On December 15th, Eldorado Gold (TSX: ELD) announced the results of the Skouries Project feasibility study. The mine has an IRR of 19% after-tax based on a long-term gold price of $1,500, while the IRR goes up to 24% if you use the current spot price of gold of $1,800. The mine has an estimated life span of roughly 20 years, with 2.9 million ounces in the ground, and an expected 182,000 ounces per year of production for the first 5 years.
The company also said that the mine will have a negative cash operating cost of $368 per ounce sold over the lifetime of the mine, and a negative all-in sustaining cost of $17 per ounce over the same time.
Eldorado Gold currently has 12 analysts covering the stock with an average 12-month price target of US$13.77. Out of the 12 analysts, 6 have buy ratings, 5 have hold ratings and 1 analyst has a sell rating on Eldorado. The street high sits at US$17.76 from Cormark Securities while the lowest price target sits at US$9.25
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In BMO Capital Markets’ note, they reiterate their outperform rating and $20 12-month price target, saying the feasibility results provide positive results. They expect the Skouries mine to produce more than 300,000 ounces in 2025, which will drive “an 80% increase in Eldorado’s production to 950 koz AuEq,” meaning that the company has a compelling risk-return profile.
BMO says that the updated feasibility results, proving that the mine has a $1.3 billion NAV, is a roughly 41% increase over the 2018 test. They attribute the increase to a “combination of enhanced development and mine sequencing, and an increase in gold and copper price assumptions.”
Eldorado Gold is still figuring out how they will finance this operation and the timeline. BMO believes that the company will have no issue getting any sort of financing, and has “ample financial flexibility,” but believes that a potential Greek partner could help on the regulator side.
Lastly, BMO calls Eldorado Gold one of the best in the intermediate producer space as Skouries puts their full-year 2025 production up to 950,000 ounces. They say that the companies growth outlook and discounted valuation makes for a compelling opportunity.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
