Skouries Completion And Renewables Will Unlock Secular Potential

Key Takeaways

• Early progress at Skouries and cost reductions at other mines point to accelerated growth, improved margins, and potential outperformance of market expectations.
  
• Strong capital returns, responsible mining practices, and rising gold demand position Eldorado Gold for greater investor appeal and strategic industry opportunities.
  
• Rising costs, operational challenges, and regulatory risks threaten profit margins, while long-term performance depends on gold prices and successful project execution in high-risk regions.

Catalysts

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

• Analyst consensus sees Skouries as merely transformational for Eldorado Gold, but current construction productivity is slightly ahead of schedule, management has layered contingency plans for skilled labor, and nearly all major procurement is complete, suggesting upside potential for both an early commissioning and cost underruns; this could sharply accelerate revenue growth and materially boost 2026-2028 EBITDA well above current market expectations.
  
• While consensus expects moderate margin enhancement from mine optimizations, ongoing technological upgrades at Kisladag and rapid operational recovery at Olympias indicate a faster-than-expected return to lower operating costs, potentially driving structural improvements in company-wide net margins by 2026 as cost pressures from one-off events abate.
  
• Eldorado's prudent capital allocation and expanded buyback program, now sized at up to five percent of shares, signals management's conviction in undervaluation and allows for rapid accretive EPS growth as free cash flow from elevated gold prices and Skouries startup is redeployed to shareholders, further derisking returns.
  
• Persistent global monetary instability and robust gold demand from emerging Asian markets could lift realized gold prices well beyond current strip assumptions, compounding Eldorado's revenue increases through both higher spot prices and improved visibility of future cash flows as gold's safe-haven appeal intensifies.
  
• The company's leadership in sustainability and responsible mining, alongside a strong balance sheet and proactive ESG investment, positions it to capture disproportionate market and investor share as global supply growth is constrained, potentially leading to strategic industry consolidation or premium asset sales that unlock hidden balance sheet value and expand long-term earnings.

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 29.4% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 23.9% today to 30.4% in 3 years time.
• The bullish analysts expect earnings to reach $933.4 million (and earnings per share of $4.48) by about July 2028, up from $339.7 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 8.0x on those 2028 earnings, down from 12.7x today. This future PE is lower than the current PE for the US Metals and Mining industry at 17.5x.
• Analysts expect the number of shares outstanding to grow by 0.34% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.99%, as per the Simply Wall St company report.

Eldorado Gold Future Earnings Per Share Growth

Risks

• Rising operating and capital costs, including increased labor, royalty, and sustaining capital expenditures, have driven all-in sustaining costs above the top end of guidance, which threatens to compress net margins and depress long-term earnings if cost pressures persist.
  
• Eldorado's long-term reliance on high gold prices to sustain profitability, as evidenced by elevated Q1 revenues and derivative losses, exposes the company to downside risk if gold prices soften due to secular trends such as rising financial innovation or reduced industrial demand from decarbonization, potentially resulting in lower future revenues and net earnings.
  
• Persistent geopolitical and permitting risks in core jurisdictions, especially Greece and Turkey, continue to threaten timely project execution, and unforeseen delays or disruptions-even with current labor contingency plans-could result in reduced production volumes and increased capital costs, thereby impacting both revenue stability and free cash flow generation.
  
• The company's asset base is aging, and Q1 performance issues at Olympias and Lamaque highlight challenges around lower grades, haulage costs, and maintenance events, which over time could contribute to declining production volumes and higher per-ounce costs, diminishing future revenues and compressing profit margins.
  
• Heightened global ESG scrutiny and potential for resource nationalism may lead to increased regulatory compliance costs, greater environmental remediation expenses, and higher royalties or taxes, collectively putting pressure on Eldorado's net margins and introducing ongoing uncertainty into earnings forecasts.

Valuation

• The assumed bullish price target for Eldorado Gold is CA$40.0, 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$40.0, and the most bearish reporting a price target of just CA$26.58.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $933.4 million, and it would be trading on a PE ratio of 8.0x, assuming you use a discount rate of 7.0%.
• Given the current share price of CA$28.52, the bullish analyst price target of CA$40.0 is 28.7% 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.