Paul Wright - President and CEO Paul Skayman - COO Fabiana Chubbs - CFO.

Andrew Quail - Goldman Sachs Steven Butler - GMP Securities John Bridges - JP Morgan Dan Rollins - RBC Capital Markets Kerry Smith - Haywood Securities Anita Soni - Credit Suisse Securities John Tumazos - John Tumazos Very Independent Research Tanya Jakusconek - Scotia Capital.

Good morning. My name is Christine and I'll be your conference operator today. At this time, I would like to welcome everyone to the Eldorado Gold Corporation 2016 Year-End and Q4 Financial and Operational Results Call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Paul Wright, President and CEO, you may begin your conference..

Thank you, operator, and good morning and welcome to our fourth quarter and year-end 2016 financial and operating results call.

I'm here this morning at Vancouver with Paul Skayman, Chief Operating Officer; Fabiana Chubbs, Chief Financial Officer; Krista Muhr, our Vice President of Investor Relations; and my soon to be successor George Burns, whose [indiscernible] you will listen to in April.

As always, we have provided detailed financial and operational information in the press release from yesterday evening.

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 2015 AIF and the forward-looking statement disclaimer at the end of the news release. As always, we will try to make this a brief call.

Paul and Fabi will review the operations and financial results, but I want to touch briefly on the strategic objectives we achieved during the year and what we expect in this upcoming year of 2017.

First off, on a safety note, I would like to extend my congratulations to all of our teams as the Company continued in 2016 to improve the overall safety record, with a reduction in lost time and injury frequency rate for the fifth consecutive year.

Through a global commitment to leadership, training, identification, management and mitigation of risks, being prepared for incidents and learning from them, we are succeeding at making our working places safer.

On to the year review; 2016 was a transitional year for the Company as we set out with specific targets and goals, and I'm happy to say that we delivered. Including the discontinued Chinese operations, we finished the year having produced just over 486,000 ounces of gold at cash cost of $579 per ounce.

The all-in sustaining cash costs averaged $900 per ounce, which was considerably lower than the initial 2016 guidance of $940 to $980.

Progress continued at our Skouries and Olympias projects in Greece, we continued to advance our development projects in Romania and Brazil, and our exploration team demonstrated success in our early-stage projects with a goal of complementing our internal growth pipeline.

The team delivered on the sales of our Chinese assets, a long and dare I say arduous process. With these sales, we ended the year with total liquidity of approximately $1.1 billion, which includes $888 million in cash, cash equivalents and term deposit, and $250 million in undrawn lines of credit.

Throughout the year, underground mine development and access rehabilitation continued at Olympias. The team now is putting the finishing touches on Phase II and is nearly complete as we move forward with the startup commissioning this quarter.

We expect Olympias to be in full production by the third quarter and it is expected to produce 40,000 to 50,000 ounces of gold at cash cost between $250 and $450 an ounce depending on the base metal credit level.

Skouries had a tough start to 2016, when after delays in the permitting process we decided to move to a temporary suspension on the construction works. We ramped back up with development halfway through the year after the receipt of the necessary permits to recommence.

Through the suspension period, we used the opportunity to take a better look at our engineering plans, we have made some significant changes to the mine plan sequencing, and now are moving forward with the engineering to change it to a dry stack tailings concept.

These decisions will facilitate early mining of the higher-value underground ore and greatly reduce the overall environmental impact on the footprint of the project. We also believe we are making progress with the new Ministry of Energy and Environment.

I have said before, we are in need of cooperative and willing government who chooses to work with us and all of our stakeholders over the long lives of these significant assets. It is indeed a slower process than we would have liked, but it is headed in the right direction.

In Turkey, while there were many news headlines throughout 2016, we experienced no disruptions in our two mines in the country.

Late in the year, at Kisladag, we made the decision to maximize near and medium-term profitability and reengineer the 13 million tonne per annum pit rather than deploying additional expansion and significant sustaining capital to move to the 20 million tonne per annum scenario.

The revised operating plan greatly enhances free cash flow from the operation in near and medium term, while maintaining the long-term operating integrity of this asset. In exploration throughout the year, we drilled over 50,000 meters of 16 greenfields, brownfields and in-mine programs.

The results from the programs have well defined our exploration plans for 2017. In Serbia, post the results from the drill testing of Copper Canyon and the Shanac zones led to the 100% acquisition of the KMC project.

In Brazil, we acquired an option covering over 3,000 square kilometers of prospective greenstone belts at the Borborema and Nazareno projects, and commenced drill testing of several target areas.

In Romania, we received the exploration license for the Bolcana project in the Certej district, and we have committed to over 25,000 meters of drilling at Bolcana through which we plan to define the large porphyry system.

In addition, we recently reached the first two drill stations in our new hangingwall exploration drift development of Stratoni in Greece. Drilling will commence shortly in our initial three-year program with exploration and resource definition drilling of the previously untested down-dip and along-strike extensions of the orebody.

Our exploration budget for 2017 has increased to $35 million and includes plans for over 80,000 meters of drilling. I strongly believe that Eldorado is now set for the next phase of our Company's growth. We are well-positioned to focus on and build our internal pipeline of quality assets.

We have the cash balance to internally fund our capital growth plans and we have the right team in place to execute. And just before I turn over to Paul and Fabi, I'd like to take this opportunity to welcome George Burns to the Eldorado team.

The official handover of the presidency or title is set to occur on our April 27th Annual General Meeting, but George has been in the office for a few weeks now and is fully engaged with all the different areas of the organization and we are gearing up to get on the road to meet many of you in the coming weeks and to spend some time at our operations in the various countries.

I will be moving to the role of Vice Chairman in April and look forward to supporting George from that role. That's it for me. Over to Paul..

Thanks Paul. Good morning, everyone. Starting off with Turkey, Kisladag produced 59,000 ounces of gold, which was under our expectations for the quarter. Overall though, we managed to produce 211,000 ounces, just below our annual guidance of 225,000 ounces.

Generally, we were not as successful in drawing down the pad inventory as we had predicted in Q4 last year with the commissioning of the new leach trends, even though we did reduce the inventory somewhat during the quarter. Inventory levels at the end of January sit at approximately 70,000 ounces.

Tonnes of ore mined and placed on pad were both over budget, with a small amount of run of mine material placed on pad in the last quarter. The year-to-date strip ratio for Kisladag was only 0.92-to-1, which was slightly below our budget of 1-to-1.

We rounded the year out with 16.2 million tonnes of material mined, and 13.1 million of that placed through the crusher with the rest being placed on the pad as run of mine material. I think the key item in the press release is the reduction of reserves from Kisladag.

I would like to remind people that when we commenced operations in 2006, it was with a reserve of 5.06 million ounces in 135 million tonnes of ore. At the end of 2016, we've mined 4.2 million ounces in 129 million tonnes. So, in the last 10 years, we've mined 83% of the gold in 96% of the ore.

We still have 5.3 million ounces in 278 million tonnes and an expected mine life of 17 years of this 13 million tonne per annum mine plan. It's still slightly more than the reserve when we commenced operations.

We designed a new 13 million tonne per annum pit to maximize profitability at Kisladag, given the projects that we are working on elsewhere have – now there is some significant capital requirements and ensuring that Kisladag continues to provide the required cash flows throughout this project build cycle.

To that end, the reserve is increased in grade by around 7% to 0.75 grams per tonne. The orebody itself is reactive to both gold price operating costs and technological advances.

All of these will potentially play a part in future changes to reserves and we haven't yet sterilized any of the material that was taken out of this reserve in terms of ability to increase the pit size at higher gold prices at some point in the future.

I'd like to draw your attention to the fact, the resource is virtually unchanged and we have converted much of the probable to proven during 2016. The resource currently stands at 9.45 million ounces from last year's 9.6 million ounces, and reserves are drawn from that resource pool.

In terms of the current phase of mining, we are capable of extracting approximately 100 million tonnes from this orebody without increasing the strip ratio of about 1-to-1, which gives us approximately seven years at current throughput rate. Overall, the strip ratio for the total reserve is around 1.35-to-1.

Sustaining capital over the next four years is expected at around $30 million per year. Recovery numbers that we are now using are based on the latest metallurgical test work that only became available late in 2016.

When we first completed the feasibility study in 2005, the recoveries were based on oxidation state only and we were using [80%] [ph] for oxide and 60% for sulfide.

It became obvious in work completed from 2010 to 2015 that these recoveries were not high enough, because if we persevered with these numbers, the inventory levels in the pad would have been negative.

Therefore, we completed a number of [indiscernible] tests on various alteration types and metallurgies and brought the recoveries down to the individual ore types. During this period, we had an average recovery from sulfide ore of 65%.

As we continue to mine underneath the water table and continue to refine the model, we have identified some bad actors in the ore types and in some cases have significantly reduced their expected recoveries.

This has allowed us to concentrate on the higher recovery materials and not place material that will potentially not be profitable on the pad at all. Overall though, we are just under the initial feasibility expected sulfide recovery – sorry, just over the initial feasibility expected sulfide recovery at 61% for sulfide.

As we are now below the water table, the amount of oxide swept in the orebody is very low, estimated at around 1% of the reserve.

Moving on from Kisladag, Efemcukuru turned in another solid quarter and year with tonnage mined and processed both over budget and the ounce production in line with our initial 2016 guidance of 90,000 to 100,000 ounces at $550 to $600 per ounce. We actually completed the year at 98,364 and average cash cost of $514.

And we are looking forward to a similar year in 2017 from the team at Efemcukuru. As you are all aware, we completed the sale of our Chinese operations during the later part of 2016, so I won't comment on those. On the development side, work continues on the Olympias Phase II construction.

Despite a rough January from a weather standpoint, we continue to guide the startup of commissioning in Q1 2017 and looking forward to getting Olympias into production. All of the mechanical equipment is now in place and we're completing electrical and pipe work on certain sections of the plant.

At Skouries, also a slow start to 2017 with significant snowfall over the site, things are starting to improve now though and work is moving forward with earthworks and some site steel work in equipment direction.

And at Tocantinzinho, we continue to work through the permit process, concentrating on the installation license in Brazil as well as completing basic engineering in Vancouver. And with that, I'll turn it over to Fabi..

Thank you, Paul, and good morning everyone. I will go through the financial statements highlighting changes in significant accounts. We ended the year with cash, cash equivalents and term deposit balance of $883 million, compared to $288 million at the end of 2015.

The increase in cash balance is mainly the result of proceeds from the sale of assets of $793 million, $104 million generated by continued operations before changes in working capital and $298 million usage of cash for capital programs. During the year, we completed the sale of our Chinese assets for net proceeds of $882 million.

This resulted in a decrease of $1.3 billion in property, plant and equipment, a $50 million decrease in goodwill and a $255 million decrease in our total liabilities. On the income statement, the result of the Chinese operation is shown in a single line as discontinued operations, included $351 million loss on sale of these assets.

Net loss attributable to shareholders of the Company was $344 million or $0.48 per share, compared to a loss of $1.5 billion or $2.15 per share in 2015.

Excluding the loss on the sale of our Chinese assets and related transaction costs of $364 million and excluding unrealized losses of $17 million, we reported adjusted net earnings for the year of $47 million or $0.07 per share compared to earnings of $13 million or $0.02 per share in 2015.

Gross profit from continued operations for the year of $163 million increased 30% year-over-year as the impact of lower sales volumes were offset by higher gold prices and lower operating costs. Gross profit from discontinued operations for the year was $53 million. Those are my comments on the financial statements. I will turn the call back to Paul..

Thank you, Fabi. Thank you, Paul. Operator, we'll hand over questions now, please..

[Operator Instructions] Your first question comes from the line of Andrew Quail from Goldman Sachs. Your line is open..

Paul and team, thanks for the update.

Just a couple of questions on Kisladag, just with the expansion being deferred now, can you guys just walk us through how much that was gold price driven, Paul, versus I suppose capital allocation to other assets, like obviously Skouries? But looking at it now, everyone is screaming that gold has just flung through $1,250 and you guys probably would've been doing more of this planning at much lower gold prices.

If we hold these levels, is this something that midyear we could get an update that this expansion is back on the table?.

I don't think $1,250 will cut it, Andrew, to be honest. Look, if you go back in the history of the expansion, the expansion was sort of muted and engineered back in the days of gold price being at $1,700 an ounce.

And when we looked at how the Company was going to go move forward at that point in time and how we were going to finance the projects going forward, which led us to obviously the bond facility and the revolver, our downside was $1,500. And as gold went down lower and lower, yes, the expansion still worked, I mean you could at $1,300.

But when you took a hard look at the cash flow generating capacity at $1,300 in the short to medium term compared to just continuing where we are, it was really not a lot of value to be gained associated with putting a significant additional capital at risk.

And in our view, and maybe we'll be proven wrong, at the end of last year, is that we were more likely to be over the next call it two or four years in a relatively depressed gold price environment relatively speaking and fairly volatile, and although we had, and still have obviously, an exceptionally strong balance sheet, it was important to us having disposed off the Chinese assets to have the financial security to be able to rebuild the production base off that balance sheet.

And to do so, certainly I felt very strongly, as did the Board, that it was essential that we had the two remaining operations clearly on path so we'd see them delivering strong cash flow in a price deck that would be call it somewhere in the $1,100 to $1,300 range.

And so that was the rationale behind it, which would ensure that we would have in terms of cash flow as well as cash on the balance sheet sufficient funds to move forward to diversify the production base of the Company over the next couple of years.

So, I think firstly my view, gold at $1,200, $1,250 projected for the next three or four years isn't likely to change our views on reactivating the expansion. What would it take? Firstly, I think you're probably taking a view of closer to $1,400 in longer-term before you would sort of say, yes, it's worth putting this additional dollars to work.

But again, you're going to do that in the context of what are the other alternatives for capital allocation inside the Company. But simply put, expanding to the 20 million tonnes a year throughput, although it didn't cost a lot in terms of the residual capital, it put us very quickly into a mode of very high sustaining capital.

So we just really weren't generating much in the way of free cash flow over the next couple of years..

Got it.

So just moving on with some of the opportunities you do have internally, something about TZ, is there something in your mind that you want to get to, whether it'd be that reserves and resources of that size, and do you guys find – I mean obviously you got all economics, but personally do you think there is some sort of size component to actually committing to the project?.

Sorry, I have lost – I mean….

In terms of ounce per annum or....

No, in terms of total ounces before you guys – I mean there's obviously a greenfield project, there is not much infrastructure.

I mean before you actually really start to commit to the project, is there a total number of ounces that you have in your head that you want to get to?.

Look, I think the project has configured delivering whatever it is, around 150,000 to 170,000 ounces, is a reasonable size of project. I think as a company given our overall sort of objectives in terms of the size of the company we are building, the size of mines we're comfortable operating, that would certainly satisfy the criteria.

There are a lot of other considerations however that go into whether or not or if we make the construction decision on TZ, but it's certainly I would say the production rate box is being already checked on that..

No, I suppose it's more about the reserve or resource, like is there – if that's – you got that right but do you want to say 10 years of reserve?.

Look, it's a bit on the light side right now. Andrew, it's a bit of a chicken and egg situation here. You'd like to have a longer mine than what we have right now, which is whatever it is a 10 year mine or thereabout, you'd like to frankly see that closer to 15 years to make I think everybody feel more comfortable.

But the reserves, the pit that holds the reserves is drilled off, and we're in sort of this situation where although the district is prospective, there is no immediate target for us in the near-term to change that reserve.

I mean, there is nothing out there obvious that we can go out and drill up which will give us another 0.5 million ounces of reserves. And we have over the years cut back significantly on exploration.

Doing exploration in that part of the world is expensive business due to access, due to infrastructure, due to jungle, all of these things, and it's difficult to understandably motivate our team when they look at how we allocate monies to different jurisdictions where we have, frankly we can get better bang for our buck elsewhere.

Now all of that changes of course if you actually make a decision to invest in the mine. The access improves, the infrastructure improves, and the cost of doing exploration diminishes, and dare I say the motivation to find more ore increases..

And threshold drops as a result of subsequent deposits..

Yes. So, it's a bit of a chicken and egg situation. I'm not sure that there's anything that we could look to in the short term that's going to enhance the reserve life. I think fundamentally there is enough smoke around the situation to support our thesis that the [indiscernible] that trend is prospective.

I mean there is no lack of mineralization in the trend..

Got it. I'll leave it at that. Thanks. If this is your last conference call, thanks Paul for all your hard work over the years. Stay in touch..

Okay, likewise. Thanks Andrew..

Your next question comes from the line of Steven Butler from GMP Securities. Your line is open..

Congrats, Paul, to you and welcome as well to George in his new role.

A question for you on Olympias, Paul Skayman, I guess on the new Kokkinolakas tailings management facility, is that [indiscernible], Paul, with respect to startup of the mill? The mining you said starts up in the first quarter and I assume the mill will do the same, but the full facility is expected to commission by middle of the year.

So how do you manage the ore in the process?.

I guess I talked about the mine as the mine and the mill, where we are putting all through end of the first quarter basically. To be honest, Steve, most of the material actually goes back underground as backfill. There is a very small component that might head over to the Kokkinolakas.

We don't see that as – we continue to work on it, but we are well advanced in terms of where we need to be if we do place material in that facility. So, no, it's certainly not an issue for us in terms of starting up Olympias..

Okay. And then, Paul, you had mentioned the sustaining capital significantly higher or a fair bit higher on expanded. I think you talked enough to beat this thing into a pulp in terms of discussion as to why not to proceed.

But at the 29 tonne per year pit, what was the sustaining capital running through your models?.

As Kisladag?.

I'm sorry, Kisladag..

Under the expanded case?.

Yes..

I'd need to go and double check. I'd be getting up around 100 million mark for sort of that short-term. I'd need to double check that..

Okay. Thanks very much..

Over the life of the mine, it was 900 million..

But obviously [indiscernible] heavily front loaded. So, there's a fair bit of sort of wide-stripping to sort of get access to more material and pad construction and rock waste dump construction as well..

Okay. Thanks guys..

Your next question comes from the line of John Bridges from JP Morgan. Your line is open..

No question but just want to congratulate you, Paul, and welcome you, George, to the business. It's just been very impressive what you have achieved over the years, and Paul in particular, your determination just to stay with the high road in terms of what you invest in. But congratulations and best of luck in keeping George at the control..

I hope that won't be too much of a challenge. Thanks for the call. Thank you very much, John. Thanks for all the support over the years..

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

I appreciate it if you have already mentioned it, but I got on the call late, sorry to do that, but I was wondering if you might be able to provide a little bit more commentary around the reduction at the Kisladag reserves beyond what was outlined in the September Investor Day, but more specifically on the impact of different recovery factors on the differing metallurgy there and the ore types and if that has any impact on the existing life of mine recoveries for the existing reserves?.

I did talk about reserves earlier. The overall recoveries for sulfide material as a group have moved from about 65% down to sort of just over 60%, which is back where we were from a feasibility standpoint. Overall, in terms of sort of adjustment to year-on-year P&P, the recovery accounted for around 25% of that.

And obviously, as you'll appreciate, everything is sort of inter-linked. So it's a little tricky to sort of look at any of these in isolation, because they obviously have an effect on other components..

And just to get a handle on potential of the optionality remaining in that large resource base, in noting Paul's comments that it's really about ensuring strong free cash flow from the existing assets while the new real value drivers of the Company are sort of developed, is there a period in time in years where you basically, once we pass like three or four years, that it's really impossible to go back to that phase for expansion and you're really just sort of now living with what you have in the current reserve base?.

No, you are not losing that optionality. I guess some of the initial thinking behind the expansion now was the sort of sweet spot in terms of grade over the next couple of years. You could certainly go back and do that expansion. It would just you would need to put some money into it..

So the strike price on that option gets a lot higher as the years go by?.

I'm not sure I'm following that..

The cost of pulling the option on the expansion as you go through the next couple of years gets higher because you're basically taking out more the sweetness of the ore body but potentially you're going to have a greater strip ratio going down the road. So it really becomes a call really in the gold price and other opportunities within the Company..

Yes. What you just said is what we've already said, Dan, absolutely..

Okay, I was just trying to find if there is an optionality because it's a large resource base that technically there could be value for it, but if it's not really capable of being produced or I think extracted, it loses value..

Look, we could have stated all of this as a reserve, all right. And it's a horrible thing to have to highlight in a conference call, it's about actually making money, all right, and this asset historically has made a lot of money for this corporation. I mean internal rate of return for this project since inception is well through 45%.

So, we have always operated this mine to make money, and that's what we're doing here as well, whilst maintaining the ability to be able to subsequently expand if metal prices and the conditions in the corporation allow that. And that's what we are focused on, all right..

Perfect.

So I'm just trying to figure out if there is any amount of period where [indiscernible] but obviously it's fairly open-ended from your viewpoint right now?.

Yes, I mean the mine started with 5 million ounces of reserves, we still got 5 million ounces of reserves, and we've been operating for 12 or 13 years..

Yes, I understand about the past of the asset. I'm just trying to get a feel for the optionality [indiscernible]..

The past is relevant to the extent that again we have always used this asset to make money. So that's what we're doing..

Perfect. Just on going to Greece, obviously we have seen a lot of changes there politically. It sounds like the tensions that were there about a year ago have really waned and you're starting to make a lot of headway.

Is there any key permits that are remaining for Olympias to get going and sort of maybe if you could talk on sort of how the relationship between the company in Greece and the management in Greece are now interacting with the government there?.

This is going to be a lengthy call, is it Dan? Look, in terms of key permits to get started, there aren't any at Olympias. I mean there is a permit related to the [indiscernible] plant….

There will be an operating permit. You can't even start with that until people can actually review safety and fire risk and those sorts of things, and we don't anticipate an issue there necessarily..

It is still a challenging environment, Dan. I mean, the situation has evolved, the relationship with the government has improved, the endorsement of the project now is frankly throughout the broader Greek society. The majority of Greek society, never mind the local region, are supportive of the investment.

It's become clear obviously through the lifespan of this government to date that what the country needs is aligned with what we are providing. But it's been slow progress.

But yet there are still elements within frankly the government and there are still elements within the society, albeit small, that are opposed to privatization or opposed to development and are opposed to mining.

But we are prevailing, the projects are getting built, and the evidence will be in front of everybody as it relates to Olympias in the second quarter as you start seeing production and cash flow..

That's perfect. Just wanted to make sure, I just wanted to confirm that the direction that we have seen over the last years is continuing, and it's baby steps but it's really good to see that continuing. So I appreciate it and thanks very much for the clarity on the call..

Your next question comes from the line of Kerry Smith from Haywood Securities. Your line is open..

Paul Skayman, is there much run of mine material left at Kisladag there in the mine plan or is it basically going to be all crushed and put on the pad?.

It's pretty well all to be crushed now, Kerry. With that slightly higher grade material, we get more value out of it by putting it through the crusher. So, there is no plans to put more run of mine on the pad..

Okay, right. And for Skouries, you talk about this permit amendment to go from paste to dry stack tail.

Does that need a permit amendment or is that just – like how does that work in terms of getting the approvals to do that or do you already have those approvals?.

We will submit – we've already had preliminary discussions with the Ministry of Environment as it relates to the proposed change. To be frank, I don't think we are sure of what it will constitute in terms of amendment, but there will be an amendment.

I mean, the move from paste backfill to dry stack tailings is obviously, and is recognized by the civil servants, beneficial on all fronts, in terms of surface impact, in terms of stability, in terms of the flexibility it gives within the mine plan. But it is a change and we'll have to work through that change with the civil servant..

Okay.

But Paul, I guess you're not expecting that that would impact the timing of the schedule as it were?.

We don't see that at present, no..

Okay. And just on Olympias on the CapEx, when we had the Analyst Day last September, at the time somebody said that there was I think it was $101 million left to spend to complete the CapEx for Phase II Olympias. And in the back half of last year you spent about $80 million, if I calculate the numbers right.

So, that leaves about $20 million left to spend based on that old number.

Is that still, is that project still on schedule for that CapEx spend because you're talking about $85 million this year, but if I did the numbers it looks like there's only $20 million left for the Phase II, but I guess there's other…?.

Yes, I mean that $85 million, the budget for this year includes other….

Kokkinolakas construction and about Phase III a little bit more underground development, et cetera..

So it's not apples and apples, Kerry..

Right.

But I guess is that old $101 million budget to complete Phase I is still roughly on schedule and on budget?.

Yes, I think so. I mean we haven't seen – we've sort of pretty well stuck to the budget in terms of what we have done for Phase II generally. So yes, I don't think we are too far off from that..

Okay. And then just on the dividend that you declared, is that – I'm trying to read the language there, is that meant to be a one-time dividend? I mean you used to pay a semi-annual dividend.

And how are you sort of portraying this $0.02 dividend?.

This is simply a reflection of the performance of the Corporation. Our dividend policy, that's [indiscernible] in 2010 and revamped in 2011 and the metal price environment that we experienced in the year. We went through a period of the year where we didn't pay dividend.

That was largely driven by metal price being below the level inside of our policy..

Okay. So [indiscernible].

Let's put it this way, Kerry, it's not unreasonable to assume that there will continue to be a dividend as long as gold price averages over $1,250, but as always these things are at Directors' discretions..

Right. Okay, that's what I was going to basically ask, okay.

And just the last question if I could on this – in Serbia, you've got this Shanac skarn that you mentioned on the exploration side, you say it was gold rich, how big is the skarn, do you even know, and when you say gold rich, what does that mean, is that like 0.5 gram, 1 gram? I don't know, I'm just trying to get a sense for how important this could be?.

Gold rich for us in copper rich would be my comment.

I mean I think look – I think we are very pleased with our entry into Serbia to the extent that we very quickly were able to move into a fairly, what we think is a fairly prospective part of Serbia, gained access, gained licenses, get into a program going, identifying a number of drill targets, start to test these targets, and hit mineralization which frankly I don't think anybody is under illusion here is economic, but it's an interesting development and it's a good start to our commitment to do exploration in Serbia.

I mean relating to the specific drilling program that you're talking about, I mean we tested an area of roughly 400x400 so far. That's 400 meters x 400 meters..

Right, okay. That's helpful, Paul. I appreciate that. Thank you..

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

Actually all of my questions have been asked, and so I would just leave it to congratulating Paul on your new role and welcoming George to his role as CEO, and I'll leave it at that..

Thanks Anita..

Your next question comes from the line of John Tumazos from John Tumazos Research. Your line is open..

Congratulations on the sale of the assets in China. Do you think that you might sell other baskets of assets to simplify the Company and raise money? You don't seem to get credit for the full breadth of your efforts. Maybe the market worries that you make a lot of money in Turkey and spend it somewhere else.

But certainly simplicity can be a virtue too..

Look, we don't have any immediate plans to divest off any assets. I mean part of obviously how we run our business includes both acquisition development and consideration of divestment. But I wouldn't say at this stage that there's any plans in the near to medium term to divest assets..

Thank you..

[Operator Instructions] Your next question comes from the line of Tanya Jakusconek from Scotia bank. Your line is open..

Just a question for Paul Skayman if we can, and sorry Paul to come back to Kisladag, but one of the statements that you made with respect to Kisladag was maximizing cash flow for the asset.

Can you talk a little bit about some of the cost savings and the benefits that you see under this 13 million tonne pit? You mentioned obviously the savings in sustaining capital, so thank you for that, that 30 million from 100 million, but is there any other thing that you could put some more color to that will help us understand?.

I don't know that it's so much sort of cost savings, I think it's more sort of improvement in terms of generating free cash flow in that medium term. We are obviously mining a slightly smaller pit, but it's got better grades. So putting 13 million tonnes on a better grade will generate more ounces and obviously lower costs for that material.

The other benefit when comparing it to the 20 million tonne obviously is that deferral in sort of requirement for wide-stripping and pad construction, et cetera..

Yes, that was appreciated. It's just also that I think the strip ratio goes up from 1 to 1.35..

Yes, the prior reserves had it over 1.4. So what it does allow us to do is sort of mine within that at a consistently lower strip ratio for a reasonable period of time, and the overall strip ratio compared to prior reserve is reduced as well..

So would it be fair to say that it's a combination then first obviously of the better grade upfront, clearly you mentioned the sustaining capital upfront is lower, and obviously this lower strip upfront, all of this upfront maximizes the cash flow over the life of mine, would that be a fair statement?.

Yes, I mean simplistically, Tanya, what was happening, the expanded case, which obviously provided more gold, provided more gold at a higher operating cost and a significantly higher all-in sustaining cost.

So, when you broke it down into increments, you were paying, your additional ounces that you produced were very low margin ounces at the price deck that we have assumed over the next few years..

Okay..

And our price deck, just to remind you, our assumption for this year is $1,150, $1,200 for next year, $1,250 for the year after, and $1,300, all right..

And we have run all the reserves at $1,200 life of mine..

Exactly, and reserves are $1,200.

And that price deck, to put a very large amount of sustaining capital in the next couple of years was essentially eliminating most of the free cash flow from the operation over the next couple of years, and albeit it would allow us to state a larger reserve but that really wasn't contributing much in the way of free cash flow.

And I guess, again I keep repeating myself, we have always run our mines to make money rather than just simply to have reserve and be able to long mine plans, all right..

And I would have assumed that those reserves would have been at the end of the mine life?.

Yes, I mean there are – we have removed tonnes that were a fair bit lower grade and needed more stripping to do. And as Paul says, under a different price environment we'll revisit it and have another look, but today this is what we think makes the most sense for the Corporation in the short to medium term..

No, we appreciate it. I was just trying to understand the benefits offsetting the loss of the ounces over like obviously a 17-year mine life. Okay, thank you..

There are no further questions at this time. Mr. Paul Wright, I turn the call back over to you..

Okay, thank you, operator, and thank you everybody for attending the call and we all look forward to listening to George host this call in April. Thanks again. Have a good weekend..

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect..