Eldorado Gold (EGO): A Golden Opportunity in Skouries and Margin Expansion

The clock is ticking on Eldorado Gold's (EGO) $1.06 billion Skouries copper-gold project in Greece—a project now 66% complete and on track to deliver first production in early 2026. With construction advancing rapidly and a robust balance sheet, Eldorado stands at the precipice of a transformative phase that could unlock a 45% production boost by 2027. This isn't just about growth; it's about margin expansion, free cash flow, and a valuation rerating that's long overdue. Here's why investors should act now.

Skouries: A Near-Term Catalyst with Long-Term Legs

The Skouries project is Eldorado's crown jewel. As of Q1 2025, Phase 2 construction is hitting milestones:
- The filtered tailings plant's structural steel is in place, with filter press components fully delivered.
- The primary crusher building's concrete foundation is complete, and work on the process plant's piping and flotation circuits is underway.
- Underground development has reached 95% equipment readiness, with plans to start test stope blasting by Q3.

By mid-2026, Skouries will begin commercial production, targeting 135,000–155,000 ounces of gold and 45–60 million pounds of copper annually. Crucially, Skouries' low-cost profile—expected to have all-in sustaining costs (AISC) significantly below the company's current average—will act as a catalyst to reduce overall costs and boost margins.

Cost Discipline: Lower AISC and Strong Balance Sheet

While current AISC across Eldorado's operations have risen due to labor inflation and operational hiccups (e.g., Olympias' flotation circuit issues), the path to margin improvement is clear. The company's 2025 AISC guidance of $1,370–$1,470/oz reflects short-term headwinds, but Skouries' lower-cost production will help push this metric down meaningfully by 2027.

Meanwhile, Eldorado's financial fortress is unshaken:
- Cash reserves: $978.1 million as of March 2025, up 18% year-over-year.
- Funding: The project remains fully funded, with $400–$450 million allocated to construction in 2025.

This liquidity buffer allows Eldorado to weather near-term cost pressures while capitalizing on rising gold and copper prices. With gold averaging $2,933/oz in Q1 2025 (a 41% increase vs. 2024), and copper prices holding near decade highs, the timing for Skouries' launch couldn't be better.

Q1 2025 Results: A Strong Foundation for Growth

Eldorado's first-quarter performance underscores its resilience:
- Revenue: $355.2 million, up 57% year-over-year, driven by higher gold prices.
- Free cash flow: $75.5 million excluding Skouries investments, a 118% jump from Q1 2024.
- Production: Despite a dip in Olympias output (due to resolved maintenance issues), total gold production held steady at 115,893 ounces.

Key mines like Kisladag (Turkey) and Lamaque (Canada) are performing well, with Kisladag's output up 18% year-over-year. These operations, while facing cost pressures, are stabilizing, and their cash flows will fuel Skouries' final push.

Risks, but They're Manageable

No investment is risk-free. Eldorado faces headwinds:
1. Labor challenges: Skouries' revised $1.06 billion cost reflects rising labor costs, but the company has contingency plans in place.
2. Geopolitical risks: Operations in Turkey and Greece carry political and regulatory uncertainty, though Eldorado has maintained good relations with local governments.
3. Commodity price volatility: While gold and copper prices are strong, a sudden decline could pressure margins.

However, Skouries' advanced stage and the company's financial flexibility mitigate these risks.

The Case for a Buy Rating

Eldorado Gold is a buy for investors seeking a leveraged play on rising gold and copper prices, with a clear path to margin expansion and free cash flow growth. Near-term catalysts include:
- Q1 2026 first production from Skouries, which will add 20–25% to annual gold output immediately.
- Valuation rerating: At current prices, EGO trades at just 10x 2025 consensus earnings—a discount to peers like Newmont (NEM) or Barrick (GOLD).

With Skouries' production profile and cost advantages, Eldorado could become one of the lowest-cost gold producers by 2027, unlocking a valuation uplift. The risks are real but manageable, and the rewards are asymmetric.

Bottom Line: Eldorado Gold is at a pivotal moment. The Skouries project's completion is a near-term certainty, and its margin-enhancing potential is undeniable. For investors willing to look past short-term cost pressures, this is a rare chance to buy a gold producer poised for a multiyear growth spurt. Act now—before the market catches on.