Eldorado Gold: The worst performer
Eldorado Gold (EGO) is Canada’s second-largest gold mining company, whose price is trading at $2.22 per share as of January 28, 2016. The recent gold rally due to the extended global haven demand has buoyed most mining companies that make up the VanEck Vectors Gold Miners ETF (GDX).
Among the biggest gainers during the first month of the new year have been South African miners that benefited from the strengthening US dollar and the relative weakening of the South African rand. Sibanye Gold (SGBL) and Gold Fields (GFI) have risen by a whopping 45.6% and 16.4%, respectively, on a 30-day-trailing basis.
Eldorado Gold has lost 28.2% on a 30-day-trailing basis, making it the worst performer in January 2016.
The above chart shows the performance of Eldorado Gold alongside gold prices, predicted here by the SPDR Gold Shares ETF (GLD). GLD has risen almost 5% since the beginning of 2016. SBGL, GFI, and EGO together make up 10.2% of the price fluctuations in the VanEck Vectors Gold Miners ETF (GDX).
One of the primary reasons for the downfall in Eldorado’s shares is the suspension of mining activity at its Skouries project in Northern Greece. Government authorities mentioned that the lack of pollution control in its mining activity caused the suspension.
Though Eldorado outperformed its expectations in 2015, the prospects for 2016 remain bleak due to the $1.6 billion impairment charges that the company is set to pay.
Eldorado gave a gold output of 724,000 ounces, which came in ahead of guidance of between 640,000 and 700,000 ounces. The company’s all-in sustaining cash costs also averaged $841 per ounce. Production figures for 2016 are expected to drop to between 565,000 and 630,000 ounces. The company’s all-in sustaining cash cost is expected to rise between $940 and $980 per ounce, indicating weakness for its share price.