Earnings Labs

Eldorado Gold Corporation (EGO)

Q4 2017 Earnings Call· Thu, Mar 22, 2018

$29.59

-3.62%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

-2.17%

1 Week

-8.70%

1 Month

+2.17%

vs S&P

+2.44%

Transcript

Operator

Operator

Good afternoon. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to Eldorado Gold Corporation 2017 Q4 and Year-End Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. George Burns, President and CEO, you may begin your conference.

George Burns

Analyst · Haywood Securities. Your line is open

Thank you, operator. Good morning and welcome to our fourth quarter and year-end 2017 financial and operating results call. With me here in Vancouver is Paul Skayman, Chief Operating Officer; Fabiana Chubbs, Chief Financial Officer and Peter Lekich, our Investor Relations Manager. Before I begin, I must remind you that any projections and objectives included in our discussion today are likely to involve risks, which are detailed in our 2016 AIF and in the forward-looking statement disclaimer at the end of the news release we put out last night. You will have seen that we have put out two releases yesterday one summarizes our financial and operating results for 2017, the other provides highlights of three technical studies and outlines our business path going forward. Before I get into our plans for 2018, I will start by briefly reviewing the 2017 overall results. Fabi and Paul will provide more detail on last year’s operations and financials after my comments. I will also leave it to Paul to review highlight of the technical studies. There is no beating around the bush for 2017 was a challenging year for the company. Looking back despite acquiring Lamaque project from Integra Gold in July, technical challenges at guess today seem to overshadow and Eldorado value proposition. Compounding this, permitting and arbitration headwinds in Greece were front and center for a good portion of the year. This was extremely frustrating for us and highly disappointing for our shareholders. I want to reiterate again that mining as a complex and long-term industry. The operational challenges that we often and count require innovative solutions, patience and whole lot of tenacity to work through. Facing these challenges head on is what our teams here and other operations are doing. I’m extremely proud of our team’s dedication to produce…

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

Thanks, George. Good morning, everyone. I just want to quickly review the 2017 results from operations and provide some commentary where appropriate. Starting with Turkey, Kişladağ produced approximately 44,300 ounces of gold in Q4 for full year’s production of around 171,400 ounces which was at the bottom end of our latest guidance for Kişladağ in 2017. As people will be aware, we increased to sign out addition rate in the second quarter and indicated that solution grade off the leach pad is expected to improve in the fourth quarter. We are happy to say that it did and was approximately in line with our expectations. As we indicated in the October call, we were seeing lower recoveries in the composite columns and subsequently reduced the leach pad inventory by 40,000 ounces. Further test work has confirmed the recoveries for much of the remaining ore and more importantly the high grade and dominant potassic material will only generate 35% to 40% recoveries by heap leach extraction methods, thereby confirming our view that milling the remaining material is the most prudent way forward. Tonnes of ore mined and grade of ore placed on were both slightly higher than budget for the quarter and placed grades is higher for the year at 1.03 grams per tonne. The 2017 strip ratio of Kişladağ was approximately 1 to 1 which is below our full guidance of 1.18 to 1. Cash cost for the year was good at $500 per ounce and in line with expectations. Continuing in Turkey, Efemçukuru had a good quarter with production of 25,500 ounces. Ounces sold was slightly below just at 23,050. For the year we did slightly more tonnes, slightly lower grade and produced a total of 96,080 ounces which was exactly on target. Ounces sold was slightly behind the…

Fabiana Chubbs

Analyst · Haywood Securities. Your line is open

Thank you, Paul. And good morning, everyone. I will go through the financial statements highlighting changes in significant accounts. We ended the year with cash, cash equivalents and term deposit balance of $485 million compared to $888 million at the end of 2016. The decrease in the cash balance is mainly the result of cash used in capital expenditures of $346 million, a $122 million used in the acquisition of Integra and $11 million in dividend payments to shareholders. This was partially offset by cash flow generated from operating activities before changes in working capital of $69.6 million, and proceeds from pre-commercial products sales of $38.2 million. During the year we completed acquisition of Integra Gold for total consideration of $357 million inclusive of the Integra shares held by Eldorado. This resulted in an increase of $394 million in property, plant and equipment, $93 million in goodwill and an increase of $127 million in deferred income taxes. Net loss attributable to shareholders of the Company was $9.9 million or $0.01 per share compared to a loss of $344 million or $0.48 per share in 2016. Excluding $37.5 million in write-down of asset net of tax, $6.2 million in transaction costs and $28 million gain on available for sale securities. We reported adjusted net earnings for the year of $15.2 million or $0.02 per share compared to adjusted earnings of $47.4 million or $0.07 per share in 2016. Gross profit for the year of $126 million was lower year-over-year mainly due to lower ounces sold. The financial results were also impacted by higher G&A costs due to higher legal and reorganization costs, an increase in exploration expenses of $19.5 million offset by $11.3 million of reduction in standby cost and a $17 million increase in investment income as well as a $27 gain on the Integra shares held at acquisition. Those are my comments on the financial statements, I will return the call back to George.

George Burns

Analyst · Haywood Securities. Your line is open

Thank you, Fabi. And operator, we can open the call for questions.

Operator

Operator

[Operator Instructions]. Your first question comes from the line of Kerry Smith with Haywood Securities. Your line is open.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Thanks, operator. George in the - with the mining now stopped at Kişladağ, obviously that makes sense, because you can get a bit of margin out of your mill. But how much production would you think you would get on the residual region 2020, which would be kind of last year before you get the mill running?

George Burns

Analyst · Haywood Securities. Your line is open

So what we are looking to do Kerry, is the numbers that we have indicated for 2018 and 2019 only draw down inventory. We will be investigating opportunities to improve that during 2018. So at the moment, we anticipate getting all of those ounces out over 2018 and 2019, but we will be investigating whether there is opportunity to improve ultimate extraction from that leach pad. And there also, there are maybe opportunity with some material that’s encountered during stripping. At the moment, it’s all been stockpiled, but we will reassess that as we move forward opportunity or if you like that from higher region will give us good recovery and maybe material that ultimately we put on. We are not there yet on 2020 I guess.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Okay. And then so that PFS will show zero production, sorry additional expect to your production unless you can do something else?

George Burns

Analyst · Haywood Securities. Your line is open

Yes. At this stage. Yes.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Okay. And there is the new plan for Skouries requires an amended in EIA? Or is that all still fine?

George Burns

Analyst · Haywood Securities. Your line is open

So we are working on revised technical study and we will be in discussion with the Greek Government. At this point our view is it will be a revision to the permit.

Kerry Smith

Analyst · Haywood Securities. Your line is open

So does that mean it would just mean an amendment there. Is that right George?

George Burns

Analyst · Haywood Securities. Your line is open

Correct.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Okay, but that’s to be determined then okay. And then maybe just the last one, how much CapEx had you now spent so far on Skouries? Like in total up to the end of 2017?

Fabiana Chubbs

Analyst · Haywood Securities. Your line is open

We are looking around $410 million since 2012.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Since on 2012 to 2017?

Fabiana Chubbs

Analyst · Haywood Securities. Your line is open

Correct.

Kerry Smith

Analyst · Haywood Securities. Your line is open

Okay, great. Thank you.

George Burns

Analyst · Haywood Securities. Your line is open

You bet Kerry.

Operator

Operator

Your next question comes from the line of Jeff Cramer with Morgan Stanley. Your line is open.

Jeff Cramer

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Just on the capital expenditures side, let’s assume, paid on Kişladağ and Skouries remains on care and maintenance. Could you help us with the overall sequencing of CapEx over 2018, 2019 and 2020? What those numbers look like overall for Eldorado?

George Burns

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

So overall?

Jeff Cramer

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Yes, annuals for each year?

George Burns

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Yes. So we are in the $275 million range in 2018. And then starts to moving up 2019 a little over $300 total. And 2020 around $450, that’s total capital.

Fabiana Chubbs

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Yes, that’s total cost includes the sustaining capital.

Jeff Cramer

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Okay, thank you. And then just to touch on the financing at this point, you said it’s not a urgent given the position. Could you just discuss, I guess some of the options you are looking at, at this point whether it’s project financing at Kişladağ itself or things you have in line?

George Burns

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Sure. I mean maybe to start with the high yield market remains robust and we remain confident we can refinance our bonds and we will be opportunistic. In terms of funding our growth, we have near-term cash to bring Lamaque into production next year and to fund much of the Kişladağ mill requirements. I would tell you we are not in the hurry, we have time to responsibly secure optimal financing the complete Kişladağ and to move Skouries forward once we have all the required permits and we will be doing that without necessarily and unduly stressing the balance sheet and without unnecessarily diluting shareholders. So, we have lots of options in front of us, when you look at the strong growth profile of the projects with have, I think we have one of the strongest growth profiles in the industry. So, we will be looking at all options that can include divestiture at right price to some of our assets that aren’t top priority for us as well as pursuing all sorts of alternatives to give us an optimum financing strategy. So, in the end we are not in a rush and we are very confident we will put in place the appropriate financing to support our near and medium term growth.

Jeff Cramer

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Okay. Understood. And I guess just as you move forward with that, would you consider hedging gold prices as you are into this kind of project mode and if not I guess what are the I guess the levers you would pull if there were a downturn in the gold prices. And I will leave at that.

George Burns

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Sure. I mean with the downturn in the gold prices we have reassessed the pace at which we are moving forward with our growth projects. In terms of hedging gold, I mean that’s always something we could look at in a worst case scenario, but definitely not one of the first leers we pull.

Jeff Cramer

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

Understood. Thank you.

George Burns

Analyst · Jeff Cramer with Morgan Stanley. Your line is open

You bet.

Operator

Operator

Your next question comes from the line of Steve Butler with GMPS. Your line is open.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Good morning guys, GMPS. George question for you on Lamaque or Paul with respect to the infill and/or resource conversion drilling 9,000 meters underground and 34,000 meters from surface. Are you targeting a fair portion, a healthy portion of resource conversion this year and can it be done by the end of the year or is it a program over the next two years let’s say?

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

Yes. We are only targeting resource conversion in C2 in the near-term.

George Burns

Analyst · Steve Butler with GMPS. Your line is open

And we have got a long history of getting a lot of drilling done meter wide that the guys do a pretty good job there. So, I don’t think there is an issue getting that done this year.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Okay. So, that the number four in plug, the other zones are they even in resources at this year or are they part of the inferred resource category?

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

C4 had some reserve, but sorry you are talking Plug 4 or the C4 zone in triangle?

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Well, beyond triangle the other zones supplying previously by Integra at Lamaque. Are they in the resource state?

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

Yes. Sorry, Plug 4 and the parallel are both in resource at the moment only.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Right in your resource category. That’s fine. Guys if you had - it’s the perfect world, if you wherever to the lineup for you in Greece with respect to arbitration result that you deems favorable. Would you be willing to go ahead full bore with respect to Skouries again to remobilize and start spinning the subject to aggressive need the Board decision as well, but I guess subject to arbitration you know because obviously you go fairly [indiscernible] in all three of these projects that we do see obviously the balance sheet starting to get crimped.

George Burns

Analyst · Steve Butler with GMPS. Your line is open

So Steve, the way I’m looking at it, we need all the permits to give us a certainty that we can get it into commercial production and that requires mechanical and electrical permit, building permit, now dry stack tailings permit. And so if we get all those permits in place, yes, our confidence in being able to get into production would be high. And I think we have an enormous number of opportunities to be able to fund that very high quality project. So it depends on the timing. If it came very quickly, which would be favorable, we definitely would be looking at another alternatives to help us bring it into production and to de-risk it from a Eldorado Gold perspective. So for my current thinking with the permits are out in front of us including dry stack, it’s going to take a bit of time to get that modified permit approved. And once that happens, I think we have considerable alternatives to be able to fund and finance, moving forward material.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

At what point would you or have you felt permit George?

George Burns

Analyst · Steve Butler with GMPS. Your line is open

That’s eminent Steve, that will be happen in the coming weeks, months. May be one last thing I would say about Skouries, it’s a high quality gold, copper con that we will be producing here, highly desirable and I think we have a lots of options around funding Skouries relative to that concentrate.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Okay. And then Paul, in your press release you guys talked about at the end of the day the reserves declined at Kişladağ by 1.7 million ounces, the recordable gold that you estimate would only have declined by about 400,000. Is that based on the old recovery assumption of 35% to 40% or is it based on the earlier estimates of 60%, 61%.

George Burns

Analyst · Steve Butler with GMPS. Your line is open

It’s based on the early estimates of around 60%.

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

Conversion from 2016 to 2017 so at the end of 2016 we were still using the higher recoveries, yes.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Right, okay. Fair enough.

George Burns

Analyst · Steve Butler with GMPS. Your line is open

The other thing I would point out to you Steve on reserves, as we took a bit of different approach when we did the reserve analysis this year and we are looking to run the business for strong financial performance. And so there is a larger pivot at Kişladağ it would meet the “definition of reserves” today, but it didn’t add a lot of value. And so what that does for us is it gives us some really good upside with our metal prices. If you fast forward four, six years from now, that potential expansion and the pit would be looked at pretty seriously and with the higher metal prices, the economics become favorable fairly quickly. So I would also just point you to the robustness of the IRR on Kişladağ and the fact that we do have the potential to expand that pit with better metal prices versus just having a maximum reserve today with a longer mine life with marginal second half of that mine life.

Paul Skayman

Analyst · Steve Butler with GMPS. Your line is open

Let me just add to that statement, Steve, and so that larger pit is something that we have can step into. It’s sufficiently large, It’s got a reasonable mining width that we could pull those walls down at some point in the future without - if we mine what we have got in front of us now, we are not losing that opportunity for a number of years.

Steven Butler

Analyst · Steve Butler with GMPS. Your line is open

Okay. Thanks guys.

George Burns

Analyst · Steve Butler with GMPS. Your line is open

Thank you Steve.

Operator

Operator

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

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Hi guys. I just wanted to ask a little bit more about the capital budgets over the next three years. Sorry, so you said I think it was around $200 million for this year. And then rising to $450 in 2020, is that the numbers?

George Burns

Analyst · Anita Soni with Credit Suisse. Your line is open

Yes.

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

And that’s total sustaining and development company wide, right?

George Burns

Analyst · Anita Soni with Credit Suisse. Your line is open

Correct.

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Okay. And then for 2019, did you give us a number or you just said that it was rising? Can you give us an actual number that you think at this stage?

George Burns

Analyst · Anita Soni with Credit Suisse. Your line is open

Yes. A bit over $300.

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Okay. Any sort of a split between the sustaining and the growth, can you give us some color on that?

George Burns

Analyst · Anita Soni with Credit Suisse. Your line is open

I don’t have that detail sitting in front of me Anita.

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Okay. Thank you very much.

George Burns

Analyst · Anita Soni with Credit Suisse. Your line is open

You bet.

Operator

Operator

Your next question comes from the line of Josh Wolfson with Desjardins. Your line is open.

Joshua Wolfson

Analyst · Josh Wolfson with Desjardins. Your line is open

Hi thanks. As for Skouries capital, I just was looking for bit more information on both the initial numbers and sustaining number. For the initial number, was that full capital expected to be incurred before force production or was there going to be I guess an overlap of the development to underground when capital is committed? And then for the sustaining number, would you be able to provide some information on why that increase relative to the old 2016 numbers?

George Burns

Analyst · Josh Wolfson with Desjardins. Your line is open

The number that we are quoting for capital is to get into production. And what we have done Josh is moved some more of that underground. If you remember previously we had, I think it was $540 million for memory and $170 million of underground development subsequent to start-up. And a lot of that’s been moved further forward. So we are basically completing most of that capital development underground in this an issue number.

Joshua Wolfson

Analyst · Josh Wolfson with Desjardins. Your line is open

Okay. And then in terms of that, I guess I'm trying to relate it to sustaining capital numbers so that number having increased to $758 million for $460 million previously is that a function of I guess capital after first production? Or is that genuine sustaining capital on an annual basis?

George Burns

Analyst · Josh Wolfson with Desjardins. Your line is open

I think you will find that all of the - well, a portion of it sort of whites placement for dam construction included in that and all of the capital profiles to developments included in there. So it won’t be a straight line run necessarily, you wouldn’t want to average that over the time, it will come in blocks. But I think importantly Josh, what we were showing previously was we actually needed to inject some more capital into this project in year, sort of six or seven or something to fund that underground development and now we are able to do it out of existing cash flow from that project.

Joshua Wolfson

Analyst · Josh Wolfson with Desjardins. Your line is open

Okay. Got it. And then, I guess on the topic of capital, has there been sort of any update in expectations what maybe sustaining capital requirements would be at Olympias with that now being I guess or further along? And also, may be for the unit costs are looking like there in the initial sort of stages of ramp up?

George Burns

Analyst · Josh Wolfson with Desjardins. Your line is open

Yes, I don’t have that in front of me. I think, we completing construction at the [indiscernible] shortly where we are also finishing of that price plan. So it come late 2018, we should be in sort of reasonable shape and I would point you that something around sort of $20 million a year as predominantly underground development, but I’m shading from the head a little bit there. Josh I don’t have anything in front of me.

Joshua Wolfson

Analyst · Josh Wolfson with Desjardins. Your line is open

Okay. I will stay tune for that. Thank you very much for taking my questions.

George Burns

Analyst · Josh Wolfson with Desjardins. Your line is open

Thanks Josh.

Operator

Operator

Your next question comes from the line of Dan Rollins with RBC Capital Markets. Your line is open.

Dan Rollins

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Yes. Thanks very much. Just a question on Olympias, not too sure where it stands right now, but the original EIA had Phase III underdevelopment if the arbitration is successful confirming the status of the EIA. Is there any time limit that requires the Phase III to move ahead?

George Burns

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Well, we have contemplated around the five, six year scenario to get it built and obviously until we get the permits we need that clock gets extended.

Dan Rollins

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Okay. And then on Skouries the same thing, if you were to receive permits 8-K say April 6 comes and they say okay, let’s go ahead, we will give you all the permits you can start constructing as of now. How much flexibility do you have as a Company and under that investment agreement to delay that construction decision, is that six month or a year or is it up to your decision?

George Burns

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Well, it’s up to our ability to execute. So, I mean ad it stands with our current updated technical study and permits that we are about to file. I think in a good scenario we could potentially get the permits within a year and we got roughly two years to build in front of us. So, I think in the ideal situation we are three years away, and it just depends on how quick we get the permits.

Dan Rollins

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Okay. And then just on permitting at Kişladağ, can you remind me how long it took you to get the amended EIA for the Kişladağ last summer was it 12 months or is it a little bit longer, I know the jurisdictional - the bureaucracy was a little bit changed since then some things may come quicker, but just what was the timeline on that last permit?

Paul Skayman

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Honestly, can’t remember, I mean I guess what we have done as people are well aware they understand the transition and the process and they came to see that extra sort of capital investment going in and keeping Kişladağ as a going concern. So, we don’t have an issue with the 12 months, so if he has a pretty solid sort of permit requirement. We own, I think apart from a couple of sort of private small parcels we own all of the land, we are already moving ahead with an expansion in terms of the discussions with the government. So, we don’t see an issue with 12 months.

George Burns

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

You know just to supplement that, the footprint for the mill scenario is the same as the prior heap leach that’s permitted. So, we are really talking about a change in processing methods that we are looking for and our designs are robust. Turkey has permitted other mills recently and we believe 12 months is a very reasonable period of time. And I had discussions just recently with the people from the Ministry of Mining who are very supportive to us moving forward with the mill scenario and I think early indications are time periods easily achievable.

Dan Rollins

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Okay. Perfect. And then just I guess look at the full details on the feasibility study over there, the type one report is filed. Could you give us some color on sort of how long do you think it will take to ramp up 13 million tonne a year plant with the commissioning starts in late 2020, is it a fairly quick ramp up in your view or are you giving yourselves 18 to 24 months to get that to stay?

Paul Skayman

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

We are thinking quicker than that. I think the only one that I would sort of point to is dialing filtration, I think most of the circle is relatively well understood and fairly simple process. So the only sort of caveat is filtering 13 million tonnes and placing it on a dry stack will take a little bit of work. That don’t always hit the road as quickly as you would like, so we have sort of given six months to get up to that nameplate capacity.

Dan Rollins

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Okay, dry stack, you have a lot of filters there. Okay, good to know. Thank you very much.

Paul Skayman

Analyst · Dan Rollins with RBC Capital Markets. Your line is open

Thanks.

Operator

Operator

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

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Hi, I have just a follow-up question. So with regards to Kişladağ, are you guys going to be doing any mining in the interim or are you putting that effectively some kind of lower level of I guess activity, care and maintenance or anything like that?

Paul Skayman

Analyst · Anita Soni with Credit Suisse. Your line is open

What we are looking to do Anita is continue with wide stripping. We have got the equipment and we have got some people there. So we are looking to mine some of the capitalized wide, bring that forward somewhat which allows us to be more efficient with the equipment over the remaining mine life. If we were to defer that we would end up having to bring more equipment in and hire more people potentially for a three or four year period, which is pretty inefficient. So we are continuing to mine. We are not targeting all, but if there is all encountered then we will stop bilateral or consider placement on a pad.

Anita Soni

Analyst · Anita Soni with Credit Suisse. Your line is open

Alright, thank you.

Operator

Operator

[Operator Instructions]. Your next question comes from the line of Matthew Hale with Bank of America Merrill Lynch. Your line is open.

Matthew Hale

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

Hey everyone. You laid out a 2018 2019, 2020 CapEx of a little over $1 billion and I’m just kind of wondering how you plan to pay for it. I know Jeff asked a little bit about this. But the stock is sort of right at about $1 per share U.S. basis, bonds trading below par a little bit over 7% yield. Can you talk about how you sort of force rank your options in raising capital to sort of deal with this aggressive capital spend and may be entertain other options like project financing or selling a precious metal stream?

George Burns

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

Again, we are not in a rush. We have got near-term financing to support the growth you just describe. And we are going to look at all of our alternatives. The key is to come up with an optimum financing plan. So I wouldn’t rule anything out. But again our focus is going to be not unnecessarily and unduly stress the balance sheet and without diluting shareholders. So everything you described is on the plate and will be considered. And again, with the strength of our projects I’m confident we will put a good financing package in place to be able to move forward with our extremely good projects.

Matthew Hale

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

Any hands of preference for one and over the other?

George Burns

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

It’s going to be a balanced approach and we are going to be looking at value.

Matthew Hale

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

Okay. Thanks very much.

George Burns

Analyst · Matthew Hale with Bank of America Merrill Lynch. Your line is open

You bet.

Operator

Operator

Your next question comes from the line of Lauren McConnell with Paradigm Capital. Your line is open.

Lauren McConnell

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

Hi thanks guys. Thanks for taking my question. I just want to talk about the decline in cash and equivalents of over $400 million in 2017. I know it’s touched on that there were some one-time items. I know it’s kind of been touched on a little bit throughout the question period. But I’m just looking for some commentary about what the annual burn rate is before construction capital?

Fabiana Chubbs

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

Well, construction capital was in the $350 million. So I may have to give you that from the total burn of the $400.

Lauren McConnell

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

I’m just looking more for going forward?

Fabiana Chubbs

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

That one, I don’t have it in front of me, I can just send it to you through features, if that’s okay.

Lauren McConnell

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

Then I just want another question then just with Skouries is going on to care and maintenance and Olympias operating, does Greece breakeven in 2018 and 2019?

George Burns

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

So I mean from Olympias perspective as Paul said, we have got some capital this year to bring the base plant into production and we are still doing finish up work in the [indiscernible] disposal facility. It’s been use essentially to finish the cleanup of the historic mining activities. So there is a bit of capital that’s not directly tied to operations, our care maintenance as Paul stated it’s nearly complete. So our run rate is less $5 million bucks a year going forward for Skouries.

Paul Skayman

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

There is a little bit of money going into a Stratoni for that exploration and development et cetera. Probably not quite balance.

George Burns

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

And we are spending a bit of money on further in the engineering on Phase III this year.

Lauren McConnell

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

Okay. Thank you.

George Burns

Analyst · Lauren McConnell with Paradigm Capital. Your line is open

You bet.

Operator

Operator

I will now turn the conference back over to our presenters.

George Burns

Analyst · Haywood Securities. Your line is open

Alright. Thanks everybody for calling in. Look forward to catching up again in about a month. Thank you.