EX-99.1 2 newsrelease.htm NEWS RELEASE 06-13 CC Filed by Filing Services Canada Inc. 403-717-3898

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NEWS RELEASE

ELD No. 06-13

TSX: ELD  AMEX: EGO

August 3, 2006

Q2 2006 Financial and Operating Results

(all figures in United States dollars, unless otherwise noted)


VANCOUVER, BC - Paul N. Wright, President and Chief Executive Officer of Eldorado Gold Corporation, is pleased to report on the Company’s financial and operating results for the second quarter ended June 30, 2006.

Q2 2006 Highlights

·

Commenced operations at the Kisladag mine and poured the first gold bar at the mine

·

Produced 6,872 ounces at Kisladag to the end of June at a cash operating cost of $242 per ounce

·

Continued to advance construction at the Tanjianshan mine in China, which continues on  schedule to start production in October

·

Announced encouraging results from our exploration at the Vila Nova gold project in Brazil

·

Recorded a net income for the quarter of $0.2 million (or $0.00 per share) compared with a net loss of $11.1 million (or $0.04 per share) in Q2 2005

·

Sold 17,907 ounces of gold at an average price of $615 per ounce

Financial Results

At June 30, 2006, we held $124.6 million in cash and short-term deposits and $50.0 million in a reserve account, offsetting our debt of $52.8 million.  We remain hedge free.


Our consolidated net income for Q2 2006 was $0.2 million (or $0.00 per share) compared with a net loss of $11.1 million (or $0.04 per share) in Q2 2005.  This increase in net income resulted from increased revenues from gold sales, increased interest income, and foreign exchange gains resulting primarily from Canadian dollars on hand, offset by increased exploration and administrative expenses.


In Q2 2006, we sold 17,907 ounces of gold at an average price of $615 per ounce, compared to 12,056 ounces at an average price of $425 per ounce in Q2 2005.  The increased gold production, as compared to Q2 2005, is due to higher ore production rates at the São Bento mine following the completion of the shaft-deepening project in 2005.

Operating Performance

São Bento

In Q2 2006, São Bento produced 18,163 ounces of gold at a total cash cost of $441 per ounce, compared to 14,932 ounces of gold at a total cash cost of $440 per ounce in Q2 2005.  The increased gold production over the comparable period from 2005 reflects higher ore production rates as a result of our completion of the shaft-deepening project in 2005.

 


We expect to end commercial production at the São Bento gold mine early in 2007.  We are currently reviewing alternatives regarding the future of the assets at our mine.  An agreement with a third party was reached during the quarter ended June 30, 2006, for the processing of 500 tonnes of gold concentrate, which during Q3 and Q4 will yield approximately 3,000 ounces of gold to the Company's account.

Kisladag

In April 2006, we announced the start-up of the Kisladag mine in Turkey.  As a result of slower than expected commissioning of the crushing circuit and mechanical problems with a process water supply pump, we have revised our estimates of Kisladag’s 2006 production from 120,000 ounces to 70,000 ounces at a cash operating cost of $219 per ounce.  We have resolved the issues with the water supply pump and we expect production to increase to the anticipated 240,000 ounces of gold per year in 2007.  The mine officially began commercial production on July 1, 2006.  In July we sold 11,484 ounces of Kisladag production at a realized price of $627 per ounce.  In July, Kisladag produced 7,502 ounces of gold.

Development

China

Construction at Tanjianshan in Q2 2006 focused on completing the mechanical and electrical works within the plant.  We completed and commissioned the water and sewage treatment plants, as well as the laboratory, accommodation and canteen facilities.  Other work included completing the CIL tanks, the roof structure and tank platform steel work.  


During the second quarter, we announced our intent to use an owner-operated mining option at the Tanjianshan mine, which will result in approximately $23 million savings in operating costs over the life of the mine.


Turkey

At Efemçukuru, we are proceeding with the permitting process and land acquisition, as well as an infill drilling program and step-out drilling program designed to test the down-dip potential of the ore zone.  We plan to complete a feasibility study in Q4 2006.  

Exploration Outlook

Our exploration budget for 2006 is $14.0 million, enabling us to continue advancing our pipeline of promising properties in Turkey, Brazil and China.  


Turkey

We concluded our drilling program at the AS project over the Dogrudere anomaly.  Results show widespread weak copper and gold mineralization; overall, the implied mineralized zone is small.  We will now concentrate on surface mapping and rock sampling in key areas to the south of the Dogrudere anomaly to guide potential sites for drilling later in the year.  


We also completed the bulk of our exploration program at Mahmur Tepe.  While trench results do show the presence of gold mineralized zones, the results have not identified the presence of structural zones containing economic concentrations of gold.  


Brazil

At the Vila Nova gold project, our drill results at the Croado pit extended the gold mineralization along strike to over 300 meters and to over 80 meters below surface.  At Gaivotas, trench sampling and initial drilling confirmed multiple zones of widespread lower grade mineralization interspersed with narrow higher grade intervals.  Metallurgical testwork on both oxidized and sulphidic samples are encouraging.  

 

 

2

 


Drill testing with three contract diamond drill rigs will continue at Vila Nova South and in Gaivotas, and we will conduct initial testing of the Santa Maria, Santa Maria Norte and Guaxeba pits.  


We completed our data acquisition at the Vila Nova iron project.  We will now update the iron project mineral resource model and revise the pit design to support a pre-feasibility study by the fourth quarter.  


China

We began infill and exploration diamond drilling in the existing Jinlonggou ("JLG")and Qinlongtan ("QLT") deposits, extending the size and grade of a high grade gold mineralized zone in the southwest end of Jinlonggou.  On August 1, 2006, we released additional positive drill results from infill drilling at JLG and QLT.  We also started to explore on Huanglvgou ("HLG") and Longbaigou ("LBG"), two highly prospective mineralized trends which sit between QLT and JLG.  In the third quarter, we will map and sample the trenches in the HLG and LBG target areas, conduct an induced polarization and magnetics survey and conclude the work activity in this area with 1,000 meters of diamond drilling.


"The pouring of the first gold bar from Kisladag on May 12 was a very significant event for our employees, our company and the local communities near Kisladag", said Paul Wright, President and Chief Executive Officer.  "With construction proceeding on schedule at Tanjianshan, by the end of 2006, we will be producing gold from three locations – São Bento, Kisladag and Tanjianshan.  Our strong cash position gives us the financial flexibility to continue to grow sustainably through the acquisition, exploration and development of mineral properties".  


Eldorado is a gold producing and exploration company actively growing businesses in Brazil, Turkey and China.  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 grow in 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


Eldorado will host a conference call on Tuesday August 3, 2006 to discuss the Q2 2006 Financial and Operating Results  at 11:30 a.m. EDT (8:30 a.m. PDT).  You may participate in the conference call by dialing 416-695-9753 in Toronto or 1-877-888-4210 toll free in North America and asking for the Eldorado Conference Call with Chairperson: Paul Wright, President and CEO of Eldorado Gold.  The call will be available on Eldorado’s website. www.eldoradogold.com.  A replay of the call will be available for one week by dialing 416-695-5275 in Toronto or 1-888-509-0081 toll free in North America and entering the Pass code: 6626230.


3


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, Form 40-F, dated March 23, 2006.  Forward-looking statements in this release include statements regarding the expectations and beliefs of management.  Such factors include, amongst others, the following: gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves, and between actual and estimated metallurgical recoveries; mining operational risk; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the section entitled “Business – Risk Factors” in the Company’s Annual Information Form, Form 40F, dated March 23, 2006.  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 1.888.353.8166

1188, 550 Burrard Street

Fax: 604.687.4026

Vancouver, BC V6C 2B5

Email nancyw@eldoradogold.com

Web site: www.eldoradogold.com


Request for information packages: info@eldoradogold.com



4

 

ELDORADO GOLD CORPORATION
          
Consolidated Balance Sheets
          
(Expressed in thousands of U.S. dollars)
          
           
   
June 30
  
December 31
  
   
2006
  
2005
  
   
(unaudited)
      
ASSETS
          
Current assets
          
   Cash and cash equivalents
  
$
124,592
  
$
33,826
  
   Accounts receivable
    
10,191
   
8,264
 
   Prepaids
    
3,683
   
2,024
 
   Inventories
   
18,931
   
7,597
 
     
157,397
   
51,711
 
               
Property, plant and equipment
   
236,504
   
186,610
 
Mineral properties and deferred development
   
25,032
   
23,326
 
Deposits (note 4)
    
50,000
   
50,000
 
Investments and advances
    
51
   
562
 
Other assets
    
8,470
   
6,288
 
Goodwill
    
2,238
   
2,238
 
               
   
$
479,692
  
$
320,735
  
               
LIABILITIES
              
Current liabilities
              
   Accounts payable and accrued liabilities
  
$
17,625
  
$
19,730
  
   Current portion of capital lease obligation
    
36
   
37
 
   Current portion of long term debt (note 4)
    
1,928
   
1,488
 
     
19,589
   
21,255
 
               
Capital lease obligation
    
72
   
90
 
Long term debt (note 4)
    
50,832
   
50,832
 
Asset retirement obligation
    
11,466
   
11,143
 
Contractual severance obligation
    
3,125
   
2,437
 
Future income taxes
   
11,214
   
10,051
 
     
96,298
   
95,808
 
               
SHAREHOLDERS' EQUITY
              
Share capital
   
739,340
   
573,721
 
Contributed surplus
    
8,065
   
7,976
 
Deficit
    
(364,011
)
  
(356,770
)
     
383,394
   
224,927
 
               
   
$
479,692
  
$
320,735
  

 


Commitments and contingencies (note 6)
Subsequent event (note 8)
 
See accompanying notes to consolidated financial statements
 
 
APPROVED BY THE BOARD OF DIRECTORS
  
   
/s/ Paul N. Wright
/s/ Robert R. Gilmore
   
Director
Director
 
 
ELDORADO GOLD CORPORATION
                  
Consolidated Statements of Operations
                  
(Unaudited – Expressed in thousands of U.S. dollars except per share amounts)
    
                   
   
Three months ended June 30
  
Six months ended June 30
  
   
2006
 
2005
 
2006
 
2005
 
                   
REVENUE
                  
   Gold sales
  
$
11,007
  
$
5,128
  
$
19,599
  
$
12,362
  
   Interest and other income
    
2,258
   
1,026
   
3,094
   
1,674
 
     
13,265
   
6,154
   
22,693
   
14,036
 
EXPENSES
                          
   Operating costs
    
8,574
   
6,920
   
16,321
   
14,974
 
   Depletion, depreciation and amortization
    
87
   
2,402
   
171
   
4,917
 
   General and administrative
    
3,555
   
2,210
   
6,228
   
4,667
 
   Exploration expense
    
3,235
   
1,620
   
5,403
   
2,828
 
   Interest and financing costs
    
23
   
36
   
61
   
36
 
   Stock based compensation expense
    
126
   
304
   
2,014
   
1,542
 
   Accretion of asset retirement obligation
    
161
   
121
   
323
   
242
 
   Writedown of assets
    
–
   
–
   
–
   
662
 
   Gain on disposal of assets
    
–
   
–
   
(904
)
  
–
 
   Foreign exchange loss (gain)
    
(2,481
)
  
1,100
   
(914
)
  
1,708
 
     
13,280
   
14,713
   
28,703
   
31,576
 
                           
Loss before income taxes
    
(15
)
  
(8,559
)
  
(6,010
)
  
(17,540
)
   Tax recovery (expense) – current
    
(29
)
  
2
   
(69
)
  
(70
)
   Tax recovery (expense) – future
    
259
   
(2,506
)
  
(1,162
)
  
(2,410
)
                           
NET INCOME (LOSS) FOR THE PERIOD
  
$
215
  
$
(11,063
)
$
(7,241
)
$
(20,020
)
                           
                           
Basic and diluted income (loss) per share – US$
 
$
0.00
  
$
(0.04
)
$
(0.02
)
$
(0.07
)
Basic and diluted income (loss) per share – Cdn$
 
$
0.00
  
$
(0.05
)
$
(0.02
)
$
(0.09
)
                           
Weighted average number of shares outstanding
    
340,515,511
   
276,458,943
   
332,786,646
   
276,397,935
 
                           
                           
                           
Consolidated Statements of Deficit
                          
(Unaudited – Expressed in thousands of U.S. dollars)
                          
 
    
Three months ended June 30 
    
Six months ended June 30
  
     
2006
   
2005
   
2006
   
2005
 
                           
Deficit, beginning of period
  
$
(364,226
)
$
(316,601
)
$
(356,770
)
$
(307,644
)
Net income (loss) for the period
    
215
   
(11,063
)
  
(7,241
)
  
(20,020
)
Deficit, end of the period
  
$
(364,011
)
$
(327,664
)
$
(364,011
)
$
(327,664
)
 

See accompanying notes to consolidated financial statements

 

6


ELDORADO GOLD CORPORATION
                  
Consolidated Statements of Cash Flows
                  
(Unaudited – Expressed in thousands of U.S. dollars)
                  
   
 
  
 
          
   
Three months ended June 30
  
Six months ended June 30
  
   
2006
 
2005
 
2006
 
2005
 
                   
Cash flows from operating activities
                  
Net income (loss) for the period
  
$
215
  
$
(11,063
)
$
(7,241
)
$
(20,020
)
Items not affecting cash
                          
   Depletion, depreciation and amortization
    
87
   
2,402
   
171
   
4,917
 
   Future income taxes
    
(257
)
  
2,506
   
1,163
   
2,410
 
   Interest and financing costs
    
–
   
36
   
–
   
36
 
   Writedown of assets
    
–
   
–
   
–
   
662
 
   Gain on disposal of assets
    
–
   
–
   
(904
)
  
–
 
   Stock based compensation
    
228
   
409
   
2,213
   
1,773
 
   Contractual severance expense
    
344
   
106
   
688
   
212
 
   Accretion of asset retirement obligation
    
161
   
121
   
323
   
242
 
   Foreign exchange (gain) loss
    
(2,635
)
  
734
   
(1,979
)
  
1,529
 
Changes in non-cash working capital
                          
   Accounts receivable and prepaids
    
(2,579
)
  
(2,880
)
  
(3,586
)
  
(2,100
)
   Inventories
    
(8,030
)
  
(1,397
)
  
(11,334
)
  
(1,345
)
   Accounts payable and accrued liabilities
    
783
   
2,191
   
(2,105
)
  
3,653
 
Cash flows used for operating activities
    
(11,683
)
  
(6,835
)
  
(22,591
)
  
(8,031
)
                           
Cash flows from investing activities
                          
   Property, plant and equipment
   
(27,615
)
  
(18,296
)
  
(48,934
)
  
(31,192
)
   Mineral properties and deferred development
    
(1,032
)
  
(152
)
  
(1,706
)
  
(294
)
   Proceeds from disposal of investments and advances
    
–
   
–
   
1,481
   
–
 
   Other assets
    
(448
)
  
(2,031
)
  
(2,182
)
  
(2,031
)
Cash flows used for investing activities
    
(29,095
)
  
(20,479
)
  
(51,341
)
  
(33,517
)
                           
Cash flows from financing activities
                          
   Long term debt
    
(691
)
  
35,159
   
(691
)
  
35,159
 
   Deposits
    
–
   
(35,115
)
  
–
   
(35,115
)
   Issuance of common shares for cash
    
1,333
   
(3
)
  
163,495
   
342
 
   Interest and financing costs
    
(4
)
  
–
   
(19
)
  
–
 
Cash flows provided by financing activities
    
638
   
41
   
162,785
   
386
 
                           
Foreign exchange gain (loss) on cash held in foreign currency
    
2,635
   
(737
)
  
1,913
   
(1,535
)
                           
Net increase (decrease) in cash and cash equivalents
    
(37,505
)
  
(28,010
)
  
90,766
   
(42,697
)
Cash and cash equivalents at beginning of the period
    
162,097
   
120,703
   
33,826
   
135,390
 
                           
Cash and cash equivalents at end of the period
  
$
124,592
  
$
92,693
  
$
124,592
  
$
92,693
  
                           
                           
Supplementary cash flow information
                         
   Income taxes paid
  
$
73
  
$
–
  
$
93
  
$
–
  
   Interest paid
  
$
691
  
$
–
  
$
691
  
$
–
  
 
 
See accompanying notes to consolidated financial statements

7

 

 

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




1.

Nature of operations


Eldorado Gold Corporation (“Eldorado”, or the “Company”) is engaged in gold mining and related activities, including exploration and development, extraction, processing, and reclamation. Gold, the primary product, is produced in Brazil.  Development and construction of mines and processing facilities are underway in Turkey and China.  Exploration activities are carried on in Brazil, Turkey and China.


The Company has not determined whether all of 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.

Basis of presentation and principles of consolidation


These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles following the same accounting policies and methods of application as the audited annual financial statements of the Company as at and for the year ended December 31, 2005, expect as stated in note 3.  The disclosures in 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 audited annual financial statements of the Company.


All material intercompany balances and transactions have been eliminated.



3.

Significant accounting policies


As a result of the commissioning of the Kisladag mine, the Company adopted an accounting policy for open pit operations, analogous to its accounting policy for underground operations:


Mineral properties and capitalized development costs, where the mine operating plan calls for production from well defined ore reserves, are amortized over the life of the mine on a units of production basis.  Buildings, machinery, mobile and other equipment are amortized on a straight-line basis over their estimated useful lives, not exceeding the life of the mine.


The adoption of this policy has no effect on any prior periods presented.







8

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




4.

Deposits and Long term debt


 

June 30

December 31

 

2006

2005

Deposits

  

      Reserve account

$    50,000

$    50,000

 

$    50,000

$    50,000

   

Long term debt

  

      Corporate loan facility

$    50,000

$    50,000

      Sino Gold Limited

832

832

 

50,832

50,832

Current portion

  

      Corporate loan facility

1,619

1,179

      Sino Gold Limited

309

309

 

$    52,760

$    52,320

   


In April 2005, a wholly-owned subsidiary of the Company, Tüprag Metal Madencilik Sanayi Ve Ticaret Limited Surketi (“Tüprag”), entered into a $65 million Revolving Credit Facility (the “Facility”) with HSBC Bank USA, National Association (“HSBC Bank”).  The Facility is secured by cash deposits by the Company to a Reserve account, equivalent to the amounts advanced by HSBC Bank to Tüprag.


At June 30, 2006, the total debt outstanding under the Facility was $50 million and bears interest fixed at LIBOR plus 1.25% on the date of the draw.  The Company has drawn this $50 million in four tranches at a weighted average interest rate of 4.90%.  Each tranche typically has a maturity of approximately 13 months.  The Company expects to renew all scheduled repayments in 2006 as they arise.


Pursuant to the acquisition of Afcan Mining Corporation, the Company assumed two loans payable to Sino Gold Limited, one of which was fully repaid prior to December 31, 2005.  The remaining loan, which is non-interest-bearing, has been discounted at 8%.  Minimum repayments required under this loan are as follows:


   

December 31, 2006

 

$        400 

December 31, 2007

 

400 

December 31, 2008

 

400 

December 31, 2009

 

150 

  

1,350 

Less: imputed interest

 

(209)

  

$     1,141 







9

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




5.

Share capital


(a)

Authorized share capital


The Company’s authorized share capital consists of an unlimited number of voting common shares without par value, and an unlimited number of non-voting common shares without par value.



(b)

Issued and outstanding common shares


Voting common shares

Number of shares

Amount

Balance, December 31, 2005

302,577,378

$  573,721

   Shares issued upon exercise of stock options

1,287,999

3,788

   Shares issued upon exercise of Afcan warrants

2,502,470

5,300

   Financing, February 2006, net of issue costs

34,500,000

154,407

   Estimated fair value of stock options exercised

–

2,124

Balance, June 30, 2006

340,867,847

$  739,340


At June 30, 2006, there were no non-voting common shares outstanding.



(c)

Share option plans


The Company has share option plans approved by shareholders that allow it to grant options, subject to regulatory terms and approval, to its directors, officers, employees, and consultants.


The continuity of share purchase options is as follows:


 

Weighted average exercise price
(Canadian dollars)

 Number of options

Contractual weighted average remaining life (years)

Balance, December 31, 2005

C$ 3.34

7,176,872 

3.36

   Granted

5.47

 1,414,000 

 

   Exercised

3.39

 (1,287,999)

 

Balance, June 30, 2005

C$ 3.74

 7,302,873 

3.27


At June 30, 2006, an aggregate of 6,415,206 share purchase options with a weighted average exercise price of Cdn$3.50 had vested and were exercisable.


The exercise prices of all share purchase options granted during the period were at or above the market price at the grant date.  Using an option pricing model, the estimated fair values of all





10

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




options granted for the three and six months ended June 30, 2006 and 2005, which have been reflected in the consolidated statements of operations, are as follows:


 

Three months ended 
June 30 

Six months ended 
June 30 

 

2006 

2005 

2006 

2005 

Operating costs

$      43

$    25

$       76

$       97

Exploration

59

80

123

134

Administration

126

304

2,014

1,542

Total compensation cost recognized in
   operations, credited to contributed surplus

$  228

$  409

$  2,213

$  1,773


The weighted-average assumptions used to estimate the fair value of options granted during the three and six months ended June 30, 2006 and 2005 were as follows:


 

Three months ended 
June 30 

Six months ended 
June 30 

 

2006 

2005 

2006 

2005 

Risk free interest rate

4.5%

3.3%

4.2%

3.2%

Expected volatility

45.0%

50.0%

48.6%

50.0%

Expected life

5.0 years

4.0 years

4.3 years

4.0 years

Expected dividends

nil

nil

nil

nil



(d)

Warrants


The continuity of the number of warrants is:


 

Number of warrants

Weighted average exercise price
(Canadian dollars)

Balance, December 31, 2005

 2,594,778 

C$ 2.44

   Exercised

 (2,502,470)

2.44

Balance, June 30, 2006

 92,308 

C$ 2.44







11

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




(e)

Contributed surplus


The continuity of contributed surplus on the consolidated balance sheet is as follows:


Balance, December 31, 2005

$   7,976 

   Non-cash stock-based compensation

2,213 

   Share purchase options exercised, credited to share capital

(2,124)

Balance, June 30, 2006

$   8,065 


6.

Commitments and contingencies


The Company’s contractual obligations at June 30, 2006, comprise:


 

Remainder of 2006

2007

2008

2009

2010

2011+

Long term debt

$  1,928

$     333

$      360

$     139

$          – 

$          – 

Capital leases

36

36

36

– 

– 

– 

Operating leases and property expenditures

1,240

1,057

1,057

1,057

1,057

3,286

Purchase obligations

35,341

49,113

16,133

11,532

11,083 

1,955 

Totals

$ 38,545

$ 50,539

$ 17,586

$  12,728

$  12,140

$  5,241


The Company has long term debt of $50 million relating to a Revolving Credit Facility (note 4).  Repayments under this Revolving Credit Facility are not listed in the above totals as the Company expects to renew each tranche as it matures.


Purchase obligations in 2006 of $35.3 million relate to construction activities at the Kisladag and Tanjianshan mines, and include the costs of a contract mining company.  Purchase obligations from 2006 through to 2008 include energy and oxygen contracts at the São Bento mine and to other contracts at the Kisladag mine.  Property expenditures for 2006 relate to land fees and contractual exploration for the Vila Nova project iron ore project and the Tanjianshan mine.






12

ELDORADO GOLD CORPORATION

Notes to the Consolidated Financial Statements

Three and six months ended June 30, 2006

(Unaudited – Expressed in thousands of US dollars, unless otherwise stated)




7.

Segment disclosures


The Company operates in a single reportable operating segment, the mining, exploration and development of mineral properties.


 

Three months ended
June 30

 

Six months ended
June 30

 

2006

2005

 

2006

2005

Gold sales

     

   Brazil

$    11,007

$     5,128

 

$     19,599

$       12,362

   Total

$    11,007

$     5,128

 

$     19,599

$       12,362

      

Interest and other revenue

     

   Brazil

$          93 

$       192 

 

$         198 

$           489 

   Turkey

–  

153 

 

2 

110 

   China

28 

–  

 

47 

–  

   Canada

2,137 

681 

 

2,846 

1,075 

   All other

–  

–  

 

1 

–  

   Total

$     2,258 

$     1,026 

 

$      3,094 

$        1,674 

      

Net income (loss)

     

   Brazil

$        653 

$    (7,541)

 

$     (1,030)

$     (11,100)

   Turkey

(3,925)

(897)

 

(5,364)

(2,451)

   China

(111)

–  

 

(307)

–  

   Canada

3,590 

(2,854)

 

(525)

(6,681)

   All other

8 

229 

 

(15)

212 

   Total

$          215

$  (11,063)

 

$    (7,241)

$     (20,020)   

      
      
    

June 30
2006

December 31
2005

Total assets

     

   Brazil

   

$     35,965

$        23,517

   Turkey

   

187,886

138,737

   China

   

68,238

97,901

   Canada

   

187,548

60,556

   All other

   

55

24

   Total

   

$   479,692

$      320,735


8.

Subsequent event


Effective July 1, 2006, the Company commenced commercial production at its Kisladag gold mine in Turkey.

 

 

 

13