Eldorado Gold (EGO) Get it for double
massive liquidity of $1.1 billion, which includes $880 million in cash, cash equivalents and term deposits, and a $250 million undrawn line of credit.
Here is where things get even more interesting. Eldorado says it finished the year with massive liquidity of $1.1 billion, which includes $880 million in cash, cash equivalents and term deposits, and a $250 million undrawn line of credit. Part of this is due to the company's completed sale of its non-core Chinese assets for $600 million. This is arguably one of the strongest balance sheets in the gold mining sector.
For 2017, Eldorado is guiding for 365,000 to 400,000 ounces of gold, and this is much lower than 2016 due to the sale of the two producing Chinese mines. However, the company expects its cash operating costs to decline significantly in 2017 to $485-535 per ounce, with all-in sustaining costs falling to $845-875 per ounce.
When it comes to expected capital expenditures, EGO says it will spend $425 million as it advances Olympias to Phase II production (commissioning on target for Q1 2017) and as it brings the Skouries mine in Greece to production (targeted for 2019). This is a very reasonable amount to spend on capital expenditures, and with Eldorado's expected profitability and strong balance sheet, the company should have no problem funding the expenses.
Eldorado also says it will defer a decision to commence construction at Tocantinzinho in Brazil until it receives all of it permits. This is a smart move, because it reduces the company's 2017 capital expenditures at Tocantinzinho from $95-105 million to just $35 million in 2017. Once the permits have been received, the company can make the decision to proceed with the project.
As mentioned in a previous article, I think Eldorado's most important project is the Skouries mine in Greece (the company received permission to build the mine last November). Phase I production will see this mine produce 2.8 million gold equivalent ounces in the first nine years at negative cash operating costs (due to high recoveries and copper by-products). Over the life of the mine, it's expected to produce 6.4 million gold equivalent ounces.
