On
behalf of the Board of Directors of Eldorado Gold Corporation, we
are pleased to invite you to our 2019 Annual Meeting of
Shareholders, which will take place on Thursday, May 2, 2019 at
3:00p.m. (Pacific time) in the Skidmore Room of the Terminal City
Club, located at 837 West Hastings Street, Vancouver,
BC.
Attached
is the Notice of Meeting of Shareholders and the Management Proxy
Circular. In addition to the normal course items (election of
directors and appointment of auditors), we will be asking our
shareholders to consider and approve, on a non-binding and advisory
basis, our approach to executive compensation. This was a key focus
for the Compensation Committee in 2018 as they worked to further
align pay and performance. The meeting
will
also provide an opportunity to provide an update on
Eldorado’s business plan.
EXECUTIVE COMPENSATION & GOVERNANCE
At
our 2018 Annual and Special Meeting of Shareholders, our
shareholders voted over 90% in favour of our refreshed approach to
executive compensation. We believe this was a result of listening
carefully to your feedback and making meaningful changes in
executive compensation to directly link pay for performance. We
continued to refine our approach
to
executive compensation and governance during the year, by making
the following changes.
✓
A stringent compensation review to strongly align
executive pay and performance
✓
A change in Compensation Committee composition,
including the addition of George Albino and Teresa
Conway
✓
Reduced overall Board cost through reducing Board
size, reducing Committee Chair fees and changing to a fixed annual
retainer fee beginning in 2019
✓
Reduced CEO long-term incentives by 40% in
addition to the 80% reduction the prior year, and executive
long-term incentives by 20% in addition to the 30% reduction the
prior year
✓
Adopted a Shareholder Engagement Policy and
increased shareholder engagement and outreach by the Board and
senior management
✓
Adopted a Gender Diversity Policy and joined the
30% Club Canada, which encourages gender balance at all levels of
organizations
✓
Adopted enhanced Corporate Governance
Guidelines
✓
Strengthened the senior management team through
the appointment of Philip Yee as EVP and CFO, and Timothy Garvin as
EVP and General Counsel
As
a Board, we are committed to remaining abreast of best
practices
in
corporate governance and executive compensation. We will
continue
to monitor developments in this area in order to
reflect this in our decision- making going forward. The Board
encourages you to consider the changes that we have made in 2018
and to vote
FOR
the Company’s approach to
executive
compensation.
2018 YEAR IN REVIEW
Despite
a solid operational year where we exceeded our production goals by
12% and kept costs in line with guidance, the Company’s
equity performance was overshadowed by a decreasing gold price,
global geopolitical uncertainty, concerns over the financing
environment for companies like Eldorado, and
a
shift in market sentiment towards rewarding short-term results and
free cash flow. Our share price performance over this period was
disappointing, particularly as our global teams successfully
executed on achieving a number of key milestones we set out for
ourselves in 2018.
These
included progressing key development projects – including
construction at Lamaque and determining feasibility of the
Kışladağ Mill – all while operating safely and
responsibly. Our teams worked hard to reduce our
long-term
injury frequency rate, which was down 21% in 2018, and had no
reportable environmental incidents. Through a lot of effort and
diligence, we continue to make strides in establishing a culture of
working safely.
During
the year, we significantly advanced development at Lamaque, pouring
first gold from the refurbished Sigma Mill in December. The project
is on track to declare commercial production in Q1
2019.
At
Kışladağ, we focused on advancing feasibility of a
mill, completing a technical study in March and a feasibility study
in October. Based on the feasibility study, the Board made the
decision to advance construction of the Kışladağ
Mill Project in late Q3.
We
had previously declared the start of commercial production at
Olympias as of December 31, 2017, making 2018 the mine’s
first year contributing to Eldorado’s operating results.
After progressive improvements in Q1 and Q2, permitting delays
which led to late commissioning of the paste backfill plant
resulted in out-of-sequence mining, leading to a non-optimal
ore
blend.
This in turn caused issues with metal recovery and concentrate
quality. We anticipate improvements over the course of
2019.
We ended the year in a solid financial
position,
with total liquidity of approximately $543 million, including $293
million in cash, cash equivalents and term deposits and $250
million in an undrawn line of credit. The strength of our balance
sheet, underpinned by a steady base of cash producing operations,
positions us to continue to make decisions to create value
for
our shareholders.
ENHANCED MANAGEMENT TEAM
The
success of our Company is dependent on the strength of our
leadership and the capability of our global teams. We enhanced
capacity in several key positions in 2018 in order to strengthen
our leadership skill set. In particular, we appointed two new EVPs
during the year. Tim Garvin joined the Company as EVP & General
Counsel in February and Phil Yee joined us as EVP & CFO in
September. Tim has extensive international experience in legal
management
roles
advising companies in mining and oil and gas. Phil brings over 25
years’ experience in the mining industry, financial
management and reporting, financial and operational recovery,
mergers and acquisitions, international risk management and
strategy development to Eldorado. He was previously EVP & CFO
at Kirkland Lake Gold.
PATH FORWARD: 2019 OUTLOOK
We
have had a strong start to 2019, with the January 31 announcement
of our amended plans at Kışladağ to suspend
advancement of the mill project in favour of resuming heap
leaching. Our decision was based on results from metallurgical
testwork received in Q4 2018 that indicated significantly improved
recoveries from longer heap leach cycles.
We
expect to recommence activities at Kışladağ in Q2
2019, and together with expected progress at Olympias and
commercial production from Lamaque, transition the Company into
generating free cash flow this year, and further strengthen our
balance sheet.
With
long-term shareholder value creation top of mind, we turn our
sights
to
building on our solid foundation and growing our business in a
responsible manner. We believe that higher gold prices, increased
production, continued resource conversion, and expansion
possibilities requiring modest capital outlay at our current
operations will create stronger equity returns for our shareholders
in 2019.
YOUR VOTE IS IMPORTANT
Your
participation as a shareholder is important to us. The Management
Proxy Circular contains important information; please familiarize
yourself with some of the key changes we’ve made before you
decide how to vote your shares.
We
ask that you exercise your vote in person or by submitting your
proxy or voting instruction form ahead of the proxy cut-off
deadline (Tuesday, April 30, 2019, 3:00p.m. Pacific
time).
We
thank you for your continued support of Eldorado Gold, and look
forward to seeing you at the 2019 Annual Meeting of
Shareholders.
Sincerely,
“George
Albino”
“George
Burns”
George
Albino
George Burns
Chair of the Board
President
& Chief Executive Officer