Eldorado Gold Corporation (ELD:CA) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlighted strong adjusted net earnings and increased gold production at Lamaque and Olympias, along with effective cost management. The Q&A reassured investors about labor and cost pressures, with no significant risks anticipated. The detailed responses and progress in key projects like Skouries and Foran suggest confidence in future performance. Given the market cap, these factors suggest a positive stock price movement within the 2% to 8% range over the next two weeks.
Key Financial Performance
Gold Production 100,358 ounces, a 13% decrease year-over-year, primarily due to lower tonnes at stacked grades at Kisladag and lower grades at Efemcukuru, partially offset by higher grades and improved recoveries at Olympias and Lamaque.
Gold Sales 100,619 ounces at an average realized gold price of $4,891 per ounce, generating total revenue of $532 million, a 50% increase from $355 million in the comparable quarter last year, driven by significantly higher gold prices.
Production Costs $188 million, up from $148 million, driven primarily by royalty expense in Turkiye and Greece (approximately 70% of the increase), labor inflation in Turkiye, and incremental labor and contractor costs at Lamaque Complex.
Total Cash Costs $1,470 per ounce sold, up from $1,153, reflecting higher royalty expense, lower production, and labor cost impacts.
All-in Sustaining Costs (AISC) $1,942 per ounce sold, compared to $1,559 in the prior year period, mainly due to higher royalty expense, lower production, and labor cost impacts.
Net Earnings Attributable to Shareholders $136 million or $0.69 per share, compared to $72 million or $0.35 per share last year, primarily due to higher realized gold prices, partially offset by lower sales volumes, higher production costs, and higher income taxes.
Adjusted Net Earnings $188 million or $0.95 per share, compared to $56 million or $0.28 per share last year.
Cash and Cash Equivalents Approximately $630 million, reflecting a decline due to capital investment, share repurchases, dividend payments, and income taxes paid, partially offset by cash generated from operating activities.
Lamaque Complex Gold Production 42,306 ounces, up 5% year-over-year, driven by higher grades and initial contribution from Ormaque. AISC was $1,370 per ounce sold, modestly lower year-over-year due to higher production volumes and cost focus.
Kisladag Gold Production 28,339 ounces, with AISC at $2,060 per ounce sold, reflecting lower volumes sold and a higher cost base. Growth capital included $51 million, including a $24 million purchase of strategic land.
Efemcukuru Gold Production 15,394 payable ounces, down from 19,307 ounces in Q1 2025, due to lower grade. AISC increased to $2,528 per ounce sold, reflecting lower volumes sold and higher sustaining capital tied to increased development meters.
Olympias Gold Production 14,319 payable ounces, up 21% from 11,829 ounces in Q1 2025, due to stable ore blend and higher metal recoveries. AISC was $2,031 per ounce sold, reduced from $2,842, reflecting improved recoveries and stable mill performance.
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Operating Highlights
Skouries and McIlvenna Bay Projects: Advancing two high-quality growth projects: Skouries in Greece and McIlvenna Bay in Saskatchewan. McIlvenna Bay is nearing first concentrate production, followed by Skouries in Q3 2026. These projects will enhance production profile and cash flow generation.
Copper Reporting: Starting Q3 2026, Eldorado will report copper assets on a dollar per pound, co-product basis for Skouries and McIlvenna Bay.
Lamaque Complex: Initial contribution from Ormaque following receipt of operating authorization. Produced 42,306 ounces in Q1 2026, up 5% year-over-year.
Copper Exposure: Addition of meaningful copper production from McIlvenna Bay in Canada and Skouries in Europe, diversifying portfolio and enhancing resilience.
Exploration Investment: Approved $17 million for exploration in 2026, focusing on near-mine and district-scale opportunities, particularly in Saskatchewan.
Operational Performance: Q1 2026 production of 100,358 ounces of gold, a 13% decrease year-over-year. Revenue increased to $532 million, driven by higher gold prices.
Cost Management: Total cash costs averaged $1,470 per ounce sold, while all-in sustaining costs (AISC) averaged $1,942 per ounce sold.
Capital Allocation: Focused on high-return opportunities, exploration, maintaining balance sheet strength, and shareholder returns through dividends and share repurchases.
Portfolio Diversification: Strategic shift towards including copper production alongside gold, enhancing commodity and geographic diversification.
Leadership Changes: CEO George Burns to retire later in 2026, with Christian Milau set to take over. Strengthened leadership team with new appointments to support project execution and operational leadership.
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Risk or Challenges
Skouries Project Capital Increase: The total project capital for Skouries has been revised to $1.315 billion, an increase of approximately $155 million from the prior estimate. This increase is primarily due to higher construction workforce levels to maintain momentum towards first concentrate production. Additionally, operational capital at Skouries has increased by $82 million to expand pre-commercial mining and site works.
Kisladag Phase 6 Cutback: 2026 is a cutback year for Phase 6 of the Kisladag open pit, resulting in lower average grades and higher all-in sustaining costs of $2,060 per ounce sold. This could impact production volumes and profitability.
Efemcukuru Lower Grades: Efemcukuru experienced lower grades in Q1 2026, leading to reduced production of 15,394 payable ounces compared to 19,307 ounces in Q1 2025. This also resulted in higher all-in sustaining costs of $2,528 per ounce sold.
Olympias Operational Challenges: While Olympias showed improved performance, it still faces high all-in sustaining costs of $2,031 per ounce sold, reflecting ongoing challenges in stabilizing operations and achieving cost efficiency.
Royalty Expense Increase: Royalty expenses increased significantly to $50 million from $22 million in the prior year, driven by higher realized gold prices and higher royalty rates, particularly in Turkiye and Greece. This has impacted overall production costs.
Labor and Inflation Costs: Labor inflation in Turkiye and incremental labor and contractor costs at Lamaque have contributed to higher production costs, impacting profitability.
Damaged Equipment at Skouries: Damaged cyclone heat pump variable speed drives at Skouries require temporary replacement equipment, which could delay commissioning and increase costs.
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Guidance & Outlook
Production Guidance: Production is expected to be back half-weighted in 2026 as two mines come into production and other operations deliver stronger results later in the year. Skouries in Greece and McIlvenna Bay in Saskatchewan are key projects nearing production, with first concentrate expected in Q3 2026.
Copper Reporting: Starting in Q3 2026, Eldorado plans to enhance disclosure by reporting copper assets on a dollar per pound, co-product basis for Skouries and McIlvenna Bay.
Capital Expenditures: The total project capital for Skouries has been revised to $1.315 billion, an increase of $155 million from the prior estimate, primarily due to increased construction workforce levels. Accelerated operational capital at Skouries is now expected to be approximately $260 million, reflecting an incremental $82 million for pre-commercial mining and site works.
Exploration Investment: Eldorado has approved approximately $17 million for exploration at McIlvenna Bay for the remainder of 2026, targeting long-term value creation through exploration success.
Operational Updates: Skouries construction is 94% complete, with first concentrate production expected in Q3 2026. McIlvenna Bay is nearing first concentrate production as well. Both projects are expected to enhance production profile and cash flow generation.
Market Diversification: The addition of copper production from Skouries and McIlvenna Bay will diversify Eldorado's portfolio, providing exposure to copper in top-tier mining jurisdictions and supporting the energy transition.
Exploration Potential: Eldorado plans to aggressively explore near-mine and wider land packages at McIlvenna Bay, with increased investment in exploration starting in 2026.
Dividend Policy: Eldorado has established a sustainable base dividend policy of $0.075 per share per quarter.
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Shareholder Return Plan
Base Dividend Policy: Eldorado Gold has established a sustainable base dividend policy of $0.075 per share per quarter.
Share Repurchase Program: In Q1 2026, Eldorado Gold opportunistically repurchased over $80 million worth of shares, reflecting the company's conviction in its intrinsic value.
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Key Q&A
Q:Given that labor cost pressures contributed to the CapEx increase at Skouries, is there a read-through to potentially cost pressures on operating costs going forward?
A:No, there is no read-through to operating costs. The capital increase was driven by completing electrical and instrumentation in the plant, requiring extra labor. Operating manpower levels are expected to come in as planned, with only normal inflationary pressure on labor costs. Cost guidance for the fourth quarter remains low once production begins.
Q:Are there any risks on the horizon, such as lingering cost pressures related to labor or contractors, that might require additional unforeseen capital before first concentrate?
A:No, there are no such risks anticipated. Construction is expected to be completed by midyear, with first concentrate in Q3. The main variable is the efficiency of energy connection, which is being coordinated with the Greek power authority. Any delays in energy connection would not impact costs significantly.
Q:Can you share the split between infill and expansion in the exploration budget for Mac Bay and the targets being focused on?
A:The exploration budget includes $4 million from the Foran team and an additional $17 million for the year. The focus is on three key targets: Tesla copper-rich feeder zone, Big Stone expansion, and geoscience activities like airborne geophysical surveys. Infill is not part of the exploration budget but rather the operational budget.
Q:What else contributed to the increase in capital costs at Skouries besides the workforce at the electric plant?
A:60% of the cost increase was due to additional contract workforce for electrical and instrumentation. The remaining 40% included $15 million in materials (fire protection, spares, gen sets, freight), $15 million in foreign exchange impacts, and indirect costs for high labor intensity to finish construction.
Q:Could you provide a breakdown of the materials, FX, and other costs contributing to the remaining 40% of the capital cost increase?
A:The breakdown includes $5 million for fire protection in the dry stack filter plant, $4 million for additional spares, $3 million for gen sets for precommissioning, $1.5 million for freight, $15 million for foreign exchange impacts, and indirect costs for maintaining a high workforce level.
Q:What are the remaining risks, whether capital or operating, to start-up at Skouries, and what contingencies are in place to meet the Q3 timeline?
A:The key risk is the timing of power connection, which will influence production guidance. Cost risks are minimal, with construction workforce levels maintained for a couple more months. Normal commissioning risks remain, but the infrastructure is robust, and the ramp-up is expected to proceed confidently.
Q:Was there a difference in labor productivity or planning that prompted the need for additional contractors at Skouries?
A:Yes, more hours of electrical and instrumentation work were required than expected. This led to the decision to bring in three European contractors to complete the work efficiently.
Q:What milestones should be looked at for the Foran acquisition ahead of first production?
A:The team is in the hot commissioning phase, where ore is added to test components and simulate full production. The process is progressing as planned, and production is expected to begin this month.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses provided detailed and specific information.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Complex
Heap leach
Saskatchewan
Skouries Greece
Skouries production
Slide ounce
TSM
Turkiye
activity project
base capital
base metal
capital development
capital spend
close
concentrate production
continuity
cost base
dividend
driver
environment
expansion project
expense gold
exploration
framework
grade recovery
jurisdiction
line substation
metal recovery
ounce gold
ounce volume
portfolio
potential
power line
price sale
production Christian
sale volume
spend capital
substation process
system
transaction
transmission
update
volume cost
yield
EGO Transcript
Eldorado Gold Corporation (ELD:CA) Q1 2026 Earnings Call Transcript
Positive5-1
The earnings call highlighted strong adjusted net earnings and increased gold production at Lamaque and Olympias, along with effective cost management. The Q&A reassured investors about labor and cost pressures, with no significant risks anticipated. The detailed responses and progress in key projects like Skouries and Foran suggest confidence in future performance. Given the market cap, these factors suggest a positive stock price movement within the 2% to 8% range over the next two weeks.
Eldorado Gold Corporation (EGO) Q2 2025 Earnings Call Transcript
Positive8-1
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%.
Eldorado Gold Corporation (EGO) Q1 2025 Earnings Call Transcript
Positive5-2
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.
Eldorado Gold Corporation (EGO) Q3 2024 Earnings Call Transcript
Unknown11-1
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.
EGO Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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