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Eldorado Gold looking well-positioned to benefit from gold bull market

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Eldorado Gold [TSX:ELD] currently controls a portfolio of long-life, high quality gold mine assets in Greece, Turkey and Canada. It has mines producing already across all three jurisdictions with annual production expected to increase to between 675,000 and 735 ounces in 2027. It also has some intriguing strategic growth projects in the pipeline.

With the gold price starting to look punchy, we are seeing some solid upside in the stock price for Eldorado Gold. We go into some further details on its assets in the article, but note the stock price is up +6.76% this month and +68.64% over six months. This is punchy and consistent performance for investors!

Eldorado Gold reported 128,453 ounces of gold produced across its portfolio in Q4 when it presented results to investors at the end of February. It realised gold sales of $1754 per ounce with over 132,000 ounces shifted in Q4. Cash, cash equivalents and long term deposits equated to $314m.

At a time when the gold price seems to be heading north (one commodities hedge fund manager The Armchair Trader spoke to last week reckons $2500 gold is now realistic) mines with a good existing production profile are starting to look more attractive. Throw in Eldorado Gold’s anticipated commercial production at its Skouries project and things start to look even more interesting here.

Just taking one example from its portfolio, which we look at in more detail below, Eldorado Gold reckons its Skouries project in Greece is transitioning into execution phase and is aiming for around 140,000 ounces of gold from the mine.

chart of production and cashflow at Skouries

Other factors to consider with Eldorado: an extremely strong cash position with $315m on the books as of the end of December 2023. It also has a consistent production profile – e.g. its Efemçukuru mine in Turkey has met annual production guidance for the ninth consecutive year.

Eldorado Gold skilfully uses strategic partnerships to help it to maximise shareholder value. It has built up a portfolio of term facility arrangements for its Skouries project it can draw on from Greek banks and the Greek state Recovery & Resilience Fund. Eldorado has been able to secure these via its relationship with Hellas Gold with expected drawdown of funds this quarter.

Management at Eldorado considers its development at Skouries in Greece to be the transformational impact of the Skouries project. The project is already half built with major processing equipment already installed. It has achieved meaningful progress on early works activities.

Approximately half Eldorado’s capital cost estimate for the project is related to labour. Commodity and input price assumptions including copper, steel and cement requirements at the site remain in line with the assumptions of the project’s feasibility study.

Looking across all the projects Eldorado has on the table at the moment, one is impressed by the sheer scale of its operations. Just taking its September mineral reserves numbers, it has proven mineral reserves of 253, 660 (x1000) tonnes with an average grade of 0.89 Au g/t. That’s just the gold. Silver adds in a further 4,671 (x1000) tonnes proven mineral reserves, grading at 49 g/t  Ag. This is before you factor in the probable mineral reserves.

Also of note is the purity being achieved at some of its sites. Efemçukuru has 5.59 g/t Au, with 9.31 from Olympias and 6.82 at Lamaque.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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