Eldorado Gold Corp (EGO) 2011 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Eldorado Gold Corporation's second quarter financial and operating results conference call. Please be advised that this call is being recorded on Friday, July 29, 2011. This call is also being webcast and is available on the Eldorado Gold website at www.eldoradogold.com.

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

Thank you, operator.

This presentation includes statements that may constitute forward-looking statements or information. Any forward-looking statements made and information provided reflect 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 statements and information.

The information contained in our Annual Information Form and in our Annual and Quarterly Management Discussions and Analysis, available on our website and on SEDAR, identifies factors and assumptions upon which the forward-looking statements 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 the presentation are expressed qualified in their entirety by the cautionary statement and the cautionary statement contained in our press release dated July 28, 2011.

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

Thank you, Nancy, and good morning, ladies and gentlemen, and welcome to the Eldorado Gold Corporation's second quarter financial and operating results conference call. Joining me this morning in Vancouver are Norm Pitcher, Chief Operating Officer; Fabiana Chubbs, our Chief Financial Officer; and Nancy Woo, Vice President of Investor Relations. We will follow the usual format. Following a brief introduction by myself,Norm and Fabiana will take you through the quarter's operating and financial results and provide some outlook commentary for the balance of the year. And then we'll open up for questions.

I'm very pleased with the performance in the second quarter. Our four operating gold mines continue to perform at or better than planned in terms of both costs and production levels. With midyear production from these mines at 311,000 ounces at cash operating costs of $403 an ounce, we are slightly ahead of our plan of 297,000 at $419 an ounce.

Production commenced in Efemcukuru and where we envision commercial production starting in the fourth quarter of this year.

In the quarter we also commissioned our expanded circuit at Kisladag and now are operating at the full 12.5 million tons a year run rate. Our Phase IV expansion study for Kisladag is progressing well, and we expect to be releasing details of this study in the next couple of weeks.

Just to give you some broad outline in materials of where this study and the resulting expansion will take Kisladag, we're now looking at expanding crusher through-put to approximately 25 million tons per year. We are going to be working after of the reserve base, stated as the beginning of this year. And in addition to crusher through-put at the level I described, we will be adding a modest level of run of mine material. We will be preferentially pushing a higher grade material through the crushing circuit, and lower grade material -- as I said earlier, approximately 5 million tons a year -- will be going out as run of mine. Beyond that, you're going to have to wait until we get the study out in the next couple of weeks.

We continue to make good progress with construction at Eastern Dragon and where we expect commercial production to begin in Q1 of 2012.

On the development front, we are pleased with the progress being made in permitting at the Perama Hill project in Greece, where the project now has been included in the fast-track process designed by the Greek government to expedite projects considered to be of strategic investment for the country. Our project is qualified, and our expectation is that as part of the process we will receive joint ministerial approval for the project in August and in the first quarter of 2012 be in receipt of the necessary licenses and permits, which will allow us to make a construction decision.

In Brazil, at the TZ project, activity continues on a number of fronts; exploration, feasibility engineering, and permitting; and we're all working here hard towards making a construction decision on this project in Q1 2012.

Mainly due to the delayed start in construction of our concentrate treatment plant at Kisladag for the Efemcukuru concentrate and the uncertainty as a result of the quantity of concentrate that we will be able to produce -- or process by year end at this facility, we have elected to ratchet back slightly our production guidance for this year to 700,000 to 725,000 ounces, at an average cash cost of $390 to $410 per out.

The Company remains financially strong, and this is reflected in our quarter end cash balance, our continued accelerated prepayment of outstanding debt in China, and our recently declared dividend of $0.06 a share based on our first six months of product.

With that I'll hand over to Norm for his comments.

Thanks, Paul. Good morning, everyone.

Let's start off on the operations. Kisladag first, which produced 66,688 at $389 per ounce for the quarter, which was right on budget for ounces and a little bit high on cost. Only about 3%. We're currently running at about 1.1 million tons per month for the leech pad, which reflects a successfully commissioning of the Phase III upgrade. Solution flows are very good, and July looks to be a very strong month for us at Kisladag.

On June 13 we announced the approval of supplementary EIA for Kisladag, which allows us to produce at the 12.5 million ton per annum rate, and also allows the construction of the Efemcukuru concentrate plant.

At Jinfeng we produced 46,250 ounces at cash cost of $401 per ounce. This was above budget for ounces produced and better than budget for cost per ounce. During the quarter we finished mining state three of the open pit, and we're currently acquiring a small amount of land for the next push back of the pit. We expect mining of stage four to begin in September. Mill feed for the remainder of the year will be a combination of underground ore and stockpile from the open pit, of which we have over 1 million tons in stockpile right now.

Tanjianshan had an excellent quarter, producing 31,997 ounces at $343 per ounce, beating the budget on both ounces and cost. Also during the quarter the province of Qinghai implemented an ecological compensation fee, which is assessed at 40 RNB per ton milled.

White Mountain produced 17,414 ounces at $518 an ounce. Ounces were a little less than budget for the quarter as a result of a lower head grade, which also impacted cash cost. However, we're on budget for the first half of the year, and in July the grade has been higher than expected.

At Vila Nova Iron Ore we created 153,000 tons of iron ore during the quarter and sold one shipment of lump ore. It was an unusually heavy rainy season this year, which affected mining and processing; however, we're on track for our ten shipments for the year and are looking for three shipments in the third quarter.

On the development side, Efemcukuru, during the quarter received a temporary operating permit, which has allowed us to begin underground ore production and commission the mill. The underground development has gone well. We now have access into the south ore chute and middle ore chute, with three stopes operational.

Mill commissioning is on going. We started on lower-grade material from the south ore shoot and have been ramping up the feed grade. currently recovering is running in the mid to high 80s. We have process a little less than 20,000 tons so far. The last few days we have been running middle ore chute through, with the head grade averaging over 12 grams per ton.

Development at Kisladag, during the quarter we completed the Phase III upgrade and continued work on the Phase IV scoping study. Also began construction work on the Efemcukuru processing plant, which is scheduled to be completed late in Q4.

Eastern Dragon construction is proceeding on schedule, and all of the major equipment has been delivered. Ore is being held by the vendors. Three permits remain, the main being the project permit approval, PPA, which is issued provincially, and we expect to receive this permit this quarter.

At Tocantinzinho we completed the prefeasibility in Q2 and will now advance the project to feasibility level. The EIA is scheduled to be submitted this quarter.

On to exploration. Very active last quarter and going into quarter. We currently have 24 diamonds drills turning, and we'll look an exploration update by mid September. In Turkey, at Kisladag most of the drilling was for infrastructure and to test some conceptual targets. Seven holes completed there.

At Efemcukuru we have two drills going and are adding a third. Initially we're drilling the northwest extension of the main zone, and the new drill will move on to the parallel Kokarpinar vein. Initial results for the northwest extension are quite encouraging.

We're also doing a project called Sizma, south of Ankara, one drill going there, drilling early-stage targets. We have had some encouragement there as well.

On to China exploration, Jinfeng and regional. We're drilling targets at the Jindu joint venture with one drill. We're currently surface drilling at Jinfeng with two drills, and underground drilling with five drills.

White Mountain, we have three drills operating at Xiaoshiren, which is a satellite deposit to the main White Mountain mine. We're also surfacing drilling at White Mountain with one drill and have three drills doing exploration work from underground.

At Tanjianshan we have started drilling the 323 zone with two drills. That program is designed to bring inferred resources up into measured and indicated, so we can declare reserve on that next year. We have also drilled three holes on the QLT deeps. Assays are pending there. And we have one RC drill defining regional targets at Tanjianshan.

In Brazil we have got two drills turning at Tocantinzinho. These are mostly extensions to the main Tocantinzinho structure, as well as [geo-chem] anomalies. And two drills have just started drilling at the Agua Branca project.

Last but not least, in Nevada we are looking at drilling Buffalo Canyon, probably this quarter.

With that I'll turn it over to Fabiana.

Good morning. I will go through the financial statement, highlighting changes in significant accounts.

Commencing with the balance sheet, cash and cash equivalents as June 30, 2011, we have a balance of $306 million, compared to year-end cash of $314 million. The net decrease in cash balance is the result of cash generation from operation, and usage of cash for debt repayment, capital program, and dividend payment. The inventory increase is mainly related to materials and supplies as the result of the increase of operations and [meets] requirements. There is also an increase in iron ore inventories, as severe rains during the quarter effected for this transportation of Vila Nova.

I would like to bring to your attention that inventory levels will increase during [commissioning] of the Efemcukuru mine, as [flotation] concentrate is produced at Efemcukuru and shipped to Kisladag for further processing.

Regarding the deferred income tax increase, I want to refresh your memory that in the first quarter, 2011, there was an increase in this balance due to the recognition of future benefit to accumulated back losses available to offset Vila Nova's taxable income.

On the liability side, year to date we paid $44.7 million of outstanding debt, which brings the debt balance to $130 million to June 30, 2011. As you may recall, this [is with] Chinese banks, which at acquisition had a balance of $190 million and is to be repaid from cash flow generated by the Chinese mine.

Moving on to the income statement, we have revenue of $251 million in the quarter. This is up $45 million from a year ago due to higher selling prices partially offset by lower sales volumes. The same is valid for the year on year $81.6 million revenue increase.

The income tax expense for the quarter is $36.8 million, compared to $25 million in the same quarter of last year. This increase is due to the impact of the weakened Turkish lira on current and deferred income taxes. This is a result of the AFRS accounting, and the Company will have an increase in income tax volatility as a result of the foreign exchange rate movements.

On the cash flow -- statement of cash flows, we generated cash flow from operating activities before changes in [no] working capital of $207 million, as compared to $168 million in December 2010. This increase is a direct result from increased operating profits. The three main uses of cash relate to our capital program, $125 million; for prepayment of debt, $44 million; and payment of dividend of $28 million. As indicated at the beginning of -- well, the remarks made by Paul, there will be another dividend payment in the third quarter of approximately $33 million.

These are my comments on the financial statement. I will turn the call back to Paul.

Thanks, Fabiana, and thanks, Norm. Operator, we'll now open it up for questions, please.

Thank you. (Operator instructions). We do have a question from Dan Rollins with UBS Securities. Please go ahead.

Thank you very much, and good morning. Paul, I wondered if you could provide a little bit of insight in to Efemcukuru, just how much gold you think you might produce from the gravity cons in 2011?

Look, the metallurgical test work supports our expectation that we'll -- ultimately we'll 20% to 25% reporting to gravity. What we're experiencing right now is less than that for a variety of reasons. One, associated with the fact that the predominate water source is coming from the south ore chute, which is met floor shoot -- seem to be seeing greater reporting to the flotation concentrate. Secondly, we're operating with slightly lower grade going through the mill [that what] we planned. And third, we're experiencing, as all mills do, a certain amount of lock-up occurring of gold going in behind the liners and in every orifice that can possibly capture gold. And preferentially, as you would expect, the gold that's going there is the gold that would typically report to gravity concentrates.

So it's difficult for us to answer that question in the way you would like to receive it, in terms of a number that you can put into your model. Less than the 20% to 25% is what I would suggest.

Okay, and -- but the game plan is still to treat the gravity con at Efemcukuru? Or is that going to be sent to --

Absolutely, yes. No, we are set up there. We have the gold room, we have the refinery set up to reduce the gold con into a [doria] on site. And we'll be doing that. It's just -- right now it's difficult to pick what that percentage is going to be of the overall concentrate produced this year.

We're also just for the first time starting to run the middle ore chute material through, which is coming in at a significant higher grade, and as Paul said, does have different metallurgical characteristics. So it's just really difficult for us right now to put a number on that.

Okay, so it's just typically the growing pains with startup, getting the steady state and looking for where everything -- I guess you were saying, Paul, where all the gold is going or hiding and just fixing everything and then -- so basically nothing has really happened, it's just pushed out production until major 2012?

Yes, what has happened is as we have described. We ended up -- the permit that we required to build the Efemcukuru plant was linked to the permit that provided us with the opportunity to obviously expand throughput at Kisladag. That came a little bit later than we expected. It wasn't problematic in terms of the Kisladag expansion, but it was problematic in terms of our ability to start on construction. So now we're hedging our bets a little bit here, because the race is on to get the treatment plant at Kisladag built and commissioned and up and running as quickly as possible.

And we just -- we know it's going to be late in the year, and inevitably we're going to end up with concentrates stockpiled at Kisladag that we're not going to get through. We just don't know how much. It's like a delayed concentrate shipment in a base metal mine. That's what we're probably going to be faced with at the end of the year.

Okay. And do you have excess - isthere excess capacity designed in to the concentrate -- the flotation concentrate facility at Kisladag, where you would basically be able to catch up --

Yes, we'll catch up, but it's not --

It's not exactly (inaudible -- multiple speakers) --

We haven't put 100% of additional capacity in or anything.

Yes, for sure.

It will take us a while to catch up.

Okay. And then just moving on to Perama Hill, it looks like things are improving there. I guess the Greeks figured out they need tax revenue. But -- sothis fast track process you've been recommended for, is this -- I guess you have to -- can you confirm that you have to apply to get on that fast track process?

Yes.

Okay. And from there, if you guys go ahead, they fast-track all the permits --

We're into the process --

Okay.

And part of the first meaningful milestone, really was the recommendation from the Invest in Greece to the Joint Ministerial Committee that this is a project that is worthy of consideration. And that's behind us, and where we are right now is in a process whereby I think it's seven ministers will review and, in our expectation, approved this project, all right? And that is the approval that we're expecting in August. And then we are in to a process whereby over the next four to five months the bureaucracy in a timely manner is expected to deliver the permits.

Okay. Great. Sounds good. Thanks a lot.

So I mean in terms of news flow, look for us by the end of August to render -- or to disclose obviously the decision of the Joint Ministerial Committee.

Great. Thanks.

Thank you. The next question from Josh Wolfson with Stifel Nicolaus. Please go ahead.

Hi. Thanks. For Efemcukuru are you still planning to report costs in the third quarter, is that going to be pushed back to 2012?

Well, what I have said is that we will be declaring commercial production in the fourth quarter. That's our expectation.

Okay.

I mean, we may very well be producing -- announcing some production in the third quarter coming from the gravity concentrate treatment at Efemcukuru, but it won't be -- it won't necessarily be commercial, It will just be production ounces produced.

With regard to Eastern Dragon spending, it seems to be tracking, I guess, below where we would have thought. What is the expenditure plans for the second half of the year?

Yes, it will start to pick up in the second half. Yes, I don't have the exact number in front of me for CapEx for the rest of the year.

It seems spending for the first half of the year has been almost non-existent. And that's in line with plan?

Yes, pretty much.

A lot of spending was done, frankly, prior --

Okay.

In terms of equipment that was ordered and purchased. If you go back in the history of this project, this is a project started by Sino Gold. Construction was started before we acquired the project in December of 2009, and then we stopped construction activities. But there was a lot procurement that was done.

And then for the mining tax at Tanjianshan, this only applies to that one asset? Is this a local thing?

Yes, that's correct. It's a provincially implemented tax.

Okay thanks for taking my questions.

Thank you. The next question from Brian Christie with Desjardins Securities.

Good morning, guys. Just wondering if you can give us some guidance for G&A? It looked like Q2 came in probably a little bit lower than we had expected. And then maybe a sense of the White Mountain grades on a go-forward for the balance of the year?

Okay. I think on the G&A, if I may say, the expectation, it is what we expect for this quarter. You may recall next -- last quarter was a little bit higher because it was special bonus paid.

Yes, I mean, in the first quarter, Brian, you typically see a little bit higher because that's the quarter when you get the compensation associated with year-end bonuses and other compensation-related charges. So, as Fabi says, I think what you have seen in the second quarter is probably what you will see for the third and fourth quarters.

Perfect on that. And just White Mountain grades?

We're looking around 4 grams. That's budget for the year. We did Q1 was 5.7, Q2 was 3.7, so --and we're back sort of 4-point-- I think we're around 4.5 right now in July. So, yes, look for 4 for the rest of the year.

Okay. Great. Thanks, guys.

Thank you. The next question is from Anita Soni with Credit Suisse.

Good morning, everybody. [That new tax] on $40 -- 40 RNB per ton. Was that Jinfeng or Tanjianshan? I missed that.

That is just Tanjianshan.

Okay. So that's why the royalties were higher, right?

Yes.

And tax -- overall tax rate -- I guess this is for Fabiana -- can you give us a little bit of guidance of what you expect that to be for the rest of the year?

Well, the tax rate will continue to be effective rate in the range of the 30%, probably, [all in].

And then, Norm, the -- when you referred to 80% recovery rate at -- that was -- at Efemcukuru -- that was with respect to the amount that would come out through the gravity concentrate, right?

No. That's talking total recovery is mid to high 80s. So far. So that's -- some of it is coming out in gravity, some of it is coming out in flotation concentrate. And we don't have the break down between the two right now.

Okay. So you can tell what is in the flotation concentrate right now?

I'm sorry?

You are tell what is in the flotation concentrate?

Yes.

Okay. I understand. And I think that's it for my questions. Thank you.

Thank you. (Operator instructions). The next question is from David Haughton with BMO Capital Markets please go ahead.

Good morning, Paul, and Norm. It sounds like the Phase III expansion is running somewhat ahead of schedule. Norm, I think I heard you say it was 1,100 tons a month, is that correct?

At Kisladag, we're talking about?

Correct.

We're currently running about 1.1 million tons to leech.

Yes, sorry, 1.1 million --

So we are a little bit ahead. Some of that is run of mine, though. It's not all going to the crusher of course.

David, we have seen -- we are seeing a little bit of extra capacity in the expansion. The design expansion was 12.5, and we have been able to run periods in excess of that on an annualized basis, so foronce the engineers got it right.

But also -- Norm's answer also touched on another question I had. You were talking about the potential for the Phase IV expansion being up to 25 million tons per annum, 5 million of that would be run of mine. And the question --

No, no, sorry. 25 million tons through the crushing facility, with up to 5 million tons of additional material that would be run through --

I see. So in total it could go to as much as 30 million tons.

That's correct.

And I presume with that there'd be lower grade than what we are seeing now? I would expect more in line with the reserver grade. Is that the kind of thing that you're thinking?

That's correct, yes.

So we would be thinking 30 million tons at 0.75 grams as an expectation.

That's correct. With preferentially higher recoveries from higher grade, then applying a lower -- applying basically the reserve cutoff grade to what would be going -- what would be going out of run of mine would be the difference between the reserve cutoff grade and the slightly higher cutoff grade, which we use to apply to the material that would be going through the crushing circuit.

I see. But differential recovery (inaudible -- multiple speakers) recovery out of the crushed material, et cetera.

Yes. What we see, David, typically in the pit is very good fragmentation. We're generating a lot of finds in the pit through blasting.

And if you got your permits in a timely fashion, when could you see this starting up? Would we be thinking 2013 or 2014?

Look at our disclosure. The disclosure that we made in our corporate presentation is as good as you're going to get until we come with our guidance in a couple of week's time.

All right. That's great. Back to White Mountain. Very good through-put for the quarter, although at much lower grade. Norm, I heard you say that -- expect 4 grams going forward. What should we think about for through-put? Would it be as good as what we saw in the June quarter, or more a kind of normalized level, somewhat lower than that.

Yes, I would say maybe a little bit lower than that. I think budget is 700,000 tons for the year. And I don't think we're going to have an issue hitting that.

All right. Thank you. There are my questions.

Thank you. The next question is from Mike Jalonen with Bank of America Merrill Lynch. Please go ahead. I'm sorry, Mike Jalonen. Your line is now open. Hearing no response, we'll proceed with the next question from Barry Cooper with CIBC. Please go ahead.

Mike's AWOL again. Anyway, just wondering if you can flush through, how was your contractor at Efemcukuru working out there, Paul? Because I understand the contractor there -- correct me if I'm wrong -- really didn't have any mining experience, although they did have underground experience. So how are they doing with respect to dilution and various things like that you have anticipated?

Well, I'll make a quick couple of comments and Norm can pick up and flush it out, but I think the experience has been very positive. I mean, he's essentially a tunneling contractor who has been made into a mining contractor. I think -- we have some fairly demanding management on site who have been very pleased with his performance. Right now his scope -- his remaining scope of work is fairly minimal, and we're moving in our own crews, but I think --

Yes, no --

-- the quality has been very high.

Yes. There's really been no -- it's a little bit of a slow startup of the contractor, because as you say, he was more of -- not necessarily a mining contractor, more of a tunnelling contractor, but since the last six months or so, he has done -- they have done very well? They've done a very good job. In terms of dilution, with just three stopes in the cycle, a little early to say how we're doing. Give us a little bit more time on that. But in general, ground conditions are pretty much as expected. No big issues there.

So am I to understand you are phasing him out and going to go to owner mining there now?

Yes.

That's the plan.

Okay. And -- I realize early stage there as well, but any idea on the reconciliation of grade? Is it more or less what you expect?

Yes, I think the reconciliation has been fine so far. No big surprises. And we meant to run some lower grade material through the mill to start with obviously.

Right.

But compared to what we're mining, compared to the model, very early days, but it has been pretty good so far.

Okay. Good enough. That's all of my questions.

Thank you. The next question is from Steve Butler with Canaccord Genuity.

Paul, implicit in your operating guidance of 700 to 725, I assume there is at least a Q4 impact in there Efemcukuru? And is there also any commercial production in that estimate -- or production estimate in there for Eastern Dragon? Thanks.

Commercial production for Eastern Dragon will not be until Q1.

Right.

The original guidance for Eastern Dragon, I think we had about 20,000 ounces, so whether it's zero thousand ounces, 15,000 or 20,000, we'll have to wait, frankly, until much later in the year before we can tell you what that is going to be. Our expectation is, yes, there will be some production contribution from Efemcukuru. How much remains to be seen. You'll have to bear with us as we get further in the year.

I mean, we've ended up with the four operating mines all working, continuing to work in accordance with plan. And we have two mines that really for different reasons are starting up very late in the year. And normally at this time, Steve, as you know, midyear, we would peg our guidance, fix the number in terms of operating costs and production levels, but we have ended up with two new mines starting up right at the end of the year, and therefore we have to keep a bracket in place until we get closer to the end of the year.

Absolutely. You said construction on the concentrate treatment plant at Kisladag was mid June, but realistically, how many months to you -- is it at least a four-month -- or five-month period of time on that fairly modest -- although still takes time?

Yes, it's a tiny little plant. Rest assured we had -- everything was sitting -- everything is procured. All of the engineering done. Everything is there. The lads with the backhoes were ready to start digging within an hour of the permit being granted, and we're working now to do everything we can in terms of running the construction schedule 24 hours a day, seven days a week, We have got review meetings again next week to see what we can do to squeeze out every additional week. So it is very much work in progress. Rest assured, we'regoing to do everything we can to get as much of the concentrate treated this year, but we're still working at determining exactly how many weeks we can realistically plan on for the year.

Right. Okay, Paul, thanks. Lastly, the25 million plus 5 million tons per annum for the Kisladag Phase IV, is that referred to in the MD&A here, or just implied based on the corporate presentations? Thanks.

It's what I just told you. It's not in the MD&A. That's the starter piece of information.

Yes, thank you very much, Paul.

Okay. To whet your appetite until --

Already been whetted.

Okay. Thank you. Hope so.

Bye.

Thank you. The next question is from Anita Soni with Credit Suisse. Please go ahead.

Hi, Norm. Just a follow-up with respect to Kisladag. The grades there, are they going to come -- I think the budget levels were about 1.07, and you are running a little bit behind that for the year. Are you going to catch up, or are we going to stay at the levels that we're at?

It was a little -- I mean, last quarter was a little bit lower. Part of that was budget for the quarter was based on a little bit older model, and we had some new drilling in there, so it's not a --Generally the model at Kisladag is predicted extremely well. Yes, so I would expect it to come back up a little bit in the next couple of quarters.

All right. Thank you.

Thank you. We do have a question from [Irwin Ostroff], who is a private investor. Please go ahead.

Paul, I've noticed that the price of gold, which is now sitting in the $630 range, seems to be somewhat independent of the price of our stock. Can you comment about why we seem to lag the price of gold, even though that's our main product?

I think we're no different from, fortunately, from most of the gold equities right now. I think if you go back a year, there was somewhat of a divergence between gold equities and gold prices, and we have been certainly caught in that. I would say more recently, we're -- the equity performance has picked up a little bit. Yes, I mean, I don't think it's a unique characteristic to ourselves, it's just you had a -- you've had this divergence and -- between the equities and gold.

What we have to do is obviously make -- continue to work hard to ensure that there is a recognition that, in the case of Eldorado Gold, the investors have an option of a superior product in terms of growth, in terms of margins, profitability, and a pure-gold producer. And that's part of what I get paid to do. But unfortunately there has been this divergence, and we're not immune from that.

Thank you.

Thank you. The next question is from Terry Crafts from Crafts Enterprises. Please go ahead.

Yes, good morning, Mr. Wright and others. Thank you for taking my question. I have a few. With the new regime -- and I'm assuming it was a change in regime in Greece -- are you getting a fast track there better now, or are we still stumbling like it was sometimes in the past?

There's two aspects of -- or two changes that have occurred in Greece in the last six months which I think are positive for ourselves, positive for Greece. And one includes a change in ministers within the government. The previous environmental minister was replaced by the minister of finance who, having met with him myself in the last week or so, I would say is extremely pragmatic, very much understands the relevance of the development of the mineral sector, and that's very positive for us in terms of process.

The other, which is very specific to us, is the development of the fast-track process, which has been legislated, and we've qualified as one of the first entries into that process. There's a strong commitment to ensure that process works the way it is meant to, and in a timely manner ensures that projects such as ourselves moves through unencumbered through the permitting process, and that we come out the other end with permits and licenses appropriate, so that we can start development in a timely manner. So I think there are some very positive changes.

It just seems such dire straights that they are in that they would fast track anything that would make them money for their country or for whatever.

One would think so, yes.

The question about Efemcukuru -- I'll butcher these names -- how is that from the Kisladag mine or Kisladag operations?

It's about a three hour drive. So, 180, 200 K, I think?

Is that truck or car or vehicle?

Well, either. Vehicle, yes (inaudible -- multiple speakers) --

I mean are you hauling all of your process back to there?

What we will haul is a flotation concentrate. So we'll be hauling about a hundred tons of concentrate a day.

Okay. I see. Question about Vila Nova. I noticed there is a $350 million to $400 million infrastructure startup there, and is there any basis of recovery on that? And what is the life of production on it? I guess it's a strip mine, isn't it.

Vila Nova is a very small iron ore mine, which is being built. And the capital infrastructure, which we've already paid for, was about $45 million. So I'm not sure -- it is an operating iron ore mine. We expect to produce about 0.5 million tons of iron ore this year or thereabouts. The name plate capacity for the plant is probably 850,000 or 900,000 tons a year, and our expect is over the next couple of years, we'll continue to increase production towards that level. Our present constraint is not the plant capacity or the mining capacity. It more relates to a shared railway facility and our ability to access additional capacity on that railway line.

Okay. I was just curious -- did I read that figure right or was that a misprint?

No, not quite sure where that --

$350 million to $400 million --

No, that's a wrong number. I'm not quite sure where that --

Okay. I read that some --I did read that, soI was curious. I thought it was an awful lot of money for building roads or whatever -- rail or whatever you were going to do.

I think maybe you were thinking of Tocantinzinho in Brazil, which is a gold project.

Oh, that -- maybe that was it. I'm -- okay.

Yes, that's a fairly larger gold project. That one is not built. That's a prefeasibility --

I guess I read the wrong paragraph in the wrong place. One other question -- I'm assuming then there is a recovery cost? You have any kind of life line or life production on that gold mine then?

Well, that mine, as Norm described, we completed prefeasibility engineering based on a 2 million ounce reserve and I think a production rate which was around 160 million -- I'm sorry, 160,000 ounces a year, which would have implied a 10 year -- 10 to 12 year mine life. Again, we're refining that engineering to feasibility level engineering. We're continuing to do exploration, so that may change. I'd look for us probably first quarter of next year to lay out what we see as being the plan for development.

Okay. And one last question. How are things doing over there in China overall? As far as labor permitting and local and the PRC government entities? Are they receptive to everything you where doing more or less?

I would say more or less, yes. We started in China with Tanjianshan, and I think we have been quite successful with that operation. And we acquired -- gold a little more than a year ago, and we have pretty much turned those operations around. And then the -- we acquired Sino Gold a little more than a year ago. And I think pretty turned those operations around, and they are operating now according to plan.

It's a different place to work, that's for sure. And you just have to take the time to understand the permitting and legal structure, but once you do, you can operate within it. The Chinese government isn't interested in having a huge influx of foreign investment in their resource sector, but I think to a certain extent we're sort of the poster child, so they can point to us and say, well, yes, look it -- there's Eldorado; we do allow foreign investment in the resource sector. So we've been fairly successful. I think part of that is flying under the radar to a certain extent as well.

Yes, I kind of wondered about that. It seems like -- to me, it seems like you have a large footprint there, but I don't have really -- haven't made comparisons to other miners. Are there any other miners or larger companies --

We're far and away the largest foreign gold producer in China.

But having said that, in terms of annual production in China, we represent less than 3% annual production, so it's not as if we're --

The Chinese are doing their own thing too, aren't they?

Sure, there's a number of SOEs that are obviously fairly large. And from a Chinese government perspective, a requirement of all gold producers in China is that all gold is sold within China.

Well I know they -- I'm sure they want their piece of the action for sure. That doesn't surprise me at all. But, no, I thank you for answering those questions. And I'm glad you are one of the largest miners over there. I wish you well. I know they are making investments in Canada too, so I'm kind of watching that. But appreciate it, Paul. Thank you for your time and everybody else. And have a nice day, and let's try to get that price back up about another dollar a share or so. I'd like to see that.

Just a dollar?

At least a buck now. What is going down here with the debt ceiling and stuff in the states, it ought to be back up there.

All right. Thank you for the call.

Thank you, sir. Bye.

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

Thank you very much, operator, and thank everybody who has called in. I look forward to talking to you at our next quarterly call and meeting a number of you on our analyst trip and investors' trip in October. Thank you.

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