Analyst Actions: Credit Suisse Analyzes Eldorado Gold's Q1; Shrs Up 2%, Further Away From Near Yr Lows

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EGO reported Q112 adj. EPS of $0.13 vs. CS at $0.17 and the street at $0.17. We calculate adj. EPS after adding back $17.8M, tax effected, for transaction costs relating to the EGU acquisition.

Negative market reaction likely, but unwarranted: The miss will likely surprise the market. We believe the miss was primarily the result of a misconception by the street (and CS) for the timing of commercial production at Efemcukuru ( EFM ). EGO reiterated guidance of 730-775koz.

Excluding EFM, operations were largely in-line or better than budget: TJS beat at 29kozs vs. CS at 26kozs and $605oz ( TCC ) vs. CS at $597oz. White Mountain beat by 15% on production at 22kozs vs CS at 19koz and TCC of $588oz vs. CS at $576oz. Jinfeng came in at 35kozs vs. quarterly (guidance) run rate of 31kozs and cash costs in-line with guidance. Kisladag production was 10% light vs. CS but not vs. EGO plan. EGO had factored into its budget the impact that cold weather has had on the heap leach in Q1 over the past four years. Based on operating history we now expect a strong Q2 and Q3. EGO Q1 production was 155kozs vs. CS at 184kozs.


There are a few issues at EFM, but they will likely be turned around by and offset in H212 (1) Unseasonably cold weather at EFM slowed down production due to freezing pipes and water storage issues. The facilities have now been winterized. (2) The concentrate treatment plant (located at Kisladag) is currently running at 60% capacity due to a faulty filter press. New filters have been ordered and will be operational by H212. Additionally, these new presses have greater design capacity. (3) As a result of the slower ramp at the Kisladag concentrate plant, EGO is still processing pre-production gold concentrate and has a backlog of 16koz gold in concentrate to process (likely completed in Q2) before reaching the 24kozs of commercial concentrate ore currently stockpiled.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: EFM , TCC

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