FORM 6K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of: April, 2003
Commission File Number 001-31522
ELDORADO GOLD CORPORATION
(Translation of registrant's name into English)
Suite 920 - 1055 West Hastings Street
Vancouver, British Columbia, Canada V6E 2E9
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F Form 40-F X
--- ---
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
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Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of
a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
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Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of
a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the
laws of the jurisdiction in which the registrant is incorporated, domiciled
or legally organized (the registrant's "home country"), or under the rules
of the home country exchange on which the registrant's securitites are
traded, as long as the report or other document is not a press release, is
not required to be and has not been distributed to the registrant's
security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b) 82-
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELDORADO GOLD CORPORATION
Date: April 29, 2003 /s/ Dawn Moss
----------------------------------------
Dawn Moss, Corporate Secretary
Management Discussion and Analysis
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
[GRAPHIC OMITTED]
NEWS RELEASE ELD No. 03-08
TSX: ELD AMEX: EGO April 30, 2003
FIRST QUARTER 2003 FINANCIAL RESULTS
NET INCOME $2.6 M ($0.01 PER SHARE)
(All figures in United States dollars unless otherwise indicated)
Paul N. Wright, President and Chief Executive Officer of Eldorado Gold
Corporation ("Eldorado", the "Company", or "we"), is pleased to announce the
Company's Unaudited First Quarter 2003 Financial Results.
--------------------------------------------------------------------------------
Highlights
----------
o Profitable quarter with net income $2.6 M
o Sao Bento performed to plan
o Proven and probable reserves increased
o Sao Bento shaft deepening announced
o Completion of Kisladag feasibility study
o Added to S&P/TSX Index
o Began trading on AMEX
Financial Results
The Company today reported its First Quarter 2003 Unaudited Financial Results,
with net income for the quarter amounting to a profit of $2.6 M ($0.01 per
share) compared to a loss of $0.3 M ($0.00 per share) in the first quarter of
2002. First quarter positive financial results were mainly driven by a gain of
$2.3 M in foreign exchange compared to a loss on foreign exchange in the first
quarter of 2002 of $0.2 M. The gain on foreign exchange is a result of the
strengthening of the Canadian dollar versus the US dollar. Eldorado currently
holds $41.6 M in cash, of this amount 80% is held in Canadian dollars. The
favorable gain occurred as the Canadian dollar strengthened against the US
dollar during the first quarter. We believe the Canadian dollar will continue to
strengthen through the second quarter resulting in further foreign exchange
gain.
First quarter 2003 gold revenues were $9.2 M compared to $5.0 M first quarter of
2002. The increased revenues are the result of the sale of 23,854 ounces of gold
at a realized price of $356 per ounce (excluding a total hedging revenue
amortization of $0.7 M) in the first quarter of 2003 compared to the sale of
13,792 ounces of gold at a realized price of $292 (excluding a total hedging
revenue amortization of $1.0 M) per ounce in the first quarter of 2002. During
the first quarter of 2002 the Sao Bento mine was operating under mandated energy
consumption restraints as well as having the #2 Autoclave shutdown for major
repair. Cash flow for the first quarter 2003 from operating activities was $1.2
M compare to $0.7 M in the first quarter of 2002.
The Sao Bento Mine, Brazil ("Sao Bento")
In the first quarter of Sao Bento produced 21,831 ounces at a cash cost of $215
per ounce in accordance with the 2003 Plan. Production and costs were influenced
by the scheduled major overhaul of Sao Bento's #1 Autoclave which was completed
in the quarter on schedule and under budget. Both autoclaves are now operating
at normal capacity and the Company forecasts second quarter production of
approximately 27,000 ounces.
The Company announced the shaft deepening at Sao Bento in its news release dated
April 2, 2003 (NR 03-07). A 5.2 meter diameter concrete line shaft at Sao Bento
will be deepened by approximately 370 meters at an approximate cost of $12.0 M
and will provide a bottom working elevation approximately 1,300 meters below
surface at the mine's 28th Level. The preparation of the shaft deepening will
commence in the second quarter of 2003 with the deepened shaft to be
commissioned in December 2004.
In light of the decision to deepen its shaft, mine management is completing a
detailed review of its production schedule through the shaft-deepening period to
ensure that interference with production is minimized and appropriately
quantified.
The Kisladag Project, Turkey ("Kisladag")
In its news release dated April 1, 2003 (NR 03-05) the Company announced the
results of the Kisladag Feasibility Study prepared by Hatch Associates,
Vancouver. Kisladag is planned as a 15 year open pit heap leach gold mine
constructed and operated in two phases with Phase I to be operational for the
first 4 years processing ore at 5 million tonnes per year and Phase II beginning
in the 5th year and expanding to process up to 10 million tonnes of ore per
year. Phase I average annual production is expected to be 143,000 ounces of gold
and Phase II average annual production is expected to increase to 230,000 ounces
of gold. Phase I initial capital and working capital expenditures are budgeted
at $56.7 M. Phase II expansion capital is budgeted at $39.4 M. Sustaining
capital is estimated at $37.2 M. Cash costs are expected to be $152 per ounce
over the life of the mine.
2002 Reserve and Resource Statement
In its news release dated April 2, 2003 (NR 03-06) the Company announced 2002
proven and probable gold reserves of 5,847,455 ounces of gold. 2002 Measured and
indicated gold resources of 8,343,263 ounces and inferred resources of 2,574,571
ounces. Increases in reserves occurred both at the Sao Bento Mine and the
Kisladag Project.
Corporate Developments
Eldorado began trading on the American Stock Exchange with the symbol EGO on
January 23, 2003. In addition, the Company has been added to the S&P/TSX
Composite Index and the Global Industry Classification Standard Sector -
Material, Gold.
Eldorado is a gold producing and exploration company with gold assets in Brazil
and Turkey, two countries that we believe have substantial geological potential.
With our international expertise in mining, finance and project development,
together with highly skilled and dedicated staff, we believe that Eldorado is
well positioned to experience continued growth and value as we create and pursue
new opportunities.
ON BEHALF OF
ELDORADO GOLD CORPORATION
"Paul N. Wright"
Paul N. Wright
President and Chief Executive Officer
The terms "Mineral Reserve", "Proven Mineral Reserve" and "Probable Mineral
Reserve" used in this release are Canadian mining terms as defined in accordance
with National Instrument 43-101 - Standards of Disclosure for Mineral Projects
under the guidelines set out in the Canadian Institute of Mining, Metallurgy and
Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council on August 20, 2000 as may be amended from time to
time by the CIM. These definitions differ from the definitions in the United
States Securities & Exchange Commission ("SEC") 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.
The terms "Mineral Resource", "Measured Mineral Resource", "Indicated Mineral
Resource", "Inferred Mineral Resource" used in this release are Canadian mining
terms as defined in accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects under the guidelines set out in the CIM
Standards. Mineral Resources, which are not Mineral Reserves, do not have
demonstrated economic viability.
For a detailed discussion of resource and reserve estimates and related matters
see the Company's technical reports, including the Annual Information Form and
other reports filed under the Company's name at www.sedar.com. A qualified
person has verified the data contained in this release.
Note to U.S. Investors. While the terms "mineral resource", "measured mineral
resource," "indicated mineral resource", and "inferred mineral resource" are
recognized and required by Canadian regulations, they are not defined terms
under standards in the United States and normally are not permitted to be used
in reports and registration statements filed with the SEC. As such, information
contained in this release concerning descriptions of mineralization and
resources under Canadian standards may not be comparable to similar information
made public by U.S companies in SEC filings. With respect to "indicated mineral
resource" and "inferred mineral resource" there is a great amount of uncertainty
as to their existence and a great uncertainty as to their economic and legal
feasibility. It can not be assumed that all or any part of an "indicated mineral
resource" or "inferred mineral resource" will ever be upgraded to a higher
category. Investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
Certain of the statements made may contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, which involve
known and unknown risk, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements are subject to a variety of risks and uncertainties which could cause
actual events or results to differ from those reflected in the forward-looking
statements. Should one or more of these risks and uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described in forward looking statements. Specific
reference is made to "Narrative Description of the Business - Risk Factors" in
the Company's Annual Information Form. Forward-looking statements in this
release include statements regarding the expectations and beliefs of management,
the assumed long-term price of gold, the estimation of mineral reserves and
resources, the realization of mineral reserve estimates, the potential of
Eldorado's properties and expectations of growth. We do not expect to update
forward-looking statements continually as conditions change and you are referred
to the full discussion of the Company's business contained in the Company's
reports filed with the securities regulatory authorities.
Eldorado Gold Corporation's shares trade on the Toronto Stock Exchange (TSX:
ELD) and the American Stock Exchange (AMEX: EGO). The TSX has neither approved
nor disapproved the form or content of this release.
Contact:
Nancy E. Woo, Manager Investor Relations Eldorado Gold Corporation
Phone: 604.601.6650 or 1888.353.8166 920-1055 W. Hastings St.,
Fax: 604.687.4026 Vancouver, BC V6E 2E9
Email nancyw@eldoradogold.com Web site: www.eldoradogold.com
Request for information packages: info@eldoradogold.com
[GRAPHIC OMITTED]
March 31, 2003 | Report to Shareholders
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|Phone: (604) 687-4018
|Fax: (604) 687-4026
1
Eldorado Gold Corporation
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars) March 31, December 31,
2003 2002
================================================================================
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 41,571 $ 37,627
Accounts receivable 1,427 1,380
Inventories 5,859 5,866
--------------------------------
48,857 44,873
Property, plant and equipment 61,547 62,103
Mineral properties and deferred development 33,753 32,958
Investments and advances 112 108
Other assets and deferred charges 78 90
--------------------------------
$ 144,347 $ 140,132
================================
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 7,465 $ 8,225
--------------------------------
7,465 8,225
Provision for reclamation costs 3,467 3,467
Deferred gain 1,277 1,957
Future income taxes 210 196
Convertible debentures 6,841 6,796
--------------------------------
19,260 20,641
SHAREHOLDERS' EQUITY
Share capital (Note 4) 369,049 366,046
Equity portion of convertible debentures 1,094 1,094
Deficit (245,056) (247,649)
--------------------------------
125,087 119,491
--------------------------------
$ 144,347 $ 140,132
================================
Approved by the Board
"Wayne D. Lenton" "Paul N. Wright"
Director Director
2
Eldorado Gold Corporation
Consolidated Statements of Operations and Deficit
(Expressed in thousands of U.S. dollars except per share amounts)
Three months ended
March 31, December 31,
2003 2002
================================================================================
(Note 3)
(Unaudited) (Unaudited)
Revenue
Gold sales $ 9,166 $ 4,996
Interest and other income 282 1,159
--------------------------------
9,448 6,155
Expenses
Operating costs 5,050 2,633
Depletion, depreciation and amortization 2,474 2,443
General and administrative 1,038 679
Exploration expense 250 119
Interest and financing costs 192 389
Foreign exchange (gain) loss (2,267) 165
--------------------------------
6,737 6,428
--------------------------------
Profit (loss) before income taxes 2,711 (273)
--------------------------------
Taxes
Current (118) (20)
Future - -
--------------------------------
Net income (loss) for the period $ 2,593 $ (293)
Deficit at the beginning of the period:
As previously reported (247,649) (249,375)
Change in accounting policy (Note 3) - (410)
--------------------------------
As restated $ (247,649) (249,785)
--------------------------------
Deficit at the end of the period $ (245,056) $ (250,078)
================================
Weighted average number
of shares outstanding 209,956,508 102,365,723
Basic Income (loss) per share - U.S.$ $ 0.01 $ 0.00
================================
Basic Income (loss) per share - CDN.$ $ 0.02 $ 0.00
================================
Diluted Income (loss) per share - U.S.$ $ 0.01 $ 0.00
================================
3
Eldorado Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Three months ended
March 31, December 31,
2003 2002
================================================================================
(Note 3)
(Unaudited) (Unaudited)
Cash flows from operating activities
Net income (loss) for the period $ 2,593 $ (293)
Items not affecting cash
Depletion, depreciation and amortization 2,474 2,443
Interest and financing costs 45 77
Amortization of hedging gain (680) (969)
Foreign exchange (gain) loss (2,430) 11
--------------------------------
2,002 1,269
Decrease (increase) in accounts receivable (47) 1,288
(Increase) decrease in inventories 7 (1,345)
(Decrease) increase in accounts payable
and accrued liabilities (760) (535)
--------------------------------
1,202 677
Cash flow from investing activities
Property, plant and equipment (1,906) (1,524)
Mineral properties and deferred development (795) (257)
Investments and advances (4) -
Restricted cash - (530)
--------------------------------
(2,705) (2,311)
Cash flow from financing activities
Repayment of long-term debt - (8,509)
Issue of common shares:
Voting - for cash 3,003 230
Special Warrants - 14,648
Other assets and deferred charges - (114)
--------------------------------
3,003 6,255
Foreign exchange gain (loss) on cash
held in foreign currency 2,444 (4)
--------------------------------
Net increase (decrease) in cash and
cash equivalents 3,944 4,617
Cash and cash equivalents at beginning
of the period 37,627 4,752
--------------------------------
Cash and cash equivalents at end
of the period $ 41,571 $ 9,369
================================
Supplemental cash flow information
Interest paid $ - $ 124
--------------------------------
Income tax paid $ 10 $ 20
--------------------------------
4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
1. Nature of Operations
Eldorado Gold Corporation ("Eldorado", "the Company") is engaged in gold mining
and related activities, including exploration, extraction, processing and
reclamation. Gold, the primary product, is produced in Brazil and exploration
activities are carried on in Brazil and Turkey.
The Company has not determined whether all its development properties contain
ore reserves that are economically recoverable. The recoverability of the amount
shown for mineral properties and deferred development is dependent upon the
existence of economically recoverable reserves, the ability of the Company to
obtain the necessary financing, licenses and permits to complete the exploration
and development of its properties, and upon future profitable production or
proceeds from the disposition of the properties. The amounts shown as mineral
properties and deferred development represent net costs to date, less amounts
amortized and/or written off and do not necessarily represent present or future
values.
2. Significant Accounting Policies
Basis of presentation
These interim financial statements do not conform in all respects to the
requirements of generally accepted accounting principles for annual financial
statements. These interim financial statements should be read in conjunction
with the most recent annual financial statements of the company.
These financial statements follow the same accounting policies and methods of
application as the most recent annual financial statements of the company.
Earnings (loss) per share
Earnings or loss per common share is calculated using the weighted average
number of common shares outstanding during each year. Diluted earnings or loss
per common share is calculated using the treasury stock method which assumes
that stock options are only exercised when the exercise price is below the
average market price during the period, and that the Company will use these
proceeds to purchase its common shares at their average market price during the
period.
3. Change in Accounting Policy
The Company has changed its method of recording revenue to recording sales when
the goods have been delivered and title passes to the purchaser. Previously the
Company recorded revenue on a production basis at the net realized value of dore
sales. The Company has applied the changes retroactively and prior periods have
been restated. The effects of the restatement are presented below.
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
3. Change in accounting policy (continued)
Income Statement March March 2002
2003 2002
(Unaudited) (Unaudited)
Revenue before change $ 9,166 $ 5,936 $ 35,404
Change in accounting policy - (940) (1,353)
-----------------------------------------------
Revenue after change $ 9,166 $ 4,996 $ 34,051
===============================================
Operating costs before change $ 5,050 $ 2,896 $ 19,600
Change in accounting policy - (263) (573)
-----------------------------------------------
Operating costs after change $ 5,050 $ 2,633 $ 19,027
===============================================
Net Income (loss) before change $ 2,593 $ 384 $ 2,916
Change in accounting policy - (677) (780)
-----------------------------------------------
Net Income (loss) after change $ 2,593 $ (293) $ 2,136
===============================================
Basic income (loss) per share before
change = U.S.$ 0.01 - 0.01
Change in accounting policy - - -
-----------------------------------------------
Basic income (loss) per share after
change - U.S.$ 0.01 - 0.01
===============================================
Diluted income (loss) per share
before change - U.S.$ 0.01 - 0.01
Change in accounting policy - - -
-----------------------------------------------
Diluted income (loss) per share
after change - U.S.$ 0.01 - 0.01
===============================================
Balance Sheet
Accounts receivable before change $ 1,427 $ 3,399 $ 3,513
Change in accounting policy - (1,722) (2,133)
-----------------------------------------------
Accounts receivable after change $ 1,427 $ 1,677 $ 1,380
===============================================
Inventories before change $ 5,859 $ 6,151 $ 4,923
Change in accounting policy - 635 943
-----------------------------------------------
Inventories after change $ 5,859 $ 6,786 $ 5,866
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
4. Share Capital
(a) Authorized and Issued Share Capital
Eldorado's authorized share capital consists of an unlimited number of voting
and non-voting common shares with no par value. The details of the common shares
issued and outstanding are as follows:
2003 Shares Issued Amount
Shares at beginning of the year 206,204,010 $ 366,046
Shares for exercised stock options 1,132,500 244
Shares for cash consideration - Warrants 5,262,266 2,813
Shares issue costs for cash consideration -
Financing - (54)
--------------- -------------
Shares at March 31, 2003 212,598,776 $ 369,049
=============== =============
(b) Share option plan
Effective January 1, 2002, the Company adopted the new standard for accounting
for Stock based Compensation.
As at March 31, 2002, the Company has a share option plan as described below. No
compensation expense is recognized for this plan when options are granted
pursuant to the plan. Consideration paid for shares on exercise of the share
options is credited to share capital.
Stock option plan
The Company established a share purchase option plan (`the Plan") in June 1994.
Amendments to the Plan were approved in June 1995, June 1996 and May 2000. The
Board of Directors administers the Plan, whereby it may from time to time grant
up to a total of 10,200,000 options to directors, officers, employees,
consultants or advisors. All options granted under the Plan shall expire not
later than the tenth anniversary of the date the options were granted. The
exercise price of an option is determined by the Board of Directors, but shall
not be less than the quoted price of the common shares of the Company on the
Toronto Stock Exchange on the last business day before the date on which the
option is granted. Vesting and terms are at the discretion of the Board of
Directors.
A summary of the terms and status of Company's outstanding options at March
31,2002 and the changes for the period ending on that date is presented below:
Three month ended
March 31, 2003
--------------------------------------------
Options Outstanding Weighted average
Options exercise price - Cdn.$
--------------------------------------------
Outstanding at the beginning
of the period 4,425,000 0.58
Granted 1,160,000 2.04
Exercised (1,132,500) 0.33
--------------------------------------------
Outstanding at the end of the
period 4,452,500 1.02
Options exercisable at period end 4,150,833 0.97
The following table summarizes information about share options during the
quarter ended March 31, 2003.
Options granted - shares Weighted average
exercise price - Cdn.$
--------------------------------------------------------------------------
660,000 1.96
100,000 2.25
400,000 2.13
--------------------------------------------------------------------------
1,160,000 2.04
--------------------------------------------------------------------------
7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
4. Share Capital (continued)
Stock Options
============================================================================================
Range of Exercise Number Outstanding At Weighted-Average Remaining Weighted Average
Price - Cdn.$ Mar. 31, 2003 Contractual Life (years) Exercise Price - Cdn.$
============================================================================================
0.40 to 0.40 350,000 0.73 0.40
0.50 to 0.65 715,000 1.14 0.54
0.70 to 0.80 110,000 2.24 0.71
0.24 to 0.51 490,000 3.35 0.33
0.70 to 1.46 1,627,500 3.99 0.86
2.13 to 2.25 1,160,000 4.82 2.04
============================================================================================
0.24 to 2.25 4,452,500 3.38 1.02
Warrants
============================================================================================
Conversion Price Number Outstanding At Weighted-Average Remaining Weighted Average
Cdn.$ Mar. 31, 2003 Contractual Life (years) Exercise Price - Cdn.$
============================================================================================
2.00 to 2.00 14,324,100 0.73 2.00
============================================================================================
Had the company determined compensation costs on this Plan based on the fair
value at the grant dates for those share options consistent with the fair value
method of accounting for stock - based compensation, the Company's net income
and earnings per share would have been reduced to the pro forma amounts
indicated below:
Net income (loss) for the period As reported $ 2,593
Pro Forma $ 1,880
Basic earnings per share As reported 0.01
Pro Forma 0.01
Diluted earnings per share As reported 0.01
Pro Forma 0.01
The pro forma amounts presented above, do not include the effect of share
options granted before January 1, 2002.
The fair values of options included in the pro forma amounts presented above,
have been estimated using an option-pricing model. Assumptions used in the
pricing model are as follows:
a) average risk-free interest rate 4.23%
b) expected life 5 years
c) expected volatility 50%
d) expected dividends nil
8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
5. Segmented Information
All of Eldorado's operations are related to the gold mining industry. In 2003
and 2002 Eldorado had one producing mine, Sao Bento, and had assets located in
North America, South America, Turkey and Australia.
==================================
| Three months |
| ended ended |
| March 31 March 31 |
| 2003 2002 |
| (unaudited) (unaudited)|
===============================================================================
Gold sales
Sao Bento Mine $ 9,166 $ 4,996
------------------------------------
9,166 4,996
------------------------------------
Operating costs
Sao Bento Mine 5,050 2,633
------------------------------------
5,050 2,633
------------------------------------
Depletion, depreciation and amortization
Sao Bento Mine 2,458 2,262
------------------------------------
2,458 2,262
------------------------------------
Corporate expenses, net of interest
and other income 1,303 (255)
Exploration expense (250) (119)
------------------------------------
Profit (loss) before income taxes 2,711 (273)
------------------------------------
Taxes
Current (118) (20)
Future - -
------------------------------------
Net income (loss) for the period $ 2,593 $ (293)
====================================
9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
5. Segmented Information (continued)
==================================
| Three months |
| ended ended |
| March 31 March 31 |
| 2003 2002 |
| (unaudited) (unaudited)|
===============================================================================
Revenues by geographic area
North America $ 219 $ 35
South America 9,199 6,120
Turkey 30 -
------------------------------------
$ 9,448 $ 6,155
------------------------------------
Net income (loss) by geographic area
North America $ 1,329 $ (1,055)
South America 1,453 909
Turkey (170) (136)
Australia (19) (11)
------------------------------------
$ 2,593 $ (293)
------------------------------------
==================================
| Three months |
| ended |
| March 31 December 31 |
| 2003 2002 |
| (unaudited) |
===============================================================================
Segment assets
Sao Bento Mine $ 73,552 $ 73,406
------------------------------------
Total assets for reportable segments 73,552 73,406
Mineral properties and deferred development 33,753 32,958
Other 37,042 33,768
------------------------------------
$ 144,347 $ 140,132
====================================
Assets by geographic area
North America $ 36,343 $ 33,023
South America 73,757 76,637
Turkey 34,243 33,468
Australia 4 4
------------------------------------
$ 144,347 $ 140,132
6. Supplementary Cash Flow Information
Three months ended Three months ended
March 31, March 31,
2003 2002
(unaudited) (unaudited)
Financing activities
Long term debt backend
fees accrual $ - $ (83)
Increase in long term debt - 83
Interest accrual on convertible
debentures 45 50
Convertible debentures (45) (50)
--------------------------------------------
$ - $ -
============================================
10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
7. Commitments and Contingencies
Interest on withholding taxes
Sao Bento Mineracao may have a liability relating to interest and penalties on
accrued but unpaid withholding tax on gold loans. The Company believes there are
no grounds to the claim and will defend its position vigorously. If an
unfavorable ruling were to occur the Company estimates the liability to be a
maximum of $1,100.
11
PRODUCTION HIGHLIGHTS(1)
--------------------------------------- ------------ ------------ ------------ ------------ -------------
First Second Third Fourth First
Quarter Quarter Quarter Quarter Quarter
2002 2002 2002 2002 2003
--------------------------------------- ------------ ------------ ------------ ------------ -------------
Gold Production
Ounces produced 16,963 27,702 28,469 30,399 21,831
Cash Operating Cost ($/oz) 166 195 185 183 215
Total Cash Cost ($/oz)2 171 201 189 189 222
Total Production Cost ($/oz)3 310 296 259 274 330
Sao Bento Mine, Brazil
Ounces produced 16,963 27,702 28,469 30,399 21,831
Tonnes to Mill 89,342 96,519 100,185 95,249 92,104
Grade (grams / tonne) 9.85 9.23 8.87 10.01 9.55
Cash Operating Cost ($/oz) 166 195 185 183 215
Total Cash Cost ($/oz)2 171 201 189 189 222
Total Production Cost ($/oz)3 310 296 259 274 330
Gold Sold
Ounces sold 13,792 27,004 28,901 29,962 23,854
Realized Price ($/oz) 4 292 303 305 316 356
--------------------------------------- ------------ ------------ ------------ ------------ -------------
1 Cost figures calculated in accordance with Gold Institute Format
2 Cash Operating Costs plus royalties and the cost of off-site
administration.
3 Total Cash Cost plus depreciation, amortization and reclamation.
4 Excludes amortization of deferred gain.
12
Management Discussion and Analysis
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
Please review this report with the Consolidated Financial Statements and
accompanying Notes. All monetary amounts are in United States dollars unless
otherwise noted.
The Management's Discussion and Analysis ("MD&A") contains certain
"Forward-Looking Statements" within the meaning of section 21E of the United
States Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical fact, included herein, including without limitation
statements regarding potential mineralization and reserves, exploration results
and future plans and objectives of Eldorado Gold Corporation ("Eldorado", the
"Company" or "we") are forward-looking statements that involve various risks and
uncertainties. There can be no assurance that such statements will prove to be
accurate and actual results and future events could differ materially from those
anticipated in such statements.
First Quarter 2003 Financial Performance
Eldorado Gold Corporation's unaudited net income for the first quarter of 2003
was a profit of $2,593 ($0.01 per share) compared to a loss of $293 ($0.00 per
share) in the first quarter of 2002. The Company's positive financial results
for the first quarter of 2003 was mainly driven by a gain of $2,267 in foreign
exchange compared to a loss on foreign exchange of $165 in the first quarter of
2002. The gain on foreign exchange is a result of the Canadian dollar
strengthening versus the US dollar. Eldorado currently holds $41,571 in cash; of
this amount 80% is held in Canadian dollars. As the Canadian dollar has
strengthened against the US dollar over the past quarter, a favorable gain has
occurred. We believe the Canadian dollar will continue to strengthen over the
next quarter resulting in further foreign exchange gains.
For the first quarter 2003 gold revenues were $9,166 compared to $4,996 for the
first quarter of 2002. The increased revenues are the result of the sale of
23,854 ounces of gold at a realized price of $356 per ounce (excluding a total
hedging gain of $680) compared to sale of 13,792 ounces of gold at a realized
price of $292 per ounce (excluding a total hedging gain of $969 in 2002). The
Company benefited from the Sao Bento mine autoclaves operating at higher
capacity and 100% power availability during the first quarter of 2003. During
the first quarter of 2002 the Sao Bento mine was operating under mandated energy
consumption restraints as well as having one of the two autoclaves shutdown for
major repairs. During the 1st Quarter 2002 the Company received business
interruption insurance claims in the amount of $1,118 recorded as other income
from the repair of the #2 Autoclave at Sao Bento. The repairs were complete and
the final insurance claims were paid in the 2nd Quarter 2002. Cash flow for the
first quarter from operating activities was $1,202 compared to $677 in the first
three months of 2002.
Sao Bento
In the first quarter of 2003, Sao Bento Mine produced 21,831 ounces of gold at
total cash cost of $222/oz. compared to 16,963 ounces at a total cash cost of
$171/oz. in the first quarter of 2002. The increase in gold production in the
first quarter of 2003 compared to the first quarter of 2002 was a result of the
major shutdown for repair of Autoclave #2 during the first three months of 2002
and governmental mandated power restrictions. During the first quarter of 2003
the #1 autoclave was shut down for one and a half month for planned major
maintenance resulting in a monthly production rate lower than the annualized
production rate of 105,000 ounces of gold forecast for 2003. The 2003 operating
plan for Sao Bento reflects the shutdown of Autoclave #1 for major maintenance
during the first quarter. This maintenance was completed in the quarter on time
and within budget. With the maintenance rebuild complete of autoclave #1 both
autoclaves are now operating at normal capacity and the Company continues to
forecast production of 105,000 ounces of gold at cash cost of $190/oz. for 2003.
On April 2, 2003 the Company announced the shaft deepening at the Sao Bento
Mine. The preparation of the shaft deepening is expected to commence in the
second quarter of 2003 with the deepened shaft to be commissioned in December
2004. The 5.2 meter diameter concrete lined shaft will be deepened by
approximately 370 meters at an approximate cost of $12,000. The shaft deepening
will provide a bottom working elevation approximately 1,300 meters below surface
at the Mine's 28th level. The capital required to complete the shaft will be
provided by internally generated cash flow from the Sao Bento Mine.
Thousands of U.S. dollars except share amounts
1st Quarter 1st Quarter
2003 2002
Gold Revenue $ 9,166 $ 4,996
Net Income (loss) $ 2,593 $ (293)
Net Income per share (loss) $ 0.01 $ -
Cash Flow from operations $ 1,202 $ 677
Interest and other income decreased by $877 over the first quarter of 2002, as a
result of recording $1,058 of cash received from the autoclave business
interruption insurance claim in 2002 offset by higher interest income in 2003.
13
Management Discussion and Analysis
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
Production Sao Bento Mine
Production Highlights (All figures in U.S. Dollars)
2003 2002
1st Quarter 1st Quarter
Gold Production
Ounces 21,831 16,963
Cash Operating Cost ($/oz) 215 166
Total Cash Cost ($/oz) 222 171
Total Production Cost ($/oz) 330 310
Sao Bento Mine, Brazil
Ounces 21,831 16,963
Ore tonnes 92,104 89,342
Grade (grams/tonne) 9.55 9.85
Cash Operating Cost ($/oz) 215 166
Total Cash Cost ($/oz) 222 171
Total Production Cost ($/oz) 330 310
Gold Sold
Ounces 23,854 13,792
Realized Price ($/oz) 356 292
Gold production in the first quarter of 2003 for the Sao Bento mine was 21,831
ounces. This compares to first quarter 2002 gold production at Sao Bento of
16,963 ounces, when the #2 autoclave was down for repair. Production in the
first quarter of 2003 was lower than usual (but still higher than first quarter
of 2002) as a result of the scheduled shut down the #1 autoclave for the
inspection and repair of the internal lining. The #1 autoclave was shut down
from January 27 to March 12, 2003. The Company continues to forecast production
of 105,000 ounces at cash costs of $190/oz in 2003.
In the first quarter of 2003 Sao Bento mined 92,104 tonnes of ore at a grade of
9.55 grams per tonne. This compares to 89,342 tonnes of ore in the first quarter
of 2002 at a grade of 9.85 grams per tonne. Of the 92,104 tons of ore mined in
the quarter approximately 12,000 tonnes remain in above ground inventory as a
result of the shut down of the #1 autoclave.
First quarter 2003 total cash costs at Sao Bento were $222 per ounce compared to
$171 per ounce in 2002. Total cash costs for the first quarter of 2002 included
business interruption credit of $38/oz. The total cash cost for the first
quarter of 2003 includes $14 per ounce reduction in costs a result of increase
in ore inventory at the mine site. The increase in ore inventory is the result
of shutting down the #1 autoclave for repair of the internal lining while
continuing to operate the mine a full production thereby building an ore
stockpile ahead of the processing plant. Since both autoclaves are now operating
at full capacity the ore stockpile will be processed over the next quarter.
14
Management Discussion and Analysis
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
Consolidated Gold Production Cost Per Ounce
1st Quarter 1st Quarter
2003 2002
Direct mining expenses $ 219 $ 253
Inventory change (14) (58)
Third party smelting, refining and
transportation 5 4
Vancouver Costs 5 5
By-product credits - -
Business Interruption credit - (38)
------------- ---------------
Cash operating cost per ounce $ 215 $ 166
Royalties and Production taxes 7 5
------------- ---------------
Total cash costs per ounce $ 222 $ 171
Depreciation/Depletion 113 133
Exchange (Gain)/Loss (5) 6
Reclamation and mine closure - -
------------- ---------------
Total production costs per ounce $ 330 $ 310
------------- ---------------
Kisladag
During the first quarter of 2003, $733 was spent on the Kisladag project. On
April 2, 2003 the Company announced the positive results of the Kisladag
Feasibility Study prepared by Hatch Associates, Vancouver. Kisladag is planned
as a 15 year open pit heap leach gold mine constructed and operated in two
phases with Phase I to be 4 years at 5,000,000 tonnes per year and Phase II
expanding up to 10,000,000 tonnes per year. Phase I average annual production is
expected to be 143,000 ounces and Phase II average annual production expected to
increase to 230,000 ounces. Phase I initial capital and working capital
expenditures is budgeted at $56,700. Phase II expansion capital is budgeted at
$39,400. Sustaining capital is estimated at $37,200. The cash costs are expected
to be $152 per ounce over the life of the mine.
Financial Condition and Liquidity
Cash flow from operating activities
Operations after changes in working capital generated cash flow of $1,202 in the
first quarter of 2003 compared to $677 in the first quarter 2002.
Cash flow from investing activities
Investing activities were $2,705 in the first quarter of 2003 compared to $2,311
in the first quarter 2002. Decrease in cash during the first quarter 2003 was
mainly on property, plant and equipment of $1,906 of which $1,862 related to Sao
Bento Capex and $795 on mineral properties and deferred development of which
$733 related to the Kisladag Project.
Cash flow from financing activities
Financing activities were $3,003 in the first quarter of 2003 compared to $6,255
in the first quarter 2002. Increase in cash during the first quarter 2003 was
from the exercise of employee stock options of $244 and warrants of $2,813
offset by an under accrual of $54 in share Issue costs on the December 23, 2002
financing.
Risk Factors
Gold Price Volatility
The profitability of the Company's operations is significantly affected by
changes in the gold price. The gold price can fluctuate widely and is affected
by numerous factors beyond the Company's control, including industrial and
jewellery demand, inflation and expectations with respect to the rate of
inflation, the strength of the U.S. dollar and of other currencies, interest
rates, gold sales by central banks, forward sales by producers, global or
regional political or economical events, and production and cost levels in major
gold-producing regions such as South Africa. In addition, the gold price is
sometimes subject to rapid short-term changes because of speculative activities.
The supply of gold consists of a combination of new production from mining and
existing stocks of bullion and fabricated gold held by governments, public and
private financial institutions, industrial organizations and private
individuals. As the amounts produced in any single year constitute a small
portion of the total potential supply of gold, typical variations in current
production do not necessarily have a significant impact on the supply of gold or
its price.
15
Management Discussion and Analysis
1st Quarter ended March 31, 2003 and 2002 (in thousands of U.S. dollars except
per share and per ounce amounts)
Impact of Hedging Activities
Hedging activities are intended to protect the Company from the fluctuations of
the price of gold and to minimise the effect of declines in gold prices on
results of operations for a period of time. Although hedging activities may
protect a company against low gold prices, they may also limit the price that
can be realized on gold that is subject to forward sales and call options where
the market price of gold exceeds the gold price in a forward sale or call option
contract. Currently the Company has no gold hedges.
Reserve and Resource Estimates
The proven and probable reserve figures set forth by the Company are estimates,
and there is no certainty that the indicated levels of gold production will be
realized. Reserve estimates may require revision based on various factors such
as actual production experience, market price fluctuations of gold, production
costs or recovery rates. Mineral resources which are not mineral reserves do not
have demonstrated economic viability. Certain reserve and resource estimates
included herein were made before NI 43-101 came into force and may vary
materially from estimates made in accordance with NI 43-101.
Production Estimates
Estimates of future production for the Sao Bento Mine and for the Company as a
whole are derived from the Company's five-year mining plans. The plans are
developed based on, among other things, mining experience, reserve estimates,
assumptions regarding ground conditions and physical characteristics of ores
(such as hardness and presence or absence of certain metallurgical
characteristics) and estimated rates and costs of production. Actual production
may vary from estimates for a variety of reasons, including risks and hazards of
the types discussed previously, actual ore mined varying from estimates in grade
and metallurgical and other characteristics, mining dilution, pit wall failures
or cave-ins, strikes and other actions by labour at unionized locations,
restrictions imposed by government agencies and other factors. Estimates of
production from properties not yet in production or from operations that are to
be expanded are based on similar factors (including, in some instances,
feasibility studies prepared by Company personnel and/or outside consultants)
but it is possible that actual cash operating costs and economic returns will
differ significantly from those currently estimated. It is not unusual in new
mining operations to experience unexpected problems during the start-up phase.
Delays often can occur in the commencement of production.
Risk of Sovereign Investments
Virtually all of the Company's activities and investments are located in foreign
countries. The Company's material foreign investments include operations in
Brazil and exploration and development projects in Brazil and Turkey.
These investments are subject to the risks normally associated with conducting
business in foreign countries. Some of these risks are more prevalent in
countries which are less developed or have emerging economies, including
uncertain political and economical environments, as well as risks of war and
civil disturbances or other risks which may limit or disrupt a project, restrict
the movement of funds or result in the deprivation of contract rights or the
taking of property by nationalization or appropriation without fair
compensation, risk of adverse changes in laws or policies of particular
countries, increases in foreign taxation, delays in obtaining or the inability
to obtain necessary governmental permits, limitations on ownership and
repatriation of earnings and foreign exchange controls and currency
devaluations. Although the Company is not currently experiencing any significant
or extraordinary problems in foreign countries arising from such risks, there
can be no assurance that such problems will not arise in the future.
In the countries where the Company has operations or conducts exploration
activities, the mineral rights or certain portions of such rights are owned by
the relevant governments. Such governments have entered into contracts with the
Company and its subsidiaries, or granted permits or concessions that enable them
to conduct operations or development and exploration activities on such lands.
Notwithstanding such arrangements, the Company's ability to conduct its
operations or development and exploration activities on such lands is subject to
changes in government policy over which the Company has no control. If such a
change were to occur that affected the right of the Company or any of its
subsidiaries to conduct operations or development and exploration activities, it
could have a material adverse effect on the results of the Company's operations.
Mining/Operations Risks
The business of gold mining is subject to a number of risks and hazards
including environmental hazards, industrial accidents, labour disputes,
encountering unusual or unexpected geologic formations or other geological or
grade problems, unanticipated changes in metallurgical characteristics and gold
recovery, encountering unanticipated ground or water conditions, cave-ins, pit
wall failures, flooding, rock bursts, periodic interruptions due to inclement or
hazardous weather conditions, and other acts of God or unfavourable operating
conditions and bullion losses. Such risks could result in damage to, or
destruction of, mineral properties or processing facilities, personal injury or
death, loss of key employees, environmental damage, delays in mining, monetary
losses and possible legal liability.
Outlook
The Company is forecasting to produce 105,000 ounces of gold at cash cost of
$190 per ounce for 2003 from our Sao Bento Mine. We are completing the detailed
engineering for a shaft-deepening project at the Sao Bento Mine with planned
construction beginning in the second quarter of 2003. The projected cost for the
shaft deepening is planned at $12,000. Construction is planned to occur over an
18-month period with completion planned for the fourth quarter of 2004.
The Environmental Impact Assessment ("EIA") for the Kisladag project has been
submitted to the Turkish governments for review. The Company is forecasting
approval of the EIA and issuance of the positive certificate early in the 3rd
quarter of 2003. The bankable feasibility study has been completed for the
Kisladag project and financing of the project is planned to be completed in the
3rd quarter of 2003. We are planning to begin construction of the Kisladag mine
in the 4th quarter of 2003.
16