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Executives

Nancy Woo - Manager of Investor Relations

Paul Wright - President and Chief Executive Officer

Norm Pitcher - Chief Operating Officer

Earl Price - Chief Financial Officer

Analysts

Anita Soni - Credit Suisse

Haytham Hodaly - Salman Partners Inc.

Kerry Smith - Haywood Securities Inc.

Dan Rollins - UBS Securities Canada Inc.

Harish Srinivasa - Dundee Securities

Heather Douglas - Thomas Weisel Partners

David Christie - Scotia Capital Inc.

Eldorado Gold Corporation (EGO) Q4 2008 Earnings Call Transcript February 19, 2009 11:30 AM ET

Operator

Good morning, ladies and gentlemen, and welcome to the Eldorado Gold Corporation 2008 fourth quarter financial and operating results conference call. This call is also being webcast and can be accessed at www.eldoradogold.com.

I would now like to turn the meeting over to Ms. Nancy Woo. Please go ahead, Ms. Woo.

Nancy E. Woo

Thank you, Operator. This presentation includes statements that may constitute forward-looking statements or information. Any forward-looking statements made and information provided reflects our current plans, estimates and views. Forward-looking statements are information which include all statements that are not historical facts, are based on certain material factors and assumptions, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in or suggested by the forward-looking statements or information. Consequently, undue reliance should not be placed on these forward-looking statements and information. The information maintained in our Annual Information Form and in our annual quarterly management discussions and analysis available on our website and on SEDAR identifies factors and assumptions upon which the forward-looking statements or information are based on and the risks, uncertainties and other factors that could cause actual results to differ. All forward-looking statements and information made or provided during this presentation are expressed, qualified in their entirety by this cautionary statement.

I will now turn the call over to Paul Wright, President and CEO of Eldorado Gold.

Paul Wright

Thank you, Nancy. Good morning, ladies and gentlemen, and welcome to Eldorado Gold Conference call to discuss our 2008 fourth quarter financial and operating results. This morning on the call, we have Norm Pitcher, Price Chief Operating Officer; and Nancy Woo, we just heard from, Vice President of Investor Relations. We will follow our usual format with Norm and Earl providing operational and financial commentary followed by a question period.

We are indeed very pleased with our Q4 results as it contributed on a significant way to 2008, being a very successful year for the company on all fronts. Production and cost in the quarter were on accordance with plan and good progress was made on our construction projects in Brazil and Turkey and we were very pleased to complete the disposition of the Sao Bento assets at what we believe was a fair price for both ourselves and AngloGold. Entering 2009, we’re in excellent shape looking forward to starting up our Vila Nova iron ore project continuing with the construction of the Efemcukuru project and advancing the Perama project through permitting and engineering. And also, we see a very busy exploration year in front of us. For the balance sheet, that presently contains $120 million in cash in no debt. We are well-equipped to execute on our internal growth projects. I now would like to handle with Norm who will bring you current on the performance on the fourth quarter along with some commentary in terms of our expectations for 2009. Norm.

Norman Pitcher

Thanks, Paul. Good morning, everyone. Let’s go ahead and start with the operations. We’ll start with Kisladag, which had a very good quarter. We produced 60,753 ounces at a cash cost of $279 per ounce in the quarter. That gave us, for the year, a total of 190,334 at $254 at 2008 and that was against 2008 forecast of 190,000 at $250. So, it’s very close there.

The transition to owner mining has gone very well and mining cost had been reduced as expected. The contractor does remain on-site mostly hauling run-of-mine oxide ore to the leach pad. We don't want to take our big haul trucks onto the leach pad. We had had no issues associated with the crushing and screening planned during the quarter. Our 2009 forecast were looking at 230,000 or 240,000 ounces at a cash cost of $265 per ounce.

Clearly, the declining oil prices could have a positive impact on our mining costs; although, I caution you, it is sort of like buying gas at the pump. You always wonder why the cost of that seems to have no relation to the world price but we see a certain correlation buying diesel as well. We have had quite heavy rains in January. In February, which as you can imagine, tend to dilute our process grades slightly. The good news on that is when it stops raining and it will eventually, we’ll have lots of processed water going forward and lots of time throughout the rest of the year to catch up.

At Tanjianshan, we produced 21,092 ounces at $352. Cash costs -- for the year, that comes out to 119,468 at $261. That was against the forecast of 110 at $289. So, we did quite well there. For 2009, we’re projecting 95,000 to 100,000 at $385. Obviously costs are going up as we transition into sulfide material. In terms of the sulfide processing plant, the commissioning is ongoing. We are running Tanjianshan concentrate through the roaster now and we continue to test the main parts of the system which are really the roaster, the acid plant, and the arsenic recovery area.

On the development side, at Efemcukuru, we spent $6.7 million in Q4. The access road is essentially complete now. Clearing and grubbing of the rock dump and plant site are finished. Work continues on the [cocarpenare] stream diversion. Again, as with Kisladag, we have been somewhat slowed by the rain but that will stop here shortly and we’ve got lots of time to catch up on the year.

At Vila Nova, construction of the site is essentially complete and we will commission the plant starting later this month into March. On the Perama Hill project in Greece, we've started to have meetings at both the federal and local levels with various stakeholders. Initial discussions, I think, had been quite encouraging and think this could be a tribute to a combination of a couple of factors. One is certainly poor economic conditions throughout Greece and locally and I think just a more sustained and organized approach by Eldorado. This leaves us to be fairly optimistic going forward on this one.

We’re preparing the PEIA, the pre-EIA for the submission to the Ministry on the Environment in Q2 of this year and I’m certainly hoping that our MRMR statement next year will include our reserves for Perama as well. On the exploration side, we spent about $14 million in 2008. Our 2009 budget is around $18 million and that’s a split between -- Brazil and Turkey are the big ones and China next. In Brazil, the focus for 2008, 2009 will be on Tocantinzinho in Para State. We are looking at drilling somewhere in the range of 14,000 more meters in 2009. We’re just getting into a metallurgical test work program now and advancing the permitting process as well.

In Turkey, we’ll continue drilling the North Ore Shoot in 2009 which remains open down plunged. We will start drilling a side check in the first half of this year. That is the intrusive center next to Kisladag and the general field season will, of course, start coming up here, hopefully, in Q2 and will commence with our generative recon program. In China, the big push there is going to be to get some of the inferred into measured and indicated and hopefully into reserves as well. And QLT deep, we had some encouragement in the last drill holes of ‘08 and we’ll be taking to look at that up here shortly in ’09.

Just a brief, couple of words on the mineral resource, mineral reserve statement, certainly, at Kisladag, the appearance of this basement shifts that resulted in decrease of inferred was sort of a geologic anomaly that we didn’t inspect in that area. The increased gold price was slightly offset by -- we flattened the pit slope slightly by about a degree and a half which is the prudent thing to do based on the geotechnical drilling that we’ve done there. I think the positives, we did quite well at Efemcukuru in terms of resources, we are able to add Perama this year to the project and including Perama South which hadn’t been declared before, for over 500,000 ounces and that’s an area that we think has considerable upside as well.

Kisladag, the downside of the shift unit was a little bit of an upside in the southeast where we did discover a new zone in a geotechnical hole. As I’ve said in the commentary in the press release, maybe this thing could be tilting a little bit that way and that will be a focus of exploration at Kisladag going forward in the 2009. With that, I’ll turn it over to Earl.

Earl Price

Thank you, Norm. Good morning. During the past quarter, the Company completed two actions, which accounted for significant changes to our earnings statement. We completed the sale of the Sao Bento mine to AngloGold Ashanti and began to monetize the shares. And we paid the remaining $35 million of our Bank Debt, releasing our restricted cash. These actions, as well as continued strong performance from our gold mining assets resulted in an excellent performance for the quarter.

Regarding the balance sheets - the assets, the cash, marketable securities and accounts receivable balances, cash at the end of the quarter was $61.8 million compared to $46 million in 2007. We reported in January that we held $110 million in cash as of January 20, 2009 as we completed the monetization of the AngloGold shares. At the end of Q4, we began the selling of the AngloGold shares. The value of the AngloGold shares that remained unsold at the end of the quarter were held in marketable securities and accounts receivable accounts, which explains the increase in those accounts over the ending balance for 2007.

Restricted cash at the end of the quarter was nil. We’ve paid the remaining bank balance loans and therefore, the restricted cash was released. Inventories increased compared to 2007 as Kisladag mine had been operating during the Q2, Q3, and Q4 quarters of 2008, compared to the mines being closed in Q3, Q4 of 2007 and Q1 of 2008.

Our mining interest have increased substantially from $377 million to $668 million, the result of, one additional capital being spent during the year of $123 million as well as the acquisition of Frontier Pacific in 2008. On the liability side, the debt, we paid off our debt during the quarter leaving us now debt-free with a very, very small balance to be paid off to Sino Gold as part of the Afghan acquisition at the end of 2009 of slightly more than $100,000. Future income taxes have increased substantially compared to 2007 as a result of the Frontier Pacific acquisition.

Moving on to the statement of operations and deficit. Revenues - gold sales in Q4 of 79,965 ounces at $800 per ounce compared to 31,902 ounces in Q4 2007 at $774 per ounce. The difference in production is that of the Kisladag mine, which was shut down during the Q4 period of 2007 and of course, operating in Q4 of 2008.

Operating costs reflect the same impact being higher in Q4 2008 due to the shut down in 2007. General and administration costs were higher in the quarter, the result of cost of employee options granted in the quarter and administrative cost associated with the sale of Sao Bento.

On a go-forward basis, our G&A costs for 2009 should be modeled at $2.5 million per month. Exploration expenses for Q4 were $3,000. This is the result of analyzing exploration expenses incurred during the previous quarters. In Turkey, several mining licenses were incorrectly expensed rather than capitalized according to our policies and we made the correcting entries this quarter.

Gain on disposal of assets reflected the sale of Sao Bento. Future income tax, we have been notified that the Greek government has lowered the income tax rate from 25% to 20%. We see this as a very positive action on the part of the Greek government to stimulate economic development in the country. This has resulted in a reversal of $9 million of future income tax liability associated with our Perama Hill property.

Net income of $101 million or $0.28 per share for the Q4 2008 compared to a net loss of $9.1 million or a loss of $0.03 per share in 2007. We are very, very pleased with these results.

Moving to the cash flow statement, I have few comments to the cash flow statement. Under the operating activities, note that the $72.4 million reduction of cash from the sale of assets. These are the Sao Bento assets. We received shares for the sales of Sao Bento and as they are monetized, the cash received has shown in the disposal of marketable securities line on the investing activities.

Note, during the quarter, we expended the $44.1 million on capital for the sulfide ore treatment facilities at TJS, construction at the Vila Nova iron ore project and construction of Efemcukuru.

These are my comments regarding the earnings statements and I am open to questions. Paul?

Paul Wright

Thanks Earl. Thanks Norm. Operator, we will open up for questions please.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Anita Soni - Credit Suisse.

Anita Soni - Credit Suisse

My first question is with regards to the Sao Bento sale. Can you let us know how many perhaps some shares or a number of dollars outstanding how much is left to be disposed of in Q1 for the sale of Sao Bento?

Earl Price

They have all been monetized. Everything was sold by January 20th.

Anita Soni - Credit Suisse

Okay. But was that all still booked in Q4 or will we see that some of that come through in Q1?

Earl Price

You will se the cash come through in Q1. That is the point I made. We had $61 million at the end of Q4, and the remaining amount will come through in January of 2009.

Paul Wright

Yes. Anita, some of those shares were sold before the end of the year and the balance was sold, as Earl described by January 20th.

Anita Soni - Credit Suisse

Okay. So, $61 million was sold in Q4, and then basically…?

Earl Price

No, no, $61 million at the end of Q4 reflected our cash position which included the disposition of some shares.

Anita Soni - Credit Suisse

Okay. Yes, I guess I was just looking for a split there if you could give it.

Earl Price

Well, the easy thing to do would be to take $61 million minus $110, which is what we announced on January 20th.

Operator

Your next question comes from the line of Haytham Hodaly - Salman Partners Inc.

Haytham Hodaly - Salman Partners Inc.

Quick question for you, actually a quick few questions, just to clarify maybe, Earl, you said the G&A was $2.5 million a month, is that including stock-based compensation or is that without?

Earl Price

That includes everything.

Haytham Hodaly - Salman Partners Inc.

Okay. And your exploration budget of $18 million, how much of that do you expect to be expensed?

Earl Price

That is the expensed portion.

Haytham Hodaly - Salman Partners Inc.

Okay. And I guess just on Vila Nova, at the end of the third quarter I think the financial statements indicated that there was about $13.7 million spent. At the end of the fourth quarter, it said $31 million but in actual CapEx was only $13.2 million. So, there is probably around $5 million discrepancy there. So, I am not sure where that is, but I will let you look at that and maybe get back to me at a later point.

Paul Wright

Do we understand the question? I am not sure I understand the question, Haytham.

Haytham Hodaly - Salman Partners Inc.

Sure, sure. At the end of the third quarter, Vila Nova expenditure was listed as $13.7 million year-to-date at that point and at the end of the fourth quarter, I believe it said the expenditures year-to-date were $31 million but only $13.2 million was spent there. It was just a small discrepancy there, if you could outline that at a later point that would be great.

The only other question I had was with regards to DD&A at Tanjianshan, Earl, on a per-ounce basis, it went up quite significantly in Q4. Obviously, you attributed and have had conversation. You attributed to the deposits you working on etc. Can you give us guidance of what you would expect for Tanjianshan DD&A in 2009?

Earl Price

Yes. What you are going to be looking at is approximately, I would say about $1.2 million a month.

Haytham Hodaly - Salman Partners Inc.

A $1.2 million a month, okay. One more question actually just with regards to exploration budget $89 million, could you just, I think you have briefly mentioned it that may have been Paul, just your breakdown of where you expect that $89 million to be spent?

Paul Wright

Yes. It is about six in Brazil, seven in Turkey and most of the remainder in China.

Operator

Your next question comes from the line of Kerry Smith - Haywood Securities Inc.

Kerry Smith - Haywood Securities Inc.

I had a couple of questions. Firstly, the life of mine strip ratio for Kisladag, does it change much with the flatter slope angles that you are now using in the model?

Paul Wright

No. It is still around one-to-one, Kerry, or very close.

Kerry Smith - Haywood Securities Inc.

Okay. So, that has not change.

Norman Pitcher

Actually, we got some low grade oxide material that made up for the…

Kerry Smith - Haywood Securities Inc.

Okay, for the waste. Okay, great. And for Efemcukuru, do you plan to update the reserve at a different gold price than the $513 an ounce?

Paul Wright

Yes, we do Kerry.

Kerry Smith - Haywood Securities Inc.

Okay. So, that will happen by next year this time in, okay.

Paul Wright

I mean I think we have got obviously; we have got some very good results in the North Ore Shoot, which added to the resources in this year, as Norm described. We are going to be doing more drilling on the North Ore Shoot and to hopefully both expand that resource and bring more of it into a category to make it eligible for reserves. So, I think we would like to get an estimate done in the course of the year that reflects both a higher metal price as well as a larger resource base.

So, frankly, we are a bit remiss in not having that updated.

Kerry Smith - Haywood Securities Inc.

Okay. But you would wait until you finished this next round of drilling I presume though?

Paul Wright

I think so. We will make it more meaningful, Kerry.

Kerry Smith - Haywood Securities Inc.

Yes, so back half then probably. Okay, and just for Earl, on Efemcukuru, it looks like by the end of the year you will still have about $43 million left to spend. Is that roughly what the budget would be for 2010 on the CapEx?

Earl Price

For 2010, or 2009?

Kerry Smith - Haywood Securities Inc.

For 2010, I just went off the $142 million CapEx less the $13 million or $13 million spent in ’08 and then $85 million this year and it comes to about $43 million. I just want to make sure that is roughly what your budget is.

Paul Wright

That number, $140 million is the only number that we put out there, Kerry. So, your arithmetic is correct, but as I think I have said previously that we probably have picked the worse time to do a capital estimate which was June of last year. So, embedded in that $140 odd million is peak of oil prices, peak of steel prices, and a strong Turkish Lira but we are not making any formal revision to that estimate until we are further into our construction.

Kerry Smith - Haywood Securities Inc.

Okay, okay. And what is the rough sensitivity on the new reserve calculation to the gold price, like you did it last year, it is $600 and this year is $725. If you would have done it at say $600 this year, would it have been much larger than it was last year or you have some sensitivity number there?

Norman Pitcher

Yes, much larger, if we had done it at the same price that based on the new information in the same price?

Kerry Smith - Haywood Securities Inc.

Right, right.

Norman Pitcher

I think it probably would have stayed about, yes, probably would have stayed about.

Kerry Smith - Haywood Securities Inc.

Okay. And just a last question if I could, the EIA, Norm, for Perama, the release is going to prepare it in early ’09. I guess I am presuming once it is prepared, you will obviously submit it I guess. That is the plan, right?

Norman Pitcher

Yes, yes.

Operator

Your next question comes from the line of Dan Rollins - UBS Securities Canada Inc.

Dan Rollins - UBS Securities Canada Inc.

I was wondering if you might be able to provide a breakdown on the split between the primary and the secondary ore at Kisladag by ton and by grade if possible.

Earl Price

I can tell you it is about half/half. It is about half/half for this year.

Dan Rollins - UBS Securities Canada Inc.

Okay.

Earl Price

Grades, I mean similar.

Dan Rollins - UBS Securities Canada Inc.

Okay, so based on the current reserve basis, is it still… what is it running at?

Earl Price

Yes. I mean we are getting more and more sulfide. I mean 50/50 this year and then it decreases as we go forward in the bulk of sulfide.

Dan Rollins - UBS Securities Canada Inc.

Okay. Thanks. And just on Tanjianshan, with the roaster starting up, basically going through commissioning right now, you probably will not really start putting much through it full time until Q2. Could give us a little bit of heads up on what the grade profile on a process basis is going to be over the next four Qs at Tanjianshan, because I think you are guiding at $4.9 million for the year?

Paul Wright

We do not change.

Earl Price

We do not give quarterly guidance on these things, Dan.

Operator

Your next question comes from the line of Harish Srinivasa - Dundee Securities.

Harish Srinivasa - Dundee Securities

Paul, I did not hear the 2009 production guidance, probably I did not hear it properly. Could you please give me the guidance again?

Paul Wright

Year 2009 for Kisladag is 230,000 to 240,000 ounces at $265.

Harish Srinivasa - Dundee Securities

And on Vila Nova, I know pricing, I am just wondering, do you guys already have some sales contract or will you be selling it on spot?

Paul Wright

We have a Memorandum of Understanding between ourselves and BHP Billiton, which was established last year and we are in the process frankly of ongoing discussions with BHP in terms of finalizing a contract and at the same time, frankly, and an another group has come to the table also with an expression, a desire to purchase the product. So, we have not finalized the sales contract with either group at this point.

Operator

Your next question is from the line of Anita Soni from Credit Suisse.

Anita Soni - Credit Suisse

Hi, sorry. Just to follow up question, I jumped on the call a couple of minutes late; I know you went over basically the schist you found at the bottom of Kisladag. Could you just elaborate a little bit more for me on what that was?

Norman Pitcher

Yes. It was not actually at the bottom, Anita. It is over in the west portion of the deposit, and if you look at, I know some of our corporate presentations there is a long section that shows it quite well, basically with some inferred ore over there. That was projected downwards. It is fairly well out of the main pit area, but the basement schist sort of came over looking almost like a ledge-type structure and we hit that in the drilling in ’08, which then we had to get rid of some of those inferred ounces over there.

Anita Soni - Credit Suisse

So, how far out from I guess the western extent of the pit is that?

Norman Pitcher

A 100 meters probably.

Anita Soni - Credit Suisse

Sorry. How many?

Norman Pitcher

A couple of 100 meters.

Operator

(Operator Instructions) You have a follow up question comes from the line of Haytham Hodaly - Salman Partners Inc.

Haytham Hodaly - Salman Partners Inc.

Just one last question guys, just can you give us your budget for CapEx for this year in the breakdown, for example, at Kisladag, Tanjianshan and I guess we went through a little bit Efemcukuru?

Earl Price

Well, basically, Efemcukuru was $85 million.

Paul Wright

A $117 million…

Earl Price

A $117 million is the total, yes, but $85 million is in Efemcukuru and the balance is split between Vila Nova and Tanjianshan and a little bit is sustaining capital at Kisladag.

Operator

Your next question comes from the line of Heather Douglas - Thomas Weisel Partners.

Heather Douglas - Thomas Weisel Partners

I am wondering if you can give us a couple more details about your work at Tocantinzinho in Brazil. You are doing your due diligence work. Can you give us an idea of what you are seeing and what you need to have to proceed to make the purchase decision there?

Paul Wright

Well, this is an exploration project, Heather, and we view it as a good exploration project. We have our own sort of views as to the size of resource that would need to be present to potentially make a development decision. We think there is a reasonable chance of hopefully attaining those ounces and the primary thrust this year is to drill test and see how big of a resource we can define. In parallel to that, obviously we are doing in very early stage engineering to what we call this project could look like that. It is going to come down. There is metal in the ground in the form and the grade that makes some sense.

Heather Douglas - Thomas Weisel Partners

What is your threshold, typically when you are looking at either acquisitions or proceeding with projects?

Paul Wright

It is like asking how long is a piece of string.

Heather Douglas - Thomas Weisel Partners

Okay.

Paul Wright

Look, I mean this is a project that is in a fairly remote part of Brazil and where infrastructure and access were significant issues, and so to be there in a meaningful way you have to have a project that is large enough to cover these high fixed costs. So for us, I think to succeed in something that really makes sense, I would suggest that we would have to have a resource in 2 million to 3 million ounce range.

Operator

Your next question comes from the line of David Christie - Scotia Capital Inc.

David Christie - Scotia Capital Inc.

Just a quick question on sustaining CapEx at Kisladag, what is your sort of run rate number you think you are going to have there?

Earl Price

Well, on sustaining capital, you are looking at probably around $4 million to $5 million a year, except I think what has been happened is every other year or Norm could probably speak to this closer and you are going to have a spike as you did not have to put in a new Leach Pad.

Norman Pitcher

Yes.

David Christie - Scotia Capital Inc.

What is the cost that I sort of had one of those coming in 2012 and what not, but what was sort of cost for the expansion of the Leach Pad?

Earl Price

It is about $1 million per cell, David.

David Christie - Scotia Capital Inc.

And how many cells to do you do at once when you do that?

Norman Pitcher

Usually three to five.

Paul Wright

Yes, I mean the big thing there, David, is obviously in 2008 we completed the expansion of a crushing circuit. So, that is done. We are fully invested in terms of a new mining fleet. So, you are not into any early rebuilds of equipment or in a near term adding additional trucks. I mean obviously as the line extends and life goes deeper, you are in to adding trucks and eventually getting into rebuilds, so as Norm and Earl described, really the biggest component is every two or three years when you have to expand the Leach Pad.

David Christie - Scotia Capital Inc.

That is great. It seems like the sustaining CapEx is quite a bit lower than a lot of mines around the world. So, that is good. Thanks.

Paul Wright

Well, that reflects to nature of the operation and the fact that it is a new mine.

Operator

You have a follow up question comes from the line of Kerry Smith - Haywood Securities Inc.

Kerry Smith - Haywood Securities Inc.

Maybe just a couple of questions if I could follow up Paul, for Vila Nova, just on the pricing here, would you sell it at spot if you did not have an agreement finalized between now and when you actually start commissioning or we just stockpile on the material?

Paul Wright

Our approach in this project is that it is a very nice project. It has got good grades. It is small. It is got low technical risk. It has not cost us a lot to develop. We also take a view on the iron ore prices that we have seen the bottom of the market, okay, and frankly, our attitude towards setting on a sales contract is one where we want to see material benefit from running this operation and that is the basis four our discussions and negotiations with the parties, and if it takes a bit longer to get there, so be it and frankly if we are not satisfied that we are getting a sales contract that allows us to share satisfactorily in the upside going forward here, we will sit on this project for three, six months, mothball it until conditions are better in terms of having in a good margin.

I mean suffice to say, with the present market conditions, there is a clear operating margin for this project. It is just us frankly wanting to ensure that we have the best exposure on a go-forward basis.

Kerry Smith - Haywood Securities Inc.

Okay. What would be the rough spot pricing today you would get if you were to sell? Do you know roughly what the spot price is?

Paul Wright

Spot, it is around $85 per ton right now.

Kerry Smith - Haywood Securities Inc.

Okay. And then obviously you are hoping to do better than that obviously. Would you sell at $85 though I guess that is my question?

Paul Wright

I am not going to answer that, Kerry.

Kerry Smith - Haywood Securities Inc.

Okay, fine.

Paul Wright

Look, as I said, our own view is we have got a nice project here. Capital is essentially invested. It is not going anywhere. We are at or have seen the low point in terms of pricing for lump and fines of this quality and we are patient people.

Kerry Smith - Haywood Securities Inc.

Right, but as I remembered that your cost structure was around sort of $40 a ton so, even at $85 it is still a decent margin.

Paul Wright

Yes, and the cost structure probably I would say it has probably improved a little bit because of the weaker, lower energy costs and lower steel prices.

Kerry Smith - Haywood Securities Inc.

Okay. And then just one last question if I could for Earl, what was the diesel price that you would have used in your’09 budgeting when you came up with the cash cost for Kisladag?

Earl Price

A $65.

Operator

You have a follow up question comes from the line of Anita Soni - Credit Suisse.

Anita Soni - Credit Suisse

One final follow up, you guys had a good decision out of the Efemcukuru EIA from the High Court in late January. I was just wondering, have you heard anything back yet on the Kisladag court case that still stands in the High Court?

Paul Wright

No. Rest assured, Anita, if we had, we would share it.

Anita Soni - Credit Suisse

Okay. And the timeline, as I recall, from what you are saying on the mine tour was something mid-year that…

Paul Wright

Look, we do not know. I mean it is not a thing that we can really monitor. I guess our hope, remote sense is that perhaps you are going to see resolution this year but we do not know.

Operator

There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Wright.

Paul Wright

Alright, well, thank you Operator and thank you for those who have attended the call and as always if you have any other questions, please do not hesitate to contact us. Have a good day.

Operator

Thank you, Mr. Wright. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.

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