Executive Summary / Key Takeaways

• Skouries is a genuine inflection point: With Phase 2 construction 73% complete and first copper-gold concentrate production targeted for Q1 2026, this $1.06 billion project represents more than diversification—it’s a complete transformation of Eldorado’s product mix and cash generation potential, with commercial production by mid-2026 defining the moment when the company’s financial profile fundamentally changes.

• Operational optimization meets execution headwinds: While Lamaque’s Ormaque deposit delivers record production and Kisladag’s whole ore agglomeration project promises to slash leach cycles from 300 to 200 days, Olympias’ viscosity modifier issues and Turkish inflation create persistent cost pressures that have forced management to raise 2025 cost guidance by over $100 per ounce.

• Capital discipline is more than rhetoric: The company generated $77 million in underlying free cash flow in Q3 2025 while simultaneously investing $138 million in Skouries and repurchasing $79 million in shares, demonstrating that core operations are cash-generative enough to fund transformational growth while returning capital to shareholders.

• The margin story is bifurcated: Consolidated all-in sustaining costs of $1,600-$1,675 per ounce for 2025 reflect both the benefit of record gold prices (which drive higher royalties) and the penalty of operational challenges at Olympias and inflationary pressures in Turkey, creating a squeeze that Skouries’ copper by-product credits are designed to alleviate.

• Execution risk is the central variable: With $15 million in monthly fixed costs if Skouries is delayed, a tight Greek labor market, and residual metallurgical issues at Olympias persisting into Q2 2026, the investment thesis hinges on management’s ability to deliver three major projects—Skouries, Kisladag agglomeration, and Olympias expansion—on time and on budget.

Setting the Scene: A Mid-Tier Gold Producer at the Precipice

Eldorado Gold Corporation, incorporated in 1996 and headquartered in Vancouver, Canada, has spent nearly three decades building a geographically diversified mining portfolio that now stands at a critical juncture. The company makes money through conventional gold production at four operating mines—Lamaque in Canada, Kisladag and Efemçukuru in Turkey, and Olympias in Greece—while developing the Skouries copper-gold project that management describes as “transformational.” This isn’t hyperbole; Skouries will shift Eldorado from a pure gold play to a gold-copper producer, fundamentally altering its exposure to commodity cycles and its cost structure through by-product credits.

The industry structure reveals why this matters. Mid-tier gold producers operate in a fragmented market where scale determines access to capital, supplier leverage, and reserve replacement capacity. Eldorado’s 470,000-490,000 ounce annual gold production places it in the competitive middle ground—large enough to self-fund development but small enough that a single major project can redefine the entire company. Unlike senior producers such as Agnico Eagle with 3+ million ounce production in stable jurisdictions, Eldorado’s strategic mix of Canadian safety and European emerging-market exposure creates a risk-reward profile that trades geopolitical uncertainty for growth potential.

The company’s evolution explains its current positioning. The 2017 acquisition of Integra brought the Lamaque Complex, which has since produced one million ounces and delivered record annual output of 196,538 ounces in 2024. More importantly, it brought the Ormaque deposit, where Eldorado converted 803,000 ounces of inferred resources to reserves by late 2024. This pattern—acquire, optimize, and replace reserves—defines Eldorado’s strategy. The 2024 divestiture of G Mining Ventures (GMIN) for $155 million and the 2025 sale of Certej mark the culmination of a portfolio cleanup that frees management to focus exclusively on cash-generating assets and Skouries.

Technology, Products, and Strategic Differentiation: The Skouries Moat

Skouries isn’t just another development project; it’s a copper-gold deposit with 21,000 ounces of gold and 5.5 million tonnes of copper stockpiled by October 2025, representing a 15-year mine life that will diversify Eldorado’s revenue base by roughly 40% once at full production. The project’s economics hinge on copper by-product credits that will materially lower the effective cost per ounce of gold produced, creating a cost structure advantage that pure gold peers cannot replicate. This is significant because in a $2,300-$2,400 gold price environment, the difference between a $1,200 and $1,000 all-in sustaining cost is the difference between 40% and 60% margins—and Skouries is engineered to deliver the lower end of that range.

The technical execution reflects sophisticated project management. With 2,000 personnel on site including 236 operational team members, construction progress tracks at or slightly above plan. The filter tailings plant—identified by management as the critical path item—has structural steel installation 92% complete with four of six filter presses assembled. This is critical because any delay in this single component triggers $15 million in monthly fixed costs and pushes back the Q1 2026 first concentrate target. The company has mitigated this risk by identifying over 700 skilled workers within the EU and implementing contingency plans for all trades, a proactive approach that reflects lessons learned from earlier projects.

Operational improvements across the existing portfolio compound Skouries’ impact. At Kisladag, the whole ore agglomeration project—budgeted at $35 million with installation in 2027—will enhance permeability and reduce leach cycles from 300 to 200 days. This isn’t marginal optimization; it accelerates metal recovery, reduces sustaining capital expenditures through lower consumable requirements, and could extend reserves if metallurgical drilling confirms positive results. The strategic decision to decouple agglomeration from HPGR screening reflects capital discipline, ensuring that growth projects don’t cannibalize each other.

At Lamaque, the Ormaque deposit development leverages permitted mill capacity to process high-grade ore, with 43,000 meters of drilling planned for Triangle and 48,000 meters for Ormaque in 2025 to convert inferred resources. The early processing of the second Ormaque bulk sample contributed to Q3 production of 46,823 ounces at cash costs of $767 per ounce—among the lowest in the portfolio. This demonstrates the value of reserve replacement: each converted ounce replaces depleted reserves without the capital intensity of a greenfield project.

Financial Performance & Segment Dynamics: Evidence of Strategy Working

Q3 2025 results provide clear evidence that Eldorado’s optimization strategy is working—mostly. Revenue grew to $434.7 million, up 31% year-over-year, driven by higher gold prices and solid operational performance at Lamaque and Efemçukuru. Underlying free cash flow of $77 million (excluding Skouries investment) proves the core business is self-sustaining, while reported free cash flow of negative $87 million reflects the deliberate choice to invest $138 million in Skouries during the quarter. This shows that Eldorado isn’t burning cash but redeploying it from operations into its highest-return project.

Segment performance reveals the portfolio’s strengths and vulnerabilities. Lamaque produced 46,823 ounces at $767 cash costs, benefiting from Ormaque high-grade ore blending. Efemçukuru delivered 17,586 ounces at $1,522 cash costs, achieving its tenth consecutive year of meeting guidance—a testament to operational consistency. These two assets alone generated over $60 million in operating cash flow after costs, funding their own sustaining capital and contributing to Skouries.

Kisladag’s performance tells a more nuanced story. Production of 37,184 ounces at $1,309 cash costs fell short due to lower tonnes mined from reduced equipment availability and short-term mine plan resequencing. However, the placement of ore on a test pad for the agglomeration project signals that management is sacrificing short-term ounces for long-term recovery improvements. This trade-off makes sense if the agglomeration project delivers its promised 33% reduction in leach time and lower sustaining capital, but it creates a production gap that Skouries must fill in 2026.

Olympias remains the portfolio’s problem child. Q3 production of 13,597 ounces at $1,869 cash costs reflects the lingering impact of flotation circuit instability caused by a viscosity modifier in paste backfill . While management implemented mitigation measures and recoveries improved in Q3, modest negative impacts will persist into Q2 2026 as affected stockpiles are processed. The mill expansion to 650,000 tonnes per annum—slated for H2 2026 commissioning—will unlock long-term profitability, but only if metallurgical stability is restored. This creates a binary outcome: either Olympias becomes a key cash flow contributor or it remains a drag on consolidated costs.

Cost pressures are real and structural. Production costs rose $23 million year-over-year to $164 million in Q3, with one-third attributable to higher royalties from Turkey’s increased royalty rates and record gold prices. Turkish labor costs continue rising as inflation outpaces currency devaluation, while Lamaque faces higher haulage costs as mining moves to deeper C5 ore zones. Management’s commentary that 50% of the cost guidance increase stems from gold price-driven royalties and 50% from Olympias performance issues reveals that half the problem is external and uncontrollable, while half is internal and fixable.

Outlook, Management Guidance, and Execution Risk

Management’s 2025 guidance tells a story of confidence tempered by realism. Gold production guidance tightened to 470,000-490,000 ounces from 460,000-500,000, signaling that the midpoint is achievable but the range is narrowing. Total cash costs revised upward to $1,175-$1,250 per ounce and all-in sustaining costs to $1,600-$1,675 reflect both the gold price royalty impact and Olympias underperformance. Eldorado is absorbing margin pressure now, betting that Skouries copper credits will reverse this trend in 2026.

Skouries remains on track for first concentrate in late Q1 2026 and commercial production by mid-2026, defined as 80% of design nameplate throughput over 30 days. The project capital estimate remains unchanged at $1.06 billion, but 2025 investment increased to $440-$470 million due to acceleration of non-critical path work and proactive derisking. This front-loading of capital reduces schedule risk but increases near-term cash burn—a calculated trade-off given the $15 million monthly cost of delay.

The capital allocation framework demonstrates management’s conviction. The Normal Course Issuer Bid, expanded to 5% of outstanding shares, saw $79 million in repurchases in Q3 and $123 million year-to-date. President Christian Milau, appointed in October 2025 as part of succession planning, explicitly stated that shares are “considerably undervalued” given the company’s financial position and growth profile. This isn’t financial engineering; it’s management putting its money where its mouth is, using Skouries construction-phase cash flow to buy future earnings at a discount.

Looking beyond 2025, management flagged 2026 as a potential “inflection point” for sustainable dividend initiation. This signals a shift from pure growth to balanced capital returns, but only if Skouries delivers its promised cash flow. The dividend decision becomes a key milestone for investors to validate the transformation thesis.

Risks and Asymmetries: Where the Thesis Can Break

The Skouries filter tailings plant remains the single point of failure. With structural steel 92% complete and four of six filter presses assembled, the project is in its riskiest phase—where commissioning surprises can derail timelines. Management’s acknowledgment that the plant is on the critical path due to a redesign from wet slurry disposal to filtered tailings, requiring over 600 concrete-reinforced steel pilings, reveals the complexity. A three-month delay would cost $45 million in fixed costs and push commercial production into late 2026, compressing the first full year of cash generation into 2027.

Olympias presents a parallel execution risk. The viscosity modifier issue, while mitigated, will affect recoveries until Q2 2026. If the mill expansion commissioning in H2 2026 coincides with unresolved metallurgical issues, the project could fail to deliver its 30% throughput increase and associated margin expansion. Management’s guidance that production will be at the lower end of its range until the expansion is complete creates a binary outcome: either Olympias becomes the portfolio’s third cash-generating pillar or it remains a cost sink that offsets Skouries’ benefits.

Turkish inflation is a macro risk that management cannot control. With inflation continuing to surpass local currency devaluation, labor costs at Kisladag and Efemçukuru will keep rising. While Efemçukuru’s two-year mine life extension and 23% reserve increase provide some buffer, the underlying cost trend pressures margins. The recent increase in Turkish royalty rates compounds this, creating a structural headwind that only Skouries’ copper credits can offset.

The labor market in Greece adds another dimension. With over 700 skilled workers identified in the EU but a “tight construction market” locally, Eldorado is competing for trades during a period of infrastructure investment across Europe. Management’s confidence that costs are “within our estimates and our guidance” depends on securing second-shift work, which requires finding people “ahead of schedule.” Any slippage here directly impacts the critical path.

On the positive side, exploration success at Lamaque and Efemçukuru creates asymmetry. The 2.6 million ounces of inferred resources at Lamaque, with 91,000 meters of drilling planned for 2025, could convert to reserves at a discovery cost well below acquisition premiums. If Ormaque delivers a prefeasibility study supporting a plant expansion, the incremental capital would generate returns far exceeding greenfield projects. Similarly, Efemçukuru’s consistent performance and reserve growth demonstrate that Eldorado can replace production without major capital outlays, a key differentiator versus peers struggling with depletion.

Valuation Context: Pricing the Transformation

At $31.29 per share, Eldorado trades at a P/E ratio of 17.19 and EV/EBITDA of 7.11, a discount to senior peers like Agnico Eagle (AEM) (P/E 25.06, EV/EBITDA 12.19) and Kinross (KGC) (P/E 19.12, EV/EBITDA 8.72). This discount reflects the market’s skepticism about Skouries execution and geopolitical risk in Turkey and Greece. If Skouries delivers on time and on budget, the multiple should re-rate toward peer levels, implying 30-40% upside before accounting for increased cash flow.

The price-to-operating cash flow ratio of 8.73 compares favorably to Kinross at 9.98 and is substantially below Agnico’s 14.74, suggesting the market is undervaluing Eldorado’s underlying cash generation. However, this metric is distorted by the heavy Skouries capex. The underlying free cash flow yield—excluding growth projects—would be approximately 5-6%, competitive with mid-tier peers but depressed by the investment phase.

Balance sheet strength provides a valuation floor. With $1.1 billion in total liquidity, debt-to-equity of 0.31, and a current ratio of 2.79, Eldorado has the financial flexibility to weather delays without diluting shareholders. This is important because many development-stage peers carry higher leverage, making them vulnerable to project overruns. The company’s ability to repurchase $123 million in shares year-to-date while investing $138 million in Skouries demonstrates that the balance sheet is not stretched.

Peer comparisons highlight Eldorado’s relative positioning. B2Gold (BTG) trades at a lower EV/EBITDA of 5.17 but lacks a transformational project like Skouries, making it a steady-state gold play without the copper optionality. Equinox Gold (EQX) trades at a premium EV/EBITDA of 14.12 but is unprofitable with a P/E of 139.50, reflecting its growth-through-acquisition strategy that carries integration risk. Eldorado’s valuation sits in the middle—neither as cheap as BTG nor as expensive as EQX—appropriately reflecting its stage in the development cycle.

The key valuation driver is Skouries’ net present value. With $1.06 billion in capital invested and first production imminent, the project’s contribution to enterprise value will become visible in 2026. If copper prices remain above $4 per pound and gold above $2,300 per ounce, Skouries could generate $200-$250 million in annual EBITDA by 2027, justifying a 1.5x multiple expansion. The market is currently pricing in a 30-40% probability of delay or cost overrun; successful commissioning would trigger a re-rating.

Conclusion: The Weight of Execution

Eldorado Gold stands at an inflection point where a decade of portfolio optimization and reserve replacement culminates in a transformational copper-gold project. The core thesis is simple: Skouries will fundamentally change the company’s cost structure and cash flow profile, but only if management executes flawlessly in the next 12 months. The underlying business is solid—Lamaque and Efemçukuru generate consistent cash, Kisladag’s agglomeration project promises step-change improvements, and the balance sheet provides ample cushion. Yet Olympias’ metallurgical issues and Turkish inflation create headwinds that Skouries must overcome.

For investors, the critical variables are binary: Skouries on time and on budget, and Olympias recovery by Q2 2026. If both occur, Eldorado will emerge as a diversified gold-copper producer with lower effective costs, higher margins, and sustainable free cash flow that supports both growth investment and shareholder returns. If either falters, the company faces margin compression and potential equity dilution to fund completion.

The current valuation reflects skepticism, trading at a discount to peers despite a superior growth profile. Management’s aggressive share repurchases signal confidence that the market is mispricing the transformation. With 2026 poised to be the “inflection point” for cash flow generation and potential dividend initiation, the next four quarters will determine whether Eldorado delivers on its promise or becomes another mid-tier producer stuck in development purgatory. The pieces are in place; the weight of execution now determines the outcome.