Eldorado Gold Corp (USA) EGO has released its updated financial and operating guidance for 2017–2020, including the Skouries and Olympias projects in Greece.
Michael Jalonen of Bank of America Merrill Lynch upgraded the rating on the company from Underperform to Buy, with a price target of $5.
Jalonen explained that the previous Underperform rating had been on account of uncertainties regarding Eldorado Gold’s Greek asset base.
Better Production, Lower Costs
The analyst also noted that the company’s production levels were higher and operating costs lower than the estimates, and Eldorado Gold had guided to gold output of more than 900koz by 2020, representing a 109 percent increase from the 2017 levels.
“The sale of the Chinese gold mines should greatly strengthen EGO’s balance sheet, providing sufficient liquidity to advance the projects,” the analyst also noted.
Impact Of Updated Operating Plan
Eldorado Gold’s updated operating plan calls for an improved gold production profile, as well as lower AISC, which the company expects to decline by about 30 percent from $850/oz in 2017 to less than $650/oz in 2020.
Jalonen believes that as Eldorado Gold “advances the two Greek projects to the production stage that the sizable discount to the peer producers will contract.”
The EPS estimates for 2016–2018 have been raised, driven by a combination of lower cash costs and higher gold output.
At time of writing, Eldorado was up 2.89 percent on the day, trading at $3.73.
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