Morningstar | Eldorado Gold Shares Surge 28% on Resumption of Heap Leach Mining at Kisladag
On Jan. 31, Eldorado provided initial 2018 production results and guidance through 2021. The most significant part of Eldorado’s news was the resumption of mining and heap leaching at Kisladag, allowing the company to restart production at the mine without having to pay for a previously planned $500 million mill. We’ve updated our model to reflect the latest guidance, although the update is not enough to move our U.S. dollar-denominated fair value estimate of USD 10 per share. Our Canadian dollar-denominated fair value estimate falls slightly to CAD 13 per share from CAD 13.50 due to changes in currency exchange rates. We maintain the company’s no-moat rating.Upon the news that Eldorado would be able to resume heap leaching at Kisladag, thus avoiding the construction of a mill, shares rose 28%. This continues to reflect how concentrated the company’s portfolio is, reinforcing our Extreme uncertainty rating. Although the current share price is significantly below our fair value estimate, we’d reiterate that roughly half of our fair value estimate is predicated on the opening of Skouries in Greece. Progress at the Greek mine continues to remain uncertain on both opening and timing, but we think Eldorado has the legal grounds to eventually open the mine.
Eldorado Gold is engaged in the exploration, development, mining and production of gold and other mining resources in Brazil, China, Turkey and Greece.
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