Opinions Jon Case
Eldorado GoldELD.TOCOMMENTJun 17, 2015
Jon CaseStock price when the opinion was issued
As of Jun 09, 2026. Market Open.
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Premium contentOur PAST TOP PICK with ELD has triggered its stop at $13.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 19%, when combined with our previous recommendations.
Premium contentDoesn't own either. Kinross has historical issues trying to right the ship, doing better recently.
For ELD, a very high 60% of NAV is exposed to development risk. Recent mine is financed and built, but there's still execution risk. Trades at a discount on geopolitical risk too.
His preference is AEM, with one of the best teams and one of the best executions he's seen over the last decade.
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Sell Telus and buy Eldorado Gold? They're totally different companies, different stories. Can't compare them. Eldorado's valuation is extended, so he'd look elsewhere. Stick with telecoms, which pay decent income and offer decent growth. People are using more bandwidth. Infrastructure and telcom stocks have been overlooked as investors have chased the tech high-flyers.
Not shorting any gold right now. Stock's run well ahead of the group, so he's not as enamoured with this name. He'd look at B2Gold. For domestic, he'd take Detour Gold. Gold is the default winner in the face of US debt putting pressure on the dollar, and will probably be higher in 6 months.
Have permitting problems in Greece, and this is the issue he sees with this company. Have free cash flow from the Kisladag mine in turkey, but most of the free cash flow that comes up is all going into Greece where about one third of the value of the company lies in a series of development assets. Development assets consume cash flow, which is one driver that this company does not have. Balance sheet is going to get worse as they develop these assets. Management is reasonably well respected, but the wealth creation potential rests with the Greek assets.