UPDATE 2-Eldorado cuts production forecast as profit falls

Fri Jul 27, 2012 9:31am EDT

* Cuts 2012 production target by 10 to 15 percent

* Blames delays in Turkey and China

* Q2 profit 7 cents/share vs 14 cents a year earlier

* Q2 gold output lower; costs rise

July 27 (Reuters) - Canada's Eldorado Gold Corp cut its full-year production target by 10 to 15 percent on Friday and reported a drop in second-quarter profit on lower gold output and higher costs.

The Vancouver-based miner now expects to produce 660,000 ounces of gold in 2012, down from a previous estimate of 730,000 to 775,000 ounces. It blamed delays at its Efemcukuru project in Turkey and at Eastern Dragon in China.

Eldorado is still waiting for a key project permit to start production at Eastern Dragon. The company said it has learned the permit must be reviewed by federal regulators, and it is in the process of preparing that submission.

At Efemcukuru, the company faced delays in the final processing of concentrate from the mine, which is shipped to Kisladag for leaching.

Eldorado earned $46.6 million, or 7 cents a share, in the second quarter, compared with $74.9 million, or 14 cents a share, in the year-earlier period.

Earnings were in line with analysts' average forecast, according to Thomson Reuters I/B/E/S.

Revenue fell 3 percent to $244.2 million as lower gold sales and higher costs weighed.

Gold production was 13 percent lower in the quarter at 140,694 ounces, while gold sales fell to 141,717 ounces from 162,164 ounces.

Cash costs rose to $480 an ounce from $397, while the average realized gold price was $1,612 an ounce, up from $1,510 a year earlier.

At the Jinfeng mine in China, production fell 45 percent on lower head grades and throughput at the mill. Output was also down slightly at the Tanjianshan and Kisladag projects.

Eldorado has operations in China, Brazil, Turkey, Romania and Greece. The company plans to more than double its gold output to 1.7 million ounces by 2016.