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Eldorado Gold Corp (NYSE:EGO)
Q3 2020 Earnings Call
Oct 30, 2020, 11:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation Third Quarter 2020 Conference Call. [Operator Instructions]

I would now like to turn the conference over to Peter Lekich, Manager, Investor Relations. Please go ahead, Mr. Lekich.

Peter Lekich -- Manager, Investor Relations

Thank you, operator, and thank you, ladies and gentlemen, for taking the time to dial into our conference call today. On the line today are George Burns, President and CEO; Phil Yee, Executive Vice President and CFO; Joe Dick, Executive Vice President and COO; and Jason Cho, Executive Vice President and Chief Strategy Officer. Our release yesterday details our 2020 third quarter financial and operating results. This should be read in conjunction with our third quarter financial statements to management's discussion and analysis, both of which are available on our website. They have also been filed on SEDAR and EDGAR. All dollar figures discussed today are in U.S. dollars, unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. Before we begin, I would like to remind you that any projections included in our discussion today are likely to involve risks, which are detailed in our 2019 AIF and in the cautionary note on slide one.

I will now turn the call over to George.

George Burns -- President and Chief Executive Officer

Thanks, Peter, and good morning, everyone. Before I get started, I'd like to give you a brief update on the earthquake that hit western Turkey just a few hours ago. Our operations are unimpacted at this point and our employees at the sites are safe. Early indications, there's been some significant damage to buildings in the Turkish province of Izmir and so we'll continue to monitor the situation. Here's the outline for today's call. I'll give an overview of Q3 along with some comments, then I'll pass it to Phil to go through the financials. Joe will follow by reviewing operational performance and then we'll open it up for questions. I'm excited to be reporting another outstanding quarter. We delivered across all metrics, both operationally and financially. Production increased by 35% year-over-year, and we had another significant quarter of free cash flow. I'm also pleased to report we completed $58.6 million in debt reduction announced in Q2, and our balance sheet is in great shape with over $500 million in cash and equivalents. We continue to make progress in delivering value for our shareholders across our portfolio.

Joe will speak more to Kisladag, including HPGR and Lamaque, so I won't get into detail here, but I want to highlight a few key developments in Greece during the quarter that demonstrate the progress of ongoing engagement with the government. We see these incremental steps as positive indication that the sentiment in Greece is becoming more supportive of our projects. At Skouries, work advanced on relocation of an ancient mining furnace from the open pit area, as you can see in the picture. We intend on moving this artifact to a prominent area near our site office where it can be displayed for visitors to see. This is a great reminder that Halkidiki is an historic mining area that has supported mining activity all the way back to the era of Alexander the Great. Also during the quarter, we received renewal of the operating permit for Olympias with an annual production limit raised to 470,000 tonnes per year. I'm also happy to report we received surface drilling permits at Stratoni in the quarter. These will allow us to complete step-up drilling and potentially expand the Mavis Petros ore body. Before I hand it over to Phil, perhaps a few words on how things are advancing in Greece. The transfer agreement negotiations are progressing, and support from senior government officials was evident during the quarter with the Minister of Energy and Environment visiting our Skouries site. Greece continues to represent a fantastic growth opportunity for Eldorado, and we believe it's not currently reflected in our valuation. Skouries and Perama Hill are world-class assets that will add significant value for our investors, local communities and the Greek state.

I'll stop there. Over to you, Phil.

Philip Yee -- Executive Vice President and Chief Financial Officer

Thank you, George. Good morning, everyone. Starting on slide four, we provide an overview of Eldorado's financial results for the third quarter of 2020. Once again, we had a very strong quarter. We delivered on our key metrics, and the headline is strong free cash flow generation of $117.2 million in the quarter, a significant increase from $16.7 million in Q3 of 2019. Year-to-date free cash flow totaled $187.7 million in the first nine months of 2020. Eldorado generated $287.6 million in total metal revenues in the quarter. This includes $264.3 million in gold revenue, an increase of 76% over the comparative quarter in 2019. The increase was a result of higher gold sales volumes of 137,704 ounces in Q3 2020 compared to 99,241 ounces in the third quarter of the prior year. The increase in revenue also reflected a higher average realized gold price of $1,919 an ounce in the third quarter of 2020 compared to $1,513 an ounce in the comparative quarter in 2019. The company reported net earnings to shareholders in the third quarter of $41 million or $0.24 earnings per share. After adjustments to remove foreign exchange losses, finance costs related to the redemption of senior notes and the gain on the sale of in the quarter, adjusted net earnings for the third quarter amounted to $56.7 million or $0.33 earnings per share. This was a significant improvement over both the third quarter of 2019, which reported adjusted net earnings of $7.6 million or $0.05 earnings per share, and the second quarter of 2020, which reported adjusted net earnings of $43.8 million or $0.26 earnings per share.

The increased adjusted net earnings and net earnings per share in Q3 2020 reflect higher gold prices and higher gold sales relative to previous quarters. EBITDA for the quarter was $162.5 million, and after removing certain noncash items, adjusted EBITDA amounted to $163.9 million. This was a material increase over EBITDA of $73.2 million and adjusted EBITDA of $75.9 million in the third quarter of 2019. Depreciation and amortization charges increased to $65.5 million in the third quarter of 2020, an increase from $40 million in the comparative quarter in 2019, reflecting higher production and higher sales volumes. A significant portion of our property, plant and equipment depreciates over the mine life of our producing assets on a unit of production basis, calculated based on mineral reserves. This results in higher depreciation charges as production increases. Finance costs were $19.9 million in the third quarter of 2020 compared to $13.2 million for the comparative quarter in 2019. The increase was due to the premium paid on the partial redemption of our senior secured notes, combined with deferred transaction costs. Income tax for Q3 2020 amounted to $38.7 million for the quarter compared to $15.9 million in the comparative period of 2019. The increase was primarily the result of significantly higher net income before taxes in Q3 of 2020 as a result of higher sales and a higher gold price. We finished the quarter with $504 million in cash, cash equivalents and term deposits and approximately $32 million available under the revolving credit facility.

Our liquidity remains very strong and provides optionality to support development of growth opportunities in our portfolio. Eldorado continues to reduce debt and completed the $58.6 million equity clawback redemption on the senior notes in August. Senior notes outstanding are now at $241.4 million as of September 30 and will be reduced a further $7.5 million in December. Net debt is at 0.15 times EBITDA at the end of Q3 2020. This is a significant reduction from net debt at 2.2 times EBITDA at the end of Q3 2019 and reflects a much stronger balance sheet compared to a year ago. The company also expects to be in a net cash position by the end of the year as we continue to generate strong cash flow and reduce debt. We also expect Q4 free cash flow generation to be impacted by the timing of capital spending as we look to complete our capital projects for the year. Moving on to slide five. Eldorado continues to show solid improving performance quarter-over-quarter and continued delivery of strong financial results. These graphs demonstrate the impressive turnaround in financial performance over the past 18 months. Adjusted EBITDA and adjusted earnings have increased significantly in each of the past two quarters, and cash generated from operating activities and free cash flow have established significant highs of $165.4 million and $117.2 million, respectively, in Q3 of 2020. Overall, at the end of Q3 2020, the company's balance sheet is solid with a strong cash position. Debt reduction is a demonstrated priority. Free cash flow generation is sustained and the company is reporting higher earnings.

I'll conclude on not positive note and will now turn it over to Joe to go through the operational highlights.

Joseph Dick -- Executive Vice President and Chief Operating Officer

Thanks, Phil, and good morning, everyone. Q3 was consistent with Q2 from an operational standpoint as well as with our expectations. We produced 136,922 ounces of gold in the quarter at cash operating cost of $537 per ounce sold and all-in sustaining cost of $918 per ounce sold. It's worth noting that Lamaque had a record quarter as the ramp development reached the top of the higher-grade C4 zone. Looking forward, we are maintaining our 2020 guidance but expect to be at the lower end of the production range, a significant accomplishment given the 2020 operating environment. We continue to operate regionally with strict health and safety protocols and tracking systems in place in order to manage the risks for COVID-19. We have activated our COVID protocols at site, including the management of a positive case at Olympias in September. These protocols worked as expected and were able to resume normal operations in short order. I'm proud of the agility of our teams as they continue to effectively adapt as we form our new operating normal. Here on slide seven, we have some further color on developments at our operations during the quarter. The flotation columns were installed at and commissioning is under way. As a reminder, this will increase the quality of our gold concentrates, reducing shipping costs. We expect to begin realizing value during Q4 as commissioning concludes and circuit optimization begins. At Lamaque, underground development has reached the top of C4 zone, a high-grade zone that as you can see from the picture is larger than C1 and C2.

We'll take our first stope from C4 in the fourth quarter. This production comes a bit planned and is helping close the production gap created by the mandatory provincial COVID suspension during Q2. Our underground crews are currently advancing the decline from triangle toward the sigma mill. We have completed 260 meters to the end of September. Additionally, the contractor has mobilized and completed the necessary prep work at surface and started advancing from Sigma Mill toward the triangle deposit as of this week. Over to Olympias, where we recently renewed our operating permit allowing production levels of up to 470,000 tonnes per annum. Underground development, along with continued operational efficiency improvements, remain the focus at Olympias as we continue to ramp up the mine. Before I move over to Kisladag, I'd like to mention that we are in the process of updating our technical report for Perama Hill. And at Lamaque, the engineering work will complete this year and will be available to us as we work the updated capital comes through our investment framework in concert with the 2021 business planning process. At Kisladag, production was consistent with Q2. Gold recoveries continue to be as expected. That said, our solution volumes and inventories remain higher than anticipated. Before we are talking about what we are doing at Kisladag, I'll give a quick recap of 2020 to date.

In Q1, we experienced higher-than-normal precipitation, impacting our ability to place them on the pad. During Q2, we began to recover the place tonnes deficit, but we lost a bit of ground on pad maintenance and operations due to reduced staffing resulting from our early stage COVID actions. During Q3, we closed the tonnes placed gap and started to return to normal pad operations. We also began to advance the work we had planned as we adopted the new mine plan early this year. To provide a bit of background, I'll outline three projects that we have under way. A new process that will allow more pregnant solution, eliminating the need to recirculate solution as in a standard practice this year. The project will be completed by year-end. we have installation ongoing for two additional CIC trains, increasing our solution processing capacity by 40%. This project will be completed during Q1 of 2021. We are also replacing the carbon column regeneration kiln to increase volume, and as a result, our activated carbon capacity. This project is scheduled for completion during Q2 2021. Timing of all these projects complements the HPGR project, which is scheduled to come online in Q3 of 2021. Before I wrap up, I would also like to add that our ongoing composite sampling and column test work to confirm our recoveries as per our mine plan.

With that, I'll turn it over to George for closing remarks.

George Burns -- President and Chief Executive Officer

Thanks, Joe. Before wrapping up, I want to thank Mike Price, who stepped down from our Board of Directors at the end of September. Mike served on the Board for 10 years, and we wish him well in his future endeavors. As a reminder, we welcome Judith to our Board effective September 30. Judith's appointment gender parity to our Board and exceeds our goal of having 30% representation of women by 2022. I'm also very pleased to add that Lisa has been promoted to Executive Vice President, People and External Affairs. This is a testament to the great work that Lisa has done in strengthening our corporate culture, people practices over the past two years. In conclusion, I want to emphasize the continued positive results we again delivered this quarter. The groundwork laid throughout 2019 continues to pay off and is reflected in the upward trajectory of our share price, which we expect to continue as we unlock value in our Greek assets. Our solid operating performance, combined with a balance sheet that supports near-term growth and our energy and drive to execute, positions us well for sustained value creation. When combined with record gold prices and several potential catalysts in Greece and Quebec, Eldorado offers a compelling value proposition.

Thank you, everyone. I'll now turn it over to the operator for questions.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Mike Parkin with National Bank. Please go ahead.

Mike Parkin -- National Bank -- Analyst

Hi, guys. Thanks for taking my questions. Congrats on a good quarter. First on reserves and resources, we should be getting that update in a couple of weeks, correct?

George Burns -- President and Chief Executive Officer

Yes. We do our reserve and resource update in the fourth quarter. And last year, we put it out in November. Expect to do it again this year.

Mike Parkin -- National Bank -- Analyst

On that, is there anything you can share with us like Lamaque? Obviously, you've been having some really good exploration success. Can you just give us a bit of a recap, you're doing some infill work on some of the deeper lenses, so we should expect more than reserve replacement, I think, is a fair assumption to assume at Lamaque for this update?

George Burns -- President and Chief Executive Officer

Yes. At Lamaque specifically, we've had a good year of exploration. Really two focal points, infill drilling to convert inferred resources to reserves in the top five veins of the deposit, so expecting some good results there. And as you stated, expecting to replace reserves and grow some. And then in the deeper part of Triangle, continuing to drill to expand those inferred resources and again, expecting to have some good results in our release next month.

Mike Parkin -- National Bank -- Analyst

What about Ormac? Is there -- I guess, that's a bit early. Obviously, the discovery holes are encouraging, but are you looking to get into a better position to drill it off with the ramp that you're putting in? Or are you doing -- you're looking to do a target like a bigger resource from surface drilling?

George Burns -- President and Chief Executive Officer

So this year, our focus has been on Lamaque has been to continue drilling from surface to determine the full potential of that new discovery. And so we've had success. We'll be updating the market with drill results in the fourth quarter. And our geologists and engineers continue to assess that new discovery, and we'll look to update the market in that regard as well.

Mike Parkin -- National Bank -- Analyst

Okay. And then switching over to -- Sorry.

George Burns -- President and Chief Executive Officer

I was just going to add to your point about the decline. I mean, one of the side benefits of the decline is the ability to drill some of the satellite deposits outside of Triangle. And definitely, is well positioned for drilling once that decline's in the position where we've got through stations.

Mike Parkin -- National Bank -- Analyst

Super. Switching over to the non core asset sales. Great update there on Belanova being sold. You mentioned that there's some form of process taking place at Toka and Certej. Can you give us a bit of color there? Is that -- like are you getting inbound interest, more just initiating the process with advisors and testing the waters for interest? Any color would be appreciated.

Jason Cho -- Executive Vice President and Chief Strategy Officer

Sure. Mike, it's Jason. So what we're doing is evaluating is probably the way to characterize it, like evaluating strategic alternatives as it relates to those assets. What we're seeing obviously is a more supportive and constructive environment for gold and market just generally speaking. So it's just an initiation of evaluating the different alternatives for and Vulkan and Certej is probably the way I'd characterize it.

Mike Parkin -- National Bank -- Analyst

Okay. Alright. Super. That's it for me. Thanks, guys. Thanks, Mike.

Operator

The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Tanya Jakusconek -- Scotiabank -- Analyst

Good morning, everyone. Can you hear me?

George Burns -- President and Chief Executive Officer

Yes. Good morning.

Tanya Jakusconek -- Scotiabank -- Analyst

Good morning, I'm Tanya. I have a bit of the voice quality is a bit low for me. So I may have missed some of the information that you mentioned, but I wanted to just circle back on a couple of technical things. The first one is just on the reserves that Mike was talking about in terms of upside at Lamaque. Do we -- how do we see Kisladag and just the rest of the assets looking because we were impacted with COVID over there in terms of people on-site and stuff for drilling?

George Burns -- President and Chief Executive Officer

Well, in terms of Kisladag, there's been no drilling at Kisladag. We've drilled that deposit out, at least the open pit potential of the deposit so there's no new drill result. As always, we'll be updating engineering analysis, metallurgical work and checking the optimization of the pit. So that's under way. Efemcukuru, we've been fairly successful at extending mine life through inferred resource conversion so that's continuing to be a focus. So there will be an update there. In Greece, we've got multi-decade mine lives in those assets, so nothing significant there with the exception of Mavis Petros. There, we've done some drilling from underground that helps us design the surface drilling that we're embarking on as we speak. So I'd say the highlight definitely will be Lamaque again, where we've got great potential to extend mine life there. And it's a significant part of our exploration budget and an update on Kisladag as well.

Tanya Jakusconek -- Scotiabank -- Analyst

Just to make sure, will you be using the same reserves and resource pricing as you used last year?

George Burns -- President and Chief Executive Officer

Yes, we're using $1,300 gold price for the remaining -- for reserves, yes.

Tanya Jakusconek -- Scotiabank -- Analyst

And if I could ask, Joe, just on Kisladag and Lamaque specifically. Just on Kisladag, and I know you talked a little bit about it and I had a clarity issue with my phone. I just wanted to understand the -- you have more than -- you have more golden solution than you expected. My understanding is that you really -- January, you didn't have time to put ore on the pad. You've got there -- you put it in -- sorry, in Q1, you put it in on the pad in Q2. And so are you saying that just Q2 and Q3, which is 60 days of leaching as wasn't enough to get it out, and we're expecting a bigger bump up in Q4 for production?

Joseph Dick -- Executive Vice President and Chief Operating Officer

Well, I think you've got it generally correct. So in Q1, it was the heavy rains that kept us from stacking everything to plan on pad. We began to close that gap in Q2 and then kind of got there in Q3. But we were complicated a bit in Q2 with COVID and lower manpower. So we got a bit behind on pad maintenance, ripping schedule, emitter changeouts, all of that. So we -- as we're catching that up, we'll be looking to get a little bit higher solution flow rate during Q4 and looking to get more meters under irrigation. But again, I expect us to be relatively consistent with the last couple of quarters.

Tanya Jakusconek -- Scotiabank -- Analyst

Okay. And so that's why we're going to be toward the lower end of the guidance is really because of Kisladag?

Joseph Dick -- Executive Vice President and Chief Operating Officer

That's correct.

Tanya Jakusconek -- Scotiabank -- Analyst

Okay. And then if we can move to Lamaque. You talked in your release about the Minrail and some of the complications you're having there with that equipment. Can you walk us through what exactly is happening there?

Joseph Dick -- Executive Vice President and Chief Operating Officer

So we have the Minrail equipment in a test stope, and we have been monitoring that or working to get it into a productive mode over most of -- toward the tail end of Q2 and into Q3. And I would say that the results are mixed. We're finding that the method shows promise. And we're working through issues in kind of getting the equipment adapted to Lamaque. And I think probably our biggest focus is determining kind of how much inventory is adaptable to the method just to determine how much continued energy we wish to put in. So we're still in process.

Tanya Jakusconek -- Scotiabank -- Analyst

And when you say the equipment to get adapted to Lamaque, what exactly are you -- what's the adaptation? What seems to be the issue? It's not adapting.

Joseph Dick -- Executive Vice President and Chief Operating Officer

Well, I think as we put the equipment into the mine, the better metals around the locking device, so that's given us a little bit of pause, trying to make sure that we keep availability up around drilling equipment, just generally kind of commissioning and working the bugs out of what is really a pilot or R&D. So -- and we've made progress there, but we haven't achieved the kind of availability yet that foretells consistent production levels. But we are making progress.

Tanya Jakusconek -- Scotiabank -- Analyst

Okay. I guess we'll continue to monitor it quarter-over-quarter. And then maybe if I could, George, circle back with you on Greece, and congrats on the progress being made there. And you mentioned the Minister of Mines and Environment was over to Skouries. Are there plans for the person to go to Perama Hill and Olympias or is that it? Are they doing due diligence on these assets? I'm just trying to understand how -- the site visits, are they just part of the plan of moving this into the framework? Just trying to understand how we're progressing there.

George Burns -- President and Chief Executive Officer

Sure. I mean, the reason for the ministerial visit to Skouries is that's really, we believe, the first catalyst in the pipeline for a couple of reasons. It's -- on our schedule, our anticipated schedules, Skouries, we believe, will be delivered faster than Olympias or Perama.

Tanya Jakusconek -- Scotiabank -- Analyst

Okay. So is it safe to assume they're going asset by asset, that's it? So we're -- we've done Skouries and now we're working on the framework there. Once we get a second and third site visits and others? Is that a good way to think about it?

George Burns -- President and Chief Executive Officer

Yes. I mean, essentially, I'd say the permitting requirements and time lines are driving the fact the minister went to Skouries first. So for Skouries, we have an EIA that needs to be modified to deal with dry stack tailings. That, as you know, is a massive improvement in risk mitigation. It also reduces the footprint of the site, increases water recycle. So it's a really good improvement to the design of the operation. So it's a simpler permitting process to get that EIA modified. In the case of Olympias, we plan to expand the throughput through that plant by about 50%. And as such, we'll be moving more out of the underground, more waste. We'll be processing more. We'll increase our rates of disposal in our state of the line tailings disposal facility. And so all that requires the appropriate regulatory reviews in terms of impacts on air, noise, water.

And our designs are sound. Again, this is a dry stack cemented paste backfill disposal system. And the filter dry stack tailings is going into a state-of-the-art line facility. So I'm very confident we will get the permit but it takes time to work through that process. And that process will require public consultation at Olympias because there are environmental impacts that have to be considered. And then for we don't currently have an EIA. So we're in the process of reoptimizing the project with current European and Greek regulatory requirements. And so that EIA will need to go through public consultation. And it's a bit further behind Skouries and probably Olympias. So the reason for the attention to Skouries from the minister is that, that one is likely going to move faster, and we were happy to have the minister at site. And again, we're making progress, and I remain confident that we're going to deliver value in these assets. And I think that positions Eldorado very well against our peers.

Tanya Jakusconek -- Scotiabank -- Analyst

Yes. No, I appreciate -- I didn't appreciate, George, that the Olympias one. I just thought it would be an amendment to your current permit to increase your throughput. I didn't realize that with the amendment came public consultation, so I didn't realize that. And maybe just on the framework, how are we progressing on the financial aspects of the framework?

George Burns -- President and Chief Executive Officer

We're progressing well there. I'd say the -- we lost some momentum like during the COVID crisis. So both Eldorado and the Greek state did what we needed to do. We focused on safety and health of our people. And so we didn't have a lot of progress and discussions. But that's changed. I mean, both the government and Eldorado are committed to negotiating a fair deal to get these investments into production and deliver value for the Greek state, for the local communities and for Eldorado and our shareholders. And I'd say the most important factor for Eldorado in these discussions is that we have a bankable deal that takes into account that we've had in Greece and confident that we'll deliver that.

Tanya Jakusconek -- Scotiabank -- Analyst

And do you feel you've moved up in priority in their roster in terms of their priorities?

George Burns -- President and Chief Executive Officer

Well, I mean, Prime Minister Mitsotakis in his campaign cited the Eldorado investments is one of the top two priorities for Greece. And so we remain at the top of that list. And again, I'm confident we'll be successful.

Tanya Jakusconek -- Scotiabank -- Analyst

Okay. Thank you so much.

George Burns -- President and Chief Executive Officer

Thank you.

Operator

The next question comes from Carey MacRury with Canaccord Genuity. Please go ahead.

Carey MacRury -- Canaccord Genuity -- Analyst

Hi. Good morning. Maybe just another question on Greece. I mean, presumably, if you get the green light there. Can you just talk a little bit about what you're thinking on how that project moves forward from here, at Skouries specifically?

George Burns -- President and Chief Executive Officer

Sure. I mean, I believe there's really three catalysts that we need to deliver in order for the executive and the Board to approve restart of Skouries construction. The first is the -- this bankable agreement that we're negotiating. The second is the modification for dry stack tailings, and both of those are advancing well. When we have both of those in hand, it sets up well the financing we'll need to put in place to move forward with the construction. So once we have those, then we're in a position as an executive team and the Board to approve restart of construction. And just a reminder, we spent nearly $0.5 billion in construction. The operation's roughly 50% constructed. We have about $700 million in capital remaining. A lot of work to be done on the underground in terms of development and test stoping. The tailings area will have an erosion control dam downstream and that needs to be constructed. The primary crusher needs to be constructed. The main body of the plant is pretty well in place, so there's lots of piping and electrical work. And we think it's about a two, 2.5-year construction period. So again, my view is these catalysts are moving well. We'll be in a position next year to restart construction is my belief.

Carey MacRury -- Canaccord Genuity -- Analyst

And maybe just two more questions. Is the plan still to bring in a partner at Skouries or would you go it alone? And then secondly, how is the relationship at the community level?

George Burns -- President and Chief Executive Officer

So on the first question, our primary strategy still remains to enter into a joint venture structure, likely at the HELIS level. We think that is the optimum solution. But to be candid, once these catalysts are delivered, we'll be able to further the discussions with the current interested parties. I think there's -- well, I don't think there has been increased interest in the opportunity with the uptick in gold price and as we're moving forward with the opportunity in Greece. So we'll be looking at every alternative, but at this point, management and the Board think a joint venture structure is likely a preferred outcome. On the second question, local communities, I think there's a perception, a wrong perception that we don't have strong community support.

The villages around our operations in Halkidiki are historic mining communities, and we have strong support out of those villages. Like everywhere around the world, there are individuals and groups that are concerned about the impacts for mining. I firmly believe, being a veteran in this industry for multi decades, that our operation designs in Greece are best-in-class. We're deploying dry stack tailings. We've got monitoring systems that are publicly available 24/7. We're very transparent in how we operate, and we're meeting our regulatory requirements in Europe and Greece. So we've got strong local support and confident that we're going to get the permits we need and the agreement we need to be able to move forward.

Carey MacRury -- Canaccord Genuity -- Analyst

Great. That's helpful. Thank you.

Operator

The next question comes from Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu -- CIBC -- Analyst

Hi. Thanks. Thanks, George, Phil, Joe and Jason. Maybe my first question is on Turkey here. Clearly, the Turkish lira has been depreciating. I guess from that perspective, as you talked about in your MD&A, it's actually been positive in terms of the cost impact. Your cost has come down for USD. However, I guess my question is, number one, how much of your cost in Turkey are actually denominated in the lira? And number two, any comments on -- are you concerned of any kind of risk that could be brought about by the depreciating Turkish lira?

George Burns -- President and Chief Executive Officer

So it's George. I'll maybe answer the high level and Phil can supplement. So I mean, for sure, we've seen a positive impact on our cost, given the impact of the lira exchange rate. I would say that to be fair though, historically, when this has happened in the past and I expect it will happen again this time as inflation kicks in. To your question, roughly half of our costs are Turkish-denominated. And largely, that's labor, labor in our workforce and contractors. And so we will see an inflationary impact on our costs that will erode at least some of that Turkish benefit. So moving forward, you can't bake in the benefits that we will see an impact -- an inflationary impact on our cost structure. Phil, anything you'd add to that?

Philip Yee -- Executive Vice President and Chief Financial Officer

Sure, George. Hi, Cosmos. So I think overall, to answer your question, we're well aware of the escalating headlines in Turkey and the currency risk. They just went through a bit of a currency crisis with depleting their currency reserves. From an Eldorado perspective, I mean, we've -- we're taking appropriate measures to ensure that our currencies are not significantly at risk in terms of being in country. We manage our funds day to day, and any funds that we deem to be surplus, not required for payroll or paying taxes or operating costs, any surplus funds, we move those funds offshore. And so I think from that perspective, that's -- I think that's pretty consistent with other companies that are operating in Turkey as well. We keep in rigor communication. And we talk about the -- any developments that are happening within country. But I think at this point, just from talking to the teams that are on the ground in Turkey, those appear, at this point, to be adequate. We do have -- in terms of managing our currency requirements, we do have two different operations and one traditionally provides proceeds, sales proceeds in lira and one traditionally provides sales proceeds in U.S. dollars. So we can effectively manage the balance. And that definitely -- we don't have to do any unnecessary currency transactions. So I think from that perspective, I think we're in a pretty good spot.

Cosmos Chiu -- CIBC -- Analyst

Of course. And as a follow-up, then with the HPGR at Kisladag, I guess, number one, how are you managing that currency? Is there any kind of currency risk or is it all in USD? And then number two, as you talked about, I think, Joe, I caught you, and you said it's scheduled to be completed sometimes Q3 2021. Have you factored in any allowances for COVID-19? As you've seen any -- have you seen any delays in terms of potential delays based on COVID-19? And any risk in terms of delivery on the HPGR?

Philip Yee -- Executive Vice President and Chief Financial Officer

So maybe I can address the currency risk question first, and then Joe can talk about the HPGR. So in terms of the cost of the equipment and so forth, if the contracts are in USD, we do have sufficient USD within our holdings. And as I mentioned earlier, Cosmos, we do have lira generated as well so we can manage that quite effectively. So there's really not much currency risk when it comes to the project. Joe?

Joseph Dick -- Executive Vice President and Chief Operating Officer

So Cosmos, yes, we have a schedule. We're still on schedule for equipment delivery. It was targeted at about 11 that still remains the schedule. We did have some issues early on through engineering and information back and forth between and us. I think that's largely in hand now. We are still scheduling to get concrete in this year. So I think we're sitting reasonably good. We don't have -- we haven't put a lot of contingency in schedule for COVID, although a bit [Indecipherable] so we're attempting to manage schedule on an ongoing basis as we look forward in kind of quarterly chunks based on what's going on. So the risk is there but it's pretty hard to quantify. It's a moving target and we've kind of kept ourselves from adding a bunch of contingency, we're going to push the project along per schedule and deal with the adjustments as necessary. We are in constant communication with on delivery and actually look to get a representative into the Amsterdam facility to see progress firsthand. For sure. And maybe one last question on Lamaque here. Of course, good to see that you now have received the permit for 2,650 tonnes per day. That's been a while back. But my question is on throughput here. If I divide your quarterly tonnage by the 90 days or plus or minus, I get to about 1,921 tonnes per day. Can you remind me in terms of your throughput and how are you expecting it to ramp up to 2,650? And when is that going to happen?

Cosmos Chiu -- CIBC -- Analyst

For sure. And maybe one last question on Lamaque here. Of course, good to see that you now have received the permit for 2,650 tonnes per day. That's been a while back. But my question is on throughput here. If I divide your quarterly tonnage by the 90 days or plus or minus, I get to about 1,921 tonnes per day. Can you remind me in terms of your throughput and how are you expecting it to ramp up to 2,650? And when is that going to happen?

Joseph Dick -- Executive Vice President and Chief Operating Officer

We're still in the kind of the business planning process. But generally, we're a couple of years into late 2022, early 2023 where we're hitting the 2,500 range roughly.

Cosmos Chiu -- CIBC -- Analyst

Okay. So is it kind of like a straight line or is it more so you're going to stick around the 2,000 tonne per day level for now and then there's a quantum leap? How should we model it?

Joseph Dick -- Executive Vice President and Chief Operating Officer

It's a bit of a ramp-up so pretty close to straight line.

Cosmos Chiu -- CIBC -- Analyst

Got it. Cool. Thanks, everyone. Sorry.

Joseph Dick -- Executive Vice President and Chief Operating Officer

Excuse me.

Cosmos Chiu -- CIBC -- Analyst

Thanks. So those are the questions I have. Anyway. So thanks, George, and team. And have a good weekend.

Joseph Dick -- Executive Vice President and Chief Operating Officer

Thanks, Cosmos.

Operator

The next question comes from Kerry Smith with Haywood Securities. Please go ahead.

Kerry Smith -- Haywood Securities -- Analyst

Thanks, operator. Good morning, everybody. I don't know maybe, Joe or George can answer this. What is the timing to release that project review that you're doing for Perama?

George Burns -- President and Chief Executive Officer

Yes. I mean, Mike, we're working on it as we speak. So the Perama time line really factors around the strategic investment law that was passed in Greece the fourth quarter of last year. And our anticipation for that is second half of next year. So we're working on the technical documents to support that EIA. And I don't have a definitive time for you, but it's obviously well ahead of getting approval in the second half. So I guess I'd characterize that you can expect an update on that. Some update perhaps with the mineral reserve update this quarter and then further updates in the new year.

Kerry Smith -- Haywood Securities -- Analyst

Okay. So just to be clear, you're expecting to file the EIA in the second half of next year, is that correct, George?

George Burns -- President and Chief Executive Officer

No, we're expecting to be able to get an approval on a strategic EIA in the second half of next year.

Kerry Smith -- Haywood Securities -- Analyst

And what does that mean exactly?

George Burns -- President and Chief Executive Officer

It means we'll be submitting it either the fourth quarter or first quarter of next year, probably first quarter of next year.

Kerry Smith -- Haywood Securities -- Analyst

Okay, got you. Okay. And Phil, can you quantify in dollars per quarter or dollars per year what it is costing you for all of your COVID costs, whether it's testing and PPE, et cetera, et cetera? Like I'm just trying to -- most people are -- most companies are giving that number. I'm just curious what your number is.

Philip Yee -- Executive Vice President and Chief Financial Officer

Hi, Kerry. I don't really have a definitive number to give you at this point but I can tell you, it's not a significant cost. We've introduced some new programs and put in some -- we got a new tracking system, for example, that tracks our employees on site, which has been very effective. We've got other programs you put in place to ensure proper protocols for COVID. But overall, it's -- I wouldn't say it's a significant number, but I can take a look and get back to you, Kerry, with an estimate. But I don't have anything else.

George Burns -- President and Chief Executive Officer

Yes, I might just supplement that answer. I think if you really look at the impacts we've had so far, whether you talk PPE or some of these systems we've developed, they're not material. I mean, I think if you want to talk about the most significant impact, it was really when we reduced our total manpower by about 25% in the early days of COVID. But if you recall, we did that when we made the decision to protect our people and then our business. So any of our employees or any of our employees that had family members that were in the high-risk category for COVID, we asked to stay home, and that reduced manpower by about 25%. Obviously, those people weren't at work, getting work done and we pay them. So that's been really only significant impact. And I don't have a number for you but Phil can get that.

Kerry Smith -- Haywood Securities -- Analyst

Right, OK. Okay, great. And then maybe just one last question. You talked about adding the new lines of carbon columns at Kisladag, which is going to improve your capacity by 40%. Does that mean that the extra gold in inventory that you've got is going to come out in Q1 when you bring those online? Or will you have been able to draw down that inventory between now and then, and it really won't have a material impact on your gold production over and above what you normally would have produced in Q1?

George Burns -- President and Chief Executive Officer

Joe, maybe I'll take that question. I know your line seems to be breaking up a bit for technical reasons. And if I miss anything, you can jump in. So yes, I mean, maybe Kisladag in general, the way I would look at it at a high level, we were a little bit slow at placing the tonnes in recoverable ounces on the year. But as Joe stated, we -- and that was due to the wet Q1 and we've made that up in Q2 and Q3. So first point is the ounces are on the pad. The second point Joe made is that all of our ongoing test work on the actual material place continues to indicate our recovery assumptions are solid and valid. So that's an important point. We are -- we have made a statement that Kisladag is trending low on the production relative to our expectations for the year. And it's really all about rinsing those ounces out of the pad. And so the impact from COVID, when we had that lower manpower number, we didn't have -- we had to decide what wasn't going to get done. And one of the things that slipped was our ability to rip and refresh the emitters that deliver the solution to the top of the pad. And as a result, we haven't got the volumes of water through the crushed material. And as a result, we're a little slower pouring the gold than we expected, but the ounces are there. And our manpower levels are back to normal.

The crews are catching up and it's just a matter of time to get those ounces through. So that's kind of a summary of the year again. Now to your question on the ADR plant expansion, we process about 78,000 cubic meters of water a day through that existing ADR plant. And as Joe said, we're going to expand that by about 40%. And the reason is that we have roughly that 40% solution is coming out of the bottom of the pad and we can't process it all. So the 78,000 cubes go through the plant but the balance up to about 92,000 cubes is being recirculated. I think the tail assay on the plant is around 0.04 gram per tonne. And the solution we pumped back to the pads like 0.08 gram. So I think that by itself tells you, not only did we have higher volumes in the pond from the wet winter. But largely back into Q2 and early Q3, those -- that solution inventory dropped. We have this recirculating load of gold going back through the pad because we can't process at all. So once the team gets that ADR plant expanded, we should be able to process all the water that comes out of the pad and produce the gold on a more timely basis, particularly during the wetter season. So I think this is a really good move. I think the other point is we did expand. We're in the process of expanding our pond capacity levels, and that, I think, is also supportive to managing this inventory better going forward.

Kerry Smith -- Haywood Securities -- Analyst

Okay, OK. That's helpful. Thanks, George.

Joseph Dick -- Executive Vice President and Chief Operating Officer

George, the only thing I would add is, just remembering, it's a long lead cycle at Kisladag, a 250-day leach cycle. So it's -- things take time to react.

George Burns -- President and Chief Executive Officer

Yes, good point.

Kerry Smith -- Haywood Securities -- Analyst

Great. Thank you.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. George Burns for any closing remarks.

George Burns -- President and Chief Executive Officer

Thank you, operator, and thank you, everybody, for tuning into our Q3 results. Look forward to further updates as we continue to add value and deliver value to our shareholders. Have a great weekend.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Peter Lekich -- Manager, Investor Relations

George Burns -- President and Chief Executive Officer

Philip Yee -- Executive Vice President and Chief Financial Officer

Joseph Dick -- Executive Vice President and Chief Operating Officer

Jason Cho -- Executive Vice President and Chief Strategy Officer

Mike Parkin -- National Bank -- Analyst

Tanya Jakusconek -- Scotiabank -- Analyst

Carey MacRury -- Canaccord Genuity -- Analyst

Cosmos Chiu -- CIBC -- Analyst

Kerry Smith -- Haywood Securities -- Analyst

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