Eldorado Gold Corp. suspended its dividend and reported a monster fourth quarter loss late Wednesday because the company struggles to maneuver forward using its troubled Greek assets.
The Vancouver-based miner said its Q4 loss was a whopping US$1.24 billion. That includes US$1.25 billion of writedowns, largely on its projects in Greece. In January, the company halted the majority of its activity in northern Greece after neglecting to receive permits on the reasonable timeline in the leftist Syriza government. Lower assumed metal prices also affected the carrying values of the assets.
Once the writedowns were stripped out, Eldorado had an adjusted lack of US$19.3 million, or two cents a share. That was slightly below most analyst estimates, though Eldorado maintained it’s performing well.
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“I’m extremely pleased to deliver strong operational results,” leader Paul Wright said on the conference call Thursday, noting that the company beat its production and cost guidance in 2015.
However, Eldorado still chose to suspend its semi-annual dividend. The company blamed a low gold price (among other factors), even though gold has rallied to date in 2016. Eliminating the dividend will save Eldorado about US$14 million annually, though Wright said it might be reinstated later in 2016.
“We still think that some of funds from operations ought to be shared with our investors and appear forward to resuming dividend payments in a stronger gold price environment,” the organization said in a statement.
Even after the dividend suspension, BMO Capital Markets analyst Andrew Kaip said in a note that he expects Eldorado will draw funds from the US$375 million credit facility to be able to fund its “longer-dated” growth initiatives.
Most of those growth plans have been in Greece, high continues to be plenty of uncertainty. The company has faced opposition from both government and local protestors that has disrupted its plans. It spent more than US$300 million around the Skouries project, its biggest asset in Greece, before halting construction in January because of permitting delays.
Eldorado did report some positive news from Greece recently, as it received a building permit for any processing plant at Skouries along with a license because of its Olympias project. Other permits and licenses are still needed at Skouries, but Wright said recent conversations with the government have been more constructive.
One of the question marks surrounding Eldorado is what it’ll use its Chinese assets, that the clients are keen to divest. Eldorado has looked into an initial public offering for that assets in Hong Kong, but has also been approached by potential buyers. On Thursday, Wright said he anticipates an answer within the “near term,” and expects to provide updates on the process in the second quarter of 2016.
pkoven@nationalpost.com
Twitter.com/peterkoven
