Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Eldorado Gold Corporation 2017 Q4 and year-end results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question- and- answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. George Burns, President and CEO, you may begin your conference.
Thank you, Operator. Good morning and welcome to our fourth quarter and year-end 2017 financial and operating results call. With me here in Vancouver is Paul Skayman, Chief Operating Officer, Fabiana Chubbs, Chief Financial Officer, and Peter Lekich , our Investor Relations Manager. Before I begin, I must remind you that any projections and objectives included in our discussion today are likely to involve risks, which are detailed in our 2016 AIF and in the forward-looking statement disclaimer at the end of the news release we put out last night. You will have seen that we have put out two releases yesterday. One summarizes our financial and operating results for 2017. The other provides highlights of three technical studies and outlines our business path going forward. Before I get into our plans for 2018, I will start by briefly reviewing the 2017 overall results.
Fabi and Paul will provide more detail on last year's operations and financials after my comments. I will also leave it to Paul to review highlights of the technical studies. There's no beating around the bush, but 2017 was a very challenging year for the company. Looking back, despite acquiring Lamaque project from Integra Gold in July, technical challenges at Kışladağ seemed to overshadow the Eldorado value proposition. Compounding this, permitting and arbitration headwinds in Greece were front and center for a good portion of the year. This was extremely frustrating for us and highly disappointing for our shareholders. I want to reiterate again that mining is a complex and long-term industry. The operational challenges that we often encounter require innovative solutions, patience, and a whole lot of tenacity to work through. Facing these challenges head-on is what our teams here and at our operations are doing.
I'm extremely proud of our team's dedication to produce three technical studies, along with the accompanying plans to move forward in an extremely short period of time. It was an incredible effort and a good outcome. These reports will be filed with the relevant securities authorities next week. Although you will have seen key highlights from these in our news release of yesterday evening. Again, I will let Paul walk through the highlights of what the teams have been busy putting together. I do have some high-level comments on the reports that I would like to make. These three technical reports for Lamaque, Kışladağ, and Skouries lay the foundation of our path forward and enable us to outline a strong near-term growth profile. By moving the Lamaque project into operation and constructing a mill at Kışladağ, we expect to restore Eldorado Gold's production to over 600,000 oz per year.
This is before factoring in any production from the Skouries project in Greece. First off, at Lamaque. Since acquiring Integra, the Lamaque project in July 2017, we focused on infill drilling the upper portion of the Triangle deposit in order to quantify a maiden reserve. Triangle is one of three currently identified deposits within the Lamaque property, and I cannot emphasize enough that it is currently the only area included in the pre-feasibility study that we released last night. What's exciting about Lamaque is the upside that we believe is there. Additional inferred resources of 1.3 million oz of gold proximal to the existing reserve were not included in the study and will be targeted for further conversion drilling to extend the mine life. Exploration drilling during the year is also testing extensions to the Parallel deposit and other targets on the property. Over to Turkey.
We will proceed with advancing a mill at Kışladağ on a staged basis. Paul will talk more about the specifics of this project, but I want to emphasize that our team in Turkey has over a decade of successful construction and operating experience. They're extremely pragmatic and competent, having built the original Kışladağ and Efemçukuru mines and execute subsequent plant expansions. Their knowledge of local construction costs and worker productivity is an asset and it increases our certainty on project timescales and budgets. I am confident that our team will be able to deliver on the plan to move the mill option forward at Kışladağ.
They have already begun to work on the permitting and planning for the feasibility study that will commence shortly. We expect to have this feasibility study complete in October of this year, at which point the board and management will look to make a final investment decision. Finally, over to Greece. After taking the reins as Eldorado's new President and CEO in May of last year, I lost track of the number of trips I made to Greece over the latter half of the year. The arbitration proceedings that officially began in September were focused on the technical study that was submitted for phase three at Olympias, and we remain confident that this technical study is consistent with the Transfer Contract, the business plan, and approved environmental terms of the project.
Given the confidential nature of the arbitration, we have not been able to publicly discuss the details of this process, but we are expecting the panel to conclude and announce their decision by April 6th. I wish to repeat what I stated last quarter, and that is, we are confident in the completeness of our efforts in Greece, the rigor of our engineering, and our adherence to all applicable health, safety and environmental laws and regulations. Based on extended engagement with the Ministry of Environment and Energy, I believe that arbitration is being pursued by the Greek government as a means to resolve issues and normalize the investment. We continue to work with the ministry to demonstrate our commitment to implementing best available technologies and operating to the highest safety and environmental standards.
This can be evidenced in the detailed plans for dry stack tailings that we have included in the latest technical study at Skouries. Even with all of the permitting delays that occurred in Greece throughout the year, our team successfully delivered on putting Olympias into commercial production at year-end. We also recently initiated our first ever exploration drilling campaign at Olympias since acquiring the project, with 7,000 meters of drilling planned to target extensions in the high-grade East Zone. Similarly, at the nearby Stratoni mine, our exploration team currently has three underground rigs actively following up on last year's successful resource expansion drilling program. First and foremost, as always, we remain prudent with our capital and we'll be opportunistic and balanced in our approach to financing. With a solid business plan with near-term high quality growth, we can now begin to assess alternatives for optimum financing to support our growth.
We are not interested in unduly stressing the balance sheet, and we will seek to optimize project economics versus overall risks. To be clear, there is no immediate rush as our liquidity supports the company's near-term requirements. To wrap it up, we have been busy setting our course and now we must deliver. I am confident in the plan that we have presented and on our abilities to execute on it. We have strengthened our management team, both in head office and overseas, and streamlined our board in order to position ourselves for success. We continue to prioritize capital in a manner that will maximize the value of our portfolio for all our stakeholders. The de-risk nature of Kışladağ and Lamaque and our team's skills and expertise give me confidence that we will deliver near-term growth on schedule and on budget.
Looking toward the horizon, we also have a robust pipeline of exploration and development projects in prospective regions to further explore. With that, I will now turn the call over to Paul Skayman.
Thanks, George. Good morning, everyone. I just want to quickly review the 2017 results and operations and provide some commentary where appropriate. Starting with Turkey, Kışladağ produced approximately 44,300 oz of gold in Q4, for a full year's production of around 171,400 oz, which was at the bottom end of our latest guidance for Kışladağ in 2017. As people will be aware, we increased the cyanide addition rate in the second quarter and indicated that solution grade off the leach pad was expected to improve in the fourth quarter. We're happy to say that it did and was approximately in line with our expectations. As we indicated in the October call, we were seeing lower recoveries in the composite columns and subsequently reduced the leach pad inventory by 40,000 oz.
Further test work has confirmed that recoveries for much of the remaining ore, and more importantly, the high-grade and dominant potassic material, will only generate 35%-40% recoveries by heap leach extraction methods, thereby confirming our view that milling the remaining material is the most prudent way forward. Tonnes of ore mined and grade of ore placed on were both slightly higher than budget for the quarter, and placed grade was higher for the year at 1.03 grams per ton. The 2017 strip ratio at Kışladağ is approximately 1:1, which is below our full year guidance of 1.18:1. Cash costs for the year were good at $500 per ounce and in line with expectations. Continuing in Turkey, Efemçukuru had a good quarter with production of 25,500 oz. Ounces sold were slightly below this at 23,050.
For the year, we did slightly more tons, slightly lower grade, and produced a total of 96,080 oz, which was exactly on target. Ounces sold were slightly behind the full-year plan. Cash costs for Q4 and the year were about $525, which was at the bottom end of our full-year guidance for this project. Moving over to Greece, we declared commercial production at Olympias at the end of the quarter. For the year, we've produced approximately 18,500 oz of gold. We continue to work on the installation of the extra filter press, and this is currently undergoing commissioning. The paste plant is also moving along well, with commissioning commencing shortly. Just this week, we've completed a couple of days at nameplate capacity using the extra filter press. We're now looking forward to running the plant at 100% for an extended period and getting the process plant settled down and further optimized.
At Stratoni, we had a slower year as we expected. Lower mill throughput and slightly lower mine grades were partially offset by higher received metal prices. The good news is that exploration continued to find extensions to the known ore zones, and at year-end, we had approximately double the amount of contained metal at Stratoni. At Skouries, we continue to move towards care and maintenance. We got hit with a significant storm late in Q4 that did some damage to the early earthworks in the tails dam area. We're approaching completion of this work, and we'll move into care and maintenance shortly. In Canada, things continue to move forward nicely at Lamaque. Underground development continues to advance, and we anticipate mining around 200,000 tons during 2018. The bulk of this material will be toll milled and expected to generate between 25,000 oz and 35,000 oz during the year.
Material toll milled to date has provided good insight into the metallurgical performance of the ore, with recoveries in excess of 95%. A recent milestone is that on March 9th this year, the company received the mining lease for the Triangle deposit, and now expecting mill startup at the beginning of 2019. For 2018, we pre-released guidance back in January, and now with Kışladağ assumptions for the full year of 120,000 oz-130,000 oz and updated figures from Lamaque of 25,000 oz-35,000 oz . On a consolidated basis, we now expect to produce between 290,000 oz and 330,000 oz at cash operating costs between $580 and $630 per oz. Now looking forward to the highlights from each of the technical studies at Kışladağ, Lamaque, and Skouries.
I should point out that there are three presentations on the website we uploaded late yesterday giving key data on these projects, and the technical studies for these will all be released next week. First at Kışladağ, pre-feasibility study identified processing remaining ore through a mill as the optimal solution to maximize project value. We'll begin work to move the mill option forward, starting with permitting, feasibility study, and detailed engineering this year. We have updated reserves, and while the overall contained ounces in reserve are lower, we're now mining 200 million tons less waste material than was previously assumed. We've also increased the head grade, reduced ore tons by 45%, but only reduced gold ounces recovered by 14%. At slightly better metal prices, much of the reserve that didn't make it into the 2017 numbers would return and extend the mine life with profitable ore.
A final investment decision on the mill construction is expected by year-end, subject to completion of a feasibility study, which is expected to be complete in October. The full timeline to mill completion from today is approximately three years. One year for permitting, and two years, plus or minus, for construction. That puts our estimates for commissioning in late 2020. Estimated capital required is approximately $380 million for the mill construction and around $110 million of pre-stripping. I should point out we'll spend approximately 6% of that total capital in 2018 and around 25% of that in 2019. Most of the funds will be required in 2020. This project generates an after-tax NPV of $434 million at a 5% discount rate and an IRR of 22%. The payback period is just under four years.
The pre-stripping is material that would've been capitalized, and rather than push it back into the mill's startup period, we feel we can do it more effectively now with existing equipment and personnel, rather than buying more equipment for a potentially short period of stripping time. The reserve base of 3.1 million oz of contained gold supports a nine-year mine life, with average annual production of approximately 270,000 oz and all-in sustaining costs of around $780 per oz. Additional resources of 5.9 million of contained oz provide further upside under a larger pit scenario. In the near term, ore mining at Kışladağ will be put on hold, but the team will continue to draw down gold inventory from the leach pad. We're expecting approximately 120,000 oz-130,000 oz for 2018 and 40,000 oz-50,000 oz for 2019. We'll continue stripping waste during this period as well. Over to Lamaque.
We announced the maiden reserve of approximately 900,000 oz yesterday, which forms the base of the initial pre-feasibility study of the project. The study only mines that reserve and outlines an initial seven-year mine plan with annual production of around 117,000 oz of gold and all-in sustaining costs of $717 per oz, generating an after-tax NPV of roughly $200 million and an IRR of 34%. We believe this is just the beginning for Lamaque as the study shows steady ramp up to annual production of 135,000 oz, which we expect to sustain with further resource to reserve conversion. As George mentioned, an additional 1.3 million oz of inferred resource is sitting proximal to existing reserves and has been excluded from the pre-feasibility study. This is in addition to the 375,000 oz of measured and indicated resource not included in the reserve.
The company will be targeting these ounces with near-term conversion drilling to extend the mine life beyond the seven years outlined in the initial study. Finally, back over to Greece, where the updated Skouries technical study reflects our optimized project economics and incorporates best available environmental and operational technologies. The $689 million capital cost of the revised design includes earlier development of the underground increased water management infrastructure and an improved estimate for the cost of the tailings filter plant. The other adjustment there is exchange rate. It's moved from 1.1 previously to 1.2 today from euro to U.S. dollar. The main improvements in the most recent work are more upfront development of the project, which maximizes underground material generation.
While the capital cost has increased prior to startup, the capital development cost from fleet phase two has decreased significantly, and the project is now cash flow positive throughout its mine life, assuming current spot prices. With the dry stack integrated waste management facility, we now have the option to stockpile the potentially problematic oxide material from the highest sections of the open pit and can process these later in the mine life. Our main concern here was the ability to successfully filter this material during startup and the lower recoveries associated with this material. By treating it later in the mine life, we'll have more filter experience and can blend this material in as required. Although Skouries is currently moving to care and maintenance as a result of delayed permits, the plant is approximately 50% built.
We estimate there's another two years to go to complete construction and commissioning once all necessary permits are received, and a board decision to proceed has taken place. On a safety note, we continue to work hard to improve our safety record. Our site's total recordable injury frequency rate was reduced for the fourth consecutive year, though unfortunately, we saw an increase in both the number and frequency of lost time injuries in 2017. Sadly, we also had a fatality involving a contractor during pre-cutting operations at our Skouries project in Greece. We're committed to making our workplaces safer, and we continue to strengthen our leadership and training, identification, management, and mitigation of risks, and being prepared for and learning from incidents. With that, I'll now turn it over to Fabi to review the 2017 financial performance.
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 and cash equivalents and term deposit balance of $485 million, compared to $888 million at the end of 2016. The decrease in the cash balance is mainly the result of cash used in capital expenditures of $346 million, $122 million used in the acquisition of Integra, and $11 million in dividend payments to shareholders. This was partially offset by cash flow generated from operating activities before changes in working capital of $69.6 million and proceeds from pre-commercial production sales of $38.2 million. During the year, we completed acquisition of Integra Gold for total consideration of $357 million, inclusive of the Integra shares held by Eldorado.
This resulted in an increase of $394 million in property, plant, and equipment, $93 million in goodwill, and an increase of $127 million in deferred income taxes. Net loss attributable to shareholders of the company was $9.9 million or $0.01 per share compared to a loss of $344 million or $0.48 per share in 2016. Excluding $37.5 million in write-down of assets net of tax, $6.2 million in transaction costs, and $28 million gain on available for sale securities, we reported adjusted net earnings for the year of $15.2 million or $0.02 per share compared to adjusted earnings of $47.4 million or $0.07 per share in 2016. Gross profit for the year of $126 million was lower year-over-year, mainly due to lower ounces sold.
The financial results were also impacted by higher G&A costs due to higher legal and organizational costs, an increase in operating expenses of $19.5 million, offset by $11.3 million of reduction in standby costs, and a $17 million increase in investment income, as well as a $27 million gain on the Integra shares held at acquisition. Those are my comments on the financial statements. I will return the call back to George.
Thank you, Fabi. Operator, we can open the call for questions.
At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Kerry Smith with Haywood Securities. Your line is open.
Thanks, Operator. George, with the mining now stopped at Kışladağ, obviously that makes sense because you can get a better margin out of the mill. How much production would you think you'd get on the residual leach in 2020, which would be kind of the last year before you get the mill running?
What we're looking to do, Kerry, is with the numbers that we've indicated for 2018 and 2019 only draw down inventory. We'll be investigating opportunities to improve that during 2018. At the moment, we anticipate getting all of those ounces out over 2018 and 2019. We will be investigating where there's opportunity to improve ultimate extraction from that leach pad. There may be opportunity with some material that's encountered during stripping. At the moment, it's all been stockpiled, but we'll reassess that as we move forward. Opportunity ore, if you like, that from higher reaches, will give us good recovery and maybe material that ultimately we put on. We're not there yet on 2020, I guess.
Okay. That PFS will show zero production, sorry. I guess you'll expect zero production unless you can do something else.
Yeah. At this stage. Yeah.
Okay. Got you. Does the new plan for Skouries require an amended EIA, or is that all still fine?
We're working on a revised technical study, and we'll be in discussions with the Greek government. At this point, our view is it'll be a revision to the permit.
Does that mean it would just need an amendment then? Is that right, George?
Correct.
Okay. That's to be determined then. Okay. Maybe just the last one. How much CapEx, Fabi, have you now spent so far on Skouries, like in total, up to the end of 2017?
We are looking around $410 million since 2012.
Since from 2012 to 2017?
Correct.
Okay, great. Thank you.
You bet, Kerry.
Your next question comes from the line of Jeff Kramer with Morgan Stanley. Your line is open.
Hi, thanks for taking my question. Just on the capital expenditure side, let's assume stay on Kışladağ, and Skouries remains on care and maintenance. Can you help us with the overall sequencing of CapEx over 2018, 2019, and 2020? What those numbers look like overall for Eldorado?
So, uh, overall?
Yeah, annuals for each year.
Yeah. So, we're in the-
200.
$275 million range in 2018, and then it starts moving up 2019, a little over $300 million total, and 2020 around $450 million.
That includes sustaining, does it?
Yeah, that's total capital.
Yeah, that's total cap, includes sustaining capital.
Excellent. Okay. Thank you. Just to touch on the financing at this point, you said it's not urgent given the cash position. Could you discuss, I guess, some of the options you're looking at this point, whether it's project financing at Kışladağ itself, or things you have in mind?
Sure. Maybe to start with, the high yield market remains robust, and we remain confident we can refinance our bond, and we will be opportunistic. In terms of funding our growth, we have near-term cash to bring Lamaque into production next year and to fund much of the Kışladağ mill requirements. I'd tell you, we're not in a hurry. We have time to responsibly secure optimal financing to complete Kışladağ and to move Skouries forward once we have all the required permits. We'll be doing that without unnecessarily and unduly stressing the balance sheet and without unnecessarily diluting shareholders. We have lots of options in front of us. When you look at the strong growth profile of the projects we have, I think we have one of the strongest growth profiles in the industry. We'll be looking at all options.
That can include divestiture at the right price of some of our assets that aren't top priority for us, as well as pursuing all sorts of alternatives to give us an optimum financing strategy. In the end, we're not in a rush, and we're very confident we'll put in place the appropriate financing to support our near and medium-term growth.
Okay, understood. I guess just as you move forward with that, would you consider hedging gold prices, just as you're into this kind of project mode? If not, I guess what are the levers you would pull if there were a downturn in gold prices? I'll leave it there.
Sure. With a downturn in gold prices, we'd reassess the pace at which we're moving forward with our growth projects. In terms of hedging gold, that's always something we could look at in a worst-case scenario, but definitely not one of the first levers we'd pull.
Understood. Thank you.
You bet.
Your next question comes from the line of Steve Butler with GMPS. Your line is open.
Good morning, guys. GMPS. George, a question for you on Lamaque, or Paul, with respect to the infill and resource conversions, really, 9,000 meters underground and 34,000 meters from surface.
Are you targeting a fair portion, a healthy portion of resource conversion this year? Can it get done by the end of the year or is it a program over the next two years, let's say?
Yeah. We're only targeting resource conversion in C2 in the near term.
We've got a long history of getting a lot of drilling done meter-wise, the guys do a pretty good job there. I don't think there's an issue getting that done this year.
Okay. The No. 4 Plug and the other zones, are they even in resources this year? Are they part of the inferred resource category?
C2 has some reserve. Sorry, you're talking Plug 4 or the C2 zone in Triangle?
Well, beyond Triangle, the other zones.
Oh, okay.
Defined previously by Integra at Lamaque. Are they in your resource statement?
Plug 4 and Parallel. Sorry. Yeah, Plug 4 and Parallel are both in resource at the moment only.
Right, in your resource category. Okay, that's fine. Guys, if you had. It's a perfect world, if it were ever to align up for you in Greece with respect to arbitration result that you deemed favorable, would you be willing to go ahead full bore with respect to Skouries again to remobilize and start spending, subject to, of course, it'd need the board decision as well, but I guess subject to arbitration? Because obviously if you go fairly hog wild on all three of these projects, we do see the, obviously the balance sheet starting to get crimped.
Steve, the way I'm looking at it, we need all the permits to give us the certainty that we can get it into commercial production, and that requires a mechanical electrical permit, building permit, now dry stack tailings permit. If we get all those permits in place, yeah, our confidence in being able to get it into production would be high. I think we have an enormous number of opportunities to be able to fund that very high quality project. It depends on the timing. If it came very quickly, which would be favorable, we'd definitely be looking at other alternatives to help us bring it into production and to de-risk it from a Eldorado Gold perspective.
For my current thinking with the permits that are out in front of us, including dry stack, it's going to take a bit of time to get that modified permit approved.
Mm-hmm.
Once that happens, I think we have considerable alternatives to be able to fund and finance the full scenario.
Okay. At what point would you or have you filed that permit, George?
That's imminent, Steve. That'll be happening-
Okay.
In the coming weeks, months. Maybe one last thing I'd say about Skouries, it's a high quality gold copper con that we'll be producing here. Highly desirable, and I think we have lots of options around funding Skouries relative to that concentrate.
Okay. And then Paul, and perhaps this you guys talked about, at the end of the day with the reserves declined at Kışladağ by 1.7 million oz of recoverable gold that you estimate would only have declined by about 400,000 oz. Is that based on the old recovery assumption of 35%-40%, or is it based on the earlier estimates of 60%-61%?
That's based on the early estimates of around 60%.
Okay.
Conversion from 2016 to 2017. At the end of 2016, we were still using the higher recoveries. Yeah.
Right. Okay. Fair enough. Thank you.
The other thing I'd point out to you, Steve, on the reserves is we took a bit of a different approach when we did the reserve analysis this year. We're looking to run the business for strong financial performance. And so... Yeah, there is a larger pit at Kışladağ that would meet the cutoff definition of reserves today, but it didn't add a lot of value. And so. What that does for us, it gives us some really good upside with higher metal prices. If you fast forward four, six years from now, that potential expansion of the pit would be looked at pretty seriously. With higher metal prices, the economics become favorable fairly quickly.
I'd also just point you to the robustness of the IRR on Kışladağ and the fact that we do have the potential to expand that pit with better metal prices versus just having a maximum reserve today with a longer mine life, but marginal second half of that mine life.
I guess I would just add to that, Steve, and say that that larger pit is something that we can step into. It's sufficiently large. It's got a reasonable mining width. So we could pull those walls down at some point in the future. If we mine what we've got in front of us now, we're not losing that opportunity for a number of years.
Okay. Thanks, guys.
Thank you, Steve.
Your next question comes from the line of Anita Soni with Credit Suisse. Your line is open.
Hi, guys. I just wanted to ask a little bit more about the capital budgets over the next three years. Sorry. You said I think it was around $200 million for this year and then rising to $410 million or $450 million in 2020. Is that the numbers?
Yes.
That's total sustaining and development company-wide, right?
Correct.
Okay. For 2019, did you give us a number or you just said it was rising? Can you give us an actual number that you think at this stage?
Yeah. A bit over $300 million.
Okay. All right. Any sort of a split between sustaining and growth? Can you give some color on that?
I don't have that detail sitting in front of me, Anita.
Okay. Thank you very much.
You bet.
Your next question comes from the line of Josh Wolfson with Desjardins. Your line is open.
Hi. Thanks. For Skouries capital, I just was looking for a bit more information on both the initial number and the sustaining number. For the initial number, was that full capital expected to be incurred before first production or was there going to be, I guess, an overlap of the development for the underground, when capital is committed? For the sustaining number, would you be able to provide some more information on why that increased relative to the old 2016 numbers?
The number that we're quoting for capital is to get it into production. What we've done, Josh, is moved some more of that underground. If you remember previously, we had, I think it was $540 million from memory and $170 million of underground development subsequent to start up, and a lot of that's been moved further forward. We're basically completing most of that capital development underground in this initial number.
Oh, okay.
Yeah.
Then in terms of that, I guess that's kind of related to the sustaining capital number. That number having increased to $758 from $460 previously, is that a function of, I guess, capital after first production or is that genuine sustaining capital on an annual basis?
I think you'll find that, well, a portion of waste placement for dam construction's included in there, and all of the capital for phase two development's included in there. It won't be a straight line run necessarily. You wouldn't want to average that over the time. It'll come in blocks. I think importantly, Josh, what we were showing previously was we actually needed to inject some more capital into this project in year six or seven or something to fund that underground development. Now we're able to do it out of existing cash flow from that project.
Okay, got it. I guess, on the topic of capital, has there been any update and expectations what maybe sustaining capital requirements would be at Olympias with that now being, I guess, further along? And also maybe what the unit costs are looking like there in the initial stages of ramp up?
Yeah, I don't have that in front of me. I think, we're completing construction at the Kokkinolakkas shortly. We're also finishing off that paste plant. Come late 2018, we should be in reasonable shape, and I would point you to something around $20 million a year as predominantly underground development. I'm shooting from the hip a little bit there, Josh. I don't have anything in front of me.
Okay. I'll stay tuned for that. Thank you very much for taking my questions.
Thanks, Josh.
Your next question comes from the line of Dan Rollins with RBC Capital Markets. Your line is open.
Yeah. Thanks very much. Just a question on Olympias. Not too sure where it stands right now, but the original EIA had phase three under development. If the arbitration is successful confirming the status of the EIA, is there any time limit that requires the phase three to move ahead?
Well, we had contemplated around the five, six year scenario to get it built, and obviously until we get the permits we need, that plot gets extended.
Okay. On Skouries, the same thing. If you were to receive permits, AKA, say, April 6th comes and they say, "Okay, let's go ahead. We'll give you all the permits. You can start constructing as of now." How much flexibility do you have as a company and under that investment agreement to delay that construction decision? Is there six months a year or is it up to your decision?
Well, it's up to our ability to execute. As it stands with our current updated technical study and permits that we're about to file, I think in a good scenario, we could potentially get the permits within a year, and we got roughly two years of build in front of us. I think in the ideal situation, we're three years away. It just depends on how quick we get the permits.
Okay. Just on permitting at Kışladağ. Can you remind me how long it took you to get the amended EIA for the Kışladağ last time around? Was it 12 months or was it a little bit longer? I know the jurisdictional bureaucracy has changed since then, so things may come quicker, but just what was the timeline on that last permit?
I honestly can't remember. I guess what we have done is people are well aware. They understand the transition and the process, and they're keen to see that sort of capital investment going in and keeping Kışladağ as a going concern. We don't have an issue with the 12 months. Turkey has a pretty solid sort of permit requirement. I think apart from a couple of private small parcels, we own all of the land. We're already moving ahead with an expansion, in terms of discussions with the government, so we don't see an issue with 12 months.
Yeah. Just to supplement that, the footprint for the mill scenario is the same as the prior heap leach that's permitted. We're really talking about a change in processing methods that we're looking for, and our designs are robust. Turkey has permitted other mills recently, and we believe 12 months is a very reasonable period of time. I had discussions just recently with the people from the ministry of mining who are very supportive to us moving forward with the mill scenario. I think early indications are our time period's easily achievable.
Okay. Perfect. I guess we'll get the full details once the feasibility study or the technical report is filed. Could you give some color on how long you think it'll take to ramp up a 13 million ton a year plant, if commissioning starts in late 2020? Is it a fairly quick ramp-up in your view, or are you giving yourselves 18-24 months to get it to steady state?
We're thinking quicker than that. I think the only one that I would sort of point to is tailings filtration. I think most of the circuit is relatively well understood and fairly simple process. That's the only sort of caveat is filtering 13 million tons and placing it on as a dry stack will take a little bit of work. They don't always hit the road as quickly as you'd like. We've sort of given it six months to get up to that nameplate capacity.
Okay. Dry stack. You're going to have a lot of filters there. Okay. Good to know. Thank you very much.
Thanks.
Your next question comes from the line of Anita Soni with Credit Suisse. Your line is open.
Hi. Just a follow-up question. With regards to Kışladağ, are you guys going to be doing any mining in the interim, or are you putting that effectively on some kind of lower level of, I guess, activity, care and maintenance or anything like that?
What we're looking to do, Anita, is continue with waste stripping. We've got the equipment and we've got some people there, so we're looking to mine some of the capitalized waste, bring that forward somewhat, which allows us to be more efficient with the equipment over the remaining mine life. If we were to defer that, we would end up having to bring more equipment in and hire more people potentially for a three or four-year period, which is pretty inefficient. We're continuing to mine. We're not targeting ore, but if there's ore encountered, then we'll stockpile that or consider placement on a pad.
All right. Thank you.
As a reminder, to ask a question, please press star followed by the number one on your telephone keypad. Your next question comes from the line of Matthew Fields with Bank of America Merrill Lynch. Your line is open.
Hey, everyone. You laid out a 2018, 2019, 2020 CapEx of a little over $1 billion, and I'm just kind of wondering how you plan to pay for it. I know Jeff asked a little bit about this, but the stock is sort of right at about $1 per share, U.S. basis. Bonds are trading below par, a little bit over 7% yield. Can you talk about how you sort of force rank your options in raising capital to sort of deal with this aggressive capital spend, and maybe entertain other options like project financing or selling a precious metal stream?
Again, we're not in a rush. We've got near-term financing to support the growth you just described, and we're going to look at all of our alternatives. The key is to come up with an optimum financing plan. I wouldn't rule anything out. Again, our focus is going to be to not unnecessarily and unduly stress the balance sheet and without diluting shareholders. Everything you described is on the plate and will be considered. Again, with the strength of our projects, I'm confident we'll put a good financing package in place to be able to move forward with our extremely good projects.
Any hints on preference for one and over the other?
It's going to be a balanced approach, and we're going to be looking at value.
That's right.
Okay. Thanks very much.
You bet.
Your next question comes from the line of Lauren McConnell with Paradigm Capital. Your line is open.
Hi. Thanks, guys. Thanks for taking my question. I just want to talk about the decline in cash and equivalents of over $400 million in 2017. I know it was touched on that there were some one-time items, and I know it's kind of been touched on a little bit throughout the question period. I'm just looking for some commentary about what the annual burn rate is before construction capital.
Well, construction capital was in the $350 million, so I may have to give you, I have to deduct that from the total burn of the $400-
I'm just looking more for going forward.
That one, I don't have it in front of me. I can just send it to you through Peter. Is that okay?
Okay. I just want to ask another question then. Just with Skouries going on to care and maintenance and Olympias operating, does Greece break even in 2018 and 2019?
From Olympias perspective, as Paul said, we've got some capital this year to bring the paste plant into production, and we're still doing finish up work on the Kokkinolakkas disposal facility that's being used essentially to finish the cleanup of the historic mining activities. There is a bit of capital that's not directly tied to operations. Our care and maintenance, as Paul stated, is nearly complete. Our run rate's less than $5 million a year going forward for Skouries.
There's a little bit of money going into Stratoni for that exploration and development, et cetera.
Yeah, I guess.
It's probably not quite balanced.
We're spending a bit of money on furthering the engineering on phase three this year.
Okay. Thank you.
You bet.
I will now turn the conference back over to our presenters.
All right. Thanks everybody for calling in. Look forward to catching up again in about a month. Thank you.
This concludes today's conference call. You may now disconnect.