Analyst Actions: Credit Suisse Revises Estimates on Eldorado Gold; TP at $20

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Investment thesis: "We maintain our Outperform rating and $20 target price. EGO is a top pick based on potential for NAV accretion through (i) existing growth projects; and (ii) exploration potential leading to reserve/resource growth. We also highlight that EGO owns a low cost cornerstone of production with 38% over the next five years from KD (400kozspa, $424/oz cash cost, +10Moz reserve deposit). EGO's low cost production base and low sustaining capital give it a ~$150/oz margin advantage over its peers. 2012 guidance maintained at 660kozs gold at cash operating costs of $465/oz. Credit Suisse estimates for FY12 are 664kozs at $441/oz."

Q3 operating highlights, production a slight beat: "Gold production of 170kozs (commercial+non-commercial) was ahead of Credit Suisse est. of 163kozs. Cash op. costs of $493/oz largely in-line coming in 3% lower than $508/oz Credit Suisse est. Total cash costs of $567/oz also in-line vs. $578/oz Credit Suisse est.

Kisladag beat Credit Suisse estimate with 84kozs at $363/oz ( TCC ) vs. 78kozs at $472/oz. Leach cycle recoveries had a better than expected improvement QoQ and are expected to continue into Q4, as the slower than usual H1 leach cycle is caught up in the second half."

Efemcukuru inventory sales to come through in Q4 and 2013: "The Credit Suisse Q4 sales estimate is 40kozs based on Friday's earnings call. Sales will come from the current 51kozs stockpile. Including the 28kozs in concentrate that Credit Suisse estimates will be produced in Q4, Efemcukuru will carry a 39kozs stockpile to be sold in 2013. As noted in our Oct. 15 note, 'In depth review of Aegean assets,' the concentrate treatment plant is currently resolving the issue of solubility of copper. EGO is evaluating a SART plant ($10M) option or increasing the addition of carbon. EPS revised for FY12 based on concentrate."



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: TCC

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