January 6, 2017 / 6:41 PM / in 8 months

UPDATE 1-Eldorado shelves growth plans as gold price slides

(Adds analyst comment, background on 2016 asset sales, updates stock price decline. All figures in U.S. dollars unless otherwise noted)

By Susan Taylor

TORONTO, Jan 6 (Reuters) - Canada’s Eldorado Gold Corp said on Friday it has indefinitely shelved expansion plans for its flagship Kisladag mine in Turkey and deferred a development decision on a project in Brazil, citing lower gold prices.

Eldorado, which also operates in Greece and Romania, said it now estimates 2017 capital expenditures at $425 million, well below a September forecast of $500 million to $580 million.

Shares of Eldorado, which lowered the gold price it used in forecasting to $1,150 an ounce from $1,300 in September, were down 6.3 percent at C$4.47 on the Toronto Stock Exchange on Friday afternoon, amid broad declines in the bullion sector.

The company said that lower spending primarily reflected the suspended development of Kisladag and the Tocantinzinho project in Brazil, along with a rejigged spending schedule at Skouries in Greece.

The company now targets 2017 gold production of 365,000-400,000 ounces, down from a September forecast of 375,000-420,000 ounces. 2016 output of 485,994 ounces lagged guidance of 495,000 ounces.

“Eldorado once had a growth profile and now they’re going the other way, which is very disappointing,” said John Ing, president of investment firm Maison Placements Canada.

“I had thought that with the sale of the Chinese assets they would look around and either gear up what they had, or look for an acquisition.”

In 2016, Eldorado sold its stake in three mines and one project in China for about $900 million.

As gold miners start to issue 2017 forecasts, those with high costs or lower-grade assets may also pare spending plans, Ing said.

Vancouver-based Eldorado now estimates 2017 sustaining capital at Kisladag of $45 million, below a previous target of $50 million to $60 million. In September, Eldorado said it planned to spend $63 million over the next two years at Kisladag, the largest gold mine in Turkey, expanding production to 310,000-320,000 ounces of gold through 2020.

The mine is now seen producing 230,000-245,000 ounces of gold in 2017 and 285,000 ounces in 2018 and 2019, Eldorado said. RBC Capital Markets analyst Dan Rollins expected output of 315,000 ounces in 2018-2019, he said in a note to clients.

Eldorado will cut 2017 capital spending at Tocantinzinho to $35 million from a previous estimate of $95 million to $105 million.

A decision on construction will be deferred until all permits are secured and will depend on gold prices.

Previously, Eldorado said that pending board approval, construction would start in 2017 with capital costs pegged at $464 million. (Editing by Dan Grebler and Matthew Lewis)

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