Eldorado’s Skouries turns years of setbacks into copper

Eldorado Gold (TSX: ELD; NYSE: EGO) has produced the first copper-gold concentrate at its Skouries project in Greece as the miner targets commercial production in the fourth quarter.

The Canadian miner introduced first ore into the crushing circuit in July and has since been commissioning key processing systems, including flotation and tailings thickening. The ore stockpile now exceeds 4.6 million tonnes, enough to support more than seven months of planned processing throughput.

“First concentrate at Skouries represents the culmination of years of development, construction and partnership and marks the beginning of a new chapter for the company,” CEO George Burns said. “Skouries is not only a transformational asset for Eldorado, but also one of the most significant investments in Greece and one of Europe’s largest copper-gold projects.”

Skouries is expected to reshape Eldorado’s production mix by adding copper revenue while lowering overall cash costs. The mine is designed to operate for 20 years and produce about 140,000 oz. of gold and 67 million lb. of copper annually from open-pit and underground operations.

Power link

One remaining hurdle is permanent power. National Bank Financial analyst Don DeMarco said final energization by the Greek transmission authority is the project’s “remaining key catalyst.” The connection, previously expected by the end of August, is now targeted for September, although temporary generators can support commissioning and the initial ramp-up.

The project is one of two developments Eldorado expects to broaden its exposure beyond gold, alongside McIlvenna Bay in Saskatchewan, Canada.

“Together with McIlvenna Bay in Saskatchewan, Skouries is expected to transform Eldorado into a larger, more diversified precious metals and critical minerals producer with a stronger production base, meaningful copper and silver exposure and enhanced free cashflow generation,” Burns said.

BMO Capital Markets analyst Brian Quast said investors are likely to remain focused on the simultaneous ramp-ups at Skouries and McIlvenna Bay, although he sees further catalysts across Eldorado’s portfolio. BMO rates the shares outperform with a $72 price target, implying a 19% total return from Tuesday’s close.

Shares in Eldorado Gold gained 1.8% to $61.57 apiece on Wednesday morning in Toronto, valuing the company at $16.1 billion. They’ve traded between $34.25 and $69.46 over the past year. 

Difficult development

Skouries, part of the Kassandra Mines Complex in northern Greece, has endured a lengthy and difficult development history.

Construction was suspended for four years between 2017 and 2021 amid permitting delays and local opposition. Eldorado reached a revised investment agreement with the Greek government in 2021 before its board approved restarting the project in 2022.

The sizeable ore stockpile gives Eldorado an inventory buffer as it commissions the processing plant and works toward its fourth-quarter commercial production target.

Commercial production would make Skouries central to Eldorado’s growth strategy after years of regulatory and construction setbacks. Its combination of gold and copper output would give the company greater exposure to a critical mineral while diversifying revenue beyond its traditional precious-metals business.