Feb 20, 2015
Executives
Paul N. Wright - Chief Executive Officer Norman S.
Pitcher - President Fabiana E. Chubbs - Chief Financial Officer Paul J.
Skayman - Chief Operating Officer Krista M. Muhr - Vice President of Investor Relations
Analysts
Cosmos Chiu - CIBC World Markets Inc. Phil Russo - Raymond James Ltd.
Patrick T. Chidley - HSBC Securities USA Inc.
Kerry Smith - Haywood Securities Inc. John D.
Bridges - J.P. Morgan Securities LLC.
W. Tony Lesiak - Canaccord Genuity Corp.
Operator
Good morning, ladies and gentlemen. My name is Erin and I will be your conference operator today.
At this time, I would like to welcome everyone to the Eldorado Gold Year-End 2014 Financial and Operating 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] I’ll now turn the call over to Paul Wright, CEO of Eldorado Gold.
Mr. Wright, you may begin your conference.
Paul N. Wright
Thank you operator. Good morning, ladies and gentlemen and welcome to Eldorado Gold Corporation’s 2014 year-end and fourth quarter financial and operating results call.
Joining me this morning in Vancouver are Norm Pitcher; Fabiana Chubbs; Paul Skayman; and Krista Muhr. Before I begin, I need to remind you that any projections and objectives included in our discussion today are likely to involve risks, which are detailed in our 2014 AIF and in the forward-looking statement disclaimer at the end of the news release.
We will follow the usual format with Norm providing commentary both the operational highlights of 2014 and our guidance for 2015. Fabby will follow with a brief review of the year-end financials and then we’ll open up for questions.
The past year was another year of significant accomplishments with the production of 789,224 ounces being a record for the corporation. The company continues to have one of the lowest cost structures in the sector, particularly when you consider the absence of base metal by-product credits with all-in sustaining cost of $779 an ounce and cash operating cost of $500 an ounce.
The strong operational performance enabled the corporation to maintain its healthy balance sheet with $876 million of liquidity at year end, after its investments in its growth projects. Reserves decreased year-over-year by 6.4% reflecting depletion and a redesign of the Kisladag pit, whereas reserve grade for the corporation increased by 4.3%.
Looking ahead to 2015, we will experience a temporary decline in production for the corporation to 640,000 to 700,000 ounces with operating costs of $570 to $615 per ounce. This reduction in production in 2015 is largely attributable to the plan mine grade at Kisladag decreasing to 0.7 grams per tonne for the year.
As highlighted in our disclosure today, we see Kisladag production increasing in the years 2016 to 2019 from approximately 225,000 to 380,000 ounces per annum, reflecting higher grades in the completion of the Kisladag expansion. Turning briefly to China, we’re making good progress and resolving the outstanding permitting issues, enabling the completion of construction to be accomplished this year.
A new EIA for the project has been approved and we expect Project Permit Approval Application to be submitted to NDRC within the next two weeks. Greece of course is in the daily news and is experiencing significant turbulence affecting the economy as well as the broader society.
This turbulence has created a lot of noise and commentary regarding our investment has been a small part of the noise. However, today as yesterday as last week, as last month over 2000 persons are at work progressing our projects in Greece.
This progress is continuing with a broad support in local society, and the company, the communities, the unions and our stakeholders continue to engage constructively with the new government in Athens. I’ll leave it to Norm to comment on the gold projects.
However, sufficed to say, a good progress is being made at Skouries and Olympias projects and along with our consultants we are working hard to complete our feasibility study for Certej, which is due in the second quarter. With that I’ll hand over to Norm.
Norman S. Pitcher
Thanks, Paul and good morning everyone. I thought we’d do things a little differently this time and instead of sort of going through the numbers that you can find either in the operational results or the guidance we just released so I'm just going to sort of hit on what I see as the pertinent points for the various operations and development projects.
Starting at Kisladag, very good year there in 2014, as we mined at the bottom of a mining phase that was above reserve grade, resulting in over 311,000 ounces of production for the year. As most of you are aware, 2015 production is lower and costs are higher, largely due to the reduced head grade, which is closer to reserve grade as we start in the next pit phase.
We’ll put about 12.5 million tonnes of crushed ore on the leach pad this year and above 4.5 million tons of run of mine material. In terms of the expansion, we deferred that until 2017, which will allow us to complete Skouries and Olympias Phase II and we’ll see the benefit of expanding the crusher capacity to 20 million tonnes starting in 2018.
In terms of reserves, we ended up with just over 8 million ounces. So when we account for depletion for mining in 2014.
That’s about a 10% overall decrease in Kisladag, P&P. Efemcukuru, we had a good year at almost 100,000 ounces, looking at a similar year in 2015.
Jinfeng also had a solid year as we got back into the bottom of the open pit, less ounces and somewhat higher cost in 2015 as we finish in the open pit and transition to primarily underground ore. Tanjianshan was our lowest cost producer in 2014; it looks like it will get the prize again for 2015.
We started on the underground decline there to access the high grade QLT deeps deposit and expect to start underground drilling there in Q2 of this year. White Mountain benefited by higher grades in 2014, which were partly due to stope sequencing and partly due to positive grade reconciliation in some areas.
Grade comes down closer to reserve grade in 2015, so it’s somewhat affecting the ounces produced. On a positive note, we did well with underground exploration at White Mountain and saw 20% increase in P&P reserves.
At Olympias, as part of the Olympias Valley reclamation project, we continue to process tailings, treating just over 625,000 tonnes in 2014. At the end of 2014, there were just over 1 million tonnes of tailings left still to process.
Stratoni, pretty regular year 2014 and 2015 as well, not much to comment there. Vila Nova Iron has been placed on care and maintenance; we did sell about 525,000 tonnes of iron ore in 2014.
On the development side, as mentioned our development focus right now is Skouries and Olympias Phase II. At Skouries, engineering design work progress well and were over 80% complete at the end of the year.
Pre-stripping in the open pit is ongoing and over 500,000 cubic meters were moved in 2014. Foundation for the SAG, ball and regrind mills were completed and mill installations are ongoing.
We now have access to the base of the tailings dam and that would a focus for 2015. For Olympias Phase II, so for Phase II will be about 400,000 tonnes of ore for the underground mine with commissioning starting in mid-2016, capital spending over the next couple of years for that project will be about $30 million.
Underground development work continues at Olympias, where we rehabbed over 900 meters of existing drifts and put in over 3,000 meters of new development and the Olympias decline is at the 1.6 kilometer mark, which is about 20% complete. As Paul mentioned, at Certej the full feasibility study will be released in Q2 of this year, we’re making good headway on that.
On Eastern Dragon permitting is progressing well with excellent support from the Canadian government, the Project Permit Approval will be submitted this quarter and we expect approval in Q2. That timing will allow us to finish the additional steps required to restart construction during the summer field season.
Last but not least on exploration, during 2014 we completed over 58,000 meters of exploration drilling at our mines and exploration projects, much of our in-mine resource drilling was focused at White Mountain. We also tested extensions to mineralized zones at Tanjianshan, within Kokarpinar, Efemcukuru and at Stratoni.
Outside of our mines we drilled-tested five exploration projects in the Certej district in Romania, continued to define Piavitsa deposit in Greece and drilled three projects in Brazil. Our $40 million exploration budget for 2015 includes plans for over 68,000 meters of drilling, split roughly evenly between in-mine and Brownfields programs and earlier stage exploration programs.
With that I will turn it over to Fabby.
Fabiana E. Chubbs
Thank you, Norm and good morning everyone. I will go through the financial statements highlighting changes in significant accounts.
Commencing with the balance sheet, we ended the year with cash, cash equivalent and term deposit balance of $501 million, compared to $624 million at the end of 2013. The decreasing cash balance is mainly the result of cash generation from operation net of uses of cash for dividend payment and capital program.
The decline in iron ore prices impacted the valuation of the Vila Nova iron ore inventory resulting in a write-down of $13.5 million. Early in the year, we completed the acquisition of Glory Resources and entered into a strategic agreement to advance our Eastern Dragon project.
This resulted in a $10 million decrease in investment in associates and an increase of $45 million in property, plant and equipment and a net increase in liabilities and equity of $12 million. Moving on to the income statement, net profit for attributable - to shareholders of the company of $103 million or 14% per share for the year compared to a loss of $853 million or $0.91 per share in 2013.
The loss in 2013 was mainly due to an impairment loss net of tax in the amount of $685 million related to Jinfeng and Eastern Dragon, as well as a deferred tax charge of $125 million related to a change in income tax rates in Greece. Revenues for the year of $1.1 billion are slightly lower from a year-ago, say due to lower realized gold price offset by 7% increase in gold sales volumes.
The increase in the combined DD&A rate year-over-year is the result of higher volume of ounces sold in 2014 from Jinfeng and White Mountain which have higher depreciation rate than the other mines. On the statement of cash flows, during the year we generated cash flow from operating activities before changes in non-working capital of $343 million, compared to $382 million in 2013.
The main use of cash related to our capital program $411 million and dividend payment $13 million. In addition, cash flow of $27 million related to gold concentrate sales proceeds from tailings retreatment was recorded as cash flows from investment activities.
Those are my comments on the financial statements. I will return the call back to Paul.
Paul N. Wright
Well thanks, Fabby and thanks, Norm. Operator, we’ll open up for questions please.
Operator
[Operator Instructions] Your first question comes from the line of Cosmos Chiu from CIBC. Please go ahead.
Cosmos Chiu
Good morning, Paul, Norm and Fabby and team, and thanks for hosting the call. Kind of few questions here, maybe first of on the five year projection, I'm just wondering if you can give us a bit of more granularity in terms of grade profile.
I guess specifically you are looking at grades that are ranging between 0.75 to 0.95 gram per tonne ahead of your reserve grade. Is that sustainable and are you stockpiling some of the lower grade material that you might be mining and when would you be reached 0.95 which is the upper end given that that’s significantly higher than reserve grade?
Norman S. Pitcher
No, I mean look, we’re going to end up - it’s going to be the same sort of wave motion that we’ve gone through here, right. Where you buildup grade, you just start to at the bottom of a phase and then you are back into lower grade.
Yes, so the grade will go down post this five year plan. I mean if you want to look at more detail grades in that five year plan, I mean I can use my calculator, you can use yours and just you know about what recovery is and it’s about 20 million tonnes through the crusher, once we get the expansion going, so, yes.
Cosmos Chiu
So in that case, Norm, just in the case where the expansion doesn’t go through, do you think you can ever go back to the 300,000 ounce per year level?
Norman S. Pitcher
[Pass] [ph].
Cosmos Chiu
No?
Norman S. Pitcher
Yes, [that’ll be top] [ph].
Cosmos Chiu
Okay, so the expansions…
Norman S. Pitcher
I shouldn’t, yes, I mean, you could have [indiscernible].
Paul N. Wright
Look we hit last year over 300,000 ounces and our head grade was 0.95 to one as we’ve indicated in our guidance. We are going to see years, in the next five-year that hit similar grades.
So therefore we would, but - I think I don’t know how we can make it simpler. This is a plus 20-year mine life.
You are going to have, if the reserve grade is 0.7, you are going to have years at 0.7 as we are this year. You are going to have years below 0.7 and you are going to have years above 0.7 and as Norm just described, I mean the nature of this is a multi phase pit and you’ve got certain grades that - higher grades that exist at certain strata and as you go though those strata, those levels, those elevation on the different phases, you are going to have years of higher grade and that’s what we’re sort of starting to see over the next two to five-years.
But after that you are going to see some lower grades and then we do the next phase you will see some higher grades again.
Cosmos Chiu
Yes, of course Paul. So I guess you’ve kind of confirmed that.
At least the next five-year should be the grades are going to be 0.75 to 0.95 range in between those two numbers?
Paul N. Wright
Yes.
Cosmos Chiu
And then in terms of the throughput to come up with a five-year projection, have you consider - is it a combination of crushed ore plus run of mine ore, is that kind of what we are looking at the next few years?
Paul N. Wright
That’s correct. And then as we step into the 20 and crushing capacity is not an issue then we’ll crush more and put [indiscernible] run of mine on.
So at the end of that five-year plan it’s predominantly crushed ore.
Cosmos Chiu
Great, thanks Paul. Maybe one more on Turkey, we are hearing that there could be the possibility of a new mining legislation that’s being considered at this point in time.
It seems like it’s moving through parliament pretty quickly. Have you considered what the potential impact could be to Eldorado?
Paul N. Wright
It is moving through fairly quickly, it doesn’t have a lot of impact at these gold prices, the plan is a tiered royalty structure, so at higher prices the royalty goes up a little bit.
Norman S. Pitcher
Our understanding is it it’s been through Parlim, it’s been through Parlim and its now for presidential approval. Sufficed to say we were actively involved and consulted as part of the drafting of the new legislation and it’s not appropriate for us to comment on specifics, because it hasn’t been released yet, but we’re not uncomfortable with what we’ve seen as part of the drafting exercise.
Cosmos Chiu
Yes, I think part of it as you said Paul, would be the royalty and that part of that would be mining licensing as well right, that’s my understating.
Paul N. Wright
Well, that’s right, I mean people tend to think of legislation as being negative, in this case many aspects of the legislation are quite positive and designed to frankly facilitate the mining in the country and without being specific our understanding of what the modification of the royalty structure we don’t see that has being excessively onerous.
Cosmos Chiu
Great. That’s all I have.
Thank you.
Paul N. Wright
Thanks.
Operator
Your next question comes from the line of Phil Russo from Raymond James. Please go ahead.
Phil Russo
Yes, good morning guys. Just a quick one here, on Kisladag expansion, can you remind us of the capital left to go on that?
Norman S. Pitcher
Original guidance was I think around $90 million to $100 million for that and we haven’t updated that yet, we haven’t update that but you are in that ballpark.
Phil Russo
Okay, great thanks for that. And then maybe just one second and last one here for Paul.
Paul may be you can give us your read of Greece here like is the government would you say that maybe they are looking of this posturing here for potentially higher royalties or taxes or you think commonsense prevails or how do you read what’s happening in Greece?
Paul N. Wright
Well, as I just sort of described it as turbulence I mean obviously there is a lot of stress on a system, you have got a new government that’s just finding its way forward, various things have been reportedly said, I think it should be premature to take anything that’s been reportedly said, and conclude that it will manifest itself in behavior or actions in the government. I mean, all I can says is that we obviously for a variety of reasons have sufficient confidence in the society and government that our objectives will be aligned with their objectives as governments and otherwise we wouldn’t be continuing to invest in the country.
Beyond that I can say that there is engagement at various levels, in terms of the company itself, the unions, the society, the Canadian government with the government of Greece and I believe that engagement to be constructive.
Phil Russo
Okay, great, and thanks very much.
Operator
Your next question comes from the line of Patrick Chidley from HSBC. Please go ahead.
Patrick T. Chidley
Yes, good morning everybody. Just wanted to ask a question about exploration, you’ve got some big comments in the release here, just wanted to - maybe if you could outline the three top exploration projects or advancements for last year that we should maybe be focusing on?
Norm S. Pitcher
Well yes, I mean White Mountain was clearly a fairly big one and we continue to drill both sort of close to the existing ore zones and fairly significant step-out drilling to the North Deeps there. We’ve had good success at Tanjianshan, as I mentioned, this year we’re putting in the decline there, we’ve already started on that and it looks like we’ll be getting down to start sort of delineation type drilling in the inferred in April and then getting deeper into it towards the end of the year with more exploration drilling.
I think the other one for this year is looking at Certej and sort of close targets near by that.
Patrick T. Chidley
Yes, you mentioned about four different targets in terms of names at Certej, those are all outside of the resource are they and so what stage are they?
Norm S. Pitcher
Sure, it’s a combination, I mean a couple of them are way outside, like 10 or 20 kilometers anyway. And they are just exploration projects that we’ve picked up and we’re drilling.
Then there are some other ones that are fairly close by and conceivably could add to mill feed in the future. So it’s a combination of both.
Patrick T. Chidley
All right, and what’s the progress on moving forward with Certej then?
Norm S. Pitcher
Well feasibility study, yeah, feasibility study in the second quarter, hopefully early in the second quarter, with prices doing what they are doing over there and the exchange rate, it’s I think we’re feeling fairly confident about it.
Paul N. Wright
I mean we do Patrick have valid EIA and construction permits which enabled us to do a fair amount of work onsite and I think when you see the feasibility study results in May, they reflect a level of engineering that is in some cases well beyond feasibility engineering, because we are doing certain work onsite particularly as it relates to Geotech and civil designs which will give us a much higher level of confidence as to what costs are going to be. So there is I think we approximately 100 people onsite at Certej right now.
So there is a physical activity going on in Certej largely to sort of support the quality of the feasibility study that we’ll be delivering.
Patrick T. Chidley
Thanks and then just on the technology chosen for Certej, its obviously refractory processing, is it going to be Albion process or just POX.
Paul N. Wright
It’s not going to be Albion, looking at pressure oxidization for that material.
Patrick T. Chidley
Okay, when you finish the feasibility study; is there a lot of extra engineering for the pressure oxidation part of it or do you encapsulate it in what you are just going to deliver?
Norman S. Pitcher
We are looking it as a POX and doing engineering on that at the moment.
Patrick T. Chidley
Okay and that would be onsite or somewhere else?
Norman S. Pitcher
On-site.
Patrick T. Chidley
All right, thanks. And then I just saw that Piavitsa that was in last years numbers or not, but there is 1.9 million ounces that inferred.
How is that looking in terms of being sort of added to general mine plan there, I guess in terms of mixing it with Olympias?
Paul N. Wright
Still early days, I would say down the road so. I mean you have got that whole Stratoni Fault structure that goes from where we are mining now at Mavis Petras through Piavitsa, in the meantime you guys are at 20 plus year at Olympias already, yes it’s down the road.
Patrick T. Chidley
Okay, all right. Thanks very much.
Operator
Your next question comes from the line of Kerry Smith from Haywood Securities. Please go ahead.
Kerry Smith
Thanks operator. Paul, what are the next steps now for the Hong Kong listing that you are foreseeing, I’m just trying to understand what has to happen now?
Paul N. Wright
The whole progress on the Hong Kong listing is really paralleling the path that we’re on to complete the outstanding permitting for Eastern Dragon. We’ve had a lot of the upfront technical work in terms of confident persons visiting the projects, completing the reports is behind us, but clearly any consideration to our Hong Kong listing is going to be driven principally by not only eligibility, but really ensuring that we capture the value that’s associated with Eastern Dragon and that true value will not be liberated until it’s clear that we are headed into production here.
So we’re progressing consistent with the progress that we’re making on the permitting.
Kerry Smith
Okay, and is the plans still to kind of say spin-out below 25% on to the Hong Kong market and you would retain 75%, is that still kind of the rough thinking?
Paul N. Wright
I would suspect we would retain less than that if we proceed it; it would be majority interest, but plus where we somewhere between 51 and what you described will be the model that we’re assuming at this point, but I think it’s important Kerry to understand, the Hong Kong listing will only progress if it frankly delivers a better result for the corporation and doing what we’re doing, all right. And that’s going to be dependant upon as well as obviously delivering on the Eastern Dragon that it’s going to depend on Asian equity markets in that environment and that’s the basis for our decision.
Kerry Smith
Gotcha. Okay and that’s good.
And then Paul at one point in time you were working on expansion at Efemcukuru to 0.5 million tonne a year, did that study ever get done or just what is the status of that?
Norman S. Pitcher
I guess what we’ve done is we’ve sort of worked on debottlenecking existing, I mean this year we’re going put through in excess of 400,000 tonnes, we are getting pretty close to that sort of 500 numbers. If we did, it would be more of a debottlenecking sort of exercise, pretty modest dollar so I don’t think it’s a project we need to sort of get into straight away so.
Paul N. Wright
And there is probably more at Efemcukuru there is probably more upside as we in future years as we get out of the middle and into the north and more to south ore shoots to minimizing dilution and maximizing the head grade.
Kerry Smith
Okay.
Norman S. Pitcher
We think we sort of mentioned before in our conference call, yes.
Kerry Smith
Right, okay. Okay, and then just last question just on the tunnel at Olympias, has the valve conditions in the rates of advance being been better now?
Are they where you would like them to be or how is that going on mining at this point?
Norman S. Pitcher
Yes, I mean we did take a break and then drilled a Geotech hole, really ground conditions aren’t be issue, its just really dealing with the water, which isn’t a lot of water, but it’s something that we got a deal with it. So we’re in a drill ground, drill block cycle which isn’t the fast, as where we want to be, probably not quite yet, but I think we’re sort of getting there.
Kerry Smith
Okay. Okay, so when would that tunnel actually be complete now based on what you know?
Norman S. Pitcher
That’s a subject of much debate, Kerry. We are…
Kerry Smith
A while as they say right.
Norman S. Pitcher
Yes, I mean you can sort of look at current - you can do the math and look the current production rates and extrapolate it out, but sufficed to say we’re looking to trying to get it - the sooner we can get this done the better for Olympias Phase III. So we’re looking at various options here.
Paul N. Wright
I mean one of the tough things Kerry is we really don’t now how persistent this water is going to be over the next seven kilometers. That’s the tough part and I think we’re all of a view that we can probably do quite a bit better, ourselves and our contractor in advancing the phase and we got to apply ourselves to that but ultimately its not as Norm said its not about the ground conditions it’s the water and how efficient we can be dealing with the water in the grouting part of the cycle and I certainly of the view that we can quite a bit more efficient than we are at present.
Kerry Smith
Okay. Okay, so that’s helpful.
Thanks very much guys.
Norman S. Pitcher
Yes, thanks.
Operator
Your next question comes from the line of John Bridges from JP Morgan. Please go ahead.
John D. Bridges
Good morning Paul everybody. Congratulations on the results.
Paul N. Wright
Thanks, John.
John D. Bridges
I just wanted to sort of follow-on from Kerry’s question. You didn’t have much reserve at Stratoni this year.
I was just wondering if you are further along in figuring out how Stratoni, Olympias and maybe Piavitsa are going to ducktail together in the production profile.
Paul N. Wright
Well John Stratoni as you appreciate has been a sort of a neglected assets for many years, I mean when was operated by European Gold Fields it was really operated as a place to sort of keep employment levels, there was really no investment in exploration and development and so we inherited an operation which was not quite to the extent that we’re a gold mining company. But however clearly has value and what we’ve been wrestling with here is just the time in the magnitude of the developments and exploration that needs to be done to realize the opportunity or the length of opportunity that’s there and how do we ducktail that into Piavitsa and where does is fit in terms of priorities, because as you have seen, we’ve been, I won’t say vacillating,, but [toing and froing] a little bit in terms of our allocation of capital in the company for gold projects.
To cut through it all, I think there is a compelling case for us to make an investment in Stratoni. The opportunity is clearly there is identified by our exploration is to significantly extend the mine life and we need to do that from the underground.
Norman S. Pitcher
Yes, we have to bite the bullet to get out into the hanging wall and there has been - I mean Stratoni Fault is a fairly big fault structure and has been traditional reluctance to try to do much either sort of in or through that fault, but I mean that’s what needs to be done to really get a decent handle on what potential reserves are. We need to get out there and put in some drill stations and start drilling a long strike in down-dip.
Paul N. Wright
Because you have the structural trend that the base extends from the coast all the way through as far as extremity of Piavitsa and we’re just getting started and clearly, because we have infrastructure, we’ve got mine and we’ve got employees there, we need to as Norm says, we need to come to grip for this pretty quickly here. Otherwise you are going to continue to see declines in production and attending increases in unit costs.
John D. Bridges
Are you going to allocate more money to drilling there this year or is - it is the money going elsewhere.
Paul N. Wright
Yes, well what we’re doing right now John is we’re putting together design of a hanging wall drift and then some drill stations, putting together the cost of drilling, its not included in this year’s budget so far and then we need our exploration guys to convince us that what they see as the targets down-dip and along striker are worth while. And so it would be out of budget, but I would say expect that we will do it this year.
John D. Bridges
Okay, so that’s a working process. Ok great.
Paul N. Wright
Yes, it is.
John D. Bridges
Okay. Well done guys.
Keep up the growth, thanks.
Paul N. Wright
Thanks, John.
Operator
[Operator Instructions] Your next question comes from the line of Tony Lesiak from Canaccord Genuity. Please go ahead.
W. Tony Lesiak
Good morning Paul, Norm, everyone. Could you confirm some of the key life of mine parameters for the expanded Kisladag, I’m particularly interested in the operating cost profile and the sustaining capital.
Paul N. Wright
Yes, probably have to get back to you on that Tony. Yes, we don’t have the numbers right in front of us.
W. Tony Lesiak
Okay, then maybe your thoughts on the development runway, I mean you are looking at completing Skouries, Olympias Phase II now, you got Eastern Dragon likely. Kisladag 2017, where does Certej and Olympias Phase III in that pipeline?
Paul N. Wright
Olympias Phase III will largely be cash flow generating; it will come from cash flow generating capacity of the Olympias Phase II, I mean part of Phase III obviously is underway right now which is the tunnel itself. The Certej project in terms of timing and financing, let’s get the feasibility study out.
I think the general mood around the shop is quite positive regarding the likely attractiveness of Certej’s investment and I think we to-date have been taking the approach that we live within our balance sheet and cash flow generating capacity and if we’re continue to do that and gold to continue to stay in the $1200 to $1300 range realistically you would not see Certej seeing significant capital investment in construction for a number of years. We are certainly giving some thought here as to the benefits of taking this project and bringing it along faster if it’s merited and look at some form of project financing to enable Certej to be developed in a more timely manner.
So that’s as current as we can bring you. I mean, we’re aware that there is more uncertainty as it relates to what the development program is for Eldorado now than there has been and on these fronts whether it’s Olympias Phase II or Olympias Phase III, Certej, we are working this year to try to bring that together in a more comprehensive development plan that we can share with you, but we’re not there yet.
W. Tony Lesiak
Okay, and then maybe finally on the Skouries underground, can you talk to maybe some of the key parameters with respect to the new sublevels stopping methodology?
Paul N. Wright
I mean we’re reviewing mining method, we’re reviewing access, we’re reviewing production rates, we’re reviewing sequencing all of that is being reworked. What we found when we took on the European Gold Fields engineering was broad brush, it was fine, but we’ve ended up doing a lot of work on the process plant for instance, I mean to make it something that really is what we wanted to build and likewise with the underground mine, a lot of work to be done.
W. Tony Lesiak
But the plan is still to integrate it within the time scale of the open pit; you are not waiting to develop that after the open pit as they concluded, yes.
Paul N. Wright
The underground development is underway; it has been for a couple of years.
W. Tony Lesiak
Okay. Thanks.
Paul N. Wright
You are welcome. End of Q&A
Operator
There are no further questions at this time. I’ll turn the call back over to the presenters.
Paul N. Wright
Well thank you operator and thank you everybody for attending and enjoy the weekend.
Operator
This concludes today’s conference call. Thank you for joining.
You may now disconnect.