ELDORADO GOLD CORP /FI, 40-F filed on 3/29/2018
Annual Report (foreign private issuer)
v3.8.0.1
Document and Entity Information
12 Months Ended
Dec. 31, 2017
shares
Document - Document and Entity Information [Abstract]  
Document Type 40-F
Amendment Flag false
Document Period End Date Dec. 31, 2017
Document Fiscal Year Focus 2017
Document Fiscal Period Focus FY
Trading Symbol EGO
Entity Registrant Name ELDORADO GOLD CORP /FI
Entity Central Index Key 0000918608
Current Fiscal Year End Date --12-31
Entity Current Reporting Status Yes
Entity Common Stock, Shares Outstanding 716,587,134
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2017
Dec. 31, 2016
Current assets    
Cash and cash equivalents $ 479,501 $ 883,171
Term deposits 5,508 5,292
Restricted cash 310 240
Marketable securities 5,010 28,327
Accounts receivable and other 78,344 54,315
Inventories 168,844 120,830
Total current assets 737,517 1,092,175
Restricted cash and other assets 22,902 48,297
Defined benefit pension plan 9,919 11,620
Property, plant and equipment 4,227,397 3,645,827
Goodwill 92,591  
Total assets 5,090,326 4,797,919
Current liabilities    
Accounts payable and accrued liabilities 110,651 90,705
Current portion of asset retirement obligation 3,489  
Current liabilities 114,140 90,705
Debt 593,783 591,589
Defined benefit pension plan 13,599 10,882
Asset retirement obligations 96,195 89,778
Deferred income tax liabilities 549,127 443,501
Total liabilities 1,366,844 1,226,455
Equity    
Share capital 3,007,924 2,819,101
Treasury stock (11,056) (7,794)
Contributed surplus 2,616,593 2,606,567
Accumulated other comprehensive loss (21,350) (7,172)
Deficit (1,948,569) (1,928,024)
Total equity attributable to shareholders of the Company 3,643,542 3,482,678
Attributable to non-controlling interests 79,940 88,786
Total equity 3,723,482 3,571,464
Total liabilities and equity $ 5,090,326 $ 4,797,919
v3.8.0.1
Consolidated Income Statements - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Revenue    
Metal sales $ 391,406 $ 432,727
Cost of sales    
Production costs 192,740 194,669
Inventory write-down 444 0
Depreciation and amortization 72,130 74,887
Cost of sales 265,314 269,556
Gross profit 126,092 163,171
Exploration expenses 38,261 18,773
Mine standby costs 4,886 16,140
Other operating items 3,658  
General and administrative expenses 54,574 37,851
Acquisition costs 4,270  
Defined benefit pension plan expense 3,451 5,602
Share based payments 11,218 10,559
Write-down of assets 46,697 4,529
Foreign exchange loss (gain) (2,382) 2,708
Operating profit (loss) (38,541) 67,009
Loss on disposal of assets (462) (2,121)
Gain (loss) on marketable securities and other investments 27,425 (4,881)
Other income 17,575 243
Asset retirement obligation accretion (2,006) (1,795)
Interest and financing costs (3,199) (9,757)
Profit from continuing operations before income tax 792 48,698
Income tax expense 19,383 56,205
Loss from continuing operations (18,591) (7,507)
Loss from discontinued operations (2,797) (339,369)
Loss for the year (21,388) (346,876)
Attributable to:    
Shareholders of the Company (9,935) (344,151)
Non-controlling interests (11,453) (2,725)
Loss for the year (21,388) (346,876)
Loss attributable to shareholders of the Company    
Continuing operations (7,138) (2,683)
Discontinued operations (2,797) (341,468)
Shareholders of the Company $ (9,935) $ (344,151)
Weighted average number of shares outstanding (thousands)    
Basic 753,565 716,587
Diluted 753,565 716,593
Loss per share attributable to shareholders of the Company:    
Basic loss per share $ (0.01) $ (0.48)
Diluted loss per share (0.01) (0.48)
Loss per share attributable to shareholders of the Company-continuing operations:    
Basic loss per share (0.01) 0.00
Diluted loss per share $ (0.01) $ 0.00
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Statement of comprehensive income [abstract]    
Loss for the year $ (21,388) $ (346,876)
Other comprehensive income (loss):    
Change in fair value of available-for-sale financial assets 15,878 11,115
Income tax on change in fair value of available-for-sale financial assets (2,595) (1,428)
Reversal of unrealized gains on available-for-sale investments on acquistion of Integra, net of taxes (24,340)  
Transfer of realized loss on disposal of availabe-for-sale financial assets   4,901
Actuarial losses on defined benefit pension plans (3,121) (1,188)
Total other comprehensive income (loss) for the year (14,178) 13,400
Total comprehensive loss for the year (35,566) (333,476)
Attributable to:    
Shareholders of the Company (24,113) (330,751)
Non-controlling interests (11,453) (2,725)
Total comprehensive loss for the year $ (35,566) $ (333,476)
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Operating activities    
Loss for the year from continuing operations $ (18,591) $ (7,507)
Items not affecting cash:    
Asset retirement obligation accretion 2,006 1,795
Depreciation and amortization 72,130 74,887
Unrealized foreign exchange loss (gain) (471) 1,191
Deferred income tax expense (recovery) (19,849) 9,039
Loss on disposal of assets 462 2,121
Write-down of assets 46,697 4,529
(Gain) loss on marketable securities and other investments (27,425) 4,881
Share based payments 11,218 10,559
Defined benefit pension plan expense 3,451 5,602
Total adjustments to reconcile profit (loss) 69,628 107,097
Property reclamation payments (3,097) (2,662)
Changes in non-cash working capital (35,755) 32,295
Net cash provided by operating activities of continuing operations 30,776 136,730
Net cash used by operating activities of discontinued operations (2,797) (23,067)
Investing activities    
Net cash paid on acquisition of subsidiary (121,664) (603)
Purchase of property, plant and equipment (345,883) (297,667)
Proceeds from the sale of property, plant and equipment 252 4,916
Proceeds from sale of mining interest, net of transaction costs   792,511
Proceeds on pre-commercial production sales and tailings retreatment 38,200 3,708
Purchase of marketable securities   (2,526)
Proceeds from the sale of marketable securities   3,665
Value added taxes related to mineral property expenditures, net 22,804  
Investment in term deposits (216) (910)
Decrease (increase) in restricted cash (9,817) 9
Net cash provided (used) by investing activities of continuing operations (416,324) 503,103
Net cash used by investing activities of discontinued operations   (21,784)
Financing activities    
Issuance of common shares for cash 586  
Dividend paid to shareholders (10,610)  
Purchase of treasury stock (5,301)  
Long-term and bank debt proceeds   70,000
Long-term and bank debt repayments   (70,000)
Net cash used by financing activities of continuing operations (15,325)  
Net increase (decrease) in cash and cash equivalents (403,670) 594,982
Cash and cash equivalents - beginning of year 883,171 288,189
Cash and cash equivalents - end of year $ 479,501 $ 883,171
v3.8.0.1
Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Share capital [member]
Share capital [member]
Integra Gold Corp [member]
Treasury stock [member]
Contributed surplus [member]
Accumulated other comprehensive loss [member]
Deficit [member]
Equity attributable to owners of parent [member]
Non-controlling interests [member]
Balance beginning of year at Dec. 31, 2015   $ 5,319,101   $ (10,211) $ 47,236 $ (20,572) $ (1,583,873)   $ 169,755
Share based payments         10,264        
Loss attributable to non-controlling interests $ (2,725)               (2,725)
Other comprehensive loss for the year 13,400         13,400      
Increase during the period                 3,257
Loss attributable to shareholders of the Company (344,151)           (344,151)    
Shares redeemed upon exercise of restricted share units       2,417 (2,417)        
Decrease due to sale of China Business and others                 (81,501)
Recognition of other non-current liability and related costs         (1,416)        
Capital reduction   (2,500,000)              
Reversal of other current liability and related costs         52,900        
Capital reduction         2,500,000        
Balance end of year at Dec. 31, 2016 3,571,464 2,819,101   (7,794) 2,606,567 (7,172) (1,928,024) $ 3,482,678 88,786
Share based payments         12,241        
Shares issued upon exercise of share options, for cash   586              
Loss attributable to non-controlling interests (11,453)               (11,453)
Purchase of treasury stock       (5,301)          
Dividends paid             (10,610)    
Other comprehensive loss for the year (14,178)         (14,178)      
Transfer of contributed surplus on exercise of options   176              
Increase during the period                 2,607
Loss attributable to shareholders of the Company (9,935)           (9,935)    
Shares redeemed upon exercise of restricted share units       2,039 (2,039)        
Shares issued on acquistion of Integra Gold Corp.     $ 188,061            
Transfer to share capital on exercise of options         (176)        
Balance end of year at Dec. 31, 2017 $ 3,723,482 $ 3,007,924   $ (11,056) $ 2,616,593 $ (21,350) $ (1,948,569) $ 3,643,542 $ 79,940
v3.8.0.1
General Information
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
General Information
1. General Information

Eldorado Gold Corporation (“Eldorado” or the “Company”) is a primarily gold exploration, development and mining company. The Company has operations and ongoing exploration and development projects in Turkey, Greece, Brazil, Canada, Romania and Serbia. On July 10, 2017, the Company finalized its acquisition of Integra Gold Corporation (“Integra”), a Canadian company with mineral assets in Quebec, Canada (note 5a). The Company disposed of its China operations (“China Business”) in 2016. Details of the sale are included in note 5b.

Eldorado is a public company which is listed on the Toronto Stock Exchange and New York Stock Exchange and is incorporated and domiciled in Canada.

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Basis of preparation
12 Months Ended
Dec. 31, 2017
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Basis of preparation
2. Basis of preparation

These consolidated financial statements, including comparatives, have been prepared using accounting policies in compliance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Certain prior period balances have been reclassified to conform to current period presentation.

The consolidated financial statements were authorized for issue by the Board of Directors on March 21, 2018.

Upcoming changes in accounting standards

The following standards have been published and are mandatory for Eldorado’s annual accounting periods no earlier than January 1, 2018:

 

    IFRS 2 ‘Share-Based Payments’ – In June 2016, the IASB issued final amendments to this standard. IFRS 2 clarifies the classification and measurement of share-based payment transactions. These amendments deal with variations in the final settlement arrangements including: (a) accounting for cash-settled share-based payment transactions that include a performance condition, (b) classification of share-based payment transactions with net settlement features, and (c) accounting for modifications of share-based payment transactions from cash-settled to equity. IFRS 2 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Company plans to apply this standard at the date it becomes effective. The Company does not expect the impact of these changes to be material.

 

    IFRS 9 ‘Financial Instruments’ – This standard was published in July 2014 and replaces the existing guidance in IAS 39, ‘Financial Instruments: Recognition and Measurement’. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Company plans to apply this standard at the date it becomes effective.

The Company has completed its assessment of the impact of IFRS 9 and expects the following impacts upon adoption:

 

  i) the classification of its financial assets and liabilities to remain consistent under the new standard, with the exception of equity securities. The Company will make the irrevocable election to continue to measure its long-term investments in equity securities at fair value through other comprehensive income. As a result and following the new standard, all realized and unrealized gains and losses will be recognized permanently in other comprehensive income with no reclassification to profit or loss upon impairment and disposition.

 

  ii) the Company does not expect to apply hedge accounting to hedge components of its non-financial items.

 

  iii) the Company does not expect a material impact to its financial statements from any of the other changes to this standard, including the new expected credit loss model for calculating impairment on financial assets.
    IFRS 15 ‘Revenue from Contracts with Customers’ – This standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. This standard is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Company plans to apply this standard at the date it becomes effective and will be adopting the modified retrospective approach.

The Company has performed a detailed review and assessment of its sales contracts, including doré and concentrate sale agreements, and has concluded that no adjustments are required in respect of current revenue recognition practices. The Company will have additional disclosures required by the new standard, in particular in relation to the impact of provisional pricing adjustments on its concentrate sales.

 

    IFRS 16 ‘Leases’ – This standard was published in January 2016 and replaces the existing guidance in IAS 17, ‘Leases’. IFRS 16 introduces a single accounting model for lessees and for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee will be required to recognize a right-of-use asset, representing its right to use the underlying asset, and a lease liability, representing its obligation to make lease payments. The accounting treatment for lessors will remain largely the same as under IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted.

The Company plans to apply this standard at the date it becomes effective and expects that, under this standard, the present value of most lease commitments will be shown as a liability on the balance sheet together with an asset representing the right of use, including those classified as operating leases under the existing standard. This implies higher amounts of depreciation expense and interest on lease liabilities that will be recorded in the Company’s profit and loss results. Additionally, a corresponding reduction in general and administrative costs and/or production costs is expected. The extent of the impact of adopting the standard has not yet been determined.

The Company is currently working in the development of its implementation plan and expects to report more detailed information, including estimated quantitative financial impacts, if material, in its consolidated financial statements as the effective date approaches.

There are other new standards, amendments to standards and interpretations that have been published and are not yet effective. The Company believes they will have no material impact on its consolidated financial statements.

v3.8.0.1
Significant accounting policies
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Significant accounting policies
3. Significant accounting policies

The principal accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements, and have been applied consistently by all Eldorado entities.

3.1  Basis of presentation and principles of consolidation

(i)    Subsidiaries and business combinations

Subsidiaries are entities controlled by Eldorado. Control exists when Eldorado is exposed to, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The acquisition method of accounting is used to account for business acquisitions. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.

The excess of the cost of acquisition over the fair value of Eldorado’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference, or gain is recognised directly in the income statement.

Transaction costs, other than those associated with the issue of debt or equity securities, which the Company incurs in connection with a business combination, are expensed as incurred.

The most significant wholly-owned and partially-owned subsidiaries of Eldorado, are presented below:

 

Subsidiary    Location      Ownership
interest
   Status    Operations and
development projects
owned
Tüprag Metal Madencilik Sanayi ve Ticaret AS (“Tüprag”)      Turkey      100%    Consolidated   

Kişladağ Mine

Efemçukuru Mine

Hellas Gold SA (“Hellas”)      Greece      95%    Consolidated   

Stratoni Mine

Olympias Mine

Skouries Project

Integra Gold Corporation      Canada      100%    Consolidated    Lamaque Project
Thracean Gold Mining SA      Greece      100%    Consolidated    Perama Hill Project
Thrace Minerals SA      Greece      100%    Consolidated    Sapes Project
Unamgen Mineração e Metalurgia S/A      Brazil      100%    Consolidated    Vila Nova Iron Ore Mine
Brazauro Resources Corporation (“Brazauro”)      Brazil      100%    Consolidated    Tocantinzinho Project
Deva Gold SA (“Deva”)      Romania      80.5%    Consolidated    Certej Project

(ii)  Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of, has been abandoned or meets the criteria to be classified as held for sale.

Discontinued operations are presented on the income statement as a separate line.

(iii)  Assets held for sale

Assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and gains or losses on subsequent re-measurements are included in the income statement. No depreciation is charged on assets and businesses classified as held for sale.

Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. The asset or business must be available for immediate sale and the sale must be highly probable within one year.

(iv)  Investments in associates (equity accounted for investees)

Associates are those entities where Eldorado has the ability to exercise significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity.

Associates are accounted for using the equity method (equity accounted investees) and are recognized initially at cost. The consolidated financial statements include Eldorado’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of Eldorado, from the date that significant influence commences until the date that significant influence ceases.

When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Company has an obligation to make, or has made, payments on behalf of the investee.

At each balance sheet date, each investment in associates is assessed for indicators of impairment.

(v)  Transactions with non-controlling interests

For purchases from non-controlling interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Eldorado treats transactions in the ordinary course of business with non-controlling interests as transactions with third parties.

(vi) Transactions eliminated on consolidation

Intra-company and intercompany balances and transactions, and any unrealized income and expenses arising from all such transactions, are eliminated in preparing the consolidated financial statements.

3.2  Foreign currency translation

(i)    Functional and presentation currency

Items included in the financial statements of each of Eldorado’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in U.S. dollars, which is the Company’s functional and presentation currency, as well as the functional currency of all significant subsidiaries.

(ii)  Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement.

3.3  Property, plant and equipment

(i)    Cost and valuation

Property, plant and equipment are carried at cost less accumulated depreciation and any impairment in value. When an asset is disposed of, it is derecognized and the difference between its carrying value and net sales proceeds is recognized as a gain or loss in the income statement.

(ii)  Property, plant and equipment

Property, plant and equipment include expenditures incurred on properties under development, significant payments related to the acquisition of land and mineral rights and property, plant and equipment which are recorded at cost on initial acquisition. Cost includes the purchase price and the directly attributable costs of acquisition or construction required to bring an asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management.

(iii)  Depreciation

Mine development costs, property, plant and equipment and other mining assets whose estimated useful life is the same as the remaining life of the mine are depreciated, depleted and amortized over a mine’s estimated life using the units-of-production method calculated based on proven and probable reserves.

Capitalized development costs related to a multi-pit operation are amortized on a pit-by-pit basis over the pit’s estimated life using the units-of-production method calculated based on proven and probable reserves related to each pit.

Property, plant and equipment and other assets whose estimated useful lives are less than the remaining life of the mine are depreciated on a straight-line basis over the estimated useful lives of the assets.

Where components of an asset have a different useful life and cost that is significant to the total cost of the asset, depreciation is calculated on each separate component.

Depreciation methods, useful lives and residual values are reviewed at the end of each year and adjusted if appropriate.

(iv)  Subsequent costs

Expenditure on major maintenance or repairs includes the cost of replacement parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that further future economic benefit will flow to the Company, the expenditure is capitalized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that future economic benefit will flow to the Company and any remaining costs of previous overhauls relating to the same asset are derecognized. All other expenditures are expensed as incurred.

(v)  Deferred stripping costs

Stripping costs incurred during the production phase of a mine are considered production costs and included in the cost of inventory produced during the period in which the stripping costs are incurred, unless the stripping activity can be shown to provide access to additional mineral reserves, in which case the stripping costs are capitalized. Stripping costs incurred to prepare the ore body for extraction are capitalized as mine development costs (pre-stripping). Capitalized stripping costs are amortized on a unit-of-production basis over the proven and probable reserves to which they relate.

(vi)  Borrowing costs

Borrowing costs are expensed as incurred except where they are directly attributable to the financing of construction or development of qualifying assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when substantially all the activities necessary to prepare the asset for its intended use are complete.

Investment income arising on the temporary investment of proceeds from borrowings is offset against borrowing costs being capitalized.

(vii)  Mine standby and restructuring costs

Mine standby costs and costs related to restructuring a mining operation are charged directly to expense in the period incurred. Mine standby costs include labour, maintenance and mine support costs during temporary shutdowns of a mine or development project.

3.4  Exploration, evaluation and development expenditures

(i) Exploration

Exploration expenditures reflect the costs related to the initial search for mineral deposits with economic potential or obtaining more information about existing mineral deposits. Exploration expenditures typically include costs associated with the acquisition of mineral licenses, prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore. All expenditures relating to exploration activities are expensed as incurred except for the costs associated with the acquisition of mineral licenses which are capitalized.

(ii) Evaluation

Evaluation expenditures reflect costs incurred at projects related to establishing the technical and commercial viability of mineral deposits identified through exploration or acquired through a business combination or asset acquisition.

Evaluation expenditures include the cost of:

 

  a) establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve;
  b) determining the optimal methods of extraction and metallurgical and treatment processes;
  c) studies related to surveying, transportation and infrastructure requirements;
  d) permitting activities; and
  e) economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.

Evaluation expenditures are capitalized if management determines that there is evidence to support probability of generating positive economic returns in the future. A mineral resource is considered to have economic potential when it is expected the technical feasibility and commercial viability of extraction of the mineral resource is demonstrable considering long-term metal prices. Therefore, prior to capitalizing such costs, management determines that the following conditions have been met:

 

  There is a probable future benefit that will contribute to future cash inflows;
  The Company can obtain the benefit and control access to it; and
  The transaction or event giving rise to the benefit has already occurred.

The evaluation phase is complete once technical feasibility of the extraction of the mineral deposit has been determined through preparation of a reserve and resource statement, including a mining plan as well as receipt of required permits and approval of the Board of Directors to proceed with development of the mine.

(iii) Development

Development expenditures are those that are incurred during the phase of preparing a mineral deposit for extraction and processing. These include pre-stripping costs and underground development costs to gain access to the ore that is suitable for sustaining commercial mining, preparing land, construction of plant, equipment and buildings and costs of commissioning the mine and mill.

Expenditures incurred on development projects continue to be capitalized until the mine and mill moves into the production stage. The Company assess each mine construction project to determine when a mine moves into production stage. The criteria used to assess the start date are determined based on the nature of each mine construction project, such as the complexity of a plant or its location. Various relevant criteria are considered to assess when the mine is substantially complete and ready for its intended use and moved into the production stage. Some of the criteria considered would include, but are not limited to, the following: (1) the level of capital expenditures compared to construction cost estimates; (2) the completion of a reasonable period of testing of mine plant and equipment; (3) the ability to produce minerals in saleable form (within specification); and (4) the ability to sustain ongoing production of minerals.

Alternatively, if the factors that impact the technical feasibility and commercial viability of a project change and no longer support the probability of generating positive economic returns in the future, expenditures will no longer be capitalized.

3.5  Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of Eldorado’s share of the net assets of the acquired business at the date of acquisition. When the excess is negative (negative goodwill), it is recognized immediately in income. Goodwill on acquisition of subsidiaries and businesses is shown separately as goodwill in the financial statements. Goodwill on acquisition of associates is included in investments in significantly influenced companies and tested for impairment as part of the overall investment.

Goodwill is carried at cost less accumulated impairment losses and tested annually for impairment. Impairment losses on goodwill are not reversed. The impairment testing is performed annually or more frequently if events or changes in circumstances indicate that it may be impaired.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash generating units (“CGU”s) that are expected to benefit from the business combination in which the goodwill arose. If the composition of one or more cash generating units to which goodwill has been allocated changes due to a re-organization, the goodwill is re-allocated to the units affected.

The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold.

3.6  Impairment of non-financial assets

Other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment test is performed when the impairment indicators demonstrate that the carrying amount may not be recoverable and it is reviewed at least annually.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use.    For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows or CGUs.

Value in use is determined as the present value of the future cash flows expected to be derived from an asset or CGU based on the detailed mine and/or production plans. The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Fair value less cost to sell is the amount obtainable from the sale of an asset or CGU in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. For mining assets, fair value less cost to sell is often estimated using a discounted cash flow approach because a fair value is not readily available from an active market or binding sale agreement. Estimated future cash flows are calculated using estimated future prices, mineral reserves and resources, operating and capital costs. All assumptions used are those that an independent market participant would consider appropriate. Non-financial assets other than goodwill impaired in prior periods are reviewed for possible reversal of the impairment when events or changes in circumstances indicate that an item is no longer impaired.

3.7  Financial assets

(i) Classification

The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities of greater than 12 months after the end of the reporting period, which are classified as non-current assets. Eldorado’s loans and receivables comprise cash and cash equivalents, restricted cash, accounts receivable and other and other assets in the balance sheet.

(c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Eldorado’s available-for-sale financial assets comprise marketable securities not held for the purpose of trading.

(ii) Recognition and measurement

Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘Gain or loss on marketable securities’ in the period in which they arise. Dividend income from ‘financial assets at fair value through profit or loss’ is recognised in the income statement as part of other income when Eldorado’s right to receive payments is established.

Gains or losses arising from changes in the fair value of available-for-sale financial assets are recognized in other comprehensive income and presented within equity. When marketable securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as ‘Gain or loss on marketable securities’.

(iii) Impairment of financial assets

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. In the case of equity instruments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset that was previously recognized in profit or loss – is removed from equity and recognized in the income statement.

All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognized previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. Impairment losses recognized for equity securities are not reversed.

 

3.8  Derivative financial instruments and hedging activities

Derivatives are recognized initially at fair value on the date a derivative contract is entered into. Subsequent to initial recognition, derivatives are remeasured at their fair value. The method of recognising any resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement.

(a) Fair value hedge

Changes in the fair values of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair values of the hedged assets or liabilities that are attributable to the hedged risk.

(b) Cash-flow hedge

The effective portions of changes in the fair values of derivatives that are designated and qualify as cash-flow hedges are recognised in equity. The gain or loss relating to any ineffective portion is recognised immediately in the income statement.

Amounts accumulated in the hedge reserve are recycled in the income statement in the periods when the hedged items will affect profit or loss (for instance when the forecast sale that is hedged takes place). If a forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a liability, the gains and losses previously deferred in the hedge reserve are transferred from the reserve and included in the initial measurement of the cost of the asset or liability.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in the hedge reserve at that time remains in the reserve and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the income statement.

The Company has not designated any derivative contracts as hedges and therefore has not applied hedge accounting in these financial statements.

3.9  Inventories

Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:

 

  i) Product inventory consists of stockpiled ore, ore on leach pads, crushed ore, in-circuit material at properties with milling or processing operations, gold concentrate, other metal concentrate, iron ore stockpile awaiting shipment, doré awaiting refinement and unsold bullion. Product inventory costs consist of direct production costs including mining, crushing and processing; site administration costs; and allocated indirect costs, including depreciation and amortization of property, plant and equipment.

Inventory costs are charged to production costs on the basis of quantity of metal sold. At operations where the ore extracted contains significant amounts of metals other than gold, primarily silver, copper, lead and zinc, cost is allocated between the joint products. The Company regularly evaluates and refines estimates used in determining the costs charged to production costs and costs absorbed into inventory carrying values based upon actual gold recoveries and operating plans.

Net realizable value is the estimated selling price, less the estimated costs of completion and selling expenses.

  ii) Materials and supplies inventory consists of consumables used in operations, such as fuel, chemicals, reagents and spare parts, which are valued at the lower of average cost and net realisable value and, where appropriate, less a provision for obsolescence. Costs include acquisition, freight and other directly attributable costs.

3.10   Trade receivables

Trade receivables are amounts due from customers for bullion, doré, gold concentrate, other metal concentrates and iron ore sold in the ordinary course of business.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less a provision for impairment where necessary.

3.11  Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with maturities at the date of acquisition of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

3.12  Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares held by the Company are classified as treasury stock and recorded as a reduction of shareholders’ equity.

3.13  Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

3.14  Debt and borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost, calculated using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities and other borrowings are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility and other borrowings will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility and borrowings will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the loan to which it relates.

3.15  Current and deferred income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the income statement except to the extent that it relates to items recognized either in other comprehensive income or directly in equity, in which case it is recognized in other comprehensive income or in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings. The tax rate used is the rate that is substantively enacted.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3.16    Employee benefits

(i)  Defined benefit plans

Certain employees have entitlements under Company pension plans which are defined benefit pension plans. For defined benefit plans, the level of benefit provided is based on the length of service and earnings of the person entitled.

The cost of the defined benefit plan is determined using the projected unit credit method. The related pension liability recognized in the consolidated balance sheet is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets.

The Company obtains actuarial valuations for defined benefit plans for each balance sheet date. Actuarial assumptions used in the determination of defined benefit pension plan liabilities are based on best estimates, including rate of salary escalation and expected retirement dates of employees. The discount rate is based on high quality bond yields, as per International Accounting Standard 19, Employee Future Benefits (“IAS 19”). The assumption used to determine the interest income on plan assets is equal to the discount rate, as per IAS 19.

Actuarial gains and losses are recognized in full in the period in which they occur in other comprehensive income without recycling to the statement of income in subsequent periods. Current service cost, the vested element of any past service cost, the interest income on plan assets and the interest arising on the pension liability are included in the same line items in the statement of income as the related compensation cost.

Past service costs are recognized immediately to the extent the benefits are vested, and otherwise are amortized on a straight-line basis over the average period until the benefits become vested.

(ii)  Defined contribution plans

The Company’s contributions to defined contribution plans are charged to the income statement in the period to which the contributions relate.

(iii) Termination benefits

Eldorado recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing benefits as a result of an offer made to encourage voluntary termination. Benefits falling due more than twelve months after the end of the reporting period are discounted to their present value.

(iv)  Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if Eldorado has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

3.17    Share-based payment transactions

The Company applies the fair value method of accounting for all stock option awards and equity settled restricted share units and performance share units. Under this method the Company recognizes a compensation expense for all stock options awarded to employees, based on the fair value of the options on the date of grant which is determined by using the Black-Scholes option pricing model. For equity settled restricted share units, compensation expense is recognized based on the quoted market value of the shares. For equity settled performance share units, compensation expense is recognized based on the fair value of the shares on the date of grant which is determined by a valuator.

The fair value of the options, restricted share units and performance share units are expensed over the vesting period of the awards with a corresponding increase in equity. No expense is recognized for awards that do not ultimately vest. Deferred share units are liability awards recorded at the quoted market price at the grant date. The corresponding liability is marked to market at each reporting date.

3.18    Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. They are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(i)    Rehabilitation and restoration

Provision is made for mine rehabilitation and restoration when an obligation is incurred. The provision is recognised as a liability with a corresponding asset recognised in relation to the mine site. At each reporting date the rehabilitation liability is re-measured in line with changes in discount rates, and timing or amount of the costs to be incurred. The rehabilitation liability is classified as an ‘Asset retirement obligation’ on the balance sheet.

The provision recognised represents management’s best estimate of the present value of the future costs required. Significant estimates and assumptions are made in determining the amount of restoration and rehabilitation provisions. Those estimates and assumptions deal with uncertainties such as: requirements of the relevant legal and regulatory frameworks, the magnitude of necessary remediation activities and the timing, extent and costs of required restoration and rehabilitation activity.

These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the balance sheet by adjusting both the restoration and rehabilitation asset and provision. Such changes give rise to a change in future depreciation and financial charges.

3.19    Revenue recognition

Revenue from the sale of bullion, doré, gold concentrate, other metal concentrates and iron ore is recognized when persuasive evidence of an arrangement exists, the bullion, doré, metal concentrates and iron ore has been shipped, title has passed to the purchaser, the price is fixed or determinable, and collection is reasonably assured. Revenues realized from sales of pre-commercial production are recorded as a reduction of property plant and equipment.

Our metal concentrates are sold under pricing arrangements where final metal prices are determined by market prices subsequent to the date of shipment. Provisional revenue is recorded at date of shipment based on metal prices at that time. Adjustments are made to the provisional revenue in subsequent periods based on fluctuations in the market prices until date of final metal pricing. Consequently, at each reporting period the receivable balances relating to sales of concentrates changes with the fluctuations in market prices.

3.20    Finance income and expenses

Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment losses recognized on financial assets. All borrowing costs are recognized in profit or loss using the effective interest method, except for those amounts capitalized as part of the cost of qualifying property, plant and equipment.

3.21    Earnings (loss) per share

Eldorado presents basic and diluted earnings per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, which comprise warrants and share options granted to employees.

v3.8.0.1
Critical accounting estimates and judgements
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Critical accounting estimates and judgements
4. Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management estimates include assumptions and estimates relating to determining defined proven and probable reserves, value beyond proven and probable reserves, fair values for purposes of purchase price allocations for business acquisitions, asset impairment analyses, asset retirement obligations, share-based payments and warrants, pension benefits, valuation of deferred income tax assets, the provision for income tax liabilities, deferred income taxes and assessing and evaluating contingencies.

Actual results could differ from these estimates. Outlined below are some of the areas which require management to make significant estimates and assumptions in determining carrying values.

Purchase price allocation

Business combinations require estimates to be made at the date of acquisition in relation to determining asset and liability fair values and the allocation of the purchase consideration over the fair value of the assets and liabilities.

In respect of mining company acquisitions purchase consideration is typically allocated to the mineral reserves and resources being acquired. The estimate of reserves and resources is subject to assumptions relating to life of the mine and may change when new information becomes available. Changes in reserves and resources as a result of factors such as production costs, recovery rates, grade or reserves or commodity prices could impact depreciation rates, asset carrying values and environmental and restoration provisions. Changes in assumptions over long-term commodity prices, market demand and supply, and economic and regulatory climates could also impact the carrying value of assets, including goodwill.

Estimated recoverable reserves and resources

Mineral reserve and resource estimates are based on various assumptions relating to operating matters, including, with respect to production costs, mining and processing recoveries, cut-off grades, as well as assumptions relating to long-term commodity prices and, in some cases, exchange rates, inflation rates and capital costs. Cost estimates are based on feasibility study estimates or operating history. Estimates are prepared by appropriately qualified persons, but will be impacted by forecasted commodity prices, inflation rates, exchange rates, capital and production costs and recoveries amongst other factors. Estimated recoverable reserves and resources are used to determine the depreciation of property, plant and equipment at operating mine sites, in accounting for deferred stripping costs, in performing impairment testing and for forecasting the timing of the payment of decommissioning and restoration costs. Therefore, changes in the assumptions used could impact the carrying value of assets, depreciation and impairment charges recorded in the income statement and the carrying value of the decommissioning and restoration provision.

Current and deferred taxes

The Company calculates current and deferred tax provisions for each of the jurisdictions in which it operates. Actual amounts of income tax expense are not final until tax returns are filed and accepted by the relevant authorities. This occurs subsequent to the issuance of financial statements. Therefore, profit in subsequent periods will be affected by the amount that estimates differ from the final tax returns.

Estimates of recoverability are required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized on the balance sheet. The Company also evaluates the recoverability of deferred tax assets based on an assessment of the ability to use the underlying future tax deductions before they expire against future taxable income. Deferred tax liabilities arising from temporary differences on investments in subsidiaries, joint ventures and associates are recognized unless the reversal of the temporary differences is not expected to occur in the foreseeable future and can be controlled.

Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future production and sales volumes, commodity prices, reserves, operating costs, decommissioning and restoration costs, capital expenditures, dividends and other capital management transactions.

Judgement is also required in the application of income tax legislation. These estimates and judgments are subject to risk and uncertainty and could result in an adjustment to current and deferred tax provisions and a corresponding credit or debit to profit.

Impairment of non-current assets and goodwill

Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be fully recoverable. We conduct an annual test for impairment of goodwill in the fourth quarter of each fiscal year and at any other time of the year if an indicator of impairment is identified.

Calculating the estimated fair values of CGUs for non-current asset impairment tests and CGUs or groups of CGUs for goodwill impairment tests requires management to make estimates and assumptions with respect to future production levels, operating and capital costs in our life-of-mine (“LOM”) plans, long-term metal prices, foreign exchange rates and discount rates. Changes in any of the assumptions or estimates used in determining the fair values could impact the impairment analysis.

Management is also required to make judgments with respect to the level at which goodwill is tested for impairment. Judgments include an assessment of whether CGUs should be grouped together for goodwill testing purposes at a level not larger than an operating segment or tested at the individual CGU level.

v3.8.0.1
Acquisitions and divestitures
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Acquisitions and divestitures
5. Acquisitions and divestitures

a)    Acquisition of Integra

On May 15, 2017, the Company announced that it had entered into a definitive agreement with Integra, pursuant to which Eldorado agreed to acquire all of the issued and outstanding common shares of Integra that it did not already own, by way of a plan of arrangement (the “Arrangement”). The acquisition was finalized on July 10, 2017.

Under the terms of the Arrangement former Integra shareholders were entitled to receive, at their option, for each Integra share they own either (i) 0.2425 Eldorado shares plus C$0.0001 in cash, (ii) C$1.2125 in cash, in both (i) and (ii) subject to pro ration, or (iii) 0.18188 of an Eldorado share and C$0.30313 in cash. Eldorado issued 77,180,898 common shares pursuant to the Arrangement with a fair value of $188,061 and paid $99,823 in cash to the former Integra shareholders. Integra is a resource company engaged in the exploration of mineral properties. It is focused on its high-grade Lamaque gold project located in Val-d’Or, Quebec.

As part of the consideration, the Company included advances to Integra for $27,046 and the fair value of the existing available-for-sale Integra investment that it previously owned for $41,968. The Company recognized a gain on marketable securities for $28,363 and taxes of $4,023, as a reversal of the unrealized gain and taxes included in other comprehensive income at the date of acquisition related to this previously owned investment.

The fair value of the common shares issued as part of the consideration paid for Integra was based on the closing share price on July 7, 2017 on the Toronto Stock Exchange.    The foreign exchange rate used at time of acquisition was CDN$1 = US$0.776.

The goodwill of $92,591 resulting from the acquisition arises mainly on the recognition of deferred income tax liabilities and represents, among other things, the exploration potential within the assets acquired and future variability in the price of minerals. None of the goodwill is deductible for tax purposes.

Eldorado paid net cash of $121,664 as a result of the Integra transaction. This net decrease of cash was a result of cash consideration, including advances to Integra, of $126,869 net of an acquired cash balance of $5,205.

During the year ended December 31, 2016, Integra issued flow-through shares (“FTS”) for total proceeds of C$46.7 million and the eligible flow-through expenditures were renounced to shareholders as at December 31, 2016. At the time of acquisition, Integra was obligated to spend the remaining flow through funds of C$16.6 million by December 31, 2017. The tax authorities are reviewing the eligibility of some of Integra’s past flow-through expenditures. As a result, a provision of $1.9 million has been recorded in accounts payable and accrued liabilities as the exposure related to potential penalties and shareholder compensation, based on challenged expenditures to date. Integra’s FTS have been measured using the residual method. Under this method, the proceeds from issuance have been allocated between the offering of shares and the sale of tax benefits based on the difference between the quoted price of non-flow through shares and the amount the investor pays for the flow through shares. A liability was recognized for this difference as the entity has an obligation to pass the tax deductions to the investor. As Integra fulfills its obligation, the sale of tax deductions has been recognized in the income statement as other income and the liability derecognized. Integra’s flow-through share premium liability as at December 31, 2017 amounts to $nil, as compared to $4.7 million at the acquisition date.

A preliminary allocation of the purchase price, which is subject to final adjustments, is as follows:

 

77,180,898 common shares of shares of Eldorado at C$3.14/share

     $ 188,061   

Cash consideration including advances

     126,869   

Fair value of existing available-for-sale investment in Integra by Eldorado

     41,968   

Total Consideration

     $ 356,898   

Net assets acquired:

  

Cash and cash equivalents

     $ 5,205   

Marketable securities

     2,857   

Accounts receivable and other

     5,920   

Inventories

     2,471   

Other assets

     3,495   

Property, plant and equipment

     393,647   

Goodwill

     92,591   

Accounts payable and accrued liabilities

     (8,028)  

Flow-through share premium liability

     (4,722)  

Other liabilities

     (9,635)  

Deferred income taxes

     (126,903)  
     $             356,898   

For the purpose of these consolidated financial statements, the purchase consideration has been allocated on a preliminary basis to the fair value of assets acquired and liabilities assumed based on management’s best estimates taking into account all available information at the time of acquisition as well as applicable information at the time these consolidated financial statements were prepared. The Company is in the process of preparing a more detailed assessment of Integra’s asset retirement obligation and will continue to review information and perform further analysis with respect to these assets, prior to finalizing the allocation of the purchase price.

Acquisition related costs of $4,270 have been charged to acquisition costs in the consolidated income statement for the year ended December 31, 2017.

These consolidated financial statements include Integra’s results from July 10, 2017 to December 31, 2017. The net loss before tax included in the consolidated income statement since July 10, 2017 contributed by Integra is $5,997. Had Integra been consolidated from January 1, 2017, the consolidated income statement would include a net loss before tax of $18,173 from Integra.

b)    Sale of China Business

On April 26, 2016, the Company announced that it had reached an agreement to sell its 82 percent interest in Jinfeng to a wholly-owned subsidiary of China National Gold Group for $300 million in cash, subject to certain closing adjustments. The sale was completed on September 6, 2016. In addition to the sale of Jinfeng, on May 16, 2016 Eldorado announced it had reached an agreement to sell its respective interest in White Mountain, Tanjianshan and Eastern Dragon to an affiliate of Yintai Resources Co. Ltd. (“Yintai”) for $600 million in cash, subject to certain closing adjustments. The sale was completed on November 22, 2016.

The Company concluded that during the second quarter of 2016, the assets and liabilities of the China Business met the criteria for classification as held for sale as settlement was expected within twelve months. Accordingly, an initial post-tax loss of $339 million was recognized in the second quarter of 2016 on re-measurement to fair value less costs of disposal of our China Business. For the year ended December 31, 2016, a net loss on sale of assets held for sale of $351.0 million was recorded in net loss from discontinued operations as a result of completing both sale transactions.

During the year ended December 31, 2017, the Company recorded an expense of $2.8 million for working capital adjustments related to the Yintai sale based on the agreement that was reached with Yintai during the year. This amount was paid to Yintai in the month of June of this year and is included as discontinued operations in the consolidated income statement.

The China Business net earnings to date of disposition were included in the Company’s consolidated results for the year ended December 31, 2016. These results have been presented as discontinued operations within the consolidated income statements and the consolidated statements of cash flows. The profit (loss) from discontinued operations for the year ended December 31, 2016 is as follows:

 

For the year ended December 31    2016      
    

 

$

   

Revenue

     217,511    

Production costs

     144,590    

Depreciation and amortization

     19,067    

 

Gross profit

     53,854    

Exploration expenses

     1,257    

General and administrative expenses

     20,999    

Foreign exchange loss

     306    

 

Operating profit

     31,292    

Interest and financing costs

     169    

Asset retirement obligation accretion

     356    

Other expense

     2,713    

 

Profit from discontinued operations before income tax

     28,054    

Income tax expense

     16,189    

 

Profit (loss) from discontinued operations

     11,865    

Loss on sale of assets held for sale

             351,234    

 

Net loss from discontinued operations

     (339,369  
v3.8.0.1
Cash and cash equivalents
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Cash and cash equivalents
6. Cash and cash equivalents

 

    

      December 31, 2017

$

    

    December 31, 2016

$

 

Cash at bank and on hand

     293,437        282,021  

Short-term bank deposits

     186,064        601,150   
     479,501        883,171  
v3.8.0.1
Accounts receivable and other
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Accounts receivable and other
7. Accounts receivable and other

 

    

      December 31, 2017

$

    

    December 31, 2016

$

 

Trade receivables

     7,746        11,053  

Value added and other taxes recoverable

     44,717        22,156  

Other receivables and advances

     7,134        8,208   

Prepaid expenses and deposits

     18,747        12,898  
     78,344        54,315  
v3.8.0.1
Inventories
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Inventories
8. Inventories

 

    

      December 31, 2017

$

    

    December 31, 2016

$

 

Ore stockpiles

     3,297        2,715  

In-process inventory and finished goods

     96,651        50,195  

Materials and supplies

     68,896        67,920   
     168,844        120,830  

The cost of materials and supplies consumed during the year and included in production costs amounted to $120,422 (2016 – $103,073).

Inventory write downs related to zinc inventory amounting to $444 (2016 – $nil) were recognized during the year.

v3.8.0.1
Investment in subsidiaries
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Investment in subsidiaries
9. Investment in subsidiaries

The following table summarizes the information relating to each of the Company’s subsidiaries that has material non-controlling interests (“NCI”). The amounts disclosed for each subsidiary are based on those included in the consolidated financial statements before inter-company eliminations.

December 31, 2017    Hellas      Deva       
     $      $     

NCI percentage

     5%        19.5%     

 

Current assets

     72,454        4,958     

Non-current assets

     2,143,089        413,989     

Current liabilities

         (1,113,471)            (234,386)     

Non-current liabilities

     (291,447)        (43,623)     

Net assets

     810,625        140,938     

Carrying amount of NCI

     31,732        46,919     

Revenue

     51,152        -     

Net loss

     (62,365)        (42,632)     

Total comprehensive loss

     (62,365)        (42,632)     

Loss allocated to NCI

     (3,118)        (8,314)     

 

Dividends paid to NCI

     -        -     

 

Cash flows from operating activities

     (9,253)        (51,328)     

Cash flows from investing activities

     (181,116)        (2,007)     

Cash flows from financing activities

     172,431        53,007     

Net decrease in cash and cash equivalents

     (17,938)        (328)     
December 31, 2016    Hellas      Deva       
     $      $       

NCI percentage

     5%        19.5%     

 

Current assets

     80,251        4,613     

Non-current assets

     1,978,622        412,082     

Current liabilities

     (950,131)        (189,548)     

Non-current liabilities

     (298,488)        (43,577)     

Net assets

     810,254        183,570     

Carrying amount of NCI

     33,553        55,233     

 

Revenue

     40,631        -     

Net loss

     (67,712)        (5,553)     

Total comprehensive loss

     (67,712)        (5,553)     

Loss allocated to NCI

     (3,386)        (1,289)     

 

Dividends paid to NCI

     -        -     

 

Cash flows from operating activities

     (52,588)        (6,037)     

Cash flows from investing activities

     (208,031)        (15,952)     

Cash flows from financing activities

     288,982        22,799     

Net increase in cash and cash equivalents

     28,363        810     

Profit/loss allocated to NCI in the consolidated income statement includes $21 related to non-material subsidiaries (2016 – $1,950, including NCI in discontinued operations).

v3.8.0.1
Other assets
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Other assets
10. Other assets

 

    

  December 31, 2017

$

    

  December 31, 2016

$

 

Restricted credit card deposits

     43        38  

Prepaid loan costs (note 14(a))

     1,272        1,772  

Restricted cash

     9,743        -  

Environmental guarantee deposits

     2,831        -  

Prepaid forestry fees

     3,628        -  

Long-term value added and other taxes recoverable

     5,385        46,487  
     22,902        48,297   

Restricted cash is held on account with HSBC Canada to support a Letter of Guarantee issued in Canada and counter-guaranteed by HSBC Athens (note 15b). The Letter of Guarantee was issued pursuant to the request from the Ministry of Environment and Energy in Greece to support the operation and restoration of the Kokkinolakkas Tailings Management Facility. The funds are invested at prevailing bank rates and interest is accrued monthly. Interest is paid directly to the account with the total balance being recorded as restricted cash. The account allows for any excess, above the notional principal of the Letter of Guarantee, to be remitted back to the Company.

v3.8.0.1
Property, plant and equipment
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Property, plant and equipment
11. Property, plant and equipment

 

    

    Land and

buildings

    

Plant and

      equipment

    

  Capital works

in progress

    

  Mineral properties

and leases

    

        Capitalized

Evaluation

     Total  
     $      $      $      $      $      $  
Cost                  
Balance at January 1, 2016      406,891        1,732,066        164,392        4,776,549        71,020        7,150,918  
Additions/transfers      24,121        62,050        2,577        235,756        6,475        330,979  
Sale of China Business      (266,878)        (376,571)        (24,712)        (1,132,900)        -        (1,801,061)  
Proceeds on production of tailings retreatment      -        -        -        (3,708)        -        (3,708)  
Other movements      1,084        2,088        (335)        6,457        -        9,294  
Disposals      (678)        (2,685)        -        (4,681)        -        (8,044)  
Balance at December 31, 2016      164,540        1,416,948        141,922        3,877,473        77,495        5,678,378  
Balance at January 1, 2017      164,540        1,416,948        141,922        3,877,473        77,495        5,678,378  
Additions/transfers      12,322        115,684        (42,933)        254,481        9,536        349,090  
Aquisition of Integra      4,820        3,646        -        385,181        -        393,647  
Proceeds on pre-commercial production and tailings retreatment      -        -        -        (38,200)        -        (38,200)  
Other movements      4,251        (2,325)        (12,336)        7,832        -        (2,578)  
Disposals      (10)        (2,313)        (29,832)        (1,168)        -        (33,323)  
Balance at December 31, 2017      185,923        1,531,640        56,821        4,485,599        87,031        6,347,014  
Depreciation and impairment losses                  
Balance at January 1, 2016      (131,905)        (820,973)        (4,733)        (1,445,548)        -        (2,403,159)  
Depreciation for the year      (12,000)        (78,847)        -        (8,820)        -        (99,667)  
Other movements      (274)        (1,198)        -        (1,897)        -        (3,369)  
Sale of China Business      105,536        193,106        -        173,010        -        471,652  
Disposals      8        1,271        -        713        -        1,992  
Balance at December 31, 2016      (38,635)        (706,641)        (4,733)        (1,282,542)        -        (2,032,551)  
Balance at January 1, 2017      (38,635)        (706,641)        (4,733)        (1,282,542)        -        (2,032,551)  
Depreciation for the year      (4,245)        (79,044)        -        (2,948)        -        (86,237)  
Other movements      (546)        (2,048)        -        80        -        (2,514)  
Disposals      -        1,683        -        2        -        1,685  
Balance at December 31, 2017      (43,426)        (786,050)        (4,733)        (1,285,408)        -        (2,119,617)  
Carrying amounts                  
At January 1, 2016      274,986        911,093        159,659        3,331,001        71,020        4,747,759  

At December 31, 2016

     125,905        710,307        137,189        2,594,931        77,495        3,645,827  
Balance at December 31, 2017      142,497        745,590        52,088        3,200,191        87,031        4,227,397  

The amount of capitalized interest during the year ended December 31, 2017 included in property, plant and equipment was $36,750 ($2016 – $31,680).

On December 31, 2017, the Company’s Olympias mine achieved commercial production. As a result, revenues from commercial production from Olympias mine will be reflected on our consolidated income statement.

Write-down of assets of $46.7 million includes $29.8 million of equipment that was sold or written down to its estimated recoverable amounts during the year ended December 31, 2017 as part of a review of the estimated useful lives and recoverable amounts of certain surplus equipment and is presented in disposal in the table above. Write-down of assets also includes $16.7 million of costs incurred during the year on assets that have been previously impaired.

In accordance with the Company’s accounting policies each CGU is assessed for indicators of impairment, from both external and internal sources, at the end of each reporting period, which may suggest that the carrying values of its assets are impaired for accounting purposes. If such indicators of impairment exist for any or all CGUs, those CGUs are tested for impairment.

The Company considered that the carrying amount of its net assets being higher than market capitalization of the Company at December 31, 2017 was an indicator of impairment. The Company determined that the indicator related to the Kisladag and Olympias mines and the Skouries development project. In accordance with the Company’s accounting policy, the Company completed analyses of the recoverable amounts of these cash generating units (“CGU’s”) versus their respective carrying values. Management determined that the recoverable amount exceeded the carrying value for each CGU where impairment test were performed and accordingly no impairments were required. Determining the estimated fair values of each CGU required management to make estimates and assumptions with respect to discount rates, future production levels including recovery rates and concentrate grades, operating and capital costs, long term metal prices and income taxes. Changes in any of the assumptions or estimates used in determining the fair values could impact the impairment analysis.

The key assumptions used for assessing the recoverable amount of the Company’s CGUs versus their carrying values are as follows:

 

Gold price ($/oz)

     $1,300     

Silver price ($/oz)

     $18     

Lead price ($/lb)

     $1.09     

Zinc price ($/lb)

     $1.27     

Copper price ($/lb)

     $2.80     

Discount rate

     5 - 8%     

 

v3.8.0.1
Goodwill
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Goodwill
12. Goodwill

 

                     2017                      2016       
     $      $       

Cost

        

Balance at January 1,

     -        50,276     

Acquired during the year

     92,591        -     

Disposal due to sale

     -        (50,276)     

Balance at December 31,

     92,591        -     

As a result of the preliminary purchase price allocation for the Integra acquisition, the Company recognized goodwill of $92,591 during the year (note 5a). The Company will continue to review information and perform further analysis with respect to these assets, prior to finalizing the allocation of the purchase price.

There has been no goodwill impairment recorded for the years ended December 31, 2017 and 2016.

Impairment tests for goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may not be recoverable. Impairment is determined for goodwill by assessing the recoverable amount of each CGU or group of CGUs to which the goodwill relates. Where the recoverable amount of the CGU is less than its carrying amount including goodwill, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. As of December 31, 2017 all goodwill relates to Integra.

The key assumptions used for assessing the recoverable amount of goodwill in Integra are as follows:

 

Gold price ($/oz)

     $1,300     

Silver price ($/oz)

     $16 - $18     

Discount rate

     7%     

The values assigned to the key assumptions represented management’s assessment of future trends in the gold mining industry and in the global economic environment. The assumptions used were management’s best estimates and were based on both current and historical information from external and internal sources.

v3.8.0.1
Accounts payable and accrued liabilities
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Accounts payable and accrued liabilities
13. Accounts payable and accrued liabilities

 

    

December 31, 2017

$

    

December 31, 2016

$

 

Trade payables

     60,081        43,712  

Taxes payable

     213        243  

Accrued expenses

     50,357        46,750    
     110,651        90,705  
v3.8.0.1
Debt
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Debt
14. Debt

(a) Revolving credit facility

In November 2012, the Company entered into a $375.0 million credit facility with a syndicate of banks. This credit facility was amended and restated in June 2016 (“the amended and restated credit agreement” or “ARCA”) and reduced to an available credit of $250 million with the option to increase by an additional $100 million through an accordion feature. The maturity date is June 13, 2020. The ARCA is secured by the shares of SG Resources and Tuprag, wholly owned subsidiaries of the Company.

The ARCA contains covenants that restrict, among other things, the ability of the Company to incur aggregate unsecured indebtedness exceeding $850 million, incur secured indebtedness exceeding $200 million and permitted unsecured indebtedness exceeding $150 million. The ARCA also contains restrictions for making distributions in certain circumstances, selling material assets and conducting business other than that which relates to the mining industry. Significant financial covenants include a maximum Net Debt to Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of 3.5:1 and a minimum EBITDA to Interest of 3:1. The Company is in compliance with these covenants at December 31, 2017.

Loan interest is variable dependent on a Net Leverage ratio pricing grid. The Company’s current net leverage ratio is approximately 0.9:1. At this ratio, interest charges and fees are as follows: LIBOR plus margin of 2.0% and undrawn standby fee of 0.50%. Fees of $2,031 were paid on the amendment dated June 2016. This amount has been deferred as pre-payment for liquidity services and is being amortized to financing costs over the term of the credit facility. As at December 31, 2017, the prepaid loan cost on the balance sheet was $1,272 (2016 - $1,772).

No amounts were drawn down under the ARCA as at December 31, 2017 (2016 – nil).

(b) Senior notes

On December 10, 2012, the Company completed an offering of $600.0 million senior notes (“the notes”) at par value, with a coupon rate of 6.125% due December 15, 2020. The notes pay interest semi-annually on June 15 and December 15. The Company received proceeds of $589.5 million from the offering, which is net of the commission payment. The notes are redeemable by the Company in whole or in part, for cash:

 

  i) At any time prior to December 15, 2016 at a redemption price equal to 100% of the aggregate principal amount of the notes at the treasury yield plus 50 basis points, and any accrued and unpaid interest;

 

  ii) On and after the dates provided below, at the redemption prices, expressed as a percentage of principal amount of the notes to be redeemed, set forth below, plus accrued and unpaid interest on the notes:

 

December 15, 2017

     101.531%     

2018 and thereafter

     100.000%     

The early prepayment prices are to reimburse the lender for lost interest for the remaining term. The fair market value of the notes as at December 31, 2017 is $596 million.

Net deferred financing costs of $6,217 (2016 - $8,411) have been included as an offset in the balance of the notes in the financial statements and are being amortized over the term of the notes.

v3.8.0.1
Asset retirement obligations
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Asset retirement obligations
15. Asset retirement obligations

 

             Greece             Brazil             Turkey             Romania              Canada              Total  
     $     $     $     $      $      $  

At January 1, 2017

     48,131       4,092       36,196       1,359        -        89,778  

Acquired during the year

     -       -       -       -        9,453        9,453  

Accretion during the year

     1,025       32       913       36        -        2,006  

Revisions to estimate of obligation

     1,112       (80     502       10        -        1,544  

Settlements

     (2,807     -       (290     -        -        (3,097

At December 31, 2017

     47,461       4,044       37,321       1,405        9,453        99,684  

Less: Current portion

     (3,489     -       -       -        -        (3,489

Long term portion

     43,972       4,044       37,321       1,405        9,453        96,195  

Estimated undiscounted amount

     71,591       4,117       49,257       2,340        12,286        139,591  

The Company’s asset retirement obligations relate to the restoration and rehabilitation of the Company’s mining operations and projects under development. The expected timing of the cash flows in respect of the provision is based on the estimated life of the various mining operations. The increase in the estimate of the obligation in 2017 was mainly due to the acquisition of Integra.

 

The provision is calculated as the present value of estimated future net cash outflows based on the following key assumptions:

 

     Greece      Brazil      Turkey      Romania      Canada  
     %      %      %      %      %  

At December 31, 2016

              

Inflation rate

     2.0 to 2.4        2.0 to 2.4        2.0 to 2.4        2.0 to 2.4        -  

Discount rate

     1.5 to 3.0        0.8        2.3 to 2.5        2.7        -  

At December 31, 2017

              

Inflation rate

         2.0 to 2.2            2.0 to 2.2            2.0 to 2.2            2.0 to 2.2            2.0 to 2.2  

Discount rate

     1.5 to 3.0        1.8        2.3 to 2.5        2.7        2.3 to 2.5  

The discount rate is a risk-free rate determined based on U.S. Treasury bond rates. U.S. Treasury bond rates have been used for all of the mine sites as the liabilities are denominated in U.S. dollars and the majority of the expenditures are expected to be incurred in U.S. dollars. Similarly, the inflation rates used in determining the present value of the future net cash outflows are based on U.S inflation rates.

Environmental guarantee deposits exist with respect to the environmental rehabilitation of the Lamaque project (note 10).

Additionally, the Company has the following:

a) a €50.0 million Letter of Guarantee to the Greek Ministry of Environment, Energy and Climate Change as security for the due and proper performance of rehabilitation works committed in relation to the mining and metallurgical facilities of the Kassandra Mines (Stratoni, Olympias and Skouries) and the removal, cleaning and rehabilitation of the old Olympias tailings. This Letter of Guarantee is renewed annually, expires on July 26, 2026 and has an annual fee of 57 basis points.

b) a €7.5 million Letter of Guarantee to the Greek Ministry of Environment and Energy for the due and proper performance of the Kokinolakas Tailings Management Facility, committed in connection with the Environmental Impact Assessment approved for the Kassandra Mines (Stratoni, Olympias and Skouries). The Letter of Guarantee is renewed annually and expires on July 26, 2026. The Letter of Guarantee has an annual fee of 45 basis points.

v3.8.0.1
Defined benefit plans
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Defined benefit plans
16. Defined benefit plans

 

         December 31, 2017          December 31, 2016  
     $      $  

Balance sheet obligations (asset) for:

     

Pension Plan

     13,599        10,882  

Supplemental Pension Plan

     (9,919)        (11,620)  
     December 31, 2017      December 31, 2016  
     $      $  

Income statement charge for:

     

Pension plan

     2,841        4,409  

Supplemental Pension Plan

     610        1,193  
     3,451        5,602  

Actuarial losses (gains) recognised in the statement of other comprehensive income in the period (before tax)

     3,121        1,188  

Cumulative actuarial losses recognised in the statement of other comprehensive income (before tax)

     18,641        15,520    

The Company operates defined benefit pension plans in Canada with two components: a registered pension plan (“the Pension Plan”) and a supplemental pension plan (“the SERP”). During the second quarter of 2012, the SERP was converted into a Retirement Compensation Arrangement (“RCA”), a trust account. As it is a trust account, the assets in the account are protected from the Company’s creditors. The RCA requires the Company to remit 50% of any contributions and any realized investment gains to the Receiver General of Canada as refundable tax.

These plans, which are only available to certain qualifying employees, provide benefits based on an employee’s years of service and final average earnings at retirement. Annual contributions related to these plans are actuarially determined and made at or in excess of minimum requirements prescribed by legislation.

Eldorado’s plans have actuarial valuations performed for funding purposes. The last actuarial valuations for funding purposes performed for the Pension Plan and the SERP are as of January 1, 2017 and the next valuation will be prepared in accordance with the funding policy as of January 1, 2018. The measurement date to determine the pension obligation and assets for accounting purposes was December 31, 2017.

The SERP is designed to provide supplementary pension benefits to qualifying employees affected by the maximum pension limits under the Income Tax Act pursuant to the registered Pension Plan. Further, the Company is not required to pre-fund any benefit obligation under the SERP.

Total cash payments

The amount contributed to the Pension Plan and the SERP was $1,415 (2016 – $1,728). Cash payments totalling $1,542 were made directly to beneficiaries during the year (2016 – $471). The expected contributions to the Pension Plan is $67 and $510 to the SERP in 2018.

Subsidiaries pension plan

According to the Greek and Turkish labour laws, employees are entitled to compensation in case of dismissal or retirement, the amount of which varies depending on salary, years of service and the manner of termination (dismissal or retirement). Employees who resign or are dismissed with cause are not entitled to compensation. The Company considers this a defined benefit obligation. Amounts relating to these pension plans have been included in the tables in this note under “Pension Plan” when applicable.

 

The amounts recognised in the balance sheet for all pension plans are determined as follows:

 

     December 31, 2017             December 31, 2016         
     Pension Plan      SERP      Total      Pension Plan      SERP      Total  
     $      $      $      $      $      $  

Present value of obligations

     16,028        43,956        59,984        12,936        37,686        50,622  

Fair value of plan assets

     (2,429)        (53,875)        (56,304)        (2,054)        (49,306)        (51,360)  

Liability (asset) on balance sheet

     13,599        (9,919)        3,680        10,882        (11,620)        (738)  

The movement in the defined benefit obligation over the year is as follows:

 

     2017                     2016                 
     Pension Plan      SERP      Total      Pension Plan      SERP      Total   
     $      $      $      $      $       

Balance at January 1,

     12,936        37,686        50,622        8,688        31,565        40,253  

Current service cost

     2,102        877        2,979        520        1,483        2,003  

Past service cost

     206        208        414        3,494        193        3,687  

Interest cost

     620        1,508        2,128        476        1,340        1,816  

Actuarial loss (gain)

     292        2,390        2,682        445        1,939        2,384  

Benefit payments

     (1,060      (1,485      (2,545      (26      (445      (471

Exchange (gain) loss

     932        2,772        3,704        (661      1,611        950  

Balance at December 31,

     16,028        43,956        59,984        12,936        37,686        50,622  

The movement in the fair value of plan assets of the year is as follows:

 

     2017                     2016                 
     Pension Plan      SERP      Total      Pension Plan      SERP      Total  
     $      $      $      $      $      $  

At January 1,

     2,054        49,306        51,360        1,968        43,016        44,984  

Interest income on plan assets

     86        1,983        2,069        81        1,823        1,904  

Actuarial gain (loss)

     (55)        (384)        (439)        (32)        (1,164)        (1,196)  

Contributions by employer

     219        1,196        1,415        -        1,728        1,728  

Benefit payments

     (57)        (1,485)        (1,542)        (26)        (445)        (471)  

Exchange gain

     182        3,259        3,441        63        4,348        4,411  

At December 31,

     2,429        53,875        56,304        2,054        49,306        51,360  

The amounts recognised in the income statement are as follows:

 

     2017                     2016                 
     Pension Plan      SERP      Total      Pension Plan      SERP      Total  
     $      $      $      $      $      $  

Current service cost

     2,102        877        2,979        520        1,483        2,003  

Interest cost

     620        1,508        2,128        476        1,340        1,816  

Past Service Cost

     206        208        414        3,494        193        3,687  

Expected return on plan assets

     (87      (1,983      (2,070      (81      (1,823      (1,904

Defined benefit plans expense

     2,841        610        3,451        4,409        1,193        5,602  

The actual return on plan assets was $1,416 (2016 – $3,801).

The principal actuarial assumptions used were as follows:

 

     2017      2016  
     Pension Plan      SERP      Pension Plan      SERP  
     Greece      Turkey      Canada      Canada      Greece      Turkey      Canada         
     %      %      %      %      %      %      %      %  
Expected return on plan assets      -        -        3.9        3.9        -        -        3.9        3.9  
Discount rate - beginning of year      1.6        10.5        3.9        3.9        2.0        10.5        4.0        4.0  
Discount rate - end of year      1.7        11.0        3.4        3.4        1.6        10.5        3.9        3.9  
Rate of salary escalation      2.8        6.5        2.0        2.0        2.8        6.0        2.0        2.0  
Average remaining service period of active employees expected to receive benefits      -        -        8.2 years        8.2 years        -        -        7.1 years        7.1 years  

The assumption used to determine the interest income on plan assets is equal to the discount rate, as per IAS 19 ‘Employee benefits’.

Plan Assets

The assets of the Pension Plan and the amounts deposited in the SERP account are managed by a major investment management company and are invested only in conformity with the investment requirements of applicable pension laws.

The following table summarizes the defined benefit plans’ weighted average asset allocation percentages by asset category:

 

     December 31, 2017     December 31, 2016      
     Pension Plan     SERP     Pension Plan     SERP                 

Investment funds

          

Money market

     0     6     2     3  

Canadian fixed income

     100     2     98     4  

Canadian equities

         20         21  

US equities

         19         20  

International equities

         7         8  

Other (1)

         46         44  

Total

                         100                         100                         100                         100  

1 Assets held by the Canada Revenue Agency in the refundable tax account

The sensitivity of the overall pension obligation to changes in the weighted principal assumptions is:

 

     Change in assumption    Impact on overall obligation                

Discount rate

  

Increase by 0.5%

  

Decrease by $2,855

  
  

Decrease by 0.5%

  

Increase by $3,157

  

Salary escalation rate

  

Increase by 0.5%

  

Increase by $8

  
  

Decrease by 0.5%

  

decrease by $14

  
v3.8.0.1
Income tax expense and deferred taxes
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Income tax expense and deferred taxes
17. Income tax expense and deferred taxes

Total income tax expense (recovery) consists of:

 

     December 31, 2017      December 31, 2016  
     $      $  

Current tax expense

     39,232        47,166  

Deferred tax expense (recovery)

     (19,849)        9,039  
     19,383        56,205  

Total income tax expense (recovery) attributable to geographical jurisdiction is as follows:

 

     2017      2016  
     $      $  

Turkey

     30,139        64,343  

Greece

     (4,598)        (1,355)  

Brazil

     (1,087)        (4,385)  

Canada

     2,960        (1,428)  

Romania

     (8,026)        (1,053)  

Other jurisdictions

     (5)        83  
                     19,383                        56,205  

Factors affecting income tax expense (recovery) for the year:

 

     2017      2016  
     $      $  

Profit from continuing operations before income tax

     792        48,698  

Canadian statutory tax rate

     26%        26%  

Tax expense on net income at Canadian statutory tax rate

     206        12,662  

Items that cause an increase (decrease) in income tax expense:

     

Foreign income subject to different income tax rates than Canada

     (11,792)        (15,695)  

Non-tax effected operating losses

     9,691        19,198  

Non-deductible expenses and other items

     10,002        10,525  

Foreign exchange and other translation adjustments

     6,289        16,048  

Amounts under (over) provided in prior years

     (84)        453  

Investment tax credits

     (226)        (269)  

Withholding tax on foreign income

     5,297        13,283  

Income tax expense

                     19,383                        56,205  

The change for the year in the Company’s net deferred tax position was as follows:

 

     2017      2016  
Net deferred tax asset (liability)    $      $  

Balance at January 1,

     (443,501)        (607,871)  

Deferred income tax (expense) recovery related to discontinued operations

     -        174,837  

Deferred income tax liability related to Integra acquisition

     (126,903)        -  

Deferred income tax (expense) recovery in the income statement

     19,849        (9,039)  

Deferred tax recovery (expense) in other comprehensive income

     1,428        (1,428)  

Net balance at December 31,

     (549,127)        (443,501)  

The composition of the Company’s net deferred income tax asset and liability and deferred tax expense is as follows:

 

                                 Expense (recovery)  
Type of temporary difference    Deferred tax assets      Deferred tax liabilities      on the income statement  
     2017      2016      2017      2016      2017      2016  
     $      $      $      $      $      $  

Property, plant and equipment

     -        -        592,062        482,530        (33,466      11,200  

Loss carryforwards

     31,457        15,436        -        -        (4,641      (1,603

Liabilities

     24,690        20,864        -        -        (80      (3,496

Investment tax credits

     -        -        -        -        -        5,665  

Other items

     1,997        13,995        15,208        11,266        18,338        (2,727

Balance at December 31,

     58,144        50,295        607,270        493,796        (19,849      9,039  

 

Unrecognized deferred tax assets    2017      2016       
     $      $       

Tax losses

     167,030        164,100     

Other deductible temporary differences

     11,253        9,968     

Total unrecognized deferred tax assets

                     178,283                        174,068     

 

Unrecognized tax losses

At December 31, 2017 the Company had losses with a tax benefit of $167,030 (2016 – $164,100) which are not recognized as deferred tax assets. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable income that can be reduced by the tax losses. The gross amount of the tax losses for which a tax benefit has not been recorded expire as follows:

 

Expiry date                Canada                  Brazil                  Greece                      Total       
         $      $      $      $       

2018

       -        -        10,880        10,880     

2019

       -        -        28,934        28,934     

2020

       -        -        26,420        26,420     

2021

       -        -        16,058        16,058     

2022

       -        -        10,638        10,638     

2025

       7,858        -        -        7,858     

2026

       14,839        -        -        14,839     

2027

       10,703        -        -        10,703     

2028

       25,959        -        -        25,959     

2029

       23,444        -        -        23,444     

2030

       7,285        -        -        7,285     

2031

       45,351        -        -        45,351     

2032

       74,871        -        -        74,871     

2033

       64,883        -        -        64,883     

2034

       58,689        -        -        58,689     

2035

       55,266        -        -        55,266     

2036

       50,503        -        -        50,503     

2037

       43,180        -        -        43,180     

No Expiry

     -        33,378        -        33,378     
     482,831        33,378        92,930        609,139     

Capital losses with no expiry

     65,812        -        -        65,812     

Tax effect of total losses not recognized

     134,289        5,791        26,950        167,030     

Deductible temporary differences

At December 31, 2017 the Company had deductible temporary differences for which deferred tax assets of $11,253 (2016 – $9,968) have not been recognized because it is not probable that future taxable profits will be available against which the Company can utilize the benefits. The vast majority of these temporary benefits have no expiry date.

Temporary differences associated with investments in subsidiaries

The Company has not recognized deferred tax liabilities in respect of historical unremitted earnings of foreign subsidiaries for which we are able to control the timing of the remittance and are considered reinvested for the foreseeable future. At December 31, 2017, these earnings amount to $788,137 (2016 – $782,803). Substantially all of these earnings would be subject to withholding taxes if they were remitted by the foreign subsidiaries.

Other factors affecting taxation

During the year the Turkish Lira has weakened, causing a deferred income tax expense during the year of $6,530 due to the decrease in the value of the future tax deductions associated with the Turkish operations. The Company expects that in the future significant foreign exchange movements in the Turkish Lira, Euro or Brazilian Real in relation to the U.S. dollar will cause significant volatility in the deferred income tax expense or recovery.

v3.8.0.1
Share capital
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Share capital
18. Share capital

Eldorado’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 December 31, 2017 there were no non-voting common shares outstanding (December 31, 2016 – nil).

 

Voting common shares   

Number of

Shares

    

Total

$

 

At January 1, 2016

     716,587,134        5,319,101  

Capital Reduction

     -        (2,500,000

At December 31, 2016

     716,587,134        2,819,101  

Shares issued upon exercise of share options, for cash

     242,648        586  

Estimated fair value of share options exercised

     -        176  

Shares issued for acquisition of Integra

     77,180,898        188,061  

At December 31, 2017

     794,010,680        3,007,924  
v3.8.0.1
Share-based payments
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Share-based payments
19. Share-based payments

(a) Share option plans

The Company has two share option plans (the “Plans”) approved, as amended and restated, by the shareholders from time to time and most recently on May 1, 2014 under which share purchase options (“Options”) can be granted to directors, officers, employees and consultants.

The Company’s Incentive Stock Option Plan - Employees, Consultants and Advisors (the “Employee Plan”) consists of options (the “Employee Plan Options”) which are subject to a 5-year maximum term and payable in shares of the Company when vested and exercised. The Employee Plan prohibits the re-pricing of Employee Options without shareholder approval. Employee Plan Options vest at the discretion of the Board of Directors at the time an Employee Option is granted. Generally, Employee Plan Options granted before November 1, 2015 vest in three equal and separate tranches with the first tranche vesting on the grant date and the second and third tranches vesting on the second and third anniversary dates of the grant date. Employee Plan Options granted on or after November 1, 2015 vest in three equal and separate tranches with vesting commencing one year after the date of grant and the second and third tranches vesting on the second and third anniversary of the grant date. Employee Plan Options are subject to withholding tax on exercise, withholding tax is paid by the Employee Option holder to the Company prior to receipt of the shares received pursuant to exercise.

The Company is responsible for remittance of the withholding tax to the appropriate tax authority. As at December 31, 2017, a total of 14,155,248 options (2016 – 14,701,541) were available to grant under the Employee Plan.

The Company’s Incentive Stock Option Plan - Officers and Directors Plan (“D&O Plan”) consists of options (the “D&O Options”) which are subject to a 5-year maximum term and payable in shares of the Company when vested and exercised. The D&O Plan prohibits the re-pricing of D&O Options without shareholder approval. D&O Plan Options vest at the discretion of the Board of Directors at the time a D&O Option is granted. Generally, D&O Plan Options granted before November 1, 2015 vest in three equal and separate tranches with the first tranche vesting on the grant date and the second and third tranches vesting on the second and third anniversary dates of the grant date. D&O Plan Options granted on or after November 1, 2015 vest in three equal and separate tranches with vesting commencing one year after the date of grant and the second and third tranches vesting on the second and third anniversary of the grant date.

D&O Options are subject to withholding tax on exercise, withholding tax is paid by the D&O Option holder to the Company prior to receipt of the shares received pursuant to exercise. The Company is responsible for remittance of the withholding tax to the appropriate tax authority. As at December 31, 2017, a total of 3,720,125 Options (2016 – 4,243,018) were available to grant under the D&O Plan.

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 

     2017      2016  
     Weighted
average
exercise price
Cdn$
    

Number of

options

     Weighted
average
exercise price
Cdn$
    

Number of

options

 

At January 1,

     7.55        28,896,035        9.97        25,519,434  

Regular options granted

     4.43        5,804,535        3.24        9,101,164  

Exercised

     3.22        (242,648)        -        -  

Forfeited

     13.44        (4,735,349)        11.49        (5,724,563)  

At December 31,

     6.04        29,722,573        7.55        28,896,035  

At December 31, 2017, 18,583,426 share purchase options (December 31, 2016 – 18,164,617) with a weighted average exercise price of Cdn$7.34 (December 31, 2016 – Cdn$9.64) had vested and were exercisable. Options outstanding are as follows:

 

      December 31, 2017  
      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$  

 
  $3.00 to $3.99       7,835,899         3.1        3.23       2,514,519           3.25    
  $4.00 to $4.99       5,842,935         4.1        4.43       33,333           4.23    
  $5.00 to $5.99       12,247         3.4        5.91       4,082           5.91    
  $6.00 to $6.99       6,916,166         2.1        6.66       6,916,166           6.66    
  $7.00 to $7.99       4,903,752         1.1        7.81       4,903,752           7.81    
  $8.00 to $8.99       45,405         0.3        8.19       45,405           8.19    
  $10.00 to $10.99       4,166,169         0.2        10.42       4,166,169           10.42    
 

 

 

       

 

 

   
          29,722,573         2.3        6.04                 18,583,426           7.34    
 

 

 

       

 

 

   

Share based payments expense related to share options for the year ended December 31, 2017 was $6,736 (2016 – $6,812).

The assumptions used to estimate the fair value of options granted during the years ended December 31, 2017 and 2016 were:

 

     2017          2016      

Risk-free interest rate (range) (%)

     0.70 – 1.05        0.43  

Expected volatility (range) (%)

     60 – 65        55 – 63  

Expected life (range) (years)

     1.80 – 3.80                    1.82 – 3.82  

Expected dividends (CDN$)

     0.02        0.02  

Forfeiture rate (%)

     11.0        11.0  

The weighted average fair value per stock option was Cdn$1.53 (2016 – Cdn$1.02). Volatility was determined based on the historical volatility over the estimated lives of the options.

(b) Restricted share unit plan

The Company has a Restricted Share Unit plan (“RSU Plan”) whereby restricted share units may be granted to senior management of the Company. Once vested, an RSU is exercisable into one common share entitling the holder to receive the common share for no additional consideration. The RSUs vest as follows: one third on the first anniversary of the grant date, one third on the second anniversary of the grant date and one third on the third anniversary of the grant date. RSUs terminate on the third anniversary of the grant date. All RSUs which have not been redeemed by the date of termination are automatically redeemed. Such RSUs may be redeemed in shares or cash, cash redemptions are subject to the approval of the Board. RSU redemptions are subject to withholding tax, withholding tax is paid by the RSU holder to the Company prior to receipt of the resultant shares or cash. Cash settlements are issued net of withholding tax. The Company is responsible for remittance of the withholding tax to the appropriate tax authority. The current maximum number of common shares authorized for issue under the RSU plan is 5,000,000.

A total of 936,832 RSUs (2016 – 784,203) at a grant-date fair value of Cdn$4.49 per unit were granted during the year ended December 31, 2017 (2016 – Cdn$3.22) under the Company’s RSU plan.

The fair value of each RSU issued is determined as the closing share price at grant date.

A summary of the status of the RSU plan and changes during the year is as follows:

 

     2017      2016         

At January 1,

     1,240,174        884,846       

Granted

     936,832        784,203       

Redeemed

     (349,842)        (335,339)       

Forfeited

     (121,068)        (93,536)       

At December 31,

                 1,706,096                    1,240,174       

As at December 31, 2017, 1,706,096 common shares purchased by the Company remain held in trust in connection with this plan (2016 – 549,507). At the end of the period, 596,780 restricted share units are fully vested and exercisable (2016 – 283,736). These shares purchased and held in trust have been included in treasury stock in the balance sheet.

Restricted share units expense for the year ended December 31, 2017 was $2,716 (2016 – $1,888).

(c) Deferred units plan

The Company has an Independent Directors Deferred Unit plan (“DU Plan”) under which DU’s are granted by the Board from time to time to independent directors (“the Participants”). DUs may be redeemed only on retirement of the independent director from the Board (the “Termination Date”) by providing the redemption notice (“Redemption Notice”) to the Company specifying the redemption date which shall be no later than December 15 of the first calendar year commencing after the calendar year in which the Termination Date occurred (the “Redemption Date”). Fifteen (15) trading days after the Redemption Date but no later than December 31 of the first calendar year commencing after the calendar year in which the Termination Date occurred, the Participant shall have the right to receive, and shall receive, with respect to all DUs held at the Redemption Date a cash payment equal to the market value of such DUs as of the Redemption Date. The Company will withhold income tax on redeemed DUs and is responsible for submission of the withholding tax to the tax authority.

At December 31, 2017, 596,836 DUs were outstanding (2016 – 498,390) with a value of $866 (2016 – $1,604), which is included in accounts payable and accrued liabilities.

Deferred units compensation income for the year ended December 31, 2017 was $1,023 (2016 – expense of $295).

(d) Performance share units plan

The Company has a Performance Share Unit plan (the “PSU” Plan) whereby PSUs may be granted to senior management of the Company at the discretion of the Board of Directors. Once vested, at the option of the Company, PSU’s are redeemable as a cash payment equal to the market value of the vested PSUs as of the Redemption Date, common shares of the Company equal to the number of vested PSUs, or a combination of cash and shares equal to the market value of the vested PSUs, for no additional consideration from the PSU holder and to be redeemed as soon as practicable after the Redemption Date. The Company will withhold income tax on redeemed PSUs and is responsible for submission of the withholding tax to the tax authority.

A total of 569,719 PSUs were granted during the year ended December 31, 2017 under the PSU Plan (2016 – 796,652). PSUs cliff vest on the third anniversary of the grant date (the “Redemption Date”) and are subject to terms and conditions including the achievement of predetermined performance criteria (the “Performance Criteria”). When fully vested the number of PSUs redeemed will range from 0% to 200% of the target award, subject to the achievement of the Performance Criteria. The current maximum number of common shares authorized for issuance from treasury under the PSU Plan is 3,130,000.

Compensation expense related to PSUs for the year ended December 31, 2017 was $2,789 (2016 – $1,564).

v3.8.0.1
Supplementary cash flow information
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Supplementary cash flow information
20. Supplementary cash flow information

 

    

December 31, 2017

$

    

December 31, 2016

$

 

Changes in non-cash working capital

     

Accounts receivable and other

     (2,456)        17,168  

Inventories

     (31,437)        (18,264)  

Accounts payable and accrued liabilities

     (1,862)        33,391  

Total

     (35,755)        32,295  

Supplementary cash flow information

     

Income taxes paid

     42,293        48,653  

Interest paid

     36,750        37,114  
v3.8.0.1
Financial risk management
12 Months Ended
Dec. 31, 2017
Text block1 [abstract]  
Financial risk management
21. Financial risk management

21.1 Financial risk factors

Eldorado’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. Eldorado’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on Eldorado’s financial performance.

(a)   Market risk

(i) Foreign exchange risk

The Company operates principally in Canada, Turkey, Brazil, Greece and Romania, and is therefore exposed to foreign exchange risk arising from transactions denominated in foreign currencies. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

Eldorado’s cash and cash equivalents, accounts receivable, marketable securities, accounts payable and accrued liabilities and debt are denominated in several currencies, and are therefore subject to fluctuation against the U.S. dollar.

The table below summarizes Eldorado’s exposure to the various currencies denominated in the foreign currency, as listed below:

 

(Amounts in thousands)    Canadian
dollar
     Australian
dollar
     Euro      Turkish
lira
     Chinese
renminbi
     Serbian
Dinar
     Romanian
lei
     British
pound
     Brazilian
real
 
Cash and cash equivalents      18,280         482         13,030         4,965         77        4,845         9,730         366         15,991   
Marketable securities      6,286                              -                              
Accounts receivable and other      13,706                24,508         60,111         -        43,157         7,542                12,547   
Accounts payable and accrued liabilities      (30,900)        (42)        (45,751)          (50,099)        -        (9,000)        (6,174)               (5,559)  
Other non-current liability      (1,269)               (6,516)        (17,999)        -                              
Net balance      6,103         444         (14,729)        (3,022)        77        39,002         11,098         366         22,979   
Equivalent in U.S. dollars    $ 4,865       $ 347       $   (17,664)      $ (802)      $ 12      $ 394       $ 2,874       $ 495       $ 6,946   

Based on the balances as at December 31, 2017, a 1% increase/decrease in the U.S. dollar exchange rate against all of the other currencies on that date would have resulted in a decrease/increase of approximately $25 in profit (loss) before taxes. There would be no effect on other comprehensive income.

Cash flows from operations are exposed to foreign exchange risk, as commodity sales are set in U.S. dollars and a certain amount of operating expenses are in the currency of the country in which mining operations take place.

(ii) Metal price risk and other price risk

Eldorado is subject to price risk for fluctuations in the market price of gold and other metals. Gold and other metals prices are affected by numerous factors beyond the Company’s control, including central bank sales, producer hedging activities, the relative exchange rate of the U.S. dollar with other major currencies, global and regional demand and political and economic conditions.

Worldwide gold and other metals production levels also affect their prices, and the price of these metals is occasionally subject to rapid short-term changes due to speculative activities. The Company has elected not to actively manage its exposure to metal price risk at this time. From time to time, Eldorado may use commodity price contracts to manage its exposure to fluctuations in the price of gold and other metals.

Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices.

Eldorado’s other price risk includes equity price risk, whereby the Company’s investments in marketable securities are subject to market price fluctuation.

(iii) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Current financial asse