July 16 (Bloomberg) -- Eldorado Gold Corp., a Canadian producer of the metal with mines in China, Europe and Brazil, will defer an expansion, slow development of projects and review its dividend policy after gold prices dropped.
The changes will ensure Eldorado can develop its business at a gold price of $1,250 an ounce for the foreseeable future, the Vancouver-based company said today in a statement.
Miners such as Barrick Gold Corp., the world’s largest, are cutting jobs and spending plans and writing down the value of assets after the precious metal plunged 23 percent in the second quarter in New York. QMX Gold Corp., a Toronto-based producer, said today it’s curtailing operations at the Lac Herbin mine in Quebec, while U.S. Silver & Gold Inc. said it will cut 126 staff at its Galena complex in Idaho.
Eldorado reduced its 2013 exploration budget 48 percent to $51 million, while planned capital spending has been lowered 36 percent to $430 million. The company will defer an expansion of its Kisladag mine in Turkey and now expects three new mines in Greece and Romania will start production about a year later than planned.
The board also will review the current dividend policy at its next quarterly meeting “to ensure that the policy fits the company’s current development spending plans,” the company said. Eldorado’s dividend payments are linked to the number of ounces it produces and the gold price. The company paid out $93.1 million in dividends in 2012.
Gold futures rose 0.5 percent to settle at $1,290.40 an ounce at 1:44 p.m. on the Comex in New York. The price has fallen 33 percent from a record $1,923.70 in September 2011.
The changes announced today by Eldorado are “prudent,” said Steven Green, a Toronto-based analyst at TD Securities Inc.
“Eldorado is well-positioned to make a quick adjustment like this without any writedowns since their reserves remain calculated at $1,250 an ounce or lower versus many of their peers who have gone to $1,400 an ounce or higher,” Green said in a note.
Eldorado rose 5 percent to C$7.11 at the close in Toronto. The shares have declined 45 percent this year.
The company said it expects to produce 745,000 ounces of gold at cash costs of $520 per ounce, within a May forecast range of 705,000 to 760,000 ounces at costs of $515 to $530.
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