Eldorado Gold: Sky's The Limit, But The Sun's Burning Up There

Aug. 02, 2019 1:55 PM ETEldorado Gold Corporation (EGO), ELD:CA115 Comments


  • Eldorado Gold had an outstanding quarter in terms of revenue with a record of $173.70 million. The company is back on track with gold production more in control and debt.
  • The gold sold in the second quarter was 113,685 Au Oz at a gold price of $1,321 per oz, which was another pleasant surprise.
  • My target for 2019-2020 is still $10-$11.

Image: Efemçukuru Gold Mine Source: EJAtlas

Investment Thesis

The Vancouver-based Eldorado Gold (NYSE:EGO) released its second-quarter of 2019 results, and finally this time, the company managed to release decent earnings with record revenues. I could not believe my eyes and thought just for a moment, that it was another company report.

Investing in Eldorado Gold has been like walking a steep and interminable dune where every step forward was followed by a half step backward. With management led by CEO George Burns, that I consider less than stellar, who almost bankrupted the company with his ill-timed decision to build an unnecessary mill for $500+ million at the Kisladag mine in Turkey.

But, let's celebrate this quarter and forget for a moment how difficult it has been for suffering long shareholders. The chart below is showing a tremendous downturn with the stock going from $3+ to now almost $8.30.

The investment thesis is now more straightforward. The company is on the right track, and production seems in control.

Potential of a quick resolution of the Greek impasse in Skouries seems possible since "New Democracy" won the last elections and stated numerous times that they were in favor of the Skouries project and intend to deliver the permits quickly.

ChartData by YCharts

As I said earlier, 2019 shapes up as a classic turnaround story.

The first positive move was when management decided to act more responsibly (Kisladag) and displays a more professional strategy aiming at solving the company near future issues (Debt, gold production, and CapEx control). Three critical steps have been achieved:

  • A significant increase in gold production expected from the new mine called Lamaque in Canada, which has been declared commercial with about 110K Oz of gold in 2019.
  • The gold sale issues at Efemcukuru have been solved.
  • The company

This article was written by

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As an experienced investor, I will help you stay on task more efficiently.

I am a former test & measurement doctor engineer (geodetic metrology). I was interested in quantum metrology for a while.

I live mostly in Sweden with my loving wife.

I have also managed an old and broad private family Portfolio successfully -- now officially retired but still active -- and trade personally a medium-size portfolio for over 40 years.

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Note: I am not a financial advisor. All articles are my honest opinion. It is your responsibility to conduct your own due diligence before investing or trading.

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.

Additional disclosure: I have been reducing significantly my long position and now trade short term frequently.

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