EX-99.1 2 financials.htm UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2010 MD Filed by Filing Services Canada Inc.  (403) 717-3898


 


 

 

 

 

 

 

 

 

 



 

 

September 30, 2010

Unaudited Interim Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suite 1188, 550 Burrard Street

Vancouver, British Columbia

V6C 2B5


Phone:  (604) 687-4018

Fax:      (604) 687-4026

 

 

 

 






Eldorado Gold Corporation

Unaudited Consolidated Balance Sheets


(Expressed in thousands of U.S. dollars)


 

 

Sepember 30,

 

December 31,

 

2010

2009

Assets

 

$

 

$

 

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

  339,403 

 

  265,369 

Restricted cash (note 4)

 

  52,221 

 

  50,000 

Marketable securities

 

  1,564 

 

  13,951 

Accounts receivable and other

 

  35,490 

 

  26,434 

Inventories

 

  130,257 

 

  129,197 

Future income taxes

 

  2,703 

 

  - 

 

 

  561,638 

 

  484,951 

Inventories

 

  40,280 

 

  31,534 

Investment in significantly influenced company

 

  5,130 

 

  - 

Restricted assets and other

 

  28,211 

 

  13,872 

Mining interests

 

  2,794,125 

 

  2,580,816 

Goodwill

 

  323,294 

 

  324,935 

 

 

  3,752,678 

 

  3,436,108 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

  139,453 

 

  157,250 

Debt - current (note 6)

 

  89,909 

 

  56,499 

Future income taxes

 

  2,313 

 

  4,264 

 

 

  231,675 

 

  218,013 

Debt - long-term (note 6)

 

  97,247 

 

  134,533 

Asset retirement obligations

 

  28,273 

 

  26,566 

Future income taxes

 

  442,131 

 

  390,242 

 

 

  799,326 

 

  769,354 

 

 

 

 

 

Non-controlling interest

 

  36,808 

 

  26,144 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

Share capital (note 7(b))

 

  2,810,109 

 

  2,671,634 

Contributed surplus

 

  21,317 

 

  17,865 

Accumulated other comprehensive income (note 7(c))

 

  465 

 

  2,227 

Retained earnings (deficit)

 

  84,653 

 

  (51,116)

 

 

  2,916,544 

 

  2,640,610 

 

 

  3,752,678 

 

  3,436,108 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Approved on behalf of the Board of Directors

 

 

(Signed) Robert R. Gilmore    Director                                            (Signed) Paul N. Wright    Director

 

See accompanying notes to the consolidated financial statements.


Eldorado Gold Corporation

Unaudited Consolidated Statements of Operations

For the periods ended September 30, 2010


(Expressed in thousands of U.S. dollars except per share amounts)





 

 

Three months ended

 

Nine months ended

 

 

2010

 

2009

 

2010

 

2009

$

$

$

$

Revenue

 

 

 

 

 

 

 

 

Gold sales

 

  190,305 

 

  81,608 

 

  578,227 

 

  213,961 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Operating costs

 

  69,095 

 

  28,109 

 

  208,271 

 

  75,053 

Depletion, depreciation and amortization

 

  27,232 

 

  9,017 

 

  79,978 

 

  20,015 

General and administrative

 

  10,771 

 

  7,442 

 

  39,803 

 

  24,101 

Exploration

 

  5,021 

 

  3,182 

 

  11,573 

 

  8,618 

Mine standby costs

 

  22 

 

  881 

 

  1,335 

 

  1,817 

Asset retirement obligation costs

 

  511 

 

  65 

 

  1,535 

 

  196 

Foreign exchange loss (gain)

 

  13,360 

 

  (442)

 

  8,327 

 

  (1,569)

 

 

  126,012 

 

  48,254 

 

  350,822 

 

  128,231 

 

 

 

 

 

 

 

 

 

(Gain) loss on disposal of assets

 

  (250)

 

  119 

 

  (1,735)

 

  (1,344)

Gain on marketable securities

 

  (4,489)

 

  (1,168)

 

  (5,347)

 

  (1,287)

Interest expense and financing costs

 

  1,992 

 

  77 

 

  6,261 

 

  235 

Interest and other income

 

  (8,970)

 

  (996)

 

  (10,654)

 

  (1,583)

 

 

  114,295 

 

  46,286 

 

  339,347 

 

  124,252 

Income before income taxes and non-controlling interest

 

  76,010 

 

  35,322 

 

  238,880 

 

  89,709 

 

 

 

 

 

 

 

 

 

Income tax (expense) recovery

 

 

 

 

 

 

 

 

Current

 

  (21,652)

 

  (13,812)

 

  (69,591)

 

  (27,465)

Future

 

  (459)

 

  8,873 

 

  4,788 

 

  8,115 

 

 

  (22,111)

 

  (4,939)

 

  (64,803)

 

  (19,350)

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

  (5,126)

 

  (229)

 

  (11,951)

 

  (1,244)

 

 

 

 

 

 

 

 

 

Net income for the period

 

  48,773 

 

  30,154 

 

  162,126 

 

  69,115 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

Basic

 

  546,039 

 

  391,583 

 

  541,164 

 

  377,601 

Diluted

  547,731 

 

  392,328 

 

  543,041 

 

  378,821 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

Basic income per share - US$

 

  0.09 

 

  0.08 

 

  0.30 

 

  0.18 

Diluted income per share - US$

 

  0.09 

 

  0.08 

 

  0.30 

 

  0.18 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 


See accompanying notes to the consolidated financial statements.



Eldorado Gold Corporation

Unaudited Consolidated Statements of Cash Flows

For the periods ended September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



 

 

Three months ended

 

Nine months ended

 

 

2010

 

2009

 

2010

 

2009

$

$

$

$

Cash flows generated from (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

Net income for the period

 

  48,773 

 

  30,154 

 

  162,126 

 

  69,115 

Items not affecting cash

 

 

 

 

 

 

 

 

Asset retirement obligations costs

 

  511 

 

  65 

 

  1,535 

 

  196 

Depletion, depreciation and amortization

 

  27,232 

 

  9,017 

 

  79,978 

 

  20,015 

Unrealized foreign exchange loss

 

  14,702 

 

  2,050 

 

  9,661 

 

  1,624 

Future income taxes expense (recovery)

 

  459 

 

  (8,873)

 

  (4,788)

 

  (8,115)

(Gain) loss on disposal of assets

 

  (250)

 

  119 

 

  (1,735)

 

  (1,344)

(Gain) loss on marketable securities

 

  (4,489)

 

  (1,168)

 

  (5,347)

 

  (1,287)

Stock-based compensation (note 8(b))

 

  3,282 

 

  1,867 

 

  13,874 

 

  7,668 

Pension expense (note 5)

 

  622 

 

  442 

 

  1,867 

 

  1,245 

Non-controlling interest

 

  5,126 

 

  229 

 

  11,951 

 

  1,244 

 

 

  95,968 

 

  33,902 

 

  269,122 

 

  90,361 

Bonus cash award units payments (note 8(c))

 

  - 

 

  - 

 

  - 

 

  (2,543)

Changes in non-cash working capital (note 9)

 

  (14,433)

 

  (6,317)

 

  (46,700)

 

  2,341 

 

 

  81,535 

 

  27,585 

 

  222,422 

 

  90,159 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Acquisition of Brazauro, net (note 3(a))

 

  (5,565)

 

  - 

 

  (5,565)

 

  - 

Mining interests

 

 

 

 

 

 

 

 

Capital expenditures

 

  (54,844)

 

  (24,151)

 

  (152,476)

 

  (63,003)

Proceeds on sales and disposals

 

  2,843 

 

  - 

 

  23,191 

 

  35 

Marketable securities disposals

 

 

 

 

 

 

 

 

Purchases

 

  (5,698)

 

  (646)

 

  (5,698)

 

  (646)

Proceeds on sales and disposals

 

  13,144 

 

  5,766 

 

  13,836 

 

  42,154 

Equity investment purchase

 

  - 

 

  - 

 

  (5,375)

 

  - 

Pension plan contributions

 

  - 

 

  - 

 

  - 

 

  (1,856)

Restricted cash

 

  - 

 

  - 

 

  (2,221)

 

  - 

Restricted assets and other

 

  (9,880)

 

  4,893 

 

  (12,363)

 

  1,888 

 

 

  (60,000)

 

  (14,138)

 

  (146,671)

 

  (21,428)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Capital stock

 

 

 

 

 

 

 

 

Issuance of common shares for cash (note 7(b))

 

  5,087 

 

  5,366 

 

  32,370 

 

  18,969 

Dividend paid to non-controlling interest

 

  - 

 

  - 

 

  (1,286)

 

  - 

Dividend paid to shareholders

 

  - 

 

  - 

 

  (26,357)

 

  - 

Long-term and current debt

 

 

 

 

 

 

 

 

Proceeds

 

  9,501 

 

  - 

 

  59,044 

 

  4,982 

Repayments

 

  (3,703)

 

  (4,982)

 

  (65,488)

 

  (4,982)

 

 

  10,885 

 

  384 

 

  (1,717)

 

  18,969 

Net increase in cash and cash equivalents

 

  32,420 

 

  13,831 

 

  74,034 

 

  87,700 

Cash and cash equivalents - beginning of period

 

  306,983 

 

  135,720 

 

  265,369 

 

  61,851 

Cash and cash equivalents - end of period

 

  339,403 

 

  149,551 

 

  339,403 

 

  149,551 

 

 

 

 

 

 

 

 

 

Supplementary cash flow information (note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




See accompanying notes to the consolidated financial statements.




Eldorado Gold Corporation

Unaudited Consolidated Statements of Shareholders’ Equity

For the periods ended September 30,


(Expressed in thousands of U.S. dollars, unless otherwise stated)





 

 

Three months ended

 

Nine months ended

 

 

2010

 

2009

 

2010

 

2009

$

$

$

$

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

 

Balance beginning of period

 

  2,708,322 

 

  951,255 

 

  2,671,634 

 

  931,933 

Shares issued upon exercise of share options, for cash

 

  5,087 

 

  5,366 

 

  32,370 

 

  18,969 

Estimated fair value of share options exercised

 

  1,582 

 

  2,037 

 

  10,987 

 

  7,756 

Share issued in consideration for interests acquired

 

  95,118 

 

  263,293 

 

  95,118 

 

  263,293 

Balance at the end of the period

 

  2,810,109 

 

  1,221,951 

 

  2,810,109 

 

  1,221,951 

 

 

 

 

 

 

 

 

 

Contributed surplus

 

 

 

 

 

 

 

 

Balance beginning of period

 

  19,052 

 

  18,901 

 

  17,865 

 

  19,378 

Non-cash stock-based compensation

 

  3,282 

 

  1,867 

 

  13,874 

 

  7,109 

Non-cash stock-based compensation on

 

 

 

 

 

 

 

 

    Brazauro warrants & options converted

 

  565 

 

  - 

 

  565 

 

  - 

Options exercised, credited to share capital

 

  (1,582)

 

  (2,037)

 

  (10,987)

 

  (7,756)

Balance at the end of the period

 

  21,317 

  - 

  18,731 

 

  21,317 

  - 

  18,731 

 

 

 

 

 

 

 

 

 

Retained earnings (deficit)

 

 

 

 

 

 

 

 

Balance beginning of period

 

  35,880 

 

  (114,559)

 

  (51,116)

 

  (153,520)

Dividends paid

 

  - 

 

  - 

 

  (26,357)

 

  - 

Net income for the period

 

  48,773 

 

  30,154 

 

  162,126 

 

  69,115 

Balance at the end of the period

 

  84,653 

 

  (84,405)

 

  84,653 

 

  (84,405)

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

 

 

 

Balance beginning of period

 

  12,391 

 

  519 

 

  2,227 

 

  (5,971)

Other comprehensive (loss) income

 

  (11,926)

 

  73,582 

 

  (1,762)

 

  80,072 

Balance at the end of the period

 

  465 

 

  74,101 

 

  465 

 

  74,101 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

  2,916,544 

 

  1,230,378 

 

  2,916,544 

 

  1,230,378 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



See accompanying notes to the consolidated financial statements.




Eldorado Gold Corporation

Unaudited Consolidated Statements of Comprehensive Income

For the periods ended September 30,


(Expressed in thousands of U.S. dollars, unless otherwise stated)




 

 Three months ended

 

 Nine months ended

 

 2010

 

 2009

 

 2010

 

 2009

 

 $

 

 $

 

 $

 

 $

 

 

 

 

 

 

 

 

Net earnings for the period ended September 30,

48,773


30,154


162,126


69,115

 








Other comprehensive income








Unrealized gains on available-for-sale investments

1,134


83,049


12,788


88,608

Future income taxes on changes in available-for-sale investments

1,475


(9,984)


(15)


(10,253)

Reversal of unrealized gains on available-for-sale investment on acquisition of subsidiary (note 3(a))

(11,424)


-


(11,424)


-

Realized (gains) losses on available-for-sale investments transferred to net income

(3,111)


517


(3,111)


1,717

Other comprehensive (loss) income

(11,926)


73,582


(1,762)


80,072

 








Comprehensive income for the period ended

    September 30,

36,847


103,736


160,364


149,187

 











See accompanying notes to the consolidated financial statements.




Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



1.

Nature of operations


Eldorado Gold Corporation (“Eldorado” or the “Company”) is a gold exploration, development, mining and production company. The Company has ongoing exploration and development projects in Turkey, China, Greece and Brazil. The Company acquired control of Sino Gold Mining Ltd. (“Sino Gold”) in December 2009, along with its two producing mines, Jinfeng and White Mountain, as well as the Eastern Dragon development project. It also completed the acquisition of Brazauro Resources Corporation (“Brazauro”) in July 2010 whose main asset is the Tocantinzinho exploration and development project in Tapajós, Brazil.

These unaudited interim consolidated financial statements were prepared by Eldorado in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) consistent with those used to prepare Eldorado’s audited consolidated financial statements for the year ended December 31, 2009 except for the new long-term investment policy described in note 2(a). As these unaudited interim consolidated financial statements do not contain all of the disclosures required by Canadian GAAP for annual financial statements, they should be read in conjunction with the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2009.

In the opinion of management, Eldorado has made all adjustments necessary to present fairly the Company’s consolidated financial position as at September 30, 2010 and the consolidated results of operations, comprehensive income and cash flows for the three- and nine-month periods ended September 30, 2010 and 2009.

Certain comparative figures have been reclassified to conform to the current period’s presentation.

2.

Changes in accounting policies and new accounting developments


(a)

Changes in accounting policies

During the three-month period ended June 30, 2010, the Company adopted an accounting policy for long-term investments. Investments in significantly influenced companies are accounted for using the equity method. Under the equity method, the original cost of the shares is adjusted for the Company’s share of post-acquisition earnings or losses less dividends.


(b)

New accounting developments

Business Combinations (Section 1582)


In January 2009, the CICA issued Section 1582, Business Combinations, which requires that all assets and liabilities of an acquired business be recorded at fair value at acquisition. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after January 1, 2011. Earlier application is permitted. If an entity applies this Section before January 1, 2011, it shall also adopt CICA Sections 1601 and 1602. The Company has not yet adopted this standard.





Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



2.    Changes in accounting policies and new accounting developments (continued)


Consolidations (Section 1601) and Non-Controlling Interest (Section 1602)


In January 2009, the CICA issued Section 1601, Consolidations, and Section 1602, Non-Controlling Interests. Section 1601 establishes standards for preparing consolidated financial statements and Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year. An entity adopting these sections for a fiscal year beginning before January 1, 2011 also must adopt CICA Section 1582. The Company has not yet adopted these standards.


International Financial Reporting Standards


Canadian public companies will be required to prepare their financial statements in accordance with IFRS, as issued by the International Accounting Standards Board, for financial years beginning on or after January 1, 2011. Effective January 1, 2011, the Company will adopt IFRS as the basis for preparing its consolidated financial statements. The Company will issue its financial results for the quarter ended March 31, 2011 prepared on an IFRS basis and provide comparative data on an IFRS basis as required.


3.

Acquisitions

(a)

Brazauro

Eldorado completed the acquisition of all of the issued and outstanding common shares of Brazauro that it did not already own on July 20, 2010. As a result, Eldorado acquired a 100% interest in the Tocantinzinho exploration and development project in Tapajós, Brazil as well as the option agreements on two early-stage exploration projects, Piranhas and Água Branca, also located in the Tapajós district of Brazil.

Under the terms of the arrangement, former Brazauro shareholders received 0.0675 of an Eldorado common share for each Brazauro share held, as well as 1/3 of a share of TriStar Gold Inc. (“TriStar”), a new exploration company that Eldorado agreed to fund with C$10 million. TriStar holds certain exploration properties owned by Brazauro prior to the arrangement.

The Company issued 5,993,898 common shares and paid the C$10 million in connection with this transaction.  Eldorado incurred acquisition costs of $3,364.

As at the date of the transaction, Eldorado held 14,326,000 common shares of Brazauro with a total cost of $7,071, net of the reversal of the unrealized gain of $11,424 included in other comprehensive income at the date of the acquisition.

This transaction has been accounted for as an acquisition of assets and liabilities because Brazauro was in the development stage. These consolidated financial statements include 100% of Brazauro results from July 20, 2010 to September 30, 2010.




Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



3.    Acquisitions (continued)


The allocation of the purchase price to the assets and liabilities of Brazauro is as follows:

Purchase price:

 

 $

       Share consideration

       Brazauro warrants & options converted

       Brazauro warrants previously held

 

95,118

565

294

       Cash consideration

 

9,479

       Cost of shares previously acquired

 

7,071

       Transaction costs

 

3,364

       Total purchase price

 

115,891

 

 


Fair value of net assets acquired:

 


       Cash

 

7,278

       Accounts receivables and other

 

73

       Mining interests

 

155,740

       Liabilities

 

(560)

       Future income taxes payable

 

(46,640)

       

 

115,891


Eldorado paid net cash of $5,565 as a result of the Brazauro transaction.  This net reduction of cash was a result of an acquired cash balance of $7,278 less cash consideration of $9,479 and transaction costs of $3,364.

(b)

Sino Gold

On December 15, 2009, Eldorado acquired all of the outstanding Sino Gold Securities not previously held by the Company. A preliminary allocation of the purchase price was disclosed in our December 31, 2009 Consolidated Financial Statements.

As of September 30, 2010 there have been no changes to the preliminary allocation except for a reduction of $1,641 to goodwill related to an adjustment to the future income tax liability. The purchase price allocation will be completed in the fourth quarter of 2010.


4.

Restricted cash

 

Restricted cash represents short-term interest-bearing money market securities and funds held on deposit as collateral. The Company had the following restricted cash:


 

 

September 30,

2010

$

 

December 31,

2009

$

Collateral account against Eastern Dragon CMB Standby letter of credit loan

 

52,221

 

-

Collateral account against Eastern Dragon CCB loan

 

-

 

50,000

 

 


 


Total

 

52,221

 

50,000





Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



5.

Defined benefit plans expense

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2010

$

 

2009

$

 

2010

$

 

2009

$

         

 

 

 

 

 

 

 

 

Pension plan expense

 

50

 

31

 

150

 

87

SERP expense *

 

572

 

411

 

1,717

 

1,158

 

 


 


 


 


Total

 

622

 

442

 

1,867


1,245

* Non-registered supplemental executive retirement plan


6.

Debt

 

Significant changes in our debt from that disclosed in the December 31, 2009 annual consolidated financial statements are as follows:

(a)

HSBC revolving loan facility

In May 2010, Heihe Rock Mining Industry Development Company Limited (“Eastern Dragon”), our 95% owned subsidiary, entered into a RMB 80.0 million ($11,938) revolving facility (“the Facility) with HSBC Bank (China). The Facility can be drawn down in minimum tranches of RMB 1.0 million ($149) or its multiples. Each drawdown bears interest fixed at the prevailing lending rate stipulated by the People’s Bank of China on the date of drawdown. The Facility has a term of up to one year and matures on April 30, 2011.  

The facility is secured by a letter of Guarantee issued by Eldorado. Eldorado must maintain at all times a security coverage ratio of 110% of the amounts drawn down. As at September 30, 2010, the security coverage is $3,600.

As at September 30, 2010, RMB 21.9 million ($3,273) had been drawn under the Facility.

(b)

Jinfeng construction loan

In 2009, Guizhou Jinfeng Mining Ltd. (“Jinfeng”), our 82% owned subsidiary acquired as part of the Sino Gold acquisition, entered into a RMB 680.0 million ($101,476) construction loan facility (“the construction loan”) with China Construction Bank (“CCB’).

The construction loan has a term of 6 years commencing from February 27, 2009 and is subject to a floating interest rate adjusted annually at 95% of the prevailing lending rate stipulated by the People’s Bank of China for similar loans.


In June 2010, Jinfeng pre-paid RMB 50.0 million ($7,461) on the outstanding balance of this loan, leaving a balance owing of RMB 630 million ($94,015) at September 30, 2010.





Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



6.    Debt (continued)


(c)

Jinfeng working capital loan

In 2009, Jinfeng entered into a RMB 85.0 million ($12,684) working capital loan (“the working capital loan”) with CCB.


The working capital loan has a term of 3 years and is due on August 17, 2012. This loan is subject to a floating interest rate adjusted annually at 95% of the prevailing lending rate stipulated by the People’s Bank of China for similar loans.


In June 2010, Jinfeng pre-paid RMB 50.0 million ($7,461) on the outstanding balance of this loan, leaving a balance owing of RMB 35 million ($5,223) at September 30, 2010.


(d)

White Mountain working capital loan

In July 2010, Sino Gold Jilin BMZ Mining Limited (“White Mountain”), our 95% owned subsidiary, entered into a RMB 50.0 million ($7,461) working capital loan (“working capital loan”) with China Merchants Bank Co (“CMB”).


Each drawdown bears interest at the prevailing lending rate stipulated by the People’s Bank of China on the date of drawdown adjusted quarterly. The working capital loan has a term of one year and can be extended, subject to CMB’s approval

The working capital loan is secured by a letter of Guarantee issued by Eldorado.


As at September 30, 2010, RMB 50.0 million ($7,461) had been drawn under the working capital loan.


(e)

White Mountain project loan

In 2008, Sino Gold Jilin BMZ Mining Limited (White Mountain”), our 95% owned subsidiary acquired as part of the Sino Gold acquisition, entered into a project loan (“project loan”) with CCB. The project loan has two components:


i.

A fixed asset loan of RMB 190.1 million ($28,368) with final payment due on September 2013; and

ii.

a working capital loan of RMB 40.9 million ($6,103) due in November 2010.


The interest rate on the project loan is the prevailing lending rate stipulated by the People’s Bank of China, adjusted annually for the fixed asset loan and twice a year for the working capital loan.


The project loan is secured by a Sino Gold corporate guarantee and the project’s fixed assets with a value above $100.  


In September 2010, White Mountain paid RMB 24.8 million ($3,703) on the fixed asset loan, leaving a balance owing of RMB 165.3 million ($24,665) at September 30, 2010.




Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



7.

Shareholders’ equity


(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. At September 30, 2010 there were no non-voting common shares outstanding.


(b)

Issued and outstanding share capital

Voting common shares

 

Number of shares

 

Amount

$

 

 

 

 

 

Balance, December 31, 2009

 

537,136,235

 

2,671,634

 

 


 


Shares issued upon exercise of share options, for cash

 

4,543,162

 

32,370

Shares issued in consideration for Brazauro (note 3(a))

 

5,993,898

 

95,118

Estimated fair value of share options exercised

 

-

 

10,987

 

 


 


Balance, September 30, 2010

 

547,673,295

 

2,810,019


(c)

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income includes the following:

 

Nine months ended September 30, 2010

$

 

Year ended December 31, 2009

$

 

 

 

 

Balance, beginning of period

2,227


(5,971)

 




Unrealized gains on available-for-sale investments

12,788


129,418

Reversal on acquisition of subsidiary

(11,424)


(122,617)

Realized (gains) losses on sale of available-for-sale investment transferred to net income

(3,111)


1,717

Future income tax on changes in available-for-sale investments

(15)


(320)

 




Balance, end of period

465


2,227






Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



8.

Stock-based compensation

(a)

Share option plans

The continuity of share purchase options outstanding is as follows:


 

 

Weighted average exercise price

Cdn$

 

Number of options

 

Contractual weighted average remaining life

(years)

 

 

 

 

 

 

 

Balance, December 31, 2009

 

6.11

 

8,928,901

 

3.3

Granted

 

 13.28

 

5,424,842

 


Exercised

 

 7.42

 

(4,543,162)

 


Forfeited

 

 11.25

 

(403,668)

 


 

 


 


 


Balance, September 30, 2010

 

 9.40

 

9,406,913

 

 3.5


At September 30, 2010, 4,050,508 share purchase options (December 31, 2009 – 5,528,557) with a weighted average exercise price of Cdn$8.34 (December 31, 2009 – Cdn$6.16) had vested and were exercisable.

Options outstanding at September 30, 2010 are as follows:

 

 

 Total options outstanding

 

 Exercisable options

Range of

exercise price

Cdn$

 

 Shares

 

 

 Weighted

 average

 remaining

 contractual

 life

 (years)

 

 Weighted

 average

 exercise

 price

 Cdn$

 

 Shares

 

 

 Weighted

 average

 exercise

 price

 Cdn$

 

 

 

 

 

 

 

 

 

 

 

$4.00 to $4.99

 

2,921,458

 

3.1

 

4.88

 

1,067,458

 

4.88

$5.00 to $5.99

 

97,500

 

1.9

 

5.26

 

92,500

 

5.28

$6.00 to $6.99

 

866,000

 

2.4

 

6.44

 

866,000

 

6.44

$7.00 to $7.99

 

613,400

 

1.8

 

7.25

 

613,400

 

7.25

$8.00 to $8.99

 

8,437

 

4.9

 

8.15

 

8,437

 

8.15

$9.00 to $9.99

 

428,200

 

3.5

 

9.62

 

262,199

 

9.70

                   $11.00 to $11.99

 

34,050

 

3.7

 

11.37

 

24,050

 

11.35

                   $12.00 to $12.99

 

457,750

 

4.4

 

12.75

 

151,083

 

12.74

                   $13.00 to $13.99

 

3,770,512

 

4.3

 

13.23

 

762,179

 

13.23

                   $15.00 to $15.99

 

200,000

 

2.1

 

15.53

 

200,000

 

15.53

                   $20.00 to $20.99

 

9,606

 

4.9

 

20.02

 

3,202

 

20.02

 

 


 


 


 


 


 

 

9,406,913

 

3.5

 

9.40

 

4,050,508

 

8.34






Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



8.    Stock-based compensation (continued)


(b)

Stock-based compensation expense

Stock-based compensation expense incurred to September 30, 2010 has been included in the undernoted expenses in the Consolidated Statements of Operations as follows:

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2010

$

 

2009

$

 

2010

$

 

2009

$

         

 

 

 

 

 

 

 

 

Operating costs

 

838

 

367

 

3,984

 

1,545

Exploration

 

144

 

220

 

560

 

795

General and administrative

 

2,300

 

1,280

 

9,330

 

4,769

 

 


 


 


 


 

 

3,282

 

1,867

 

13,874


7,109


The assumptions used to estimate the fair value of Options granted were:


 

September 30,

 2010

 

December 31, 2009

 

 

 

 

 

Risk-free interest rate (range)

 

1.69% – 1.99%

 

1.40% – 2.11%

Expected volatility (range)

 

47% – 73%

 

64% – 76%

Expected life (range)

 

0.8 - 2.8 years

 

1.5 - 3.8 years

Expected dividends

 

Nil

 

Nil

Weighted average fair value per stock option (CAD$)

 

$ 4.12

 

$ 4.80


(c)

Bonus Cash Award Units plan

As of September 30, 2010 all Bonus Cash Award Units awarded by the Company were exercised. The Company paid $2,543 in bonus cash award units in the six months ended June 30, 2009. The related cost in the amount of $559 was included in general and administrative expense in the Consolidated Statements of Operations for the same period.


(d)

Deferred Share Units plan

On July 15, 2010 the Company adopted the Independent Directors Deferred Share Unit (“DSU”) Plan under which DSU’s will 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. 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 September 30, 2010, 29,970 DSU’s were outstanding with a value of $554.






Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



9.

Supplementary cash flow information


 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2010

$

2009

$

 

2010

$

2009

$

 

 

 

 

 

 

 

Changes in non-cash working capital

 

 

 

 



Accounts receivable and other

 

(8,477)

(2,526)

 

(10,813)

16,002

Inventories

 

(5,807)

(10,595)


(7,596)

(22,672)

Accounts payable and accrued liabilities

 

(149)

6,804

 

(28,291)

9,011

 

 



 



 

 

(14,433)

(6,317)

 

(46,700)

2,341

 

 



 



Supplementary cash flow information

 



 



Income taxes paid

 

15,944

12,667

 

49,729

25,529

Interest paid

 

2,542

89

 

7,835

211

 

 



 



Non-cash investing and financing activities

 



 



        Shares, options and warrants  issued on acquisition of Brazauro

 

95,683

-

 

95,683

-

Increase in mineral interest financed by

 



 



accounts payable

 

-

750

 

-

750


10.

Segmented information

During the period ended September 30, 2010, Eldorado had five reporting segments. The Brazil reporting segment includes the development activities of Vila Nova, Tocantinzinho and exploration activities in Brazil. The Turkey reporting segment includes the operations of the Kişladağ mine, development activities of the Efemçukuru development project and exploration activities in Turkey. The China reporting segment includes the operations of the Tanjianshan mine, Jinfeng mine, White Mountain mine, the Eastern Dragon development project and exploration activities in China. The Greece reporting segment includes development activities on the Perama Hill development project. The Other reporting segment includes the operations of the Company’s corporate office and exploration activities in other countries.


 

 

 September 30, 2010

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Net mining interests

 

 

 

 

 

 

 

 

 

 

 

Producing properties

 

 228,144

 

 1,234,145

 

 -

 

 -

 

 -

 1,462,289

Properties under development

 

 148,098

 

 735,944

 

 175,153

 

 211,102

 

 -

 1,270,297

Iron ore property

 

 -

 

 -

 

 46,236

 

 -

 

 -

 46,236

Other mining interests

 

 12,013

 

 -

 

 245

 

 -

 

 3,045

 15,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 388,255

 

 1,970,089

 

 221,634

 

 211,102

 

 3,045

 2,794,125


Goodwill

 

 -

 

 323,294

 

 -

 

 -

 

 -

 323,294





Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



10.    Segmented information (continued)


 

 

 December 31, 2009

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Net mining interests

 

 

 

 

 

 

 

 

 

 

 

Producing properties

 

 196,066

 

 1,261,367

 

 -

 

 -

 

 -

 1,457,433

Properties under development

 

 96,275

 

 745,187

 

 -

 

 209,408

 

 -

 1,050,870

Iron ore property

 

 -

 

 -

 

 47,212

 

 -

 

 -

 47,212

Other mining interests

 

 7,214

 

 -

 

 15,544

 

 -

 

 2,543

 25,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 299,555

 

 2,006,554

 

 62,756

 

 209,408

 

 2,543

 2,580,816


Goodwill

 

 -

 

 324,935

 

 -

 

 -

 

 -

 324,935



Operations


 

 

 For the three months ended September 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Gold sales

 

 81,432

 

 108,873

 

 -

 

 -

 

 -

 190,305

 

 

 81,432

 

 108,873

 

 -

 

 -

 

 -

 190,305

Expenses (income) except the undernoted

 

 18,291

 

 52,575

 

 2,368

 

 3,365

 

 5,671

 82,270

Depletion, depreciation and amortization

 

 3,482

 

 23,395

 

 12

 

 -

 

 343

 27,232

Exploration

 

 2,290

 

 447

 

 1,373

 

 -

 

 911

 5,021

Mine standby costs

 

 -

 

 -

 

 22

 

 -

 

 -

 22

Gain on disposal of assets

 

 -

 

 (103)

 

 (146)

 

 -

 

 (1)

 (250)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before tax

 

 57,369

 

 32,559

 

 (3,629)

 

 (3,365)

 

 (6,924)

 76,010

Income tax (expense) recovery

 

 (9,731)

 

 (10,584)

 

 -

 

 -

 

 (1,796)

 (22,111)

Non-controlling interest

 

 -

 

 (5,126)

 

 -

 

 -

 

 -

 (5,126)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 47,638

 

 16,849

 

 (3,629)

 

 (3,365)

 

 (8,720)

 48,773













Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



10.    Segmented information (continued)


 

 

 For the three months ended September 30, 2009

 

 

 

 

 

 

 

 


 

 

 

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Gold sales

 

53,606

 

28,002

 

-

 

-

 

 -

81,608

 

 

53,606

 

28,002

 

-

 

-

 

 -

81,608

Expenses (income) except the undernoted

 

17,057

 

12,966

 

79

 

1,649

 

1,336

33,087

Depletion, depreciation and amortization

 

2,738

 

6,041

 

14

 

-

 

224

9,017

Exploration

 

1,488

 

230

 

597

 

-

 

867

3,182

Mine standby costs

 

-

 

-

 

881

 

-

 

-

881

Gain on disposal of asset

 

11

 

-

 

-

 

-

 

108

119

 

 


 


 


 


 



Income (loss) before tax

 

32,312

 

8,765

 

(1,571)

 

(1,649)

 

(2,535)

35,322

Income tax (expense) recovery

 

(6,182)

 

(8,744)

 

-

 

-

 

9,987

(4,939)

Non-controlling interest

 

-

 

(229)

 

-

 

-

 

-

(229)

 

 


 


 


 


 



Net income (loss)

 

26,130

 

(208)

 

(1,571)

 

(1,649)

 

7,452

30,154



 

 

 For the nine months ended September 30, 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Gold sales

 

 256,988

 

 321,239

 

 -

 

 -

 

 -

 578,227

 

 

 256,988

 

 321,239

 

 -

 

 -

 

 -

 578,227

Expenses (income) except the undernoted

 

 70,219

 

 149,510

 

 2,611

 

 (1,853)

 

 27,709

 248,196

Depletion, depreciation and amortization

 

 11,484

 

 67,497

 

 45

 

 -

 

 952

 79,978

Exploration

 

 4,885

 

 1,623

 

 2,691

 

 -

 

 2,374

 11,573

Mine standby costs

 

 -

 

 -

 

 1,335

 

 -

 

 -

 1,335

Gain on disposal of assets

 

 -

 

 (1,526)

 

 (206)

 

 -

 

 (3)

 (1,735)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before tax

 

 170,400

 

 104,135

 

 (6,476)

 

 1,853

 

 (31,032)

 238,880

Income tax (expense) recovery

 

 (34,156)

 

 (30,318)

 

 -

 

 -

 

 (329)

 (64,803)

Non-controlling interest

 

 -

 

 (11,951)

 

 -

 

 -

 

 -

 (11,951)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 136,244

 

 61,866

 

 (6,476)

 

 1,853

 

 (31,361)

 162,126










Eldorado Gold Corporation

Notes to the Unaudited Interim Consolidated Financial Statements

September 30, 2010


(Expressed in thousands of U.S. dollars, unless otherwise stated)



10.    Segmented information (continued)


 

 

 For the nine months ended September 30, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Turkey

 $

 

 China

 $

 

 Brazil

 $

 

 Greece

 $

 

 Other

 $

 Total

 $

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Gold sales

 

155,212


58,749


-


-


-

213,961

 

 

155,212


58,749


-


-


-

213,961

Expenses (income) except the undernoted

 

48,963


29,100


168


1,411


15,504

95,146

Depletion, depreciation and amortization

 

8,022


11,323


58


-


612

20,015

Exploration

 

4,337


837


1,396



-


2,048

8,618

Mine standby costs

 

-


-


1,817



-


-

1,817

Gain on disposal of asset

 

11


-


-



-


(1,355)

(1,344)

 

 











Income (loss) before tax

 

93,879


17,489


(3,439)



(1,411)


(16,809)

89,709

Income tax (expense) recovery

 

(19,808)


(9,764)


-



-


10,222

(19,350)

Non-controlling interest

 

-


(1,244)


-



-


-

(1,244)

 

 











Net income (loss)

 

74,071


6,481


(3,439)



(1,411)


(6,587)

69,115