Explaining Eldorado Gold
Nov. 18, 2018 1:26 PM ET|41 comments | About: Eldorado Gold Corporation (EGO)
Sven Carlin
Growth at reasonable price, long-term horizon, book author, Fund Manager
Sven Carlin Research Platform
(4,879 followers)
Summary
I explain why is Eldorado down 90% over the last 5 years and down 50% year to date.
The value of its assets is not questionable, but EGO's financial structure is, which consequently affects its potential.
The Greek issue, Kisladag and the Lamaque flop are just a few mistakes on the management's track record.
However, if gold prices rise, they will be deemed genius. That is how things work.
When a stock falls 50% in less than a year and 90% over the last 5, many wonder what is going on. It is hard to grasp how can something change that fast, but that is how things work when it comes to stocks, especially gold mining companies. Eldorado gold (EGO) didn't change much as a company, it still owns the same assets as a year ago, but even subtle changes, can have a significant effect on the stock price.
Eldorado stock priceIn the below video, I explain the factors that have hit EGO over time which should explain the current market valuation. I look at the value of each mine EGO owns, make a net present value analysis and look at the cost of capital necessary to develop those mines. High future debt costs significantly lower the net present values that EGO is using for its assets. At the end of the video I share EGO's acquisition track record over the past 10 years. Enjoy the video.
Video content:
0:45 Eldorado overview (business plan, growth, financing and debt)
1:32 Kisladag
3:33 Efemcukuru
3:57 Lamaque
5:01 Certej
5:27 Brazil operations
5:51 Greece operations
7:31 Sum of parts value - balance sheet
8:31 Risks and investment thesis
10:15 EGO’s track record