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Eldorado Gold Stock Skyrocketed on May 22

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Nov. 20 2020, Updated 11:59 a.m. ET

Eldorado Gold stock

Eldorado Gold (EGO) stock suffered a great deal in 2017 due to the standoff with the Greek government and some technical issues at its Turkey mines. The company’s stock price fell ~56% in 2017 in addition to the YTD (year-to-date) decline of 33.6%. The VanEck Vectors Gold Miners ETF (GDX) and the SPDR Gold Shares (GLD) fell 3.9% and 0.9%, respectively, YTD. Agnico Eagle Mines (AEM), Yamana Gold (AUY), and IAMGOLD (IAG) returned -7.2%, -8.0%, and 3.3%, respectively.

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Stock skyrocketed yesterday

In March, Eldorado Gold stock fell below $1.0 and didn’t meet the NYSE criteria to stay listed. The company plans to do a reverse split of 5:1 to stay listed. Yesterday, there was a sense of relief for Eldorado Gold stock. Reuters reported that Greece is aiming to resolve a long-standing standoff with Eldorado Gold about its development work. While Eldorado Gold blames the Greek government for not issuing the necessary permits, the government says that the company didn’t submit a complete plan. There are issues with Eldorado Gold following environmental regulations. Following the positive announcement, Eldorado Gold stock skyrocketed and closed 16.8% higher yesterday.

Greece’s energy minister said, “The main aim is to reach an agreement in the coming weeks within the spirit of the arbitration ruling.” While there weren’t many details, the government is trying to ensure that Eldorado Gold is able to produce gold, silver, and zinc in the country.

Positive catalyst

Eldorado Gold froze investments and suspended its operations for the Skouries project in November 2017. There were delays in getting permits. If the company is able to get all of the permits to resume the work at Skouries, it will likely remove a significant overhang from the stock. Skouries in one of Eldorado Gold’s most valuable mines. Skouries has 23 years of estimated mine life with an expected annual production of 140,000 ounces of gold and 67 million pounds of copper.

In the next few weeks, investors will need to see how the negotiations progress. Over time, Eldorado Gold’s Greek assets have mainly been discounted by the market. Working on the assets would be a significant positive catalyst for Eldorado Gold stock. Investors should note that Eldorado Gold’s financial position also remains strong, which makes it a fundamentally sound stock.

Read Can These Intermediate Gold Miners Provide Valuation Upside? for more on Eldorado Gold’s relative valuation.

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