Investing.com -- Moody’s Ratings has upgraded the outlook for Eldorado Gold (NYSE: EGO ) Corporation from stable to positive, while affirming the company’s corporate family rating (CFR) at B1. The ratings agency also maintained Eldorado (SO: ELDO11B )’s probability of default rating at B1-PD and its senior unsecured notes rating at B3. The company’s speculative grade liquidity rating (SGL) remains at SGL-2.
The positive outlook change is attributed to the progress on Eldorado’s Skouries project in northern Greece, which is slated to commence commercial production in mid-2026. The new low-cost mine is expected to enhance Eldorado’s credit profile, increasing production and operational diversity, generating positive cash flow, and reducing financial leverage. Moody’s also anticipates that Eldorado’s leverage will stay under 2.5x despite significant capital spending for the Skouries project, supported by the company’s strong liquidity position.
Eldorado’s strengths include low leverage, a long average reserve life for its assets, a competitive cost position, and good liquidity. The company’s Kisladag mine has a 13-year mine life, while the Skouries project is expected to have a 20-year life. Eldorado’s total cash costs for 2025 are projected to be between $980 and $1080 per ounce.
However, the rating is limited by Eldorado’s small scale of production, concentration of production and cash flow at its Kisladag and Efemcukuru mines in Turkey, geopolitical risks associated with its Turkish assets, execution risk related to the Skouries project, and exposure to volatile gold prices due to its concentration in gold production.
The Skouries project, a copper-gold porphyry deposit, will utilize a mix of conventional open pit and underground mining techniques. The project is expected to produce an average of 140,000 ounces of gold and 67 million pounds of copper annually over an initial 20-year life span. This is expected to increase Eldorado’s production, provide additional operational and geographic diversity, and reduce its average cost profile.
Eldorado has strong liquidity, with approximately $1.4 billion of total sources against about $500 million of uses up to June 2026. This includes $857 million of cash as of Q4/2024, about $239 million of availability on its $350 million revolving credit facility (expires June 2028), and about $273 million available on the €680 million Skouries project financing facility.
The positive outlook is based on the expectation that Eldorado’s credit profile will improve when the Skouries project starts production, leading to higher output and improved cash costs, thus strengthening the company’s credit metrics.
The ratings could be upgraded if Eldorado achieves increased mine diversity, generates sustained positive free cash flow, and maintains adjusted leverage below 2.75x. Successful completion of the Skouries project would also be a prerequisite for an upgrade. Conversely, a downgrade could be considered if Eldorado’s free cash flows are projected to be negative past 2025, or if adjusted debt/EBITDA is expected to remain above 3.5x. Other downgrade triggers could include material cost overruns on the Skouries project that affect liquidity.
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