Eldorado Gold Corporation (EGO) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong revenue growth and improved cash flow, despite increased costs and tax expenses. The Q&A section reveals confidence in project completion and shareholder value return, boosting sentiment. However, caution is warranted due to increased costs and lack of clear guidance on NCIB. The market cap suggests moderate sensitivity, leading to a prediction of a 2% to 8% stock price increase.
Key Financial Performance
Net Earnings $72 million (up from $0 in Q1 2024), driven by higher average realized gold prices which offset elevated production costs.
Earnings per Share $0.35 (up from $0 in Q1 2024), reflecting the increase in net earnings.
Adjusted Net Earnings $56 million or $0.28 per share (up from $0 in Q1 2024), adjusted for a $74 million tax recovery and a $63 million unrealized loss on derivative instruments.
Free Cash Flow Negative $22 million (compared to positive $34 million in Q1 2024), but positive $76 million when excluding capital investments in the Skouries project.
Cash Flow Before Changes in Working Capital $137 million (up from $108 million in Q1 2024), primarily due to a 38% increase in revenue.
Revenue $355 million (up from $255 million in Q1 2024), buoyed by an average realized gold price of $2,933 per ounce compared to $2,086 in the previous year.
Total Cash Costs $1,153 per ounce sold (up from $1,000 in Q1 2024), impacted by higher royalty expenses and production costs.
All-in Sustaining Costs (ASIC) $1,559 per ounce sold (up from $1,400 in Q1 2024), reflecting increased production costs and royalties.
Capital Investments $71 million in operating mines and $84 million in Skouries project, supporting growth initiatives.
Tax Expense $47 million (up from $12 million in Q1 2024), reflecting higher operating profitability.
Deferred Income Tax Recovery $80 million (compared to an expense of $4 million in Q1 2024), driven by recognition of deferred tax assets.
Production 115,893 gold ounces (compared to 100,000 ounces in Q1 2024), with challenges at Olympias affecting overall production.
Lost Time Injury Frequency Rate (LTIFR) 0.7 (down from 1.63 in Q1 2024), indicating improved safety performance.
Operating Highlights
Gold Production Guidance: Eldorado Gold expects to produce between 460,000 and 500,000 ounces of gold in 2025.
Skouries Project Progress: Skouries copper-gold project is 66% complete, with first gold production expected in Q1 2026.
Production Performance: Total gold production for Q1 2025 was 115,893 ounces, with challenges at Olympias now resolved.
Safety Performance: Lost time injury frequency rate improved to 0.7 from 1.63 in Q1 2024.
Cash Costs: Total cash costs were $1,153 per ounce sold, influenced by higher royalties and labor costs.
Shareholder Value Initiative: Eldorado expanded its normal course issuer bid to enhance shareholder value.
Capital Investments: $71 million invested in operating mines and $84 million in Skouries project, supporting growth initiatives.
Risk or Challenges
Production Challenges: Production at Olympias was lower than expected due to challenges with flotation circuit stability and unplanned maintenance on the pyrite concentrate filtration.
Cost Increases: Total cash costs and all-in-sustaining costs were higher compared to 2024, primarily due to increased royalties driven by higher gold prices and higher labor costs.
Regulatory Risks: Ongoing global U.S. tariff discussions could add approximately $4 per ounce to total cash costs and $6 per ounce to all-in sustaining costs for the rest of the year.
Labor Challenges: The need for skilled labor at the Skouries project is critical, and while the number of personnel has exceeded targets, ensuring the right skill sets is essential for project advancement.
Economic Factors: High gold prices have driven both revenue and some costs upwards, impacting overall profitability despite increased cash flow generation.
Guidance & Outlook
Share Repurchase Program: Eldorado expanded its normal course issuer bid (NCIB) as part of its commitment to enhancing shareholder value and demonstrating confidence in the long-term prospects of the business.
Skouries Project Progress: The Skouries copper-gold project is 66% complete, with first gold production expected in Q1 2026 and commercial production in mid-2026.
Sustainability Initiatives: The company rolled out the third version of its Sustainability Integrated Management System (SIMS) to all sites, aimed at driving continuous improvement in sustainability performance.
Health and Safety Improvements: Eldorado continues to focus on health and safety improvements, achieving a lost time injury frequency rate of 0.7, down from 1.63 in Q1 2024.
2025 Gold Production Guidance: Eldorado expects to produce between 460,000 and 500,000 ounces of gold in 2025.
Cost Guidance: Total cash costs are projected at $1,153 per ounce sold and all-in sustaining costs at $1,559 per ounce sold for Q1 2025.
Capital Expenditures Guidance: The company expects project capital guidance for Skouries to be between $400 million and $450 million for the full year.
Free Cash Flow Expectations: Free cash flow for Q1 was negative $22 million, but positive $76 million when excluding capital investments in the Skouries project.
Shareholder Return Plan
Share Repurchase Program: Eldorado Gold Corporation expanded its normal course issuer bid (NCIB) as part of its commitment to enhancing shareholder value. The company believes the current share price does not fully reflect its underlying value and sees the NCIB as an important way to return capital to shareholders.
Key Q&A
Earnings Word Cloud
EGO Transcript
The earnings call presented strong financial performance with a significant revenue increase, driven by elevated gold prices, and a positive free cash flow when excluding Skouries investments. The expansion of the share repurchase program and strategic investments in Skouries and other projects indicate confidence in long-term growth. Despite some concerns about production delays and increased costs, management's optimistic guidance and strategic initiatives suggest a positive outlook. Given the market cap of approximately $3 billion, the stock is likely to experience a positive movement of 2% to 8%.
The earnings call indicates strong revenue growth and improved cash flow, despite increased costs and tax expenses. The Q&A section reveals confidence in project completion and shareholder value return, boosting sentiment. However, caution is warranted due to increased costs and lack of clear guidance on NCIB. The market cap suggests moderate sensitivity, leading to a prediction of a 2% to 8% stock price increase.
The earnings call summary presents a mixed picture. Financial performance shows increased net earnings and cash flow, but with negative free cash flow and increased costs. The Q&A reveals some uncertainties, particularly regarding underground development and inflationary pressures. However, optimistic guidance on production and liquidity provides balance. The market cap suggests moderate reaction, leading to a neutral prediction.
The earnings call presents a mixed picture. While net earnings and cash flow from operations have improved, free cash flow remains negative due to capital investments. The Q&A section reveals some uncertainties, particularly regarding production optimization and labor costs. However, management's optimistic outlook on future production and no significant operational disruptions suggest stability. Given the market cap and mixed signals, the stock is likely to remain neutral in the short term.
EGO Report
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