Eldorado Gold Earnings Call: Profits Up, Costs Rising

Eldorado Gold ((TSE:ELD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Eldorado Gold’s latest earnings call struck a tone of cautious optimism as management balanced robust revenue and profit growth against mounting cost pressures and project execution risks. Higher gold prices and disciplined capital allocation underpinned strong financial results, yet rising royalties, elevated all‑in sustaining costs, and revised capital needs at Skouries kept management’s message firmly grounded.

Revenue Soars on Strong Gold Pricing

Eldorado Gold delivered total revenue of $532 million in Q1 2026, up roughly 50% from $355 million a year earlier. The jump was largely driven by a significantly higher realized gold price of $4,891 per ounce, which more than offset lower consolidated production in the quarter.

Earnings Nearly Double as Adjusted Profit Surges

Net earnings attributable to shareholders from continuing operations climbed to $136 million, or $0.69 per share, versus $72 million, or $0.35 per share, last year, an 89% increase. Adjusted net earnings were even stronger at $188 million, or $0.95 per share, compared with $56 million a year ago, reflecting both price leverage and operational improvements.

Balance Sheet Flexibility Supports Growth Plans

The company closed the quarter with approximately $630 million in cash and cash equivalents, giving Eldorado meaningful flexibility to advance its growth pipeline. Management emphasized that this liquidity underpins ongoing project spending, exploration, and shareholder return initiatives without compromising balance sheet strength.

Skouries and McIlvenna Bay Drive Near-Term Growth

Skouries is approximately 94% complete and targeting first concentrate in the third quarter, though total project capital has been revised up to $1.315 billion, an increase of about $155 million. At McIlvenna Bay, integration is underway with hot commissioning nearing completion, and $17 million of exploration approved for the rest of 2026 as the company prepares to outline production and cost metrics in the second quarter.

Lamaque and Olympias Deliver Standout Operations

Operationally, Lamaque produced 42,306 ounces in Q1, up 5% year over year, and was recognized with the TSM Gold Leadership Award at Level AAA, highlighting strong ESG performance. Olympias produced 14,319 payable ounces, up 21%, with revenue nearly doubling to $88 million as higher gold and base‑metal grades and recoveries translated into stronger economics.

Capital Returns Signal Shareholder-Friendly Strategy

Eldorado introduced a sustainable base dividend of $0.075 per share per quarter, adding a predictable income component for investors. The company also repurchased more than $80 million of its shares in Q1 and reiterated a capital allocation hierarchy that balances growth, exploration, balance sheet health, dividends, and opportunistic buybacks.

Exploration Spend Steps Up for Future Growth

Management is leaning into exploration, with increased investment across the portfolio and an incremental $17 million earmarked for McIlvenna Bay in 2026 on top of Foran’s internal plan. The focus is on extending mine life and unlocking district‑scale potential, which could underpin longer‑term production growth beyond current project pipelines.

Portfolio Production Dips Despite Bright Spots

Total gold production fell to 100,358 ounces in Q1 2026, a 13% decline from the prior year as weaker output at Kisladag and Efemcukuru outweighed gains at Lamaque and Olympias. Lower grades and fewer tonnes at the Turkish operations were the main drag, underscoring the importance of bringing new growth assets on line.

Costs and Royalties Climb with Price Tailwind

Production costs increased to $188 million from approximately $148 million, a 27% rise that reflected both inflationary pressures and lower production volumes. Royalty expense more than doubled to $50 million from $22 million, driven by higher realized gold prices and steeper royalty rates, putting pressure on unit cost metrics.

AISC Inflation Highlights Margin Pressure

Total cash costs averaged $14.70 per ounce sold, up from $11.53, a 27.5% increase that eroded some of the benefit from stronger gold prices. All‑in sustaining costs jumped to $1,942 per ounce, with management citing higher royalties, lower production, and labor impacts as key contributors to the sharp cost escalation.

Skouries Capital Rises on Workforce and Materials

The Skouries project’s total capital requirement rose by about $155 million to $1.315 billion, roughly a 13.4% uplift versus prior estimates. The increase was driven by a larger contractor workforce, which expanded from around 2,350 to 3,200 people, plus higher owner support, material costs, foreign exchange impacts, and accelerated pre‑commercial mining investment.

Site-Specific Operational Headwinds in Turkey

Kisladag is in a planned cutback year at Phase 6 with a lower average grade, pushing all‑in sustaining costs to $2,060 per ounce and weighing on overall portfolio performance. Efemcukuru output fell to 15,394 payable ounces from 19,307, while AISC surged to $2,528 per ounce, reflecting lower grades and higher sustaining capital requirements for underground development.

Execution and Commissioning Risks Remain

At Skouries, the key outstanding risk is securing a timely power connection, as delays in coordination with the Greek grid operator could shift first concentrate from early to mid‑Q3 without adding cost. Management also flagged normal start‑up and commissioning risks, including temporary equipment issues such as the need for replacement cyclone feed pump drives.

Cash Drawdown Tied to Growth and Returns

Despite the strong cash balance, Eldorado’s cash position declined versus the end of 2025 as capital spending, share repurchases, dividends, and income tax payments outpaced operating cash inflows. While management views this as a deliberate investment in growth and returns, it modestly reduces the near‑term liquidity buffer ahead of major project start‑ups.

Guidance: Back-Half Weighted Growth and Cash-Flow Inflection

Looking ahead, Eldorado expects 2026 to be back‑half weighted as Skouries and McIlvenna Bay ramp toward first concentrate, with Skouries targeting Q3 start‑up and McIlvenna Bay progressing through hot commissioning. The company will begin disclosing copper assets on a dollar‑per‑pound co‑product basis, sees a cash‑flow inflection later in 2026, maintains about $630 million in cash and its base dividend, and continues to prioritize high‑return expansions, exploration, balance sheet strength, and selective buybacks.

Eldorado Gold’s earnings call painted a picture of a miner leveraging high gold prices and disciplined capital allocation to fund a transformative growth phase while grappling with cost inflation and project complexity. Investors are being asked to look through near‑term production softness and higher capital outlays in exchange for materially stronger cash generation and diversified metal exposure as new assets come on line.