Eldorado Gold

ELD-T

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.

He just raised his target from $1.40 to $1.45. He likes plays with good reserves in the ground and generating cash flow. If you own it, hold it, don't sell it. This sector has taken a beating. Consider averaging down, because there will be a rebound in precious metals. Be patient with the metals.

This company has had a lot of trouble for several years. His preferred way to own gold is through a royalty holding such as Franco-Nevada, where you are insulated from government nationalization or granting reviews.

Replace this with Silvercorp? He'd keep Eldorado. If he's down 50% on a stock, he'd sell it for a tax loss, wait 30 days, then decide with a clear mind. This company has made some horrible capital allocation decisions. It's so beaten down and heated that he's actually attracted to it. But he wants to see their next capital allocation decision before buying.

They have had a lot of problems, especially in Greece, where negotiations have been very difficult and will continue to be. Golds have not moved up a lot over the past few years. They often go up before PDAC (Prospectors & Developers Association of Canada Conference, http://www.pdac.ca/convention) and go down after it. So if you are planning to sell Eldorado, this might be the right time.

Likes golds, but Eldorado's ROIC negative and still lags compared to everyone else in this space. There should be positive returns at this point in the cycle.

Gold is not cheap enough to be a contrarian play. There are some gold companies that he likes. With this one, you get into the political scene in Greece. They’ve had all kinds of difficulties, and continue to do so.

When it appeared they might have come to an agreement with the Greek government a couple of months ago, he felt it was the 3^rd inning. However, they’ve taken a step back. It’s an ongoing saga. They’ve put about $1 million into the mine and have employed a lot of workers. It’s on his Watch List, but he’s not willing to dive into it.

Has been on his watch list for years. Greece is their big growth prospect. They were having all kinds of difficulty with the Greek government. Recently the government capitulated to some degree. The company was threatening to leave the country. They've spent well over $1 billion already. They employed a lot of workers who demonstrated against the government. It's a fascinating contrarian play. If you buy into a stock like this, you have to be very, very patient.

Has some very good assets, but unfortunately in some difficult environments, Greece being front and centre. Probably trades at a 30%-40% discount to its peers. A very low cost producer and great margins. Material growth down the road over the next 5 years. Unfortunately, they are in a bit of a battle with the more recent Greek government, where permitting and the ability to get things done has been hampered. They are now going into arbitration. They’ve received an important license for the Olympias project, one of 2 major projects there. He has avoided this stock because he is not interested in extreme volatility.