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Transcript Summary

Eldorado Gold Corporation's Q1 2026 results reflected a company on the verge of a major transformation. While gold production decreased 13% to 100,358 ounces due to planned lower grades at Kisladag and Efemcukuru, record gold prices drove revenue up 50% to $532 million. The company reported adjusted net earnings of $0.95 per share and initiated a quarterly dividend of $0.075, alongside $80 million in share buybacks. The focus is squarely on the Q3 2026 startup of the Skouries project and the imminent production at McIlvenna Bay. Skouries is 94% complete, though capital costs were revised upward by $155 million to $1.315 billion to secure additional labor for final electrical and instrumentation work. McIlvenna Bay has entered hot commissioning, and Eldorado has committed an extra $17 million for exploration to unlock the site's district-scale potential. Management remains optimistic about becoming a significant copper producer, extending the average mine life of the portfolio into the mid-teens. Despite cost pressures at Skouries and reliance on the Greek power authority for commissioning, the company's strong balance sheet and high gold prices provide a solid foundation for the upcoming production ramp-up.

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Eldorado Gold Corp: Derivative Blowouts and Tax-Enhanced Bottom Lines

Full Earnings Call Transcript — Q1 • 2026-05-01

Operator: Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation First Quarter 2026 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations, Communications and External Affairs. Please go ahead, Ms. Gould.
Lynette Gould: Thank you, operator, and good morning, everyone. I would like to welcome you to our conference call to discuss our first quarter 2026 results. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures and risk factors in our Management’s Discussion and Analysis. Joining me on the call today, we have George Burns, Chief Executive Officer; Christian Milau, President; Paul Ferneyhough, Executive Vice President and Chief Financial Officer; and Simon Hille, Executive Vice President and Chief Operating Officer. Our release yesterday details our first quarter 2026 financial and operating results. The release should be read in conjunction with our Q1 2026 financial statements and Management’s Discussion and Analysis, both of which are available on our website. They have also both been filed on SEDAR+ and EDGAR. All dollar figures discussed today are U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast, which can be downloaded from our website. After the prepared remarks, we will open the call for Q&A, at which time we will invite analysts to queue. I will now turn the call over to George.
George Burns: Thank you, Lynette, and good morning, everyone. I will begin with an overview of our first quarter and provide brief updates on McIlvenna Bay and Skouries. I will then hand the call over to Paul to review the financials, and then to Simon with an update on our operations. Following that, Christian will make some concluding remarks before opening up the call for questions. We have had a very busy and solid start to 2026, with performance in the quarter tracking in line with our expectations and full-year guidance. This year, production is back-half weighted as two mines come into production and several other operations deliver stronger results later in the year. 2026 is an important year for Eldorado Gold Corporation as we continue to advance two high-quality growth projects, Skouries in Greece and McIlvenna Bay in Saskatchewan. MacBay is nearing first concentrate production, followed by first concentrate at Skouries in Q3. Once in operation, both assets will meaningfully enhance our production profile and cash flow generation. Starting in 2026, to provide greater transparency as these polymetallic assets come online, we plan to enhance our disclosure by reporting copper assets on a dollar-per-pound co-product basis for Skouries and MacBay. Before getting into the project updates, I want to note that, as previously announced, I plan to retire as CEO later this year as we ramp up Skouries towards commercial production. Christian, who joined us last September, has been deeply involved across the business and is set up to seamlessly step into the role at that time. I am pleased to remain on the Board to support continuity, and Dan Myerson has joined the Board as Deputy Chair, providing important continuity from the Foran side. I want to take a moment to recognize the achievement of our colleagues at Lamaque. In March, they received the TSM Gold Leadership Award, a special recognition for mining operations who achieved Level AAA, the highest possible rating across all applicable TSM performance indicators. This recognition reflects the dedication of our employees and our unwavering commitment to responsible mining in Quebec and across our global operations, where TSM protocols are applied as a matter of practice under Eldorado Gold Corporation’s Sustainability Integrated Management System. Well done, Lamaque team. The Foran transaction represents a significant milestone for Eldorado Gold Corporation. At MacBay, we have now begun integration activities and are working closely with the existing team as the project nears first concentrate production. Following the close, members of our management team visited Saskatchewan and the MacBay project to welcome the team to Eldorado Gold Corporation, see progress firsthand, and engage with our stakeholders in Saskatchewan. What stood out was the enthusiasm of our new team, the capability supporting the operation, and the clear focus on safety, collaboration, and responsible execution. Now that MacBay is part of our portfolio, expect us to provide the following with our second quarter results: MacBay production and cost outlook for 2026, timing for an expansion study, and progress on a study for a potential lead-silver circuit. Following the close of the transaction, we have already approved approximately $17 million to spend on exploration for the remainder of 2026, reflecting the target-rich environment and our view that continued exploration success has the potential to drive meaningful long-term value. The quality of MacBay and its exploration potential reinforce our confidence that it will become a long-term cornerstone asset within our portfolio, delivering near-term growth while adding copper exposure in a stable, top-three global mining-friendly jurisdiction. Turning to Skouries in Greece on slide six, construction activities continue to progress well across all major areas. The team remains focused on disciplined, safe execution as we move through the final construction phase. At the end of the quarter, overall project progress was approximately 94%, steadily advancing towards first concentrate production. As execution activities have progressed and the project advances towards construction completion on schedule, we have updated our forecast to complete and revised our total project capital to $1.315 billion, an increase of approximately $155 million from the prior estimate. The primary driver was the increase related to construction workforce levels to support sustained final construction momentum. Total workforce has increased from 2,350 in mid-Q1 to approximately 3,200, which includes about 490 in operations. Advancing Skouries into safe production in the current metal environment is a key driver of value creation. This incremental capital reflects our continued focus on maintaining momentum towards first concentrate production. Accelerated operational capital at Skouries is now expected to be approximately $260 million, reflecting an incremental $82 million to expand pre-commercial mining and site works. This supports open-pit mining and advancing underground development ahead of first production. We are well positioned for startup with more than 2.8 million tons of ore stockpiled, which provides the entire planned mill tonnage for 2026. Overall, this investment supports a smoother ramp-up into production. On the process plant, work remains focused on final mechanical installations, piping, cable tray, and cabling as we prepare for first ore. With respect to the damaged cyclone feed pump variable-speed drives, temporary replacement equipment is expected to be installed in Q2. High- and medium-voltage electrical distribution for multiple stations is progressing. The process control building structure is complete, and electrical rooms are being progressively handed over to commissioning. On the power line and substations, the 150 kV power line and primary substation continued to advance to startup in Q3. Ahead of grinding area ore commissioning, final electrical regulatory authority approval will require completion of inspection and energization protocols. Powerline construction is progressing with the transmission tower assembly complete and pilot wire pulling now underway along the transmission line. The primary substation is advancing through ongoing assembly of the substation structures and control building structural completion. Pre-commissioning is now underway starting with the substations that feed the process plant, filter plant, and primary crusher, while commissioning continues across fire, utility, and process water systems. In parallel, we have begun pre-commissioning in flotation focused on air and instrumentation, as well as the SAG and ball milling instrumentation, electrical and control systems, and we started wet commissioning in the process water pumps and tailings thickeners. Together, Skouries and McIlvenna Bay represent a step change for Eldorado Gold Corporation in scale and portfolio diversification across jurisdictions and metals. With that, I will turn it over to Paul to review the financial results.
Paul Ferneyhough: Thank you, George, and good morning. I will start on slide seven. In Q1 2026, we produced 100,358 ounces of gold, a 13% decrease year over year, primarily reflecting lower tons at stack grades at Kisladag and lower grades at Efemcukuru, partially offset by higher grades and improved recoveries at Olympias and Lamaque. Gold sales totaled 100,119 ounces at an average realized gold price of $4,891 per ounce, generating total revenue in excess of $532 million, a 50% increase from $355 million in the comparable quarter last year, driven by significantly higher gold prices. Production costs were $188 million, up from just over $148 million, driven primarily by royalty expense in Turkey and Greece, which accounted for approximately 70% of the increase, with the balance largely attributable to labor inflation in Turkey and incremental labor and contractor costs associated with continued development of the Lamaque Complex. Royalty expense increased to $50 million from $22 million last year, reflecting higher realized gold prices and higher royalty rates, partially offset by lower sales volumes. On a unit basis, total cash costs across the portfolio averaged $14.70 per ounce sold, up from $11.53, while AISC averaged $1,942 per ounce sold compared to $15.59 in the prior-year period, mainly reflecting higher royalty expense driven by the higher gold price environment, lower production, and labor cost impacts. Below the line, net earnings attributable to shareholders from continuing operations were $136 million, or $0.69 per share, compared to $72 million, or $0.35 per share, last year, primarily due to higher realized gold prices, partially offset by lower sales volumes, higher production costs, and higher income taxes. Adjusted net earnings were $188 million, or $0.95 per share, compared to $56 million, or $0.28 per share, last year. The adjustments this quarter included an $18 million foreign exchange translation loss on deferred tax balances, a $20 million unrealized loss on derivative instruments, and $8 million of acquisition costs related to the Foran Mining transaction. Turning to slide eight, we ended the quarter with cash and cash equivalents of approximately $630 million, maintaining a strong balance sheet and significant financial flexibility to fund our growth initiatives. Cash declined in Q1 relative to Q4 2025 primarily due to capital investment, share repurchases, dividend payments, and income taxes paid, partially offset by cash generated from operating activities. As we prepare the company for the significant cash flow that will come following ramp-up of production at Skouries and McIlvenna Bay, it is worth reflecting on our developing capital allocation policy, which is based on a framework built around five key priorities. First, we continue to allocate funds towards the highest-return opportunities within our global portfolio, including potential expansion projects at Lamaque and McIlvenna Bay, advancement at Perama Hill, ongoing optimization and expansion of Olympias, and continued investment for our stable, cash-generating mines in Turkey. Second, we have meaningfully increased our exploration investment focused on mine life extensions and the discovery of new resources. Third, we remain committed to maintaining balance sheet strength with a focus on reducing leverage over time, including the prudent management of our $500 million high-yield bond maturing in 2029, while preserving the flexibility to execute our pipeline of development projects. Fourth, we have established a sustainable base dividend policy of $0.075 per share per quarter. Finally, we continued in Q1 to opportunistically repurchase shares, reflecting our conviction in the company’s intrinsic value, particularly given the potential for an estimated double-digit free cash flow yield based on our current valuation, compared to industry-leading peers who currently trade at a lower yield. Overall, we believe our capital allocation framework appropriately balances growth, financial strength, and shareholder returns. With that, I will turn it over to Simon for an operational update.
Simon Hille: Thank you, Paul. Starting on slide nine, at Lamaque we produced 42,306 ounces in Q1, up 5% year over year. The outperformance was primarily grade driven, and we also saw the initial contribution from Ormaque following the receipt of our operating authorization. All-in sustaining costs were $13.70 per ounce sold, modestly lower year over year, reflecting higher production volumes and continued cost focus, partially offset by the impact of deeper mining and timing of sustaining capital spend. Total capital spend was $48 million, including $20 million of sustaining capital, primarily for underground development, drilling, and equipment. Growth capital totaled $28 million, largely related to development of Ormaque and ramp development at the Triangle Mine and supporting infrastructure. Continuing to slide 10, at Kisladag, we produced 28,339 ounces as planned. As we have previously disclosed, 2026 is a cutback year for Phase 6 of the open pit, where the average grade is lower than the life of mine. All-in sustaining cost was $2,060 per ounce sold, primarily reflecting lower volumes sold on a higher cost base. Sustaining capital spend included $4 million, while growth capital included $51 million, including a one-time $24 million purchase of strategic land to support the North Heap Leach pad and North Rock waste dump expansions. The remaining planned $27 million was largely waste stripping and continued construction of Phase 3 at the heap leach in 2026. At Efemcukuru, on slide 11, we produced 15,394 payable ounces in Q1 relative to 19,307 payable in 2025. Lower output is primarily due to lower grade, partially offset by higher throughput. All-in sustaining costs increased to $2,528 per ounce sold, primarily reflecting the lower volumes sold and the higher cost base, as expected, with the higher sustaining capital tied to increased development meters. Sustaining capital spend included $5 million, primarily for underground development, and $2 million of growth capital related to the new portal development at Kokarpinar along with the development costs for the new Bati Zone. Finally, to slide 12, at Olympias, we produced 14,319 payable ounces of gold in Q1, up 21% from 11,829 ounces in 2025. This improvement reflects a stable ore blend and flotation performance that drove higher metal recoveries. Revenue increased to $88 million from $46 million, primarily on the higher realized gold price, higher sales volumes for gold and base metals, and with the base metals also benefiting from higher grades and recoveries. All-in sustaining cost was $2,031 per ounce sold, reduced from $2,842, primarily reflecting improved metal recovery and stable mill performance that resulted in lower cash cost per ounce sold as a result of higher volumes sold. Sustaining capital was $5 million, while growth capital was $8 million, driven by the mill expansion project, with sequential area completion commencing at the end of Q3 and ramp-up through 2026. Across all sites, safety remains core to our operations, and we continue to reinforce a culture of safe, responsible production. I will now turn it over to Christian for closing remarks.
Christian Milau: Thank you, Simon, and good morning, everyone. Overall, the first quarter reflects a solid start to what is a defining year for Eldorado Gold Corporation. We are delivering solid operational and financial performance while continuing to make meaningful progress on our key growth projects as they march towards the finish line. In addition, we initiated our dividend and bought back over $80 million worth of Eldorado Gold Corporation shares in Q1. Importantly, we have continued to strengthen our leadership team over recent months, including the well-deserved promotion of Simon to Chief Operating Officer and the appointment of Gordana Viseptievich, who will be joining us shortly as Senior Vice President of Projects. Gordana has significant experience leading projects of a large and small scale globally, as well as experience working with G Mining Services, which will be a key partner on a number of future projects. Additionally, we would like to recognize Sylvain Lehoux, who has been promoted to Senior Vice President, Operations for Canada, taking on responsibility for Eldorado Gold Corporation’s growing Canadian portfolio. The deliberate steps we have taken to enhance our bench strength—particularly in project execution and operational leadership—are already contributing to improved alignment and stronger integration across the business. Complementing these efforts in 2026, we entered into a project alliance with G Mining Services to support project development and execution, reinforcing our technical capacity and ability to deliver projects safely, efficiently, and on schedule. As I have spent time across our sites and corporate offices, I have seen strong alignment with our values, particularly in how our teams are approaching collaboration and execution. These behaviors will be critical as we move through the remainder of the year. With Skouries and McIlvenna Bay advancing towards key milestones and first production, and with the strength of the team we have in place, we are entering a period of meaningful transformation for the company that we believe will enhance our scale, diversify our portfolio, and strengthen our long-term value proposition. Looking ahead, while Eldorado Gold Corporation remains predominantly a gold producer, the addition of meaningful copper production from Canada and Europe represents an exciting extension of our portfolio. At McIlvenna Bay, we are building exposure to copper in a top-tier mining jurisdiction with dependable infrastructure and access to a skilled workforce, and we appreciate the Major Projects Office support of the Strategic Projects for Canada and Eldorado Gold Corporation. Further, the district-scale exploration potential and work being done by the team in Saskatchewan is extremely exciting, with excellent targets to be followed up, as evidenced by our increased investment in exploration. Expect us to aggressively explore the Deposit and wider land package starting this year. This potential and the already long mine life will enhance our peer-leading average mine life and exciting exploration portfolio across all jurisdictions. At Skouries, we expect to deliver a long-life copper-gold asset within Europe, where demand for responsibly produced metals continues to grow. Northern Greece is highly prospective and will continue to grow as a core part of our portfolio. These two near-production mines provide substantial exposure to copper and its key role in electrification and the energy transition, while also enhancing the resilience of our portfolio through greater commodity and geographic diversification, and extending our average years of mine life into the mid-teens with excellent potential to extend further. I am excited about Eldorado Gold Corporation’s future and the strong culture and teams across the company. As we reach the significant cash flow inflection point later in 2026, I have a high level of confidence in our team, our strategy, and our ability to surface significant value from execution of peer-leading near-term growth. Thank you to our employees, partners, and you, shareholders, for your continued support. I will now turn the call back to the operator for questions from our analysts. Thank you.
Operator: We will now open the call for questions. The first question comes from Don DeMarco with National Bank. Please go ahead.
Don DeMarco: Thank you, operator, and good afternoon, George and team. First question, looking at Skouries, given that labor cost pressures contributed to the CapEx increase, is there a read-through to potentially cost pressures on operating costs going forward?
George Burns: Hi, Don, thanks for the question. No read-through there. What drove this capital increase as we get to the final stage of construction was completing electrical and instrumentation in the plant, so we brought in three EU contractors just recently to help ensure we can maintain the early Q3 startup of the plant. It is essentially some extra labor to complete that electrical and instrumentation. No read-through in terms of our operating cost. Our operating manpower levels are going to come in as expected, and we have only had normal inflationary pressure on labor costs. If you look at our cost guidance for the fourth quarter as we bring it into operation, we continue to maintain a very low cost profile once we are into production.
Don DeMarco: Okay. And so then, looking at the next couple of quarters before first concentrate, are there any risks on the horizon—maybe lingering cost pressures, whether related to labor, contractors, etc.—that might require additional capital that might be unforeseen at this time?
George Burns: No, Don, we do not see that at this point. Again, from a construction perspective, we should have the construction complete at the midyear point, and we have said Q3 as first concentrate. Really, the variable for us remaining is how efficiently we can get the energy connected to be able to put first ore through the grinding mills and through the plant. There we are collaborating with the Greek power authority. If we get our construction completed in July, our expectation is final checks with us and them on that main substation can happen together in parallel, and that would result in an early Q3 startup. If we cannot get that collaboration and they do their checks subsequent to ours, it could slip to mid-Q3. But really that is not a cost impact. We will be ramping down construction workforce rapidly as we get this construction completed around midyear.
Don DeMarco: Okay, great. And then for a final question, just shifting over to MacBay. I see that you have approved an exploration budget. Can you share the split between infill and expansion, and some of the targets that you might be focusing on with that budget?
Simon Hille: Thanks, Don. Simon here. I can give you some color on our plans around the exploration portion of the budget. The Foran team had around a $4 million exploration budget for the year, to which we are adding $17 million for the remainder of the year, and the team is quite excited to mainly focus on three key targets: the Tesla copper-rich feeder zone, Bigstone expansion, and then adding some more geoscience to the existing land package around some airborne geophysical surveys and expanded LIBS on the whole-body characterization. These things should set us up for good success moving forward. In our exploration budget, we typically do not have infill. Infills are part of an operational budget.
Don DeMarco: Okay, that is very helpful. That is all for me. Good luck with the rest of the development.
Paul Ferneyhough: Thanks, Don.
Operator: The next question comes from Analyst with Scotiabank. Please go ahead.
Analyst: Hey, good morning, everyone. Thank you for taking my questions. Just a couple more questions on Skouries. We were quite surprised by the increase in capital costs, and you mentioned it was related mainly to the workforce at the electric plant. But what else happened? What else changed since the previous increase in Q4?
George Burns: Again, really, 60% of that cost increase is the additional contractor workforce completing the electrical and instrumentation, and then the balance is split between materials, FX, and owner support costs. Bottom line, it is taking us a couple of months of additional full workforce to get the final construction complete. If you go back to our last guidance on Skouries capital, at that point the view was we would be waiting to get the power connected in the power lines and doing final things in the tailings filtration plant. Bottom line, this increase is us spending some additional dollars bringing in some additional EU contractors to ensure we are ready to run once that power is connected, hopefully early Q3.
Analyst: Great, thank you. And then, you said 60% was the contract work with the balance being materials, FX, etc. Could you give a little bit more of a breakdown between what the materials were and the split of that remaining 40%?
George Burns: Yes. There were about $15 million in materials across four key items. In the dry stack filter plant, our insurers have requested—and we have agreed—to put in additional fire protection; that is about $5 million. We have added about $4 million in additional spares to ensure a smooth ramp-up and balance of the year. We have added about $3 million in additional gensets that are helping us with pre-commissioning as we wait for power connection. There was about $1.5 million in freight. Then there was about $15 million in foreign exchange impacts, and the balance is really the indirect costs to support that couple of months of high labor intensity to finish the construction.
Analyst: Thank you. Last question for me: What are the remaining risks in your opinion—whether that be capital or operating—to startup, and what contingencies do you have in place to make sure we hit this Q3 timeframe?
George Burns: The key risk for the year remaining on Skouries is to get that power connected, and the timing of that will really determine whether we are closer to the bottom end of our production guidance or the top end. If we can get that power connected in July as we expect, we would expect to be higher in production guidance. In terms of cost risk, that is not a worry for me now. We have got a couple of months of maintaining these high workforce levels to complete the construction. The only remaining risk beyond that is just the normal commissioning risk. Once power is connected, we start moving ore through the circuit, and as always in every construction you have adjustments that need to be made. At this point, I think we have a 20-year mine life plus here, fantastic infrastructure that has been constructed, and I am pretty confident about the ramp-up.
Analyst: Thank you for the color and best of luck with these two projects.
Lynette Gould: Thank you.
Operator: The next question comes from Analyst with RBC Capital Markets. Please go ahead.
Analyst: Yes, thank you very much. Just going back to this labor conversation on Skouries. I understand the need for the additional contractors to meet the timelines, but was there some difference in thinking versus the prior plan in terms of labor productivity being challenged, or what really is prompting this change?
George Burns: It is really taking more hours of electrical and instrumentation to get this finished. We have not hit the numbers we expected and, again, brought in three European contractors to button this up and get it running.
Analyst: Got it. Thank you. And I understand it has only been a short amount of time since the Foran acquisition closed. I noted the second quarter will have a more comprehensive update. Is there anything you could provide in terms of what is required ahead of first production, or what milestones we should be looking at there?
Simon Hille: It is Simon here. We are pretty excited. We were on the ground a couple of weeks ago and are in close contact with the team. The team is right in the thrust of what we call hot commissioning right now, which is where we start to add ore into various parts of the process to test the components and simulate what we will see as we run into full production, and we link those things together on a sequential basis. We are pretty excited that things are moving to plan, and we expect to see this running this month.
Analyst: Great. Thank you very much.
Operator: That is all the questions we have for today. This concludes the question-and-answer session and today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.