Thursday, March 30, 2017

Eldorado Gold: Turnaround?

Yesterday Eldorado Gold made this announcement:

"Improved Concentrate Sales Terms

The Company is pleased to announce that it has received multiple tenders for significantly better concentrate sales terms for material produced beyond 2017. Under the new sales terms, gold payability rates have increased from 58% up to a maximum of 71%, which is expected to result in an increase of approximately 15,000 ounces of payable gold production per year.  Annual Phase II production is now estimated to be approximately 85,000 ounces of gold (from 72,000 ounces per year previously) plus approximately 55,000 ounces of gold equivalent production."

It seems that this event is not widely commented but, in my opinion, it is a very interesting message. Why? Well, the quality of a concentrate does not suddenly improve so much as is in the case of Eldorado. If a smelter wants the concentrate from Eldorado and wants to pay more for it (the gold payability of 71% instead of 58%) it may mean that the demand for the gold concentrate (and for the gold itself) is stronger than people think.

On the other hand, for a few last years Eldorado shares have been lagging behind their peers. Look at the chart below:


The blue arrow indicates the last downward trend of EGO against GDX.

Now the question is: is the last announcement (which should substantially improve the Olympias economics) a turnaround event for this unpopular company?


  1. Kirkland Lake had great results. How about an update?

  2. That and several $100 million in excess liquidity that they've been sitting on for some time now, waiting & wanting to invest when the opportunity opens.

    Having a 13% investment in ICG, with their high-margin, safe jurisdiction, and growing multi-million ounce resource, a near-term deal would not be a surprise.