Skouries Commissioning Will Fuel Lasting Operational Transformation

Key Takeaways

• Commissioning of a new copper-gold project and ongoing site optimizations are set to increase production, diversify revenue, and expand margins through improved efficiencies and lower costs.
  
• Industry trends and resilient gold prices, supported by macroeconomic factors and tight supply, coupled with active share buybacks, enhance long-term revenue and shareholder value.
  
• Persistently rising costs, operational and regulatory risks, and higher debt reliance threaten long-term margin stability, earnings growth, and financial resilience.

Catalysts

Engages in the mining, exploration, development, and sale of mineral products primarily in Turkey, Canada, and Greece.

• The approaching commissioning of the Skouries copper-gold project, slated for Q1 2026 and on schedule, is expected to be transformative by materially increasing production volumes, diversifying the revenue mix, and expanding EBITDA margins due to the asset's high grades and lower costs relative to existing operations.
  
• Sustained global macroeconomic trends-particularly heightened geopolitical uncertainty and persistent inflation-are supporting record-high and resilient gold prices, which directly feed into higher top-line revenues for Eldorado and are likely to persist given central bank buying and gold's role as a safe-haven asset.
  
• Ongoing operational optimization initiatives at flagship sites such as Kişladağ (with investment to increase throughput and recoveries) and Lamaque (throughput increases and early Ormaque ore processing) are expected to lower all-in sustaining costs and enhance net margins and free cash flow as operational efficiencies and higher grades flow through to financials.
  
• Robust share buyback activity, funded by a strong balance sheet and advantaged project-level financing, signals management's conviction that the current valuation does not reflect the company's intrinsic value, and fewer shares outstanding could support higher per-share earnings and return-on-equity metrics.
  
• Industry-wide tightening supply from declining discovery rates and constrained new developments is likely to support a structurally higher gold price, boosting long-term revenue potential and pricing power for efficient producers like Eldorado Gold, especially as the company improves cost control and brings Skouries online.

Eldorado Gold Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Eldorado Gold's revenue will grow by 26.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 26.7% today to 32.8% in 3 years time.
• Analysts expect earnings to reach $1.0 billion (and earnings per share of $3.97) by about August 2028, up from $420.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 5.9x on those 2028 earnings, down from 11.1x today. This future PE is lower than the current PE for the US Metals and Mining industry at 18.8x.
• Analysts expect the number of shares outstanding to decline by 0.26% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.84%, as per the Simply Wall St company report.

Eldorado Gold Future Earnings Per Share Growth

Risks

• Elevated all-in sustaining costs (AISC), reported at $1,520/oz and expected to be at or above the high end of guidance for the full year, suggest persistent cost pressures from labor, royalties, and taxes-potentially leading to long-term margin compression and lower net profit margins.
  
• Skouries project faces complex commissioning and ramp-up risks, including technical challenges associated with the filtered tailings plant and variable ore types during startup, which could result in delays, higher-than-expected capex, or slower revenue contribution, impacting future earnings growth.
  
• Continued exposure to regulatory, permitting, and geopolitical risks in Greece and Turkey, as indicated by permitting delays at Olympias and prior drilling contractor issues in Turkey, introduces uncertainty around stable production and cash flow, with potential negative impacts on revenue and long-term margin stability.
  
• Higher capital outlays and ongoing investments (e.g., Skouries, Kışladağ circuit optimization, Lamaque expansion) increase reliance on external financing; drawing significantly on debt facilities, while manageable now, elevates future balance sheet risk and could lead to shareholder dilution if free cash flow growth stalls.
  
• Rising labor and royalty costs, partly driven by high gold prices and escalating local wages, may persist or intensify due to inflationary trends or increased local taxation/regulation, threatening to erode net margins and weaken the resilience of future operating profitability.

Valuation

• The analysts have a consensus price target of CA$34.377 for Eldorado Gold based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$40.97, and the most bearish reporting a price target of just CA$28.45.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.2 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 5.9x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of CA$31.74, the analyst price target of CA$34.38 is 7.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.