Skouries And Olympias Will Ignite Global Gold Demand

Key Takeaways

• Accelerated project completion and cost declines at key sites could significantly boost cash flow, profitability, and net margins beyond current projections.
  
• Strategic share buybacks, strong gold prices, and leading ESG practices position the company for enhanced per-share growth, market valuation, and capital access.
  
• Geopolitical risks, rising costs, regulatory hurdles, and reliance on asset sales threaten margin stability, reserves growth, and the sustainability of core operations for Eldorado Gold.

Catalysts

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

• Analysts broadly agree the Skouries project will be transformational, but the pace of commissioning and ramp-up is currently surpassing internal productivity assumptions, and with early mechanical and electrical completions, the project could reach nameplate capacity ahead of schedule, accelerating revenue recognition and cash flow generation.
  
• Analyst consensus expects the Olympias expansion to moderately boost profitability, yet overlooked is the significant cost decline (35% decrease in cash costs in just one quarter) already achieved post-plant stabilization; if this trend persists, net margins at Olympias could substantially exceed forecasts.
  
• Eldorado Gold is aggressively executing share buybacks, with a renewed NCIB program across both TSX and NYSE, which, if coupled with near-term cash flow inflection from Skouries, could drive rapid per-share earnings growth and unlock a higher market valuation.
  
• Sector-wide, rising global gold prices and sustained demand due to inflation hedging and emerging market consumption are already feeding directly into Eldorado's realized average selling prices, while the company's expanding production profile positions it for outsized top-line growth.
  
• Industry tightening on ESG and sustainability is setting high barriers for new entrants, but Eldorado's recent awards, recognition, and leading ESG practices should increase its access to capital and premium markets, potentially allowing for lower cost of capital and higher long-term earnings resilience.

Eldorado Gold Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Eldorado Gold compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Eldorado Gold's revenue will grow by 28.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 26.7% today to 31.1% in 3 years time.
• The bullish analysts expect earnings to reach $1.0 billion (and earnings per share of $4.93) by about September 2028, up from $420.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 6.9x on those 2028 earnings, down from 12.6x today. This future PE is lower than the current PE for the US Metals and Mining industry at 18.6x.
• Analysts expect the number of shares outstanding to decline by 0.47% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.92%, as per the Simply Wall St company report.

Eldorado Gold Future Earnings Per Share Growth

Risks

• Eldorado Gold is facing ongoing permitting delays and geopolitical challenges, particularly in Greece and Turkey, which could restrict or delay key projects such as Skouries and Olympias, resulting in revenue shortfalls and higher capital expenditures that may negatively affect long-term earnings.
  
• Rising global ESG standards and increasingly stringent anti-mining sentiment may create regulatory and community relations hurdles, driving up compliance and operational costs and placing downward pressure on net margins as a result.
  
• The company's cost profile is relatively high, with reported all-in sustaining costs reaching $1,520 per ounce, and several operations already experiencing cost increases from higher labor, royalties and input prices, making Eldorado Gold especially vulnerable to margin compression if the gold price declines or cost inflation continues.
  
• Eldorado Gold relies on periodic asset sales and non-core divestitures, such as the ongoing effort to dispose of its Romanian assets, to manage the balance sheet, a strategy that cannot be sustained indefinitely and may erode the consistency of earnings and put pressure on liquidity if core operations underperform.
  
• Industry headwinds, such as declining ore grades globally and intensifying competition for high-quality exploration assets, may make it more difficult and expensive for Eldorado to sustain or grow its reserve base over time, potentially constraining future production growth and placing limits on revenue and earnings expansion.

Valuation

• The assumed bullish price target for Eldorado Gold is CA$41.05, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Eldorado Gold's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$41.05, and the most bearish reporting a price target of just CA$29.11.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $3.4 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 6.9x, assuming you use a discount rate of 6.9%.
• Given the current share price of CA$36.31, the bullish analyst price target of CA$41.05 is 11.6% higher.
• 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.