Eldorado Gold Upgraded At Credit Suisse Following Investor Day

Credit Suisse’s Anita Soni believes the higher political risk perceived due to the exposure of Eldorado Gold Corp (USA) EGO to Turkey has been reflected in the 15 percent underperformance of the stock, as compared to its gold peers, since July 15.

Soni upgraded the rating on the company from Neutral to Outperform, while raising the price target from $5.00 to $5.50.

Greater Clarity

The analyst mentioned that the September 7 investor day has helped improve clarity regarding Eldorado Gold’s longer term outlook, declining Turkey exposure headwind and attractive P/NAV.

Related Link: Goldman Sachs Upgrades Eldorado Gold To Buy, Bullish On Opportunities From Growth Projects

“While President Erdogan's crackdown against purported organizers of the failed coup remains ongoing, we note that foreign investment has not been impacted and the three-month State of Emergency is set to expire on October 21,” Soni stated.

Growth Drivers

The analyst believes there are growth drivers that could raise AISC from 400koz in 2017 to 830koz in 2020, including the Kisladag expansion to 20Mt per year; Olympias Phase II, which is scheduled to begin in 2017; Skouries Phase I, expected to begin in 2019; and Tocantinzinho, which is scheduled for a late 2019 start.

“We estimate EGO has sufficient cash on hand and available credit to maintain US$100Mz cash and fund its growth plans until 2020 at $1,300/oz, when we estimate EGO would need to refinance US$195 million of its $600 million debt principal due,” the analyst added.

Full ratings data available on Benzinga Pro.