422 2014 Total 2,248 1,601 (2,229) 1,620 The actual return on plan assets was $1,687 (2014 – $3,124). Eldorado Gold Financials 2015 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 16 . Defined Benefit Plans (continued) 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 Pension Plan 4.0 4.0 4.0 2.0 2015 SERP 4.0 4.0 4.0 2.0 Pension Plan 4.0 4.8 4.0 2.5 2014 SERP 4.0 4.8 4.0 2.5 expected to receive benefits 8.5 years 8.5 years 7.2 years 7.2 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 management company and are invested only in conformity with the investment requirements of applicable pension laws. The following table summarizes the defined benefit plans’ weighted average asset allocation percentages by asset category: (%) December 31, 2015 December 31, 2014 Pension Plan SERP Pension Plan SERP Investment funds Money market Canadian fixed income Canadian equities US equities International equities Other (1) Total 3 97 – – – – 4 4 19 19 9 45 1 99 – – – – 8 4 20 16 7 45 100 100 100 100 (1) Assets held by the Canada Revenue Agency in the refundable tax account. The sensitivity of the overall pension liability to changes in the weighted principal assumptions is: Discount rate Change in assumption Impact on overall liability Increase by 0.5% Decrease by 0.5% Decrease by $2,496 Increase by $2,256 Salary escalation rate Increase/decrease by 0.5% Increase/decrease by $105 58 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 17 . Income Tax Expense and Deferred Taxes Total income tax expense (recovery) consists of: ($ thousands) December 31, 2015 December 31, 2014 Current tax expense Deferred tax expense (recovery) Total income tax expense (recovery) attributable to geographical jurisdiction is as follows: ($ thousands) Turkey China Greece Brazil Canada Romania Other jurisdictions Factors affecting income tax expense (recovery) for the year: ($ thousands) Profit (loss) before income tax Canadian statutory tax rate Tax expense (recovery) on net income (loss) 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 (recovery) 76,864 (261,232) (184,368) 2015 61,726 37,022 (247,903) 5,719 – (41,140) 208 (184,368) 2015 (1,829,510) 26.00% (475,673) (26,713) 63,503 43,056 13,063 137,397 45,510 1,396 (13,989) 28,082 (184,368) 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 Eldorado Gold Financials 2015 59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 17 . Income Tax Expense and Deferred Taxes (continued) The change for the year in the Company’s net deferred tax position was as follows: ($ thousands) Net deferred tax asset (liability) Balance at January 1, Deferred income tax (expense) recovery in the income statement Net balance at December 31, 2015 2014 (869,103) 261,232 (607,871) (841,308) (27,795) (869,103) 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 (recovery) on the income statement ($ thousands) 2015 2014 2015 2014 2015 2014 Property, plant and equipment Loss carryforwards Liabilities Investment tax credits Other items – 20,389 18,650 5,665 12,135 2,735 17,590 28,082 1,078 6,729 653,922 913,383 (256,726) – – – – 51 – 10,788 11,883 (2,799) 9,381 (4,587) (6,501) 36,610 (5,531) (12,589) 6,717 2,588 Balance at December 31, 56,839 56,214 664,710 925,317 (261,232) 27,795 Unrecognized deferred tax assets ($ thousands) Tax losses Other deductible temporary differences Total unrecognized deferred tax assets 2015 151,889 20,583 172,472 2014 128,169 6,733 134,902 Unrecognized Tax Losses At December 31, 2015 the Company had losses with a tax benefit of $151,889 (2014 – $128,169) which are not recognized as deferred tax assets. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable income that can be reduced by the tax losses. The gross amount of the tax losses for which a tax benefit has not been recorded expire as shown on the following page. 60 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 17 . Income Tax Expense and Deferred Taxes (continued) ($ thousands) Expiry date 2016 2017 2018 2019 2020 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 No Expiry Canada Brazil Greece Australia Total – – – – – 7,858 14,839 10,703 25,965 23,444 7,285 45,351 75,450 64,883 58,689 58,634 – – – – – – – – – – – – – – – – – 19,528 2,199 5,708 10,176 27,095 19,225 – – – – – – – – – – – – – – – – – – – – – – – – – – – – 31,179 2,199 5,708 10,176 27,095 19,225 7,858 14,839 10,703 25,965 23,444 7,285 45,351 75,450 64,883 58,689 58,634 50,707 393,101 19,528 64,403 31,179 508,211 Capital losses with no expiry Tax effect of total losses not recognized 140,477 120,468 – – – 140,477 3,390 18,677 9,354 151,889 DEDUCTIBLE TEMPORARY DIFFERENCES At December 31, 2015 the Company had deductible temporary differences for which deferred tax assets of $20,583 (2014 – $6,733) have not been recognized, because it is not probable that future taxable profits will be available against which the Company can utilize the benefits. The vast majority of these temporary benefits have no expiry date. TEMPORARY DIFFERENCES ASSOCIATED WITH INVESTMENTS IN SUBSIDIARIES The Company has not recognized deferred tax liabilities in respect of historical unremitted earnings of foreign subsidiaries for which we are able to control the timing of the remittance and are considered reinvested for the foreseeable future. At December 31, 2015, these earnings amount to $1,159,318 (2014 – $1,803,336). Substantially all of these earnings would be subject to withholding taxes if they were remitted by the foreign subsidiaries. TAX CREDITS The Company has $0 (2014 – $396) of tax credits that have not been recognized. OTHER FACTORS AFFECTING TAXATION During the year the Turkish lira has weakened, causing a deferred income tax expense during the year of $24,505 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. Eldorado Gold Financials 2015 61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 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, 2015 there were no non-voting common shares outstanding (December 31, 2014 – none). Voting common shares At January 1, 2014 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 Shares issued upon exercise of share options, for cash Estimated fair value of share options exercised At December 31, 2015 19 . Share-Based Payments (a) Share Option Plans Number of shares Total $ 716,216,690 5,314,589 315,914 – 31,920 716,564,524 22,610 – 716,587,134 1,996 2,141 224 5,318,950 121 30 5,319,101 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. Employee Plan Options granted before November 1, 2015 vest in three separate tranches over two years and Employee Plan Options granted on or after November 1, 2015 vest annually in three separate tranches commencing one year after the date of grant. As at December 31, 2015, a total of 15,510,585 options (2014 – 18,287,530) 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. D&O Plan Options granted before November 1, 2015 vest in three separate tranches over two years and D&O Plan Options granted on or after November 1, 2015 vest annually in three separate tranches commencing one year after the date of grant. As at December 31, 2015, a total of 6,810,575 Options (2014 – 9,033,015) 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: Weighted average exercise price (CDN$) 11.75 6.64 6.64 12.62 9 .97 2015 Number of options 20,995,992 8,274,440 (22,610) (3,728,388) 25,519,434 Weighted average exercise price (CDN$) 13.20 7.78 7.23 12.01 11 .75 2014 Number of options 16,753,421 6,365,824 (315,914) (1,807,339) 20,995,992 At January 1, Regular options granted Exercised Forfeited At December 31, 62 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 19 . Share-Based Payments (continued) At December 31, 2015, 18,273,622 share purchase options (December 31, 2014 – 15,199,444) with a weighted average exercise price of CDN$11.17 (December 31, 2014 – CDN$12.97) had vested and were exercisable. Options outstanding are as follows: Range of exercise price (CDN$) $3.00 to $3.99 $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 $14.00 to $14.99 $15.00 to $15.99 $16.00 to $16.99 Shares 100,000 8,030,710 5,673,643 45,405 4,925,186 507,952 62,289 4,075,149 2,099,100 25,519,434 Total options outstanding Exercisable options December 31, 2015 Weighted average remaining contractual life (years) Weighted average exercise price (CDN$) Weighted average exercise price (CDN$) Shares 4.8 4.1 3.2 2.3 2.1 1.4 1.8 1.1 0.1 2 .7 3.96 6.66 7.81 8.19 10.43 12.74 14.45 15.22 16.66 9 .97 16,667 2,759,234 3,782,640 45,405 4,925,186 507,952 62,289 4,075,149 2,099,100 18,273,622 3.95 6.66 7.81 8.19 10.43 12.74 14.45 15.22 16.66 11 .17 Share-based payments expense related to share options for the year ended December 31, 2015 was $11,282 (2014 – $11,123). The assumptions used to estimate the fair value of options granted during the years ended December 31, 2015 and 2014 were: Risk-free interest rate Expected volatility (range) Expected life (range) Expected dividends Forfeiture rate 2015 2014 0.39% 53% – 58% 1.01% 45% – 50% 0.83 – 2.85 years 0.83 – 2.83 years CDN$0.02 7% CDN$0.12 6% The weighted average fair value per stock option was CDN$1.75 (2014 – CDN$1.83). 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. For RSUs granted before November 1, 2015, one-third 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. For RSUs granted on or after November 1, 2015, one-third vest on the first anniversary of the date of grant, a second third vest on the second anniversary of the date of grant and the last third vest on the third 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 596,089 RSUs (2014 – 877,753) at a grant-date fair value of CDN$6.67 per unit were granted during the year ended December 31, 2015 (2014 – CDN$7.84) under the Company’s RSU plan and 198,697 RSUs were exercisable at December 31, 2015 (2014 – 292,585). The fair value of each RSU issued is determined as the closing share price at grant date. Eldorado Gold Financials 2015 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 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 Forfeited At December 31, 2015 1,086,523 596,089 (715,889) (81,877) 884,846 2014 774,845 877,753 (566,075) – 1,086,523 As at December 31, 2015, 884,846 common shares purchased by the Company remain held in trust in connection with this plan (2014 – 1,086,523). At the end of the period, 225,406 restricted share units are fully vested and exercisable (2014 – 282,314). 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, 2015 was $4,147 (2014 – $7,380). (c) Deferred Share Units Plan The Company has an Independent Directors Deferred Share Unit (“DSU”) plan under which DSUs 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, 2015, 386,303 DSUs were outstanding (2014 – 259,037) with a value of $1,144 (2014 – $1,581), which is included in accounts payable and accrued liabilities. Compensation income related to the DSUs was $381 for the year ended December 31, 2015 (2014 – expense of $272). (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. A total of 624,580 PSUs were granted during the year ended December 31, 2015 under the Company’s PSU plan (2014 – none). The PSUs vest on the third anniversary of the grant date, subject to achievement of predetermined performance criteria. When fully vested the number of PSUs redeemed will range from 0% to 200% of the target award, subject to the performance of the share price over the three-year period. The current maximum number of common shares authorized for issuance from treasury under the PSU plan is 3,130,000. Compensation expense related to PSUs for the year ended December 31, 2015 was $829 (2014 – $0). 20 . Supplementary Cash Flow Information ($ thousands) December 31, 2015 December 31, 2014 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 64 Eldorado Gold Financials 2015 (6,562) 45,915 (9,960) 29,393 81,282 34,166 (34,206) 13,184 (35,480) (56,502) 88,150 34,536 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 21 . Financial Risk Management 21 .1 FINANCIAL RISK FACTORS Eldorado’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. Eldorado’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on Eldorado’s financial performance. (a) Market Risk (i) Foreign Exchange Risk The Company operates principally in Canada, Turkey, China, Brazil, Greece and Romania, and is therefore exposed to foreign exchange risk arising from transactions denominated in foreign currencies. Foreign exchange risk arises when future commercial transactions or recognized 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: Canadian Australian dollar dollar Turkish Euro lira Chinese Swedish Romanian Great British Brazilian real pound renminbi krona lei Cash and cash equivalents Marketable securities 4,705 25,369 Accounts receivable and other 2,261 172 4,737 2,165 357,183 1,774 8,014 244 21,559 – 1 – – – 6,143 54,785 182,288 – – – 9,212 – – – 10,255 Accounts payable and accrued liabilities Other non-current liability Debt (12,111) (192) (58,596) (97,073) (434,573) – (6,027) – (3,953) – – (2,158) (11,116) – – – – – – – – Net balance 20,224 (19) (49,874) (51,239) 104,898 1,774 11,199 244 27,861 Equivalent in US dollars 14,614 (14) (54,143) (17,622) 16,155 210 2,700 360 7,112 Based on the balances as at December 31, 2015, 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 $306 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 economic conditions. Worldwide gold and other metals production levels also affect their prices, and the price of these metals is occasionally subject to rapid short-term changes due to speculative activities. The Company has elected not to actively manage its exposure to metal price risk at this time. From time to time, Eldorado may use commodity price contracts to manage its exposure to fluctuations in the price of gold and other metals. Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices. Eldorado’s other price risk includes equity price risk, whereby the Company’s investments in marketable securities are subject to market price fluctuation. Eldorado Gold Financials 2015 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 21 . Financial Risk Management (continued) (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 Company’s debt is in the form of notes with a fixed interest rate of 6.13%. (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. 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, 2015. (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 MANAGEMENT Eldorado’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of our mining projects. Capital consists of all of the components of equity: share capital from ordinary shares, contributed surplus, accumulated other comprehensive income, 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, 2015, our debt to capital ratio was 15.0% (2014 – 10.8%) and our debt to EBITDA ratio was 1.99:1 (2014 – 1.3:1). These policy targets are managed through the repayments and issuances of debt as well as the continuing management of operations and capital expenditures. 21 .3 FAIR VALUE ESTIMATION Fair values are determined directly by reference to published price quotations in an active market, when available, or by using a valuation technique that uses inputs observed from relevant markets. 66 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated21 . Financial Risk Management (continued) 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, 2015 are marketable securities. No liabilities are measured at fair value on a recurring basis as at December 31, 2015. 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, 2015, include: ($ thousands) Operating leases and capital expenditures Purchase obligations Totals 2016 6,683 53,136 59,819 2017 4,580 2,354 6,934 2018 2019 and later 2,221 63 2,284 12,234 126 12,360 Purchase obligations in 2016 relate primarily to sustaining capital expenditures at Kişladağ, mine development projects in 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, 2015, the amount of ultimate liability with respect to these actions will not, in the opinion of management, ma-terially affect Eldorado’s financial position, results of operations or cash flows. 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: ($ thousands) Salaries and other short-term employee benefits Defined benefit pension plan Share-based payments 2015 10,106 1,670 9,188 20,964 2014 13,199 1,620 12,514 27,333 Eldorado Gold Financials 2015 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 25 . Financial Instruments by Category Fair Value The following table provides the carrying value and the fair value of financial instruments at December 31, 2015 and De-cember 31, 2014: ($ thousands) December 31, 2015 December 31, 2014 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 ($ thousands) 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 27 . Interest and Financing Costs ($ thousands) Interest expense Financing fees Total interest and financing costs 68 Eldorado Gold Financials 2015 18,331 18,331 4,251 4,251 288,189 288,189 498,514 498,514 4,382 248 69,273 19,320 4,382 248 69,273 19,320 2,800 262 77,617 21,893 2,800 262 77,617 21,893 236,819 589,395 – 236,819 526,878 – 184,712 603,544 49,194 184,712 600,221 49,194 2015 95,653 36,686 50,631 39,104 46,668 103,558 32,723 31,199 33,596 469,818 2015 10,108 8,220 18,328 2014 104,118 51,152 48,570 34,865 46,745 144,281 28,664 3,238 46,647 508,280 2014 23,039 5,740 28,779 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 28 . Earnings per Share 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: (Thousands) December 31, 2015 December 31, 2014 Weighted average number of ordinary shares used in the calculation of basic earnings per share Diluted impact of stock options 716,586 4 716,288 12 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 716,590 716,300 29 . Segment Information IDENTIFICATION OF REPORTABLE SEGMENTS The Company has identified its operating segments based on the internal reports that are reviewed and used by the Chief Executive Officer and the executive management (the chief operating decision makers or CODM) in assessing performance and in determining the allocation of resources. The CODM considers the business from both a geographic and product perspective and assesses the performance of the operating segments based on measures of profit and loss as well as assets and liabilities. These measures include operating profit, expenditures on exploration, property, plant and equipment and non-current assets, as well as total debt. As at December 31, 2015, Eldorado had six reportable segments based on the geographical location of mining and exploration and development activities. 29 .1 GEOGRAPHICAL SEGMENTS Geographically, the operating segments are identified by country and by operating mine or mine under construction. The Turkey reporting segment includes the Kişladağ and the Efemçukuru mines and exploration activities in Turkey. The China reporting segment includes the TJS, Jinfeng and White Mountain mines, the Eastern Dragon project and exploration activities in China. The Brazil reporting segment includes the Vila Nova mine, Tocantinzinho project and exploration activities in Brazil. The Greece reporting segment includes the Stratoni mine, the Olympias, Skouries, Perama Hill and Sapes projects and exploration activities in Greece. The Romania reporting segment includes the Certej project and development activities in Romania. 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. Eldorado Gold Financials 2015 69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 29 . Segment Information (continued) ($ thousands) Turkey China Brazil Greece Romania Other 2015 Total Information about profit and loss Metal sales to external customers Production costs Inventory write-down Depreciation Gross profit (loss) 443,609 384,213 214,001 217,696 – – 77,164 89,657 (399) 1,616 8,745 1,028 35,869 36,505 3,279 10,676 152,444 76,860 (11,788) (14,591) – – 1 (1) – – 452 863,292 469,818 12,024 178,978 (452) 202,472 Other material items of income and expense Impairment loss on property, plant and and equipment and goodwill – 38,699 28,233 1,559,823 254,910 Other write-down of assets Exploration expenses Income tax expense (recovery) Additions to property, plant and 6,891 5,576 6,387 1,524 61,726 37,021 3,173 1,493 5,719 – – 2,421 3,351 3,488 – – 1,881,665 16,451 17,853 (247,722) (41,140) 28 (184,368) equipment during the year 83,501 49,517 4,176 242,655 19,983 250 400,082 Information about assets and liabilities Property, plant and equipment (1) Goodwill 898,027 1,327,725 179,702 1,942,419 398,147 1,739 4,747,759 – 50,276 – – – – 50,276 898,027 1,378,001 179,702 1,942,419 398,147 1,739 4,798,035 Debt – – – – – 589,395 589,395 (1) Net of revenues from sale of production from tailings retreatment. 70 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 29 . Segment Information (continued) ($ thousands) Turkey China Brazil Greece Romania Other 2014 Total Information about profit and loss Metal sales to external customers Production costs Inventory write-down Depreciation Gross profit (loss) 524,919 460,343 207,809 227,958 – – 55,420 107,365 31,619 29,926 13,469 4,928 51,018 42,587 – 8,782 – – – 1 – – – 731 1,067,899 508,280 13,469 177,227 261,690 125,020 (16,704) (351) (1) (731) 368,923 Other material items of income and expense Other write-down of assets Exploration expenses Income tax expense Additions to property, plant and equipment during the year – 3,415 74,959 3,001 2,682 37,263 – 3,796 2,761 – 1,395 6,085 – – 2,092 2,850 3,001 16,230 201 – 121,269 88,844 50,410 5,399 253,685 18,730 404 417,472 Information about assets and liabilities Property, plant and equipment (1) Goodwill 895,035 1,407,558 205,091 2,817,855 636,134 1,938 5,963,611 – 52,514 – 473,782 – – 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 Financials 2015 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated 29 . Segment Information (continued) 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, 2015, 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/CYCLICALITY OF OPERATIONS Management does not consider operations to be of a significant seasonal or cyclical nature. 30 . EVENTS OCCURRING AFTER THE REPORTING DATE On January 11, 2016, the Company announced that due to delays on the issuance of routine permits and licences by the Greek authorities, that would allow Hellas Gold to complete the construction of the Skouries processing plant, construction and development activities at the Skouries project have been suspended. Environmental protection works and care and maintenance activities will continue to be performed in order to safeguard the environment and the assets of the Company at site at a cost of approximately $1.0 million per month. 72 Eldorado Gold Financials 2015 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSExpressed in thousands of US dollars, unless otherwise stated BOARD OF DIRECTORS, OFFICERS AND SENIOR MANAGEMENT TEAM BOARD OF DIRECTORS EXECUTIVE OFFICERS SENIOR MANAGEMENT Robert Gilmore (1) (2) Non-executive Chairman of the Board and Independent Director Paul Wright President and Chief Executive Officer Jason Cho VP, Corporate Development Fabiana Chubbs Chief Financial Officer Paul Skayman Chief Operating Officer Dawn Moss Executive VP Administration and Corporate Secretary 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 (1) Independent Director Paul Wright President and Chief Executive Officer Committees of the Board of Directors (1) Audit Committee (2) Compensation Committee (3) Corporate Governance and Nominating Committee (4) Sustainability Committee Dale Churcher VP, Engineering Doug Jones Senior VP, Operations Peter Lewis VP, Exploration Krista Muhr VP, Investor Relations and Corporate Communications 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 Shane Williams VP, Capital Projects Jacinta Zaleski VP, Human Resources Eldorado Gold Financials 2015 73 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 May 25, 2016 3:00pm Pacific Time INVESTOR CONTACT INFORMATION For inquiries related to Eldorado Gold’s operating activities and financial performance: Krista Muhr Vice President Investor Relations 604 687 4018 info@eldoradogold.com For inquiries related to shares, dividends or change of address: Computershare Investor Services 1 800 564 6253 www-us.computershare.com/Investor/ Contact/Enquiry Vancouver Club 915 West Hastings Street Vancouver, BC V6C 1C6 TRANSFER AGENT AND REGISTRAR Computershare Investor Services 100 University Avenue 8th Floor, North Tower Toronto, Ontario M5J 2Y1 AUDITORS KPMG LLP Vancouver, BC LEGAL COUNSEL Fasken Martineau DuMoulin LLP Vancouver, BC Canada Dorsey & Whitney LLP Denver, CO USA SOURCES OF SHAREHOLDER INFORMATION These financials are one of several sources of information for shareholders of Eldorado Gold Corporation. Other sources include: ■ 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, the SEDAR website (www.sedar.com) and the US Securities and Exchange Commission website (www.sec.gov). Section 303A.11 of the NYSE Listed Company Manual permits foreign private issuers to follow home country practices in lieu of certain provisions of the NYSE Listed Company Manual. A foreign private issuer that follows home country practices in lieu of certain provision of the NYSE Listed Company Manual must disclose any significant ways in which its corporate governance practices differ from those followed by domestic companies. A description of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to the NYSE Listed Company Manual is available on the Company’s website at www.eldoradogold.com. COMPANY FILINGS www.sedar.com www.sec.gov 74 Eldorado Gold Financials 2015 CORPORATE INFORMATION Canada (Head Office) Greece 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 Hellas Gold SA & Thracean Gold Mining SA 23A Vasilissis Sofias Avenue Athens 10674 Greece Tel: 30 214 687 0000 Fax: 30 214 687 0095 Turkey Brazil 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 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 Eldorado Gold Financials 2015 75 CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS AND INFORMATION Certain statements and information in this 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 operating performance, price of gold and other commodities, cash flow, cash costs, targets, production and expenditures; our mineral reserve and resource estimates; and our proposed mine development (including permitting), exploration, acquisitions, our expectation as to future performance at our mines 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 Report, we have made numerous assumptions, estimates and opinions that may prove to be incorrect, 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, dispositions, suspensions or delays 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, interest rate risk and credit rating risk; • the risks that the integration of acquired businesses may take longer than expected, the anticipated benefits of the integration may be less than estimated or the costs of acquisition may increased capital requirements and the ability to obtain financing; be higher than anticipated; • the impact of acquisitions and dispositions, monetization, mergers and other business combinations and transactions, including effect of changes in our 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; • failure, security breaches or disruption of our information technology systems; and • risks related to natural disasters and climate change. 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 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 other aspects of our 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. 76 Eldorado Gold Financials 2015 CORPORATE INFORMATION Canada (Head Office) Greece 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 Hellas Gold SA & Thracean Gold Mining SA 23A Vasilissis Sofias Avenue Athens 10674 Greece Tel: 30 214 687 0000 Fax: 30 214 687 0095 Turkey 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 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 y e l l e n n o D R R : t n i r P i s o d u t S n e p k n I : n g i s e D 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 

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