Analyst Actions: Credit Suisse Looks at Eldorado Gold

Valuation: "We are revising our DCF downward to $14.09/sh (from $14.25/sh) to which we apply a Target multiple of 1.5x to our revised DCF and add net cash of $0.93 (from $0.96/sh) to derive our $22.00 Target price. Our Outperform rating is maintained. Our revisions incorporate the revised guidance and an additional 5Mtpa of ROM ore at the Kisladag expansion."

Investment thesis: "ELD provides good leverage to gold, while offering exceptional production growth and exploration potential. As we were expecting, ELD has experienced a significant upward rerating as ELD nears lower cost production coming on-line with recent start-up of Efemcukuru and Eastern Dragon in Q4/11. As Q2/11 earnings highlighted, mine start-ups are rarely smooth; however, the nature of the delay is more a temporary issue than a ongoing long term issue, and thus we believe it is now priced into the stock. We note that ELD shares could continue to benefit from the recent reversal in the risk-off trade as it has exposure to China, Turkey and Greece."

EPS revisions: "Our 2011/2012/2013 EPS estimates have been revised to $0.57/$0.94/$1.02 (from $0.64/$0.90/$0.97) to account for the delays at Efemcukuru and Kisladag. We have now revised our production profile to incorporate the revised guidance and Q2/11 results."

2011 production guidance revised down on Efemcukuru delay: "ELD revised prior guidance of 715-770kozs at cash op. costs (COC) of $375-$395/oz to 700-725kozs at $390-$410/oz, due to delayed permits for the regrind facility at Kisladag for Efemcukuru ore. We are now forecasting 2011FY gold production 700kozs with 646kozs commercial production at $416/oz, from 726kozs, 696kozs and $391/oz, respectively.

"Kisladag processing facilities for Efemcukuru ore began construction in mid-June after the receipt of permits and are expected to be completed by year end, for now, concentrate is being stockpiled. The processing facilities at Efemcukuru have been constructed and commissioned."

Kisladag to expand to 30Mtpa, with a PEA to be released in mid August.

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

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