Gold Miner Delivers 'Production Surprise' with Q2/18 Beat

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Source: Streetwise Reports   08/04/2018

An Eight Capital report reviewed this Canadian company's quarterly production results.

In a July 27 research note, Eight Capital analyst Craig Stanley reported that Eldorado Gold Corp. (ELD:TSX; EGO:NYSE) exceeded Q2/18 production estimates and, consequently, boosted its full year 2018 guidance.

The corporation's Q2/18 production was 99,105 ounces (99,105 oz) versus Eight Capital’s 72,000 oz estimate and consensus' 80,000 oz forecast. The beat is attributed to production at the Kisladag mine in Turkey surpassing expectations.

Cash costs during the quarter also came in better than Eight Capital anticipated and were in line with consensus. Contributors there were lower costs at Olympias in Greece and higher byproduct credits. Cash cost guidance remains CA$5.80–6.30 an ounce. All-in sustaining costs in Q2/18 were as forecasted.

On the heels of the production beat, Eldorado increased guidance for the full year by 8%, as measured at midrange, to 330,000–340,000 ounces (330–340 Koz), up from 290–330 Koz.

The miner also revised 2018 production from the Kisladag operation to 140–150 Koz from 120–130 Koz along with cash costs at that mine, to CA$700–800 per ounce from CA$600–700. Work continues on a feasibility study for a mill at Kisladag, which is due out in Q3/18.

As for specific project news, at Lamaque, underground development is progressing and is ahead of schedule. "Results from toll milling are reconciling well with the reserve block model," Stanley relayed. The target date for commercial production there is still early 2019.

Regarding Skouries, the project remains on hold pending outstanding permits, for which Eldorado continues having discussions with the Greek government. "Even if the required permits for Skouries are granted, Eldorado does not have the balance sheet to fund development of Skouries (US$689M) and Lamaque (US$100M) as well as the installation of a mill at Kisladag ($490M)," Stanley pointed out.

As far as finances, at the end of Q2/18, Eldorado had CA$430 million in cash, CA$250 million in undrawn lines of credit and CA$600 million in debt that is due December 2020.

Eight Capital has a Neutral rating on Eldorado Gold, whose stock is trading now at around CA$1.35 per share.

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Disclosures from Eight Capital, Eldorado Gold Corp., Target Revision, July 27, 2018

Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions.

Eight Capital generally restricts any research analyst/associate and any member of his or her household from executing trades in the securities of a company that such research analyst covers, with limited exception.

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• his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report;

• they have not affected a trade in a security of any class of the issuer whether directly or indirectly through derivatives within the 30-day period prior to the publication of this research report;

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Disclosures are available here.

( Companies Mentioned: ELD:TSX; EGO:NYSE, )

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