Consolidated Financial Statements |
December 31, 2011 and 2010 |
(Expressed in thousands of U.S. dollars) |
KPMG LLP Chartered Accountants PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada | Telephone (604) 691-3000 Fax(604) 691-3031 Internetwww.kpmg.ca |
KPMG LLP Chartered Accountants PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada | Telephone (604) 691-3000 Fax(604) 691-3031 Internetwww.kpmg.ca |
Consolidated Balance Sheets |
(Expressed in thousands of U.S. dollars) |
Note | December 31, 2011 | December 31, 2010 |
|
| January 1, 2010 | |||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | 5 | 393,763 | 314,344 | 265,369 | ||||||||||||
Restricted cash | 6, 15 | 55,390 | 52,425 | 50,000 | ||||||||||||
Marketable securities | 7 | 2,640 | 8,027 | 13,951 | ||||||||||||
Accounts receivable and other | 8 | 42,309 | 42,437 | 26,434 | ||||||||||||
Inventories | 9 | 164,057 | 147,263 | 129,197 | ||||||||||||
| 658,159 | 564,496 | 484,951 | |||||||||||||
Non-current inventories | 9 | 26,911 | 29,627 | 31,534 | ||||||||||||
Investments in significantly influenced companies | 10 | 18,808 | 6,202 | - | ||||||||||||
Deferred income tax assets | 18 | 4,259 | - | - | ||||||||||||
Restricted assets and other | 11 | 38,430 | 19,328 | 13,759 | ||||||||||||
Property, plant and equipment | 12 | 2,847,910 | 2,699,787 | 2,527,567 | ||||||||||||
Goodwill | 13 | 365,928 | 365,928 | 324,935 | ||||||||||||
| 3,960,405 | 3,685,368 | 3,382,746 | |||||||||||||
LIABILITIES & EQUITY |
| |||||||||||||||
Current liabilities |
| |||||||||||||||
Accounts payable and accrued liabilities | 14 | 168,367 | 145,695 | 153,036 | ||||||||||||
Current debt | 15 | 81,031 | 98,523 | 56,499 | ||||||||||||
| 249,398 | 244,218 | 209,535 | |||||||||||||
Debt | 15 | - | 68,140 | 134,533 | ||||||||||||
Asset retirement obligations | 16 | 43,213 | 33,228 | 26,995 | ||||||||||||
Defined benefit plan | 17 | 19,969 | 12,019 | 7,811 | ||||||||||||
Deferred income tax liabilities | 18 | 336,579 | 330,512 | 355,425 | ||||||||||||
| 649,159 | 688,117 | 734,299 | |||||||||||||
Equity |
| |||||||||||||||
Share capital | 19 | 2,855,689 | 2,814,679 | 2,671,634 | ||||||||||||
Treasury stock |
| (4,018 | ) | - | - | |||||||||||
Contributed surplus |
| 30,441 | 22,967 | 17,865 | ||||||||||||
Accumulated other comprehensive (loss) income | (10,069 | ) | (1,637 | ) | 2,227 | |||||||||||
Retained earnings (deficit) | 382,716 | 125,221 | (69,423 | ) | ||||||||||||
Total equity attributable to shareholders of the Company | 3,254,759 | 2,961,230 | 2,622,303 | |||||||||||||
Attributable to non-controlling interests | 56,487 | 36,021 | 26,144 | |||||||||||||
3,311,246 | 2,997,251 | 2,648,447 | ||||||||||||||
3,960,405 | 3,685,368 | 3,382,746 |
Consolidated Income Statements |
(Expressed in thousands of U.S. dollars except per share amounts) |
For the year ended December 31 | Note | 2011 | 2010 | |||||||||
Revenue | ||||||||||||
Metal sales | 1,098,933 | 791,175 | ||||||||||
Cost of sales | ||||||||||||
Production costs | 27 | 346,484 | 277,974 | |||||||||
Depreciation and amortization | 122,414 | 107,157 | ||||||||||
Total cost of sales | 468,898 | 385,131 | ||||||||||
Gross profit | 630,035 | 406,044 | ||||||||||
Exploration expenses | 30,773 | 22,501 | ||||||||||
Mine standby costs | - | 1,335 | ||||||||||
General and administrative expenses | 59,239 | 44,935 | ||||||||||
Defined benefit plan expense | 17 | 2,088 | 1,337 | |||||||||
Share based payments | 20 | 19,722 | 17,112 | |||||||||
Foreign exchange loss |
| 5,367 | 2,712 | |||||||||
Operating profit |
| 512,846 | 316,112 | |||||||||
| ||||||||||||
Gain on disposal of assets |
| (2,729 | ) | (592 | ) | |||||||
Gain on marketable securities |
| (664 | ) | (6,572 | ) | |||||||
Loss on investments in significantly influenced companies |
| 4,225 | 531 | |||||||||
Other income |
| (7,673 | ) | (13,468 | ) | |||||||
Asset retirement obligation accretion | 16 | 1,546 | 2,727 | |||||||||
Interest and financing costs | 28 | 5,331 | 8,089 | |||||||||
| ||||||||||||
Profit before income tax |
| 512,810 | 325,397 | |||||||||
Income tax expense | 18 | 165,587 | 86,939 | |||||||||
Profit for the year |
| 347,223 | 238,458 | |||||||||
| ||||||||||||
Attributable to: |
| |||||||||||
Shareholders of the Company |
| 318,662 | 221,001 | |||||||||
Non-controlling interests |
| 28,561 | 17,457 | |||||||||
Profit for the year |
| 347,223 | 238,458 | |||||||||
| ||||||||||||
Weighted average number of shares outstanding | 29 | |||||||||||
Basic |
| 549,791 | 542,861 | |||||||||
Diluted |
| 551,625 | 545,850 | |||||||||
| ||||||||||||
Earnings per share attributable to shareholders of the Company: | 29 | |||||||||||
Basic earnings per share |
| 0.58 | 0.41 | |||||||||
Diluted earnings per share |
| 0.58 | 0.40 |
Consolidated Statements of Comprehensive Income |
(Expressed in thousands of U.S. dollars) |
For the year ended December 31 | Note | 2011 | 2010 | |||||||||
Profit for the year | 347,223 | 238,458 | ||||||||||
Other comprehensive income (loss): | ||||||||||||
Change in fair value of available-for-sale financial assets | (989 | ) | 13,480 | |||||||||
Income tax on items taken to equity | 12 | (40 | ) | |||||||||
Reversal of unrealized gains on available-for-sale investments on acquisition of subsidiary | - | (11,424 | ) | |||||||||
Realized gains on disposal of available-for-sale financial assets transferred to net income | (794 | ) | (3,245 | ) | ||||||||
Actuarial losses on defined benefit pension plans | 17 | (6,661 | ) | (2,635 | ) | |||||||
Total other comprehensive (loss) income for the year | (8,432 | ) | (3,864 | ) | ||||||||
Total comprehensive income for the year | 338,791 | 234,594 | ||||||||||
Attributable to: | ||||||||||||
Shareholders of the Company | 310,230 | 217,137 | ||||||||||
Non-controlling interests | 28,561 | 17,457 | ||||||||||
Total comprehensive income for the year | 338,791 | 234,594 |
Consolidated Statement of Cash Flows |
(Expressed in thousands of U.S. dollars) |
For the year ended December 31 | Note | 2011 | 2010 | |||||||||
Cash flows generated from (used in): | ||||||||||||
Operating activities | ||||||||||||
Profit for the year | 347,223 | 238,458 | ||||||||||
Items not affecting cash | ||||||||||||
Asset retirement obligation accretion | 1,546 | 2,727 | ||||||||||
Depreciation and amortization | 122,414 | 107,157 | ||||||||||
Unrealized foreign exchange loss | 6,500 | 5,802 | ||||||||||
Deferred income tax expense (recovery) | 1,804 | (8,083 | ) | |||||||||
Gain on disposal of assets | (2,729 | ) | (592 | ) | ||||||||
Loss on investment in significantly influenced companies | 4,225 | 531 | ||||||||||
Gain on marketable securities | (664 | ) | (6,572 | ) | ||||||||
Share based payments | 19,722 | 17,112 | ||||||||||
Defined benefit plan expense | 2,088 | 1,337 | ||||||||||
502,129 | 357,877 | |||||||||||
Changes in non-cash working capital | 21 | 9,948 | (59,509 | ) | ||||||||
512,077 | 298,368 | |||||||||||
Investing activities | ||||||||||||
Acquisition of subsidiaries net of cash received | - | (6,083 | ) | |||||||||
Purchase of property, plant and equipment | (272,818 | ) | (226,296 | ) | ||||||||
Proceeds from the sale of property, plant and equipment | 147 | 23,756 | ||||||||||
Purchase of marketable securities | (1,823 | ) | (11,983 | ) | ||||||||
Proceeds from the sale of marketable securities | 8,154 | 15,611 | ||||||||||
Non-registered supplemental retirement plan investments, net | (7,045 | ) | - | |||||||||
Investments in significantly influenced companies | (16,830 | ) | (6,727 | ) | ||||||||
Increase in restricted cash | (2,957 | ) | (2,463 | ) | ||||||||
Increase in restricted assets and other | - | (7,007 | ) | |||||||||
(293,172 | ) | (221,192 | ) | |||||||||
Financing activities | ||||||||||||
Issuance of common shares for cash | 31,600 | 35,907 | ||||||||||
Dividend paid to non-controlling interests | (8,095 | ) | (7,580 | ) | ||||||||
Dividend paid to shareholders | (61,167 | ) | (26,357 | ) | ||||||||
Purchase of treasury stock | (6,438 | ) | - | |||||||||
Long-term and bank debt proceeds | 5,782 | 59,839 | ||||||||||
Long-term and bank debt repayments | (98,169 | ) | (90,010 | ) | ||||||||
Loan financing costs | (2,999 | ) | - | |||||||||
(139,486 | ) | (28,201 | ) | |||||||||
Net increase in cash and cash equivalents | 79,419 | 48,975 | ||||||||||
Cash and cash equivalents - beginning of year | 314,344 | 265,369 | ||||||||||
Cash and cash equivalents - end of year | 393,763 | 314,344 | ||||||||||
Consolidated Statements of Changes in Equity |
(Expressed in thousands of U.S. dollars) |
For the year ended December 31, | 2011 | 2010 | ||||||||
$ | $ | |||||||||
Share capital | ||||||||||
Balance beginning of year | 2,814,679 | 2,671,634 | ||||||||
Shares issued upon exercise of share options, for cash | 30,115 | 35,895 | ||||||||
Transfer of contributed surplus on exercise of options | 9,410 | 12,020 | ||||||||
Shares issued in consideration for interests acquired | - | 95,118 | ||||||||
Shares issued upon exercise of warrants, for cash | 1,485 | 12 | ||||||||
Balance end of year | 2,855,689 | 2,814,679 | ||||||||
Treasury stock | ||||||||||
Balance beginning of year | - | - | ||||||||
Purchase of treasury stock | (6,438 | ) | - | |||||||
Shares redeemed upon exercise of restricted share units | 2,420 | - | ||||||||
Balance end of year | (4,018 | ) | - | |||||||
Contributed surplus | ||||||||||
Balance beginning of year | 22,967 | 17,865 | ||||||||
Share based payments | 19,304 | 16,557 | ||||||||
Share based payments on Brazauro warrants and options | ||||||||||
converted | - | 565 | ||||||||
Shares redeemed upon exercise of restricted share units | (2,420 | ) | - | |||||||
Transfer to share capital on exercise of options | (9,410 | ) | (12,020 | ) | ||||||
Balance end of year | 30,441 | 22,967 | ||||||||
Accumulated other comprehensive (loss) income | ||||||||||
Balance beginning of year | (1,637 | ) | 2,227 | |||||||
Other comprehensive (loss) income for the year | (8,432 | ) | (3,864 | ) | ||||||
Balance end of year | (10,069 | ) | (1,637 | ) | ||||||
Retained earnings (deficit) | ||||||||||
Balance beginning of year | 125,221 | (69,423 | ) | |||||||
Dividends paid | (61,167 | ) | (26,357 | ) | ||||||
Profit attributable to shareholders of the Company | 318,662 | 221,001 | ||||||||
Balance end of year | 382,716 | 125,221 | ||||||||
Total equity attributable to shareholders of the Company | 3,254,759 | 2,961,230 | ||||||||
Non-controlling interests | ||||||||||
Balance beginning of year | 36,021 | 26,144 | ||||||||
Profit attributable to non-controlling interests | 28,561 | 17,457 | ||||||||
Dividends paid | (8,095 | ) | (7,580 | ) | ||||||
Balance end of year | 56,487 | 36,021 | ||||||||
Total equity | 3,311,246 | 2,997,251 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
1. | General Information |
2. | Basis of preparation and first-time adoption of IFRS |
· | IFRS 9 ‘Financial Instruments: Classification and Measurement’ – This is the first part of a new standard on classification and measurement of financial assets that will replace IAS 39, ‘Financial Instruments: Recognition and Measurement’. IFRS 9 has two measurement categories: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is recorded at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is measured at fair value with changes in fair value through profit or loss. In addition, this new standard has been updated to include guidance on financial liabilities and derecognition of financial instruments. This standard is effective for years beginning on or after January 1, 2015. The extent of the impact of adoption of IFRS 9 has not yet been determined. |
· | IFRS 11 ‘Joint Arrangements’ – This standard replaces the guidance in IAS 31 Interests in Joint Ventures. Under IFRS 11, joint arrangements are classified as either joint operations or joint ventures. Joint venture entities are now accounted for using the equity method. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
· | IFRS 12 ‘Disclosure of Interests in Other Entities’ – This IFRS shall be applied by companies with an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities. The application of this standard intends to enable users of the financial statements to evaluate the nature of and risks associated with its interests in other entities, and the effects of those interests on its financial position, financial performance and cash flows. Companies will be required to disclose information about significant judgments and assumptions made in determining the control of another entity, the joint control of an arrangement or significant influence over another entity and the type of joint arrangement when the arrangement has been structured through a separate vehicle. This standard is effective for years beginning on or after January 1, 2013. The Company does not expect IFRS 12 to have a material impact on the consolidated financial statements. |
· | IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. The Company is yet to assess IFRS 13’s full impact and intends to adopt IFRS 13 no later than the accounting period beginning on or after January 1, 2013. |
· | IFRIC 20 ‘Stripping costs in the production phase of a surface mine’ – This interpretation applies to waste removal costs that are incurred in open pit mining activity during the production phase of the mine. Recognition of a stripping activity asset requires the asset to be related to an identifiable component of the ore body. Stripping costs that relate to inventory produced should be accounted for as a current production cost in accordance with IAS 2, ‘Inventories’. Stripping costs that generate a benefit of improved access and meet the definition of an asset should be accounted for as an addition to an existing asset. Existing stripping costs on the balance sheet at transition that do not relate to a specific ore body should be written off to opening retained earnings. The stripping activity asset shall be depreciated on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. This interpretation is effective for years beginning on or after January 1, 2013. The Company does not expect IFRIC 20 to have a material impact on the consolidated financial statements as the Company currently applies comparable principles to those found in this interpretation. |
· | There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company. |
3. | Significant accounting policies |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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 generally measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.
Subsidiary | Location | Ownership interest | Status | Operations and development projects owned |
Qinghai Dachaidan Mining Ltd (“QDML”) | China | 90% | Consolidated | TJS Mine |
Tüprag Metal Madencilik Sanayi ve Ticaret AS (“Tüprag”) | Turkey | 100% | Consolidated | Kişladağ Mine Efemcukuru Mine |
Unamgen Mineração e Metalurgia S/A | Brazil | 100% | Consolidated | Vila Nova Iron Ore Mine |
Thracean Gold Mining SA | Greece | 100% | Consolidated | Perama Hill Project |
Sino Guizhou Jinfeng Mining Limited | China | 82% | Consolidated | Jinfeng Mine |
Sino Gold Jilin BMZ Mining Limited | China | 95% | Consolidated | White Mountain Mine |
Heihe Rockmining Limited | China | 95% | Consolidated | Eastern Dragon Project |
Brazauro Resources Corporation (“Brazauro”) | Brazil | 100% | Consolidated | Tocantinzinho Project |
Associates and jointly controlled entities 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 or joint control commences until the date that significant influence or joint control 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 or has made payments on behalf of the investee. |
At each balance sheet date, the investment in associates is assessed for indicators of impairment. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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.
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
i) | 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; |
ii) | determining the optimal methods of extraction and metallurgical and treatment processes; |
iii) | studies related to surveying, transportation and infrastructure requirements; |
iv) | permitting activities, and; |
v) | economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies. |
§ | 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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Acquisitions prior to January 1, 2010 |
On transition to IFRS, Eldorado elected to restate only those business combinations that occurred on or after January 1, 2010. In respect of acquisitions prior to January 1, 2010, goodwill represents the amount recognized under Eldorado’s previous accounting framework, Canadian GAAP. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Derivatives are recognized initially at fair value on the date a derivative contract is entered into. Subsequent to initial recognition, derivatives are measured at fair value, and changes in fair value thereafter are recognized in profit and loss. Fair values for derivative instruments are determined using valuation techniques, using assumptions based on market conditions existing at the balance sheet date. Derivatives are not accounted for using hedge accounting. |
Inventories are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and conditions 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, 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. |
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. |
Trade receivables are amounts due from customers for bullion, doré or 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 neccesary. |
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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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. |
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. |
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost, calculated using the effective interest rate 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 rate method. |
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility 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 will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. |
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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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. |
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. |
A provision is recognized if, as a result of a past event, Eldorado 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. |
Provisions 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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
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. |
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. |
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. |
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. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
5. | Cash and cash equivalents |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Cash at bank and on hand | 387,761 | 312,844 | 264,669 |
Short-term bank deposits | 6,002 | 1,500 | 700 |
393,763 | 314,344 | 265,369 |
6. | Restricted cash |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Eastern Dragon CMB standby letter of credit loan (Note 15(e)) | 52,390 | 52,425 | - |
Unamgen HSBC letter of credit | 3,000 | - | - |
Eastern Dragon CCB loan (Note 15(g)) | - | - | 50,000 |
55,390 | 52,425 | 50,000 |
7. | Marketable securities |
All marketable securities owned by the Company are categorized as available-for-sale. |
8. | Accounts receivable and other |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Trade receivables | 7,037 | 7,233 | - |
Value added and other taxes recoverable | 7,679 | 4,196 | 5,956 |
Other receivables and advances | 5,528 | 8,990 | 9,123 |
Prepaid expenses and deposits | 22,065 | 22,018 | 11,355 |
42,309 | 42,437 | 26,434 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
9. | Inventories |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Current | |||
Ore stockpiles | 47,544 | 39,483 | 37,503 |
In-process inventory including doré | 50,583 | 62,366 | 56,098 |
Materials and supplies | 65,930 | 45,414 | 35,596 |
164,057 | 147,263 | 129,197 | |
Non-current | |||
Ore stockpiles | 19,112 | 15,659 | 15,987 |
In-process inventory | 7,799 | 13,968 | 15,547 |
26,911 | 29,627 | 31,534 |
10. | Investments in significantly influenced companies |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Serabi Mining Plc (“Serabi”) | 3,646 | 6,202 | - |
Kopy Goldfields (“Kopy”) | 3,959 | - | - |
Glory Resources (“Glory”) | 11,203 | - | - |
18,808 | 6,202 | - |
2011 | 2010 | |
$ | $ | |
Balance at January 1, | 6,202 | - |
Purchases during the year | 1,318 | 6,727 |
Equity loss for the year | (3,874) | (525) |
Balance at December 31, | 3,646 | 6,202 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2011 | |
$ | |
Balance at January 1, | - |
Purchases during the year | 4,273 |
Equity loss for the period | (314) |
Balance at December 31, | 3,959 |
2011 | |
$ | |
Balance at January 1, | - |
Purchases during the year | 11,240 |
Equity loss for the period | (37) |
Balance at December 31, | 11,203 |
11. | Restricted assets and other |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Restricted non-current asset – SERP (Note 17) | 14,456 | 7,872 | 7,066 |
Restricted credit card deposits | 648 | 656 | 618 |
Restricted non-current marketable securities | - | - | 156 |
15,104 | 8,528 | 7,840 | |
Non-current accounts receivable | 369 | 352 | 2,477 |
Prepaid loan costs (Note 15(i)) | 2,849 | - | - |
Environmental guarantee deposits | 12,304 | 10,448 | 3,442 |
Deposit on land acquisition at Jinfeng | 7,804 | - | - |
38,430 | 19,328 | 13,759 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
12. Property, plant and equipment
Land and buildings | Plant and equipment | Capital works in progress | Mineral properties and leases | Total | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Cost | ||||||||||||||||||||
Balance at January 1, 2010 | 259,068 | 612,347 | 95,810 | 1,723,178 | 2,690,403 | |||||||||||||||
Acquisition of Brazauro | - | 118 | - | 108,282 | 108,400 | |||||||||||||||
Additions | 25,585 | 120,713 | 44,475 | 71,083 | 261,856 | |||||||||||||||
Finalization of purchase price allocation for Sino | - | - | - | (58,523 | ) | (58,523 | ) | |||||||||||||
Other movements | - | 268 | - | 261 | 529 | |||||||||||||||
Disposals and writedown of mineral interests | (724 | ) | (4,549 | ) | - | (25,596 | ) | (30,869 | ) | |||||||||||
Balance at December 31, 2010 | 283,929 | 728,897 | 140,285 | 1,818,685 | 2,971,796 | |||||||||||||||
Balance at January 1, 2011 | 283,929 | 728,897 | 140,285 | 1,818,685 | 2,971,796 | |||||||||||||||
Additions/transfers | 58,067 | 185,012 | (81,593 | ) | 118,299 | 279,785 | ||||||||||||||
Other movements | - | (6,303 | ) | - | - | (6,303 | ) | |||||||||||||
Disposals | (345 | ) | (1,418 | ) | - | (3,430 | ) | (5,193 | ) | |||||||||||
Balance at December 31, 2011 | 341,651 | 906,188 | 58,692 | 1,933,554 | 3,240,085 | |||||||||||||||
Depreciation and impairment losses | ||||||||||||||||||||
Balance at January 1, 2010 | (35,558 | ) | (120,662 | ) | - | (6,616 | ) | (162,836 | ) | |||||||||||
Depreciation for the year | (22,412 | ) | (56,411 | ) | - | (32,124 | ) | (110,947 | ) | |||||||||||
Disposals | 273 | 1,501 | - | - | 1,774 | |||||||||||||||
Balance at December 31, 2010 | (57,697 | ) | (175,572 | ) | - | (38,740 | ) | (272,009 | ) | |||||||||||
Balance at January 1, 2011 | (57,697 | ) | (175,572 | ) | - | (38,740 | ) | (272,009 | ) | |||||||||||
Depreciation for the year | (31,712 | ) | (63,869 | ) | - | (27,611 | ) | (123,192 | ) | |||||||||||
Disposals | 1,847 | 1,179 | - | - | 3,026 | |||||||||||||||
Balance at December 31, 2011 | (87,562 | ) | (238,262 | ) | - | (66,351 | ) | (392,175 | ) | |||||||||||
Carrying amounts | ||||||||||||||||||||
At January 1, 2010 | 223,510 | 491,685 | 95,810 | 1,716,562 | 2,527,567 | |||||||||||||||
At December 31, 2010 | 226,232 | 553,325 | 140,285 | 1,779,945 | 2,699,787 | |||||||||||||||
Balance at December 31, 2011 | 254,089 | 667,926 | 58,692 | 1,867,203 | 2,847,910 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2011 | 2010 | |
$ | $ | |
Cost | ||
Balance at January 1, | 365,928 | 324,935 |
Adjustments to preliminary purchase price allocation | - | 40,993 |
Balance at December 31, | 365,928 | 365,928 |
2011 | 2010 | |
Gold price ($/oz) | $1,300 - $1,700 | $1,050 - $1,400 |
Discount rate | 7% - 9% | 7% - 9% |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
14. | Accounts payable and accrued liabilities |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Trade payables | 67,056 | 55,786 | 27,786 |
HST and other taxes | 40,256 | 26,627 | 28,630 |
Accrued expenses | 61,055 | 63,282 | 96,620 |
168,367 | 145,695 | 153,036 |
15. | Debt |
December 31, 2011 $ | December 31, 2010 $ | January 1, 2010 $ | |
Current: | |||
Jinfeng construction loan (a) | 19,929 | 21,139 | - |
White Mountain fixed asset project loan (c) | - | 9,749 | 3,633 |
White Mountain working capital project loan (c) | - | 6,176 | 5,991 |
White Mountain working capital loan (d) | - | 7,549 | - |
Eastern Dragon CMB standby letter of credit loan (e) | 50,786 | 48,317 | - |
Eastern Dragon HSBC revolving loan facility (f) | 10,316 | 5,593 | - |
Eastern Dragon CCB loan (g) | - | - | 46,875 |
81,031 | 98,523 | 56,499 | |
Non-current: | |||
Jinfeng construction loan (a) | - | 52,951 | 97,867 |
White Mountain fixed asset project loan (c) | - | 15,189 | 24,214 |
Jinfeng working capital loan (b) | - | - | 12,452 |
- | 68,140 | 134,533 | |
Total debt | 81,031 | 166,663 | 191,032 |
i) | Sino Gold corporate guarantee; |
ii) | pledge all shares held by Sino Gold in Jinfeng; |
iii) | mortgage on all fixed assets of Jinfeng with a value above $100; |
iv) | mortgage on Jinfeng mining license and exploration license; and |
v) | mortgage on land use right. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
i) | A fixed asset loan of RMB 190.1 million ($30,170) with final payment due on September 2013 (fully paid); and |
ii) | A working capital project loan of RMB 40.9 million ($6,176) due on November 2010 (fully repaid). |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
i) | A 5 year term, RMB 320.0 million ($50,786) long term loan (“the long term loan”) to replace the LC loan with CCB; |
ii) | A 4 year term RMB 100.0 million ($15,871) fixed asset loan (“the fixed asset loan”); and |
iii) | A one year term RMB 30.0 million ($4,761) working capital loan (“the working capital loan”). |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
1. | Obtain project approval from the Heilongjiang Provincial Development and Reform Commission; |
2. | Sino Gold to open an offshore banking business bank account with CMB and deposit $40,000; |
3. | The aggregate of the amount deposited in the offshore account, Eastern Dragon registered capital and shareholder loan is at least $84,660 (this threshold has been reached as at December 31, 2009). |
i) | The project obtains the mining license; |
ii) | The project has been developed and in production; |
iii) | The gold operation permit has been granted; and |
iv) | The safety production permit and environmental protection permit have been granted. |
In October 2011, the Company entered into a $280.0 million revolving credit facility with HSBC (“the credit facility”) and a syndicate of four other banks. The credit facility matures on October 12, 2015 and is secured by the shares of SG Resources and Tuprag, wholly owned subsidiaries of the Company. |
The credit facility contains covenants that restrict, among other things, the ability of the Company to incur additional indebtedness exceeding $200.0 million, make distributions in certain circumstances, sell material assets and carry on a business other than one related to the mining business. Significant financial covenants include a maximum 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, 2011. |
Loan interest is variable, set at the lesser of LIBOR plus an interest rate margin or Prime rate plus interest rate margin dependent on a leverage ratio pricing grid. The Company’s current leverage ratio is less than 1:1. At this ratio, interest charges and fees are as follows: LIBOR plus margin of 1.75% and undrawn standby fee of 0.40%. Fees of $2,999 were paid on the establishment of the credit facility. This amount was deferred as a pre-payment for liquidity services and will be amortized over the term of the credit facility. As at December 31, 2011, the prepaid loan cost on the balance sheet was $2,849 (Note 11). |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Asset retirement obligations | ||||
Brazil | China | Turkey | Total | |
$ | $ | $ | $ | |
At January 1, 2010 | 1,062 | 20,555 | 5,378 | 26,995 |
Accretion during the year | 95 | 2,268 | 364 | 2,727 |
Revisions to estimate of obligation | 1,684 | (5,720 | 7,542 | 3,506 |
At December 31, 2010 | 2,841 | 17,103 | 13,284 | 33,228 |
Estimated undiscounted amount | 3,805 | 22,658 | 39,533 | 65,996 |
At January 1, 2011 | 2,841 | 17,103 | 13,284 | 33,228 |
Accretion during the year | 135 | 855 | 556 | 1,546 |
Revisions to estimate of obligation | 269 | 1,991 | 6,179 | 8,439 |
At December 31, 2011 | 3,245 | 19,949 | 20,019 | 43,213 |
Estimated undiscounted amount | 4,281 | 25,788 | 51,640 | 81,709 |
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 closure of the various mining operations.
Asset retirement obligations | |||
Brazil | China | Turkey | |
At January 1, 2010 | |||
Inflation rate | 2.5 | 2.5 to 3.3 | 2.5 |
Discount rate | 4.4 | 4.4 to 7.0 | 4.6 |
At December 31, 2010 | |||
Inflation rate | 5.0 | 4.0 | 5.0 |
Discount rate | 3.3 | 2.0 to 3.3 | 4.1 to 4.3 |
At December 31, 2011 | |||
Inflation rate | 3.5 | 3.5 | 3.5 |
Discount rate | 3.1 | 3.1 | 3.1 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
17. | Defined benefit plans |
December 31, 2011 | December 31, 2010 | |
$ | $ | |
Balance sheet obligations for: | ||
Pension plan | 388 | 329 |
Non-registered supplementary pension plan | 19,581 | 11,690 |
19,969 | 12,019 | |
Year ended December 31, 2011 | Year ended December 31, 2010 | |
$ | $ | |
Income statement charge for: | ||
Pension plan | 118 | 132 |
Non-registered supplementary pension plan | 1,970 | 1,205 |
2,088 | 1,337 |
Actuarial losses recognised in the statement of other comprehensive income in the period (before tax) | 6,661 | 2,635 |
Cumulative actuarial losses recognised in the statement of other comprehensive income (before tax) | 9,296 | 2,635 |
2012 | 2013 | 2014 | 2015 | 2016 | 2017 and later | |
$ | $ | $ | $ | $ | $ | |
Estimated future pension payments | 169 | 228 | 1,280 | 1,280 | 1,488 | 1,490 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
December 31, 2011 | December 31, 2010 | |||||||||||||||
Pension Plan | SERP | Pension Plan | SERP | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Present value of funded obligations | 2,101 | 19,581 | 1,609 | 11,690 | ||||||||||||
Fair value of plan assets | (1,713 | ) | - | (1,280 | ) | - | ||||||||||
Liability on balance sheet | 388 | 19,581 | 329 | 11,690 |
2011 | 2010 | |||||
Pension Plan | SERP | Total | Pension Plan | SERP | Total | |
$ | $ | $ | $ | $ | $ | |
Balance at January 1, | 1,609 | 11,690 | 13,299 | 1,268 | 7,685 | 8,953 |
Current service cost | 120 | 1,292 | 1,412 | 127 | 705 | 832 |
Interest cost | 92 | 678 | 770 | 81 | 500 | 581 |
Actuarial losses | 265 | 6,396 | 6,661 | 64 | 2,571 | 2,635 |
Benefit payments | - | (174) | (174) | - | (167) | (167) |
Exchange variance | 15 | (301) | (286) | 69 | 396 | 465 |
Balance at December 31, | 2,101 | 19,581 | 21,682 | 1,609 | 11,690 | 13,299 |
2011 | 2010 | |||||||||||||||
Pension Plan | SERP | Pension Plan | SERP | |||||||||||||
$ | $ | $ | $ | |||||||||||||
At January 1, | 1,280 | - | 1,137 | - | ||||||||||||
Expected return on plan assets | 94 | - | 76 | - | ||||||||||||
Actuarial gains and losses | 58 | - | - | - | ||||||||||||
Contributions by employer | 322 | - | - | - | ||||||||||||
Exchange variance | (41 | ) | - | 67 | - | |||||||||||
At December 31, | 1,713 | - | 1,280 | - |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2011 | 2010 | |||||||||||||||
Pension Plan | SERP | Pension Plan | SERP | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Current service cost | 120 | 1,292 | 127 | 705 | ||||||||||||
Interest cost | 92 | 678 | 81 | 500 | ||||||||||||
Expected return on plan assets | (94 | ) | - | (76 | ) | - | ||||||||||
Defined benefit plans expense | 118 | 1,970 | 132 | 1,205 |
2011 | 2010 | |||
Pension Plan | SERP | Pension Plan | SERP | |
% | % | % | % | |
Expected return on plan assets | 6.5 | 6.5 | 6.5 | 6.5 |
Discount rate - beginning of year | 5.5 | 5.5 | 6.0 | 6.0 |
Discount rate - end of year | 4.5 | 4.5 | 5.5 | 5.5 |
Rate of salary escalation | 3.0 | 3.0 | 4.5 | 4.5 |
Average remaining service period of active employees expected to receive benefits | 6.7 years | 6.7 years | 5 years | 5 years |
December 31, 2011 | December 31, 2010 | |||||||
Pension Plan | SERP | Pension Plan | SERP | |||||
Cash and equivalents | 2% | 2% | 4% | 4% | ||||
Fixed income | 98% | 43% | 96% | 51% | ||||
Equity | - | 55% | - | 45% | ||||
Total | 100% | 100% | 100% | 100% |
Change in assumption | Impact on overall liability | |
Discount rate | Increase by 0.5% | Decrease by 6.2% |
Decrease by 0.5% | Increase by 6.9% | |
Salary escalation rate | Increase/decrease by 0.5% | Increase/decrease by 0.2% |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
18. | Income tax expense and deferred taxes |
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
$ | $ | |||||||
Current tax expense | 163,783 | 95,022 | ||||||
Deferred tax expense (recovery) | 1,804 | (8,083 | ) | |||||
165,587 | 86,939 |
2011 | 2010 | ||||||
$ | |||||||
Turkey | 94,781 | 47,780 | |||||
China | 70,131 | 38,876 | |||||
Greece | 260 | - | |||||
Brazil | 125 | - | |||||
Canada | 172 | 283 | |||||
Other jurisdictions | 118 | - | |||||
165,587 | 86,939 |
2011 | 2010 | |
$ | ||
Profit before income tax | 512,810 | 325,397 |
Canadian statutory tax rate | 26.50% | 28.50% |
Tax on profit at Canadian statutory tax rate | 135,895 | 92,738 |
Items that cause an increase (decrease) in income tax expense: | ||
Foreign income subject to different income tax rates than Canada | (23,973) | (23,463) |
Derecognition (initial recognition) of deferred tax assets | (7,634) | - |
Non-tax effected operating losses and capital gains | 16,593 | 9,488 |
Non-deductible expenses and other items | 9,302 | 8,118 |
Foreign exchange and other translation adjustments | 18,699 | (2,702) |
Amounts under (over) provided in prior years | 5,800 | (518) |
Withholding tax on foreign income | 10,905 | 3,278 |
Income tax expense | 165,587 | 86,939 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2011 | 2010 | ||||
$ | $ | ||||
Net deferred tax asset (liability) | |||||
Balance at January 1, | (330,512) | (355,425) | |||
Deferred income tax (expense) recovery in the income statement | (1,804) | 8,083 | |||
Deferred income tax charged to other comprehensive income | (12) | 40 | |||
Adjustments to acquisitons | - | 16,474 | |||
Other | 8 | 316 | |||
Net balance at December 31, | (332,320) | (330,512) |
Expense (recovery) | ||||||||||||||||||||||||
Type of temporary difference | Deferred tax assets | Deferred tax liabilities | on the income statement | |||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Property, plant and equipment | 1,838 | 3,286 | 346,687 | 338,876 | 9,259 | (9,463 | ) | |||||||||||||||||
Loss carryforwards | 11,142 | 6,581 | - | - | (4,561 | ) | 833 | |||||||||||||||||
Liabilities | 11,534 | 7,678 | 6,365 | 494 | 2,015 | (1,257 | ) | |||||||||||||||||
Other items | 1,536 | - | 5,318 | 8,687 | (4,909 | ) | 1,804 | |||||||||||||||||
Balance at December 31, | 26,050 | 17,545 | 358,370 | 348,057 | 1,804 | (8,083 | ) |
Unrecognized deferred tax assets | 2011 | 2010 | ||
$ | $ | |||
Tax losses | 61,287 | 61,599 | ||
Other deductible temporary differences | 9,639 | 19,218 | ||
Total unrecognized deferred tax assets | 70,926 | 80,817 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Expiry date | Canada | Brazil | Greece | Australia | Total | |
$ | $ | $ | $ | $ | ||
2012 | - | - | 1,611 | - | 1,611 | |
2013 |
| 5,989 | - | 1,652 | - | 7,641 |
2014 |
| 6,030 | - | - | - | 6,030 |
2025 |
| 7,938 | - | - | - | 7,938 |
2026 |
| 14,868 | - | - | - | 14,868 |
2027 |
| 10,725 | - | - | - | 10,725 |
2028 |
| 25,965 | - | - | - | 25,965 |
2029 |
| 23,455 | - | - | - | 23,455 |
2030 |
| 7,480 | - | - | - | 7,480 |
2031 |
| 46,445 | - | - | - | 46,445 |
No Expiry | - | 9,397 | - | 28,346 | 37,743 | |
148,895 | 9,397 | 3,263 | 28,346 | 189,901 | ||
Capital losses with no expiry | 96,868 | - | - | - | 96,868 | |
Tax effect of total losses not recognized | 49,342 | 2,174 | 653 | 8,504 | 60,673 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
19. | Share capital |
Voting common shares | Number of Shares | Total $ |
At January 1, 2010 | 537,136,235 | 2,671,634 |
Shares issued upon exercise of share options, for cash | 5,056,216 | 35,895 |
Estimated fair value of share options exercised | - | 12,020 |
Shares issued for acquisition of subsidiary | 5,993,898 | 95,118 |
Shares issued for cash upon exercise of warrants | 843 | 12 |
At December 31, 2010 | 548,187,192 | 2,814,679 |
Shares issued upon exercise of share options, for cash | 3,399,096 | 30,115 |
Estimated fair value of share options exercised | - | 9,410 |
Shares issued for cash upon exercise of warrants | 96,629 | 1,485 |
At December 31, 2011 | 551,682,917 | 2,855,689 |
20. | Share-based payments |
2011 | 2010 | |||
Weighted average exercise price Cdn$ | Number of options | Weighted average exercise price Cdn$ | Number of options | |
At January 1, | 9.49 | 8,720,524 | 6.11 | 8,928,901 |
Granted | 16.53 | 3,869,691 | 13.30 | 5,448,842 |
Exercised | 8.70 | (3,399,096) | 7.37 | (5,056,216) |
Forfeited | 14.96 | (575,006) | 11.76 | (601,003) |
At December 31, | 12.60 | 8,616,113 | 9.49 | 8,720,524 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
December 31, 2011 | ||||||||||
Total options outstanding | Exercisable options | |||||||||
Range of | Shares | Weighted average remaining contractual life (years) | Weighted average exercise price Cdn$ | Shares | Weighted average exercise price Cdn$ | |||||
$4.00 to $4.99 | 1,218,686 | 1.8 | 4.88 | 1,218,686 | 4.88 | |||||
$5.00 to $5.99 | 82,500 | 0.6 | 5.31 | 82,500 | 5.31 | |||||
$6.00 to $6.99 | 471,000 | 1.1 | 6.42 | 471,000 | 6.42 | |||||
$7.00 to $7.99 | 284,333 | 0.5 | 7.24 | 284,333 | 7.24 | |||||
$9.00 to $9.99 | 302,900 | 2.3 | 9.64 | 302,900 | 9.64 | |||||
$11.00 to $11.99 | 10,000 | 2.2 | 11.40 | 10,000 | 11.40 | |||||
$12.00 to $12.99 | 183,500 | 3.1 | 12.60 | 116,833 | 12.44 | |||||
$13.00 to $13.99 | 2,616,916 | 3.1 | 13.23 | 1,381,091 | 13.23 | |||||
$15.00 to $15.99 | 453,646 | 4.3 | 15.54 | 231,215 | 15.44 | |||||
$16.00 to $16.99 | 2,919,026 | 4.1 | 16.66 | 858,329 | 16.66 | |||||
$18.00 to $18.99 | 24,000 | 3.9 | 18.81 | 16,000 | 18.81 | |||||
$19.00 to $20.02 | 49,606 | 4.4 | 19.35 | 19,737 | 19.46 | |||||
| ||||||||||
8,616,113 | 3.1 | 12.60 | 4,992,624 | 10.57 |
2011 | 2010 | |||
|
| |||
Risk-free interest rate (range) | 1.60% – 2.05% | 1.69% – 1.99% | ||
Expected volatility (range) | 29% – 61% | 38% – 73% | ||
Expected life (range) | 0.8 – 2.8 years | 0.8 - 2.8 years | ||
Expected dividends | Cdn $0.10 | Nil | ||
Forfeiture rate | 4% | 4% |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Total RSUs | |
Balance at December 31, 2010 | - |
RSUs Granted | 416,454 |
Redeemed | (146,059) |
Forfeited | (16,808) |
Balance at December 31, 2011 | 253,587 |
21. | Supplementary cash flow information |
December 31, 2011 $ | December 31, 2010 $ | |
Changes in non-cash working capital | ||
Accounts receivable and other | (7,902) | (14,307) |
Inventories | (13,299) | (12,452) |
Accounts payable and accrued liabilities | 31,149 | (32,750) |
Total | 9,948 | (59,509) |
Supplementary cash flow information | ||
Income taxes paid | 134,594 | 93,056 |
Interest paid | 7,856 | 10,415 |
Non-cash investing and financing activities | ||
Shares, options and warrants issued on acquisition of subsidiaries | - | 95,683 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
22. | Financial risk management |
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 |
Canadian | Australian dollars | Euro | Turkish | Chinese | Brazilian | |
Cash and cash equivalents | 20,837 | 1,308 | 61 | 65,989 | 855,214 | 7,097 |
Marketable securities | 2,686 | - | - | - | - | - |
Accounts receivable and other | 2,353 | - | 499 | 8,560 | 90,695 | 25,189 |
Accounts payable and accrued liabilities | (12,424) | (12) | (38) | (59,520) | (672,734) | (12,740) |
Debt | - | - | - | - | (510,568) | - |
Net balance | 13,452 | 1,296 | 522 | 15,029 | (237,393) | 19,546 |
Equivalent in U.S. dollars | $ 13,227 | $ 1,318 | $ 675 | $ 7,956 | $ (37,676) | $ 10,433 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
22. | Financial risk management (continued) |
(iii) Interest rate risk |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
22. | Financial risk management (continued) |
· | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
· | Level 2 – Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs (i.e.,quoted prices for similar assets or liabilities). |
· | Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Balance at December 31, 2011 | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable inputs | ||||
$ | $ | $ | $ | ||||
(Level 1) | (Level 2) | (Level 3) | |||||
Assets | |||||||
Held-for-trading | |||||||
Restricted asset (SERP) | 14,456 | 14,456 | - | - | |||
Available-for-sale financial assets | |||||||
Marketable securities | 2,640 | 2,640 | - | - | |||
Total assets | 17,096 | 17,096 | - | - | |||
23. | Commitments |
2012 $ | 2013 $ | 2014 $ | 2015 and later $ | |||||
Operating leases and capital expenditures | 10,337 |
| 3,560 |
| 3,491 |
| 1,930 | |
Purchase obligations | 81,785 |
| 5,133 |
| 1,056 |
| 562 | |
|
|
|
|
|
|
| ||
Totals | 92,122 |
| 8,693 |
| 4,547 |
| 2,492 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
23. | Commitments (continued) |
24. | Contingencies |
25. | Related party transactions |
2011 | 2010 | ||
$ | $ | ||
Salaries and other short-term employee benefits | 18,897 | 7,966 | |
Termination benefits | 732 | - | |
Post-employment benefits | 95 | 87 | |
Share-based payments | 17,104 | 25,556 | |
36,828 | 33,609 |
26. | Financial instruments by category |
December 31, 2011 | December 31, 2010 | |||||||||||||||||||
Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||
Financial Assets | ||||||||||||||||||||
Held-for-trading | ||||||||||||||||||||
Restricted assets and other (SERP) | 14,456 | 14,456 | 7,872 | 7,872 | ||||||||||||||||
Available-for-sale | ||||||||||||||||||||
Marketable securities | 2,640 | 2,640 | 8,027 | 8,027 | ||||||||||||||||
Loans and receivables | ||||||||||||||||||||
Cash and cash equivalents | 393,763 | 393,763 | 314,344 | 314,344 | ||||||||||||||||
Restricted cash | 55,390 | 55,390 | 52,425 | 52,425 | ||||||||||||||||
Accounts receivable and other | 34,630 | 34,630 | 38,241 | 38,241 | ||||||||||||||||
Restricted assets and other | 23,974 | 23,974 | 11,456 | 11,456 | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Accounts payable and accrued liabilities | 168,367 | 168,367 | 145,695 | 145,695 | ||||||||||||||||
Debt | 81,031 | 81,031 | 166,663 | 166,663 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
27. | Production costs |
2011 | 2010 | |
$ | $ | |
Production costs | ||
Labor | 59,079 | 47,302 |
Fuel | 30,580 | 22,143 |
Reagents | 39,873 | 29,910 |
Electricity | 31,753 | 25,146 |
Mining contractors | 31,677 | 42,415 |
Operating and maintenance supplies and services | 73,532 | 62,725 |
Finance and administrative costs | 19,210 | 23,579 |
Inventory change | 13,185 | (2,375) |
Royalties, production taxes and selling expenses | 47,595 | 27,129 |
Total production costs | 346,484 | 277,974 |
28. | Interest and financing costs |
2011 | 2010 | |
$ | $ | |
Interest expense | 4,208 | 7,730 |
Financing fees | 1,123 | 357 |
Interest on capital leases | - | 2 |
Total interest and financing costs | 5,331 | 8,089 |
29. | Earnings per share |
December 31, | December 31, | |
2011 | 2010 | |
(in thousands) | (in thousands) | |
Weighted average number of ordinary shares used in the calculation | ||
of basic earnings per share | 549,791 | 542,861 |
Diluted impact of stock options | 1,834 | 2,989 |
Weighted average number of ordinary shares used in the calculation | ||
of diluted earnings per share | 551,625 | 545,850 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
30. | Segment information |
2011 |
|
|
|
|
| |
Turkey | China | Brazil | Greece | Other | Total | |
Information about profit and loss | ||||||
Metal sales from external customers | 455,311 | 586,759 | 56,863 | - | - | 1,098,933 |
Production costs | 117,189 | 198,995 | 30,300 | - | - | 346,484 |
Depreciation | 11,342 | 104,154 | 4,689 | - | 2,229 | 122,414 |
Operating profit | 326,780 | 283,610 | 21,874 | - | (2,229) | 630,035 |
Other material items of income and expense | ||||||
Exploration costs | 10,515 | 8,741 | 5,639 | - | 5,878 | 30,773 |
Income tax expense | 94,781 | 70,131 | 125 | 260 | 290 | 165,587 |
Information about assets and liabilities | ||||||
Property, plant and equipment | 591,896 | 1,903,793 | 185,667 | 163,239 | 3,315 | 2,847,910 |
Goodwill | - | 365,928 | - | - | - | 365,928 |
Non-current assets | 591,896 | 2,269,721 | 185,667 | 163,239 | 3,315 | 3,213,838 |
Additions to property, plant and equipment | ||||||
during the year | 166,601 | 82,249 | 17,532 | 2,902 | 2,062 | 271,346 |
Total debt | - | 81,031 | - | - | - | 81,031 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2010 |
|
|
|
|
| |
Turkey | China | Brazil | Greece | Other | Total | |
Information about profit and loss | ||||||
Metal sales from external customers | 339,151 | 443,699 | 8,325 | - | - | 791,175 |
Production costs | 96,658 | 177,045 | 4,271 | - | - | 277,974 |
Depreciation | 14,419 | 90,304 | 1,031 | - | 1,403 | 107,157 |
Operating profit | 228,074 | 176,350 | 3,023 | - | (1,403) | 406,044 |
Other material items of income and expense | ||||||
Exploration costs | 13,181 | 3,464 | 3,063 | - | 2,793 | 22,501 |
Income tax expense | 47,780 | 38,876 | - | - | 283 | 86,939 |
Information about assets and liabilities | ||||||
Property, plant and equipment | 431,392 | 1,924,959 | 179,612 | 160,335 | 3,489 | 2,699,787 |
Goodwill | - | 365,928 | - | - | - | 365,928 |
Non-current assets | 431,392 | 2,290,887 | 179,612 | 160,335 | 3,489 | 3,065,715 |
Additions to property, plant and equipment | ||||||
during the year | 141,001 | 101,089 | 9,560 | 2,368 | 2,421 | 256,439 |
Total debt | - | 166,663 | - | - | - | 166,663 |
At December 31, 2011, each of our Chinese mines had one major customer, to whom each sells its entire production, as follows: |
TJS Mine | Henan Zhongyuan Gold Smelter Factory Co. Ltd.of Zhongjin Gold Holding Co. Ltd. |
Jinfeng Mine | China National Gold Group Corporation |
White Mountain Mine | Refinery of Shandong Humon Smelting Co. Ltd. |
30.3 Seasonality/cyclicality of operations |
Management does not consider operations to be of a significant seasonal or cyclical nature. |
31. | Events occurring after the reporting date |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
31. | Events occurring after the reporting date (continued) |
The transaction was to be carried out by way of court-approved plan of arrangement and required shareholders’ approval. The shareholders of both Eldorado and European Goldfields approved the transaction on February 21, 2012 and court approval was obtained on February 22, 2012.
32. | Explanation of transition to IFRS |
The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended December 31, 2011, the comparative information presented in these financial statements for the year ended December 31, 2010 and in the preparation of an opening IFRS balance sheet at January 1, 2010 (Eldorado’s date of transition). |
In preparing its opening IFRS balance sheet, Eldorado has adjusted certain amounts reported previously in financial statements prepared in accordance with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected Eldorado’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. |
1. Initial elections upon adoption |
Set out below are the applicable IFRS 1 exemptions applied by Eldorado in the conversion from Canadian GAAP to IFRS: |
1.1 IFRS exemption options: |
Exemption for business combinations |
Exemption for share-based payment transactions |
Exemption for employee benefits |
Exemption for borrowing costs |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
32. | Explanation of transition to IFRS (continued) |
2. Reconciliations of Canadian GAAP to IFRS |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
32. | Explanation of transition to IFRS (continued) |
2.1 Opening balance sheet (January 1, 2010) |
Canadian GAAP | Effect of transition | IFRS | ||
to IFRS |
| |||
Note | ||||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 265,369 | - | 265,369 | |
Restricted cash | 50,000 | - | 50,000 | |
Marketable securities | 13,951 | - | 13,951 | |
Accounts receivable and other | 26,434 | - | 26,434 | |
Inventories | 129,197 | - | 129,197 | |
484,951 | - | 484,951 | ||
Long term inventories | 31,534 | - | 31,534 | |
Restricted assets and other | 13,872 | (113) | 13,759 | |
Property, plant and equipment | (a); (c); (f) | 2,580,816 | (53,249) | 2,527,567 |
Goodwill | 324,935 | - | 324,935 | |
3,436,108 | (53,362) | 3,382,746 | ||
LIABILITIES & EQUITY | ||||
Current liabilities | ||||
Accounts payables and accrued liabilities | (bii); (e) | 157,250 | (4,214) | 153,036 |
Current debt | 56,499 | - | 56,499 | |
Deferred income taxes | (aii) | 4,264 | (4,264) | - |
218,013 | (8,478) | 209,535 | ||
Debt | 134,533 | - | 134,533 | |
Asset retirement obligations | (c) | 26,566 | 429 | 26,995 |
Pension fund obligation | (b) | - | 7,811 | 7,811 |
Deferred income taxes | (a); (c); (e); (f) | 390,242 | (34,817) | 355,425 |
769,354 | (35,055) | 734,299 | ||
Non-controlling interests | (d) | 26,144 | (26,144) | - |
Equity | ||||
Share capital | 2,671,634 | - | 2,671,634 | |
Contributed surplus | 17,865 | - | 17,865 | |
Accumulated other comprehensive income | 2,227 | - | 2,227 | |
Deficit | (51,116) | (18,307) | (69,423) | |
Total equity attributable to shareholders of the Company | 2,640,610 | (18,307) | 2,622,303 | |
Attributable to non-controlling interests | (d) | - | 26,144 | 26,144 |
2,666,754 | 7,837 | 2,648,447 | ||
3,436,108 | (53,362) | 3,382,746 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
2.2 | Balance sheet (December 31, 2010) |
Canadian GAAP | Effect of transition | IFRS | ||
to IFRS | ||||
Note | December 31, 2010 | |||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | 314,344 | - | 314,344 | |
Restricted cash | 52,425 | - | 52,425 | |
Marketable securities | 8,027 | - | 8,027 | |
Accounts receivable and other | 42,437 | - | 42,437 | |
Inventories | 147,263 | - | 147,263 | |
Deferred income taxes | (aii) | 606 | (606) | - |
565,102 | (606) | 564,496 | ||
Long term inventories | 29,627 | - | 29,627 | |
Investment in significantly influenced company | 6,202 | - | 6,202 | |
Restricted assets and other | 19,328 | - | 19,328 | |
Property, plant and equipment | (ai); (c) | 2,793,722 | (93,935) | 2,699,787 |
Goodwill | 365,928 | - | 365,928 | |
3,779,909 | (94,541) | 3,685,368 | ||
LIABILITIES & EQUITY | ||||
Current liabilities | ||||
Accounts payables and accrued liabilities | (bii); (e) | 152,781 | (7,086) | 145,695 |
Current debt | 98,523 | - | 98,523 | |
Deferred income taxes | (aii) | 2,915 | (2,915) | - |
254,219 | (10,001) | 244,218 | ||
Debt | 68,140 | - | 68,140 | |
Asset retirement obligations | (c) | 24,275 | 8,953 | 33,228 |
Pension fund obligation | (b) | - | 12,019 | 12,019 |
Deferred income taxes | (a); (c); (e) | 430,020 | (99,508) | 330,512 |
776,654 | (88,537) | 688,117 | ||
Non-controlling interests | (d) | 36,021 | (36,021) | - |
Equity | ||||
Share capital | 2,814,679 | - | 2,814,679 | |
Contributed surplus | 22,967 | - | 22,967 | |
Accumulated other comprehensive income | (bi) | 998 | (2,635) | (1,637) |
Retained earnings (deficit) | 128,590 | (3,369) | 125,221 | |
Total equity attributable to shareholders of the Company | 2,967,234 | (6,004) | 2,961,230 | |
Attributable to non-controlling interests | (d) | - | 36,021 | 36,021 |
3,003,255 | 30,017 | 2,997,251 | ||
3,779,909 | (94,541) | 3,685,368 |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
Note | Year ended | |
December 31, 2010 | ||
Comprehensive Income under Canadian GAAP | 222,291 | |
Profit adjustments | ||
Reduction in pension expense | (b) | 1,037 |
Increase in depreciation of asset retirement obligation (net of tax) | (c) | (274) |
Decrease in severance provision expense (net of tax) | (e) | 300 |
Revision to asset retirement obligation liability (net of tax) | (c) | (866) |
Foreign exchange (loss) gain on reversal of deferred income tax | (a) | 12,223 |
Tax adjustment to reflect foreign exchange difference | (aii) | 2,518 |
Other comprehensive income adjustments | ||
Recognition of actuarial gains/losses in other comprehensive income | (bi) | (2,635) |
Total IFRS adjustments to comprehensive income | 12,303 | |
Comprehensive Income under IFRS | 234,594 |
a) | i) Under IFRS, deferred income taxes are not recognized on an asset acquisition providing certain conditions are met, |
ii) | Under Canadian GAAP, no future tax assets or liabilities are recognized for temporary differences associated with the cost of non-monetary assets and liabilities of subsidiaries where the tax basis is measured in a currency different from the functional currency. IFRS requires that deferred taxes be recognized in respect of these foreign exchange differences by translating the tax bases of the assets and liabilities at the year end rate and comparing to the accounting carrying value calculated at historical rates. Upon adoption of IFRS, this resulted in an adjustment to decrease property, plant and equipment by $1,864, decrease deferred income tax liability by $1,620 and increase the deficit by $244. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
b) | i) Under Canadian GAAP, Eldorado applied the corridor method of accounting for actuarial gains and losses. |
ii) | Under IFRS, Eldorado expenses the cost of past service benefits awarded to employees under post employment benefit plans over the year in which the benefits are vested. Under Canadian GAAP, Eldorado expensed past service costs over the weighted average service life of active employees remaining in the plan. This adjustment increased benefit fund obligations and deficit by $2,665 as at January 1, 2010. |
c) | IFRS requires that asset retirement obligations are discounted using a current discount rate specific to the related future liability or a risk-free interest rate if risks are incorporated into the related cash flows. Under Canadian GAAP, a credit adjusted risk-free rate was used. As a result, the asset retirement obligation recorded at January 1, 2010 has been re-measured using the risk-free discount rate in effect at that date, given that risks have been incorporated into the related cash flows, and an adjustment has been recorded to the corresponding asset. This resulted in an increase in property, plant and equipment of $370, an increase in asset retirement obligation of $429, a decrease in the deferred income tax liability of $11 and an increase in deficit of $48 at January 1, 2010. As a result of this, the annual accretion of the liability increased under IFRS. |
d) | Under IFRS, the non-controlling interests’ share of the net assets of subsidiaries is included in equity and their share of the comprehensive income of subsidiaries is allocated directly to equity. Under Canadian GAAP, non-controlling interests were presented as a separate item between liabilities and equity in the statement of financial position and the non-controlling interests’ share of income and other comprehensive income were deducted in calculating net income and comprehensive income of the entity. |
Notes to the Consolidated financial statements |
(Expressed in thousands of U.S. dollars, unless otherwise stated) |
e) | IFRS requires provisions to be recorded at fair value rather than carrying value, therefore the severance provision at January 1, 2010 in Turkey was reduced by $975, creating a deferred tax liability of $195 on transition. The offsetting entry for these adjustments was recorded against retained earnings. During the 2010 year the provision was decreased by $375 and the deferred tax liability increased by $75. The decrease has been accrued over the year on a straight-line method, with the offsetting entry recorded in the income statement. |
f) | As part of the IFRS transition and the evaluation of components of property, plant and equipment, the Company recorded at January 1, 2010 a decrease of $315 to property, plant and equipment, a decrease of $63 to the deferred tax liability and an increase of deficit of $252. |