Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eldorado Gold Corp (EGO, Financial) achieved safe gold production of 125,195 ounces in Q3, aligning with full-year guidance.
- The company successfully concluded a three-year CBA agreement with the union workforce at Olympias, supporting long-term profitability.
- Year-to-date production increased by 7% compared to the same period in 2023, indicating strong operational performance.
- Eldorado Gold Corp (EGO) reported net earnings attributable to shareholders of approximately $101 million, positively impacted by higher revenue and a gain on deferred consideration.
- The Skouries project remains on track for first production in Q3 2025, with significant derisking and all major contracts signed.
Negative Points
- Total cash costs and all-in sustaining costs increased due to higher royalties and labor costs, impacting profitability.
- Gold production guidance was slightly lowered due to inventory buildup at Kisladag and work stoppages at Olympias.
- The company's lost-time frequency rate increased to 0.91 per million work hours, indicating a need for improved safety measures.
- Free cash flow was negative $4.8 million, reflecting the impact of capital investment in the Skouries project.
- Underground development at Skouries was delayed, potentially impacting future ramp-up speed after first production.
Q & A Highlights
Q: Could the slower underground development at Skouries impact the ramp-up after first production?
A: George Burns, President and CEO, explained that the underground development at Skouries is not critical for the initial years of production. The focus is on optimizing technical assumptions and stope sizes. Delays were due to transitioning contractors, but productivity is improving, and there is no material impact on operations for the next several years.
Q: With $920 million total CapEx for Skouries, how will the remaining spend be distributed?
A: George Burns confirmed confidence in the $920 million budget. Spending will ramp up significantly in Q4 and Q1 2025. Some non-critical infrastructure might be delayed but won't impact operations. Underground development will proceed as planned, with no material impact on production next year.
Q: What are the drivers for the expected increase in Q4 production?
A: George Burns noted that Lamaque and Efemcukuru are performing stronger than expected, while Kisladag and Olympias faced challenges. A strong quarter is anticipated at Lamaque, and Olympias is expected to recover from previous issues, supporting the updated guidance.
Q: What is the impact of higher gold prices on royalties and costs?
A: Paul Ferneyhough, CFO, stated that higher realized gold prices increased royalty costs by $105 per ounce compared to the budget set at $1,900. This sensitivity will be considered in future guidance.
Q: Is there a plan to reinstate dividends given the strong gold prices?
A: George Burns indicated that reinstating dividends is a focus, but the company aims for sustainability. The decision will likely be revisited in 2026 after Skouries reaches commercial production.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
