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Eldorado Gold Wins Arbitration In Greece

Apr. 04, 2018 11:23 AM ETEldorado Gold Corporation (EGO), ELD:CA44 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • Eldorado Gold confirms positive arbitration ruling in Greece.
  • This is a positive catalyst for the company, but the problems are not over.
  • The stock should have more upside once the market realizes how and when Eldorado Gold will be financing the development of the Greek project.

This article is an update to my bullish thesis on Eldorado Gold (NYSE:EGO) outlined in “Eldorado Gold Is Undervalued, First Target $2.20-$2.40”.

Finally, there’s some positive news from Eldorado Gold. The Q4 report has disappointed the market, as capital expense estimates for three major projects (Lamaque, Kisladag and Skouries) came significantly higher than previously expected. With the continuation of work on Skouries under a big question at that time, the market felt free to sell Eldorado Gold shares below $1.00.

The company has just announced that it has received positive arbitration ruling regarding the technical study for the Madem Lakkos metallurgy plant for treating Olympias and Skouries concentrates. This is exactly what the company has been waiting for. Here’s the comment from Eldorado Gold’s CEO on this issue:

"We respect and acknowledge the Panel's ruling. We have always acted in good faith and in a manner we understood to be in accordance with our obligations under the Transfer Contract, including our commitment to developing the Kassandra assets in accordance with the Greek State's approval of the Investment Plan in 2006, and the Environmental Impact Study in 2011. We have repeatedly communicated this commitment, including during the course of the arbitration.

We believe this decision provides a foundation to allow us to advance dialogue with the Greek government in order to define a mutually-agreeable and clear path forward for our Kassandra investments. We look to the Greek State to fulfil its obligations under the Transfer Contract including issuing the outstanding permits for the Skouries project. The full, efficient and responsible development of the Kassandra assets will benefit the Greek State and its citizens, the local communities, our shareholders and our teams of Greek employees.

Eldorado has continued to demonstrate its commitment to improving the environmental impact of our investments by recently

This article was written by

Vladimir Zernov profile picture
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. I use technical analysis as well as fundamental analysis in my research.

Analyst’s Disclosure: I am/we are long EGO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (44)

The mentioned R/S
this is uncredible. Good results and share fall down 0,90$. What happen?????
2Legit2BReal profile picture
Great news today! I'm all in, let it roll!
You are not concerned about reverse split or dilution?
whoopy profile picture
the short term (1 to 3 month), reverse split may be bad for EGO. But in the longer term, it will be good. Many investment funds have requirements related to Market Caps and individual stock prices. By consolidating shares and increasing the price of their stock, typically above $5, then a company can bring their stock into the target range of larger funds. Doing this in theory will help increase the market for a company and help improve the share price.
Insider buying is also a very good sign, there is more to come... It's a good buy at this point.
Dennis Beaudet profile picture
would you say that the ~$470 million of capital they spent on (~$127 on acquisition) and (~$345 on property, plant and eqipment) were accretive?.... or "good" spends?
downgrade BoA fall EGO. positive news....fall EGO. FOR EVERY NEWS good or bad fall EGO....
BoA downgrade..
Hi Rusty13.

sorry my ignorance, what is the meaning of BoA.

Bank of America
all gold shares up and Eldorado down.What happen? Arbitration positive. Great value, but the speculation and short selling is everyday.
this fact affect negative all us who have EGO from 2017 and bought about 2 $. After 2-3 year EGO will over from 3$ but is long time for investors this.......But sell with loss 50% don't good idea......patient for better days!
Couple of points. They also have $250M in undrawn credit in addition to the $485M cash, which gives circa $735M funding for capital works. I believe they have already stated via the recent webcast that they will not be looking to try and develop all 3 projects in parallel, and the $735M gives the them a cushion as to when and how they go forward. So will be interesting to see how they plan ahead.
yeti786 profile picture
Is this a real win for EGO? No.
A win is when you come up smelling roses on your terms. Or maybe smelling, but still on your terms.
Here, EGO has finally capitulated to a long standing demand by Greece: Clean up your act - specifically the environmental part - as reflected in the 'reduction of environmental footprint by 40%' accepted EGO during arbitration. (What a spin on a simple line in English to effect 'EGO will reduce pollution of the environment by 40%.')
Had EGO agreed to this a year or two back this frittering away of time and resources not to mention confidence of many investors could well have been avoided.
I taked a positions very early, at an average cost of 1.07, and in the today's premarket it hit this price (LOL), well, I hope it improves his value and I can have a good profit in the midle term. good luck everybody who are inside.
Just read that there are huge copper porphyry reserves at Skouries? Doesn't that make it more attractive for bigger mining players?
The latest technical report destroyed any chances for me to come out with a profit.. My only hope here is a M&A/JV otherwise you are giving your money to mgmt to make the right decisions.. Looks like the news leaked yesterday as we'll probably go into the red now.. Another way for me to get whole is buying more at $.80 cents or lower..
Would you accept 2$usd a shares?
CDon55 profile picture
$2.50 and I'm still underwater from my Integra shares
what would be a fair takeover price?? How do you come up with your price targets??
11146471 profile picture
Wfy don't you take a look at fixed assets for a start?
Garic Moran profile picture
Hecla just paid $420MM for Klondex.
That would value current production of Eldorado at $1.15 a share.
That leaves $2B of PEA NAV un accounted for!
What/when is the next catalyst for EGO in your opinion? Are we waiting for upgrades?
xeeeu3 profile picture
To me the main catalyst would be the actual permit.
Garic Moran profile picture
This is great news. The market had priced Kisladag & Skouries at 0; Eldorado's net asset value just went up $925MM. Now that Skouries has been de-risked (somewhat), I would expect a cash flow rich intermediate miner to buy them out. B2 is selling at 12X the Enterprise Value to resource as Eldorado (as are many intermediate miners). M&A is picking up in the sector as many miners are experiencing very strong cash flow at $1300 plus Gold. 53MM Gold equivalent ounces in the ground will prove to be very attractive for a cash flow rich, but resource limited miner!
Vladimir Zernov profile picture
I agree, EGO looks like a takeover target at current prices. The question is who has the resources AND the will to go after it?
garic it does ...the market will wake up.....short term 2.20 is resitance..
And how EGO will be priced in this hypothetical scenario
2Legit2BReal profile picture
Great news! Especially for those that waited and picked up the stock @ $ .82.
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