Eldorado Gold Exec Insights: OpEx Figures, Eastern Dragon
On Friday, Eldorado Gold Corp (NYSE:EGO) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.
OpEx Figures for Skouries
Joung Park – Morningstar: My first question was in the technical report for Skouries that came out in 2011 and site’s operating cost of €1.6 per tonne for the surface €12.5 per tonne for the underground and then roughly €3.5 to €4.5 tonne in processing cost, I was wondering if the OpEx figures for Skouries are still accurate and now that you guys have had updated mining plan?
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Paul N. Wright – President and CEO: Well, I think first of all, you can only attach significance to numbers we disclose. I think we said previously that our view on operating cost in general going into transaction where that review the operating cost likely to be a little bit higher than were described by European Goldfields that was our view following the completion of our review subsequent to the acquisition, but you can really only go on the numbers that we provide you rather than us commenting on numbers that were generated previously by others.
Joung Park – Morningstar: So, to assume a little bit of inflation maybe and then for the CapEx spending, it seems like you guys have only spent $53 million, are you guys still targeting the $350 million in the growth CapEx for the year that you’ve outlined before?
Paul N. Wright – President and CEO: Well, I mean actually the CapEx for the year is has increased reflecting the addition of the European Goldfields assets. I think we’re now looking more at $550 million for the year.
Joung Park – Morningstar: So, this is including sustaining and capitalized exploration against the $550 million?
Fabiana Chubbs – CFO: Includes sustaining and no capitalized exploration.
Joung Park – Morningstar: As you guys are doing the refurbishment on the existing plant Olympias, I’m curious what kind of condition you’re finding that plant to be in?
Norm S. Pitcher – COO: I would say not bad. It’s out there for over many years, 10 years or something like 10 or 15 years. So, you’d expect a certain amount of degradation, but replacing flows, also things like that, but it almost done. We’re kind of 90% plus done at this stage. So, but it wasn’t in bad shape.
Joung Park – Morningstar: Is there reprocessing, is that are you guys hitting for maybe May start up something like that?
Norm S. Pitcher – COO: No it will be little bit later than that.
Joung Park – Morningstar: So perhaps in the third quarter of the year?
Paul N. Wright – President and CEO: You’ll see the first production in the third quarter we’ll probably start turning the mills and commissioning towards the end of the June.
David Haughton – BMO Capital Markets: Just got a question on Eastern Dragon what’s your expected build time once you get all these permits in place for the open pit and then subsequent underground?
Norm S. Pitcher – COO: Sort of six months now. Basically the mill is finished. You’ve got some surface work to do in terms of the tailings and open pit, but that’s really about it.
Paul N. Wright – President and CEO: The first production comes from the open pit, David I mean and the ore is right on surface fairly high grade, so it’s a matter of frankly clearing the trees as Norm described and scraping off the surface and going out at it in terms of tailings dam, it’s a dry tailings storage and rest assured we don’t have to build a tailings facility over the next 10 years, we need to get enough so we can get it started for the next winter season.
David Haughton – BMO Capital Markets: Well the seasonality is kind of the important here.
Paul N. Wright – President and CEO: That’s the issue here, yes.
David Haughton – BMO Capital Markets: Can you just remind what sort of life you are expecting from the open pit before the underground kicks in?
Norm S. Pitcher – COO: It’s about 3.5 years, I think.
David Haughton – BMO Capital Markets: So you’ve got a bit of breathing space on getting that portal in place and new development work et cetera for the underground?
Norm S. Pitcher – COO: Yeah, this thing outcrops on surface and there is actually an exploration – there is an exploration drive through the (guts) of the ore body already, so it’s not– getting that access up and going in China will not take all that long. We do have some time.
David Haughton – BMO Capital Markets: Just going back to Efemcukuru, during this current quarter, we are just going to be capitalizing whatever is processed as you sort out the filter situation at Kisladag and the filter and the mine issues at Efemcukuru. Commercial production likely now in the September quarter, you’ve got a backlog of inventory there? Is that going to be like a big rush of sales in the third and fourth quarter as a bit of a catch-up or how you’re going to treat that?
Paul N. Wright – President and CEO: We certainly hope so, David. I mean as you remember from a week ago, we have fields of concentrate bags, which we would plan on aggressively pushing through in third and fourth quarters. I mean, as Norm described, we are bringing additional filtration capacity into replace but we are going to look to try to utilize existing filtration capacity to give ourselves as much filtering capacity as possible to try to get this off the books by the end of the year?
David Haughton – BMO Capital Markets: So, it’s going to be a big, big rush of revenue I guess fourth quarter in particular coming out of this thing. With the weather situation of the freezing of the pipes and various other things you had encountered, what remedial actions are in place so that it doesn’t occur every winter, or was this a particular harsh winter?
Norm S. Pitcher – COO: This was an incredibly harsh winter I would say. But I guess the good part of that is it sort of pointed out the weaknesses in our system for next winter and around the water treatment plant and the water pipes going underground and the exposed pipes in the mill, obviously will be looking to insulate those for the next winter. We even had issues at some points getting people up to site because they don’t expect lot of snow there and to get a bunch of snow and there aren’t plows and things like that so hopefully we won’t see this again for a while. You will be a lot more prepared for it.
David Haughton – BMO Capital Markets: Also I noticed that you have changed your presentation style for the quarterly, so it’s not a compact and now, so I’m happy with that. With regard to Stratoni, the way that you presented that in the report, is that the way that we will expect to get them information going forward or you’re looking to fine-tune that issue more about what’s required for disclosure?
Paul N. Wright – President and CEO: You can gather from the silence David. We’re trying to organize our answer here.
David Haughton – BMO Capital Markets: That’s okay. I understand. Entirely it’s work in progress but thanks for the additional way that you’ve worked the presentation there.