Strategic Case for Eldorado Gold: Skouries Project as a Catalyst for Undervalued Growth and Free Cash Flow in a Rising Gold/Copper Price Environment

Eldorado Gold Corporation (EGO) has long been a compelling player in the gold and base metals sector, but its current valuation and strategic positioning in 2025 present an extraordinary opportunity. With gold prices nearing $3,400 per ounce and copper trading at $4.39 per pound (despite short-term volatility), EGO's Skouries Project—its flagship copper-gold venture in Greece—emerges as a transformative catalyst. This article argues that EGO is undervalued relative to its future cash flow potential, driven by the Skouries Project's proximity to commercial production and the favorable macroeconomic backdrop for both gold and copper.

The Skouries Project: A High-Grade, Diversified Growth Engine

Eldorado's Skouries Project, located in the Halkidiki Peninsula, is a 20-year mine with an expected annual output of 140,000 ounces of gold and 67 million pounds of copper. As of Q2 2025, the project is 70% complete for Phase 2 construction, with first production of copper-gold concentrate slated for Q1 2026 and full commercial production by mid-2026. The project's capital costs have risen to $1.06 billion due to labor and supply chain challenges, but it remains fully funded, with €154.1 million drawn in Q2 2025 alone.

The strategic significance of Skouries lies in its diversification potential. While EGO's current revenue is gold-centric, copper—a critical component of the global energy transition—offers a high-margin, inflation-protected revenue stream. Copper prices, though down 14.68% from their July 2025 peak of $5.94 per pound, remain 7% above 2024 levels. Analysts project a rebound to $5.93 per pound by year-end and $6.39 in 12 months, aligning with Skouries' expected commercial production timeline.

Undervaluation Metrics: A Compelling Entry Point

Eldorado's valuation metrics suggest significant upside. At a trailing P/E of 12.80 and a forward P/E of 12.08, EGO trades at a discount to the gold sector median of 15.76. Its price-to-book ratio of 1.06 and enterprise value-to-EBITDA of 5.91 further underscore its affordability. These metrics are even more compelling when considering Skouries' $1.06 billion capital outlay and its projected $61.5 million in free cash flow from existing operations in 2025.

The company's share repurchase program, which has returned $44.6 million to shareholders in Q2 2025 alone, signals management's confidence in EGO's intrinsic value. With a market cap of $4.322 billion and a debt-to-equity ratio of 0.24, EGO's balance sheet is robust, supporting further value creation through capital recycling.

Gold/Copper Price Tailwinds: A Macro-Driven Tailwind

Gold and copper prices are poised to benefit from converging macroeconomic forces. Gold, trading at $3,400 per ounce, is supported by inflationary pressures, central bank demand (particularly from China and India), and expectations of a Fed rate cut in late 2025. Copper, a key input for renewable energy infrastructure, faces structural demand growth as governments accelerate decarbonization goals.

The Skouries Project's timing is impeccable. With commercial production expected in mid-2026, EGO will begin generating cash flow from copper at a time when prices are projected to rise. Even if copper dips to $4.39 per pound in the near term, the project's long-term hedges—such as zero-cost collars covering 28,000 ounces of gold from 2027—provide downside protection.

Risks and Mitigants

While EGO's valuation is attractive, investors must consider risks. The Altman Z-Score of 1.45 places it in the “distress zone,” though this is mitigated by its strong liquidity (current ratio of 3.12) and conservative leverage. Insider selling activity over the past three months (413,553 shares sold) warrants scrutiny, but management's capital allocation strategy—prioritizing Skouries and share buybacks—suggests disciplined execution.

Investment Thesis: Buy for Skouries-Driven Growth

Eldorado Gold's Skouries Project represents a $1.06 billion bet on the future of gold and copper. With gold and copper fundamentals aligned, the project's expected $140,000-ounce gold and 67 million-pound copper output by 2026 will drive margin expansion and free cash flow. At current valuations, EGO offers a compelling risk-reward profile, particularly for investors seeking exposure to the energy transition and inflation-hedging assets.

Actionable Advice: Investors should consider accumulating EGO shares at current levels, leveraging its undervalued metrics and the Skouries Project's near-term production timeline. A long-term hold through 2026 will allow investors to capitalize on the project's cash flow generation and the anticipated rise in base and precious metal prices.

In conclusion, Eldorado Gold is a rare combination of undervaluation, strategic growth, and macroeconomic tailwinds. The Skouries Project is not just a line item in EGO's capital plan—it is a transformative catalyst that could redefine the company's trajectory in the next decade.