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Eldorado Gold: Olympias Disappoints Again

May 04, 2020 10:39 AM ETEldorado Gold Corporation (EGO), ELD:CA10 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • Eldorado Gold reports first quarter results, missing analyst estimates on both earnings and revenue.
  • Olympias records very high costs despite the increase in production levels.
  • Other mines are performing well, and Eldorado Gold shares will likely experience another upside move in case gold manages to stay above $1700 per ounce.

Eldorado Gold (NYSE:EGO) has recently published its first quarter results, and it’s high time to see how the company performed amid the coronavirus pandemic. Back in April, the company provided its first quarter production numbers (I discussed them here) so the real intrigue was the cost performance and the guidance for 2020.

Eldorado Gold reported revenues of $205 million and a loss of $5.5 million, or $0.03 per share. The company generated $53.3 million of operating cash flows, and I expect that healthy cash flow performance will continue due to solid production (more on this later) and high gold prices.

The company finished the quarter with $309 million of cash, $54.8 million of term deposits and $2.9 million of marketable securities following its decision to draw $150 million from the credit facility as a precaution measure at these uncertain times.

In my above-mentioned article about Eldorado’s first quarter production results, I estimated that the new production guidance for 2020 will be close to 490,000–520,000 ounces of gold. At that time, I believed that Lamaque’s stoppage due to virus containment measures in Canada would lead to a decrease of full-year production. However, the company has maintained its previous production guidance of 520,000–550,000 ounces which is positive news.

In the first quarter, Eldorado Gold produced 116,000 ounces at all-in sustaining costs (AISC) of $952 per ounce. For the full year, the company expects AISC of $850-$950 per ounce. Unfortunately, problems with costs continue at the Greek mine Olympias despite the recent increase in gold production, which should have theoretically had a positive impact on costs. In the first quarter, Olympias produced 15,182 ounces of gold at an AISC of $1646. So far, this mine has been an unmitigated disaster for Eldorado Gold, and it remains to be seen whether the company will be able to improve the situation.

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 (10)

Eldorado still one of the worst performing gold miners on TSX and one of only handfull that still can't make profit at $1600 POG . Shame on incompetent management.
@Vladimir Zernov do you think EGO is the best miner to invest in from potential of SP upside point of view?
Vladimir Zernov profile picture
The best gains in % terms will be in stocks that are close to penny territory - if things go right for them. Nobody has a crystal ball so I think it makes more sense to play any upside with several candidates rather than picking just one. AUY looks interesting at the breach of $5 for momentum, for example. For l-t, big names like GOLD or NEM are also interesting.
Spitfire MK V profile picture
Still smarting from the 5 to 1 consolidation from a while back , a 2 dollar stock going no where until they get some decent management . Got out at just above even .
It's not a problem, the worse the miners report the more stock rallies these days.
Total joke.
13ISMYNAME profile picture
I believe you meant to say "retest the February highs", not lows. Am I right?
Vladimir Zernov profile picture
Highs. Submitted a correction.
You wrote "In this light, I believe that Eldorado Gold shares have good chances to re-test the February lows". Probably you meant little chances instead of good.... at least that is what I understood from your contribution.
Vlad .... Did u mean February lows or highs??
Vladimir Zernov profile picture
Typo. Highs, of course, I'm looking for a retest of highs. I'll submit a correction.
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