Eldorado Gold Corp EGO recently announced an updated Life-of-Mine plan for its Kisladag mine in Turkey, which extends the mine’s life from three years to fifteen years through to 2034. The company is also poised to benefit from higher gold prices in the near term, according to BofA Securities.
The Eldorado Gold Analyst
Michael Jalonen upgrades Eldorado Gold from Underperform to Buy while raising the price target from $7.75 to $13.
The Eldorado Gold Thesis
Eldorado Gold’s net asset value estimate has increased, after factoring in Kisladag’s extended mine life and higher gold prices, Jalonen said in the note.
The company has projected 2020 production at between 520,000 to 550,000 ounces of gold at cash costs of $600-$650 per ounce and all-in-sustaining costs of $850-$950 per ounce.
Considering the extension of Kisladag’s mine life and rising output from Lamaque and Olympias, Eldorado Gold’s five-year guidance projects gold output to average over 450,000 ounces per annum. “This is a big improvement vs. our prior modeling calling for gold output to decline to below 400,000 ozs by 2024,” the analyst wrote.
He raised the earnings estimates for 2020 and 2021 from 62 cents per share to 79 cents per share and from 34 cents per share to 48 cents per share, respectively. Jalonen added that the stock was trading at a 30% discount to “the peer intermediate producer group.”
EGO Price Action
Shares of Eldorado Gold were up 1.06% to $9.53 at time of publication.
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