Eldorado Gold Corporation (EGO) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold and Foran Mining Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations, Communications and External Affairs at Eldorado Gold. Please go ahead, Ms. Gould.

Thank you, operator, and good morning. Welcome to our call to discuss today's announced combination of Eldorado Gold and Foran Mining. Before we begin, please note that today's remarks will include forward-looking statements and references to non-IFRS measures. Full cautionary language is included in the accompanying presentation. Joining me today are George Burns, CEO of Eldorado Gold; Christian Milau, President of Eldorado Gold; and Dan Myerson, Executive Chairman and CEO of Foran Mining. All figures are in U.S. dollars unless otherwise stated. The presentation will be available on both companies' websites following this call. After the prepared remarks, we will open the call for analyst Q&A. I'll now turn the call over to George.

Thank you, and good morning. Today marks an important step as Eldorado and Foran combined to form a stronger, more competitive gold and copper producer. This transaction reflects a shared vision of building a business with industry-leading growth, diversified long-life assets and a resilient organization focused on sustainable value creation. From the outset, it was clear that both companies share aligned and thinking values. We both believe long-term success hinges on people, bringing together teams with complementary strengths and a unified commitment to operational excellence and responsible mining. This combination delivers tangible benefits to shareholders of both companies, including 2 world-class projects entering production in 2026. The exceptional long-life nature of these mines will enhance Eldorado's peer-leading long average mine lives, enhanced exposure to copper and increased presence in Canada, a top-tier mining jurisdiction, a stronger balance sheet and improved financial flexibility, further enhances our company as a free -- high free cash flow margin business, supporting a potential market rerating and shared sustainability priorities and strong alignment on carbon reduction goals. Turning to Slide 4. This transaction creates a diversified gold, copper producer with long-life assets across Canada, Greece and Turkiye. We are particularly pleased to expand our presence in Saskatchewan through McIlvenna Bay, reinforcing Canada as a core jurisdiction for the combined company. Slide 5 details the key terms, which include Eldorado will acquire all outstanding Foran shares via a plan of arrangement. Foran shareholders will receive 0.1128 Eldorado shares per Foran share, implying equity value of approximately CAD 3.8 billion. Post-transaction ownership, approximately 76% Eldorado shareholders and 24% Foran shareholders. All foreign directors and officers have entered voting support agreements in favor of the transaction and shareholder meeting is expected on or around April 14, 2026, with closing targeted for Q2 2026. I will now hand over the call to Dan to cover the benefits of this combination and provide more details about McIlvenna Bay.

Thanks, George. Turning to Slide 6. This combination strengthens Canada's role in supplying critical minerals and supporting the energy transition. The combined company will remain headquartered in Vancouver with McIlvenna Bay contributing long-term jobs and economic activity in Saskatchewan. Slide 7. Skouries in Greece and McIlvenna Bay in Saskatchewan are both fully financed and entering production in 2026. Skouries is expected to produce 140,000 ounces of gold and 67 million pounds of copper annually over its 20-year mine life. McIlvenna Bay provides additional long-life, copper-rich production and supports our growth profile. McIlvenna Bay is significantly advanced with most capital investment and execution risks largely mitigated. At year-end 2025, the project was approximately 85% complete, on budget and on schedule for production in 2026. Together with Skouries, the combined portfolio is approaching a meaningful inflection point, characterized by rising production, increasing free cash flow and a clear path to sustained growth. Christian will now walk us through some of the details of the combined company.

Thanks, Dan. And turning to Slide 8. These assets will transform our production profile, driving free cash flow to almost $1.5 billion in 2027 based on consensus estimates. And at the consensus pricing levels, this could be over $2 billion of EBITDA in 2027 with even greater upside at spot prices. Looking at Slide #9, Eldorado stands out amongst its peers, forecasted to increase production by 80% to over 900,000 gold equivalent ounces in 2027, placing us at the upper end of the sector. However, the cash margin of both companies' assets in the long term is more compelling. On Slide #10, you can see that the addition of McIlvenna Bay allows Eldorado to diversify its asset base in 2 key areas. First, we gained meaningful exposure to copper, which is expected to account for roughly 15% of our revenues in 2027. Second, we diversify our geographic risk and balance by adding a second asset in Canada, a Tier 1 jurisdiction with strong support for responsible resource development. Importantly, McIlvenna Bay also enhances our long-term production profile, complementing the step change we'll see with Skouries and positions Eldorado with a broader, more resilient mix of assets across 3 countries. On the next slide, turning to Slide 11. Eldorado currently operates 4 assets, the Lamaque Complex in Quebec, Olympias in Greece, Kisladag and Efemcukuru in Turkiye. These assets provide a stable gold and copper business, diversified production base, supported by ongoing optimization and exploration programs. On Slide #12, the combined company has an excellent spread of fully financed development assets, as Dan mentioned, including Skouries and McIlvenna Bay, both advancing towards production here in the near term in 2026. Alongside Perama Hill and the Ormaque deposit at Lamaque, our portfolio offers robust optionality and long-life multi-jurisdictional growth potential. On Slide 13, it shows the exploration momentum remains strong, including new high-grade zones at Ormaque and continued upside Olympias and Stratoni Skarn, which were announced recently. At McIlvenna Bay, the Tesla zone represents the most promising near-term expansion opportunity with resources open down plunge and direct access to existing infrastructure. I'll now turn it over to Dan to talk a little bit more about Tesla.

Thanks, Christian. Turning to Slide 14. Beyond the current mine plan, the most important opportunity for near-term expansion potential at McIlvenna Bay is the Tesla zone. Tesla represents a significant near-mine mineralized system open down plunge with immediate access to existing infrastructure. As we continue to advance exploration and resource definition at Tesla, this is the area we see as the most likely driver of future expansion opportunities, providing the potential to increase scale, extend mine life and enhance the overall value of the operation. I'll turn it over to Christian.

Thanks again, Dan. Slide #15 shows the details of the combined company that had approximately $1.5 billion of cash and equivalents at the end of quarter 3 based on a pro forma set of numbers. Based on consensus estimates, the company is expected to generate over $2 billion of EBITDA in 2027 and maintain minimal net debt, approximately $90 million on that same pro forma basis. This provides flexibility to fund development, exploration and continuing returns to shareholders. On Slide #16, Skouries, along with McIlvenna Bay are expected to transform Eldorado into a high-margin free cash flow business that will provide the opportunity to meaningfully increase our combined value over the next few years. And then what this means on Slide #17 is that, again, on the back of this exciting combination, we believe it supports a potential market re-rate and move towards the right with higher multiples. McIlvenna Bay further enhances this outlook by adding very long-life growth, excellent jurisdiction and critical minerals exposure. And turning to Slide 18. In terms of the upcoming catalyst, it's a really catalyst-rich period. The key upcoming milestones include commercial production at Skouries and McIlvenna Bay in mid-2026, Tesla zone made resource later 2026, Olympias expansion at Ormaque commercial production in the second half of 2026, so it will be a very busy year full of many catalysts. So I'll now hand it back to George to take -- to summarize.

In summary, this combination positions us as a new gold copper growth leader with near-term cash flow, long-life assets and strong alignment on culture and sustainability. With major projects entering in production in 2026, we are well positioned for meaningful value creation in the years ahead. Dan?

Thank you, George. Echoing George's remarks, this is a tremendous growth company with tremendous amount of free cash flow generating and production growth -- of peer-leading production growth in the sector. We are very excited for what's to come. Thank you for joining us, and we will now open the line for questions.

[Operator Instructions] The first question today comes from Cosmos Chiu with CIBC.

Maybe my first question is on the metal mix. I don't know Foran as well, mostly because in the past, it's been viewed as a base metals company. And I guess my question is, should Eldorado investors be surprised that you are essentially acquiring a base metals company? And what's the metal mix before and sort of after the transaction?

Yes. Thanks, Cosmos. I don't think this is going to surprise anybody. If you look at the basic metal mix, the metals being produced at McIlvenna Bay are already being produced in our portfolio. Gold, copper, lead, zinc, silver are in our portfolio. So it's a perfect match. In terms of strategy, again, a perfect match. Rebalancing our portfolio, we've got a lot of cash flow and production coming into Greece this year, but this asset then increases our jurisdiction in Canada and is, I think, a perfect balance of our overall portfolio. In terms of copper and Eldorado's strategy, we're a gold company. We're still going to be 77% gold production pro forma, but we're becoming a pretty serious copper producer, bringing on Skouries. So by adding this asset, it's additive. And from a strategy perspective, I would tell you, both of these projects have been largely derisked. If I can speak to Skouries. At Skouries, we've drilled off the first 3 years in the open pit. That drilling has confirmed the ore body. We have a large stockpile of ore ahead of the mill. In the longer term, the underground is going to be important at Skouries. We've done 2 test stopes. We've confirmed the geotechnical parameters. That has gone very well. And now we're confident to go to larger stopes this year. In fact, we're going to do 4 test stopes this year rather than 2 that was planned last year. So I'd say in a mining perspective, we've derisked the Skouries ramp-up, and we're in the final stretches to get the mill wrapped up and to begin commissioning at the end of this quarter. So we don't have risk of a blowout. We don't have risk of a misstep, and it's going to be a catalyst unfolding to the positive. Now -- our team has done our due diligence on McIlvenna Bay, and we're very confident about where they sit. We're basically in lockstep with one another with catalyst unfolding. We've got to know G Mining Services with our Tocantinzinho divestment. They've done a fantastic job to bring value to us and the execution of that construction project, which was essentially built on our schedule, on our budget, which is amazing post-COVID. And now they're building the project [indiscernible], and we were very impressed with the construction where it sits today. And we're also partnering with them with our Perama project in Greece. So we like everything they've done, and we think both of these projects are well positioned for massive rerate this year for the combined company.

And just to add to that, Cosmos, on revenue mix and metal mix and all of that. The beautiful thing about McIlvenna Bay is, as George outlined, it produces gold, zinc, copper, silver, lead. It's a wonderful, wonderful asset. So you can look at it many different ways. The key is that there was no streaming done or anything like that to finance the operation. So you have full exposure to all of those metals. So it's a wonderful metal mix. And yes, you've got a lot of optionality in that sense.

And George, as you mentioned, I know the kind of key criteria, key sort of critical path items for Skouries fairly well. But how about McIlvenna Bay? I'm just trying to get a better understanding in terms of -- because you talk about perfect match. This is perfectly matching in terms of commercial production at the same time for both assets. So I just want to make sure how well derisked McIlvenna Bay is, what investors need to look for. And then as a follow-up to that, there was forest fires in sort of Northern Manitoba, Northern Saskatchewan last year. Did it impact Foran in any way?

Yes, Cosmos, so I'll answer both of those questions. So where is McIlvenna Bay in terms of construction progress? Well, we are 85% complete as of the end of December. We will be coming out with an update for the month of January in the next few weeks, but 85% complete. We are in wet commissioning already, and we're on track for first -- not first, but we're on track for commercial production by middle of 2026. So as George outlined, it's in lockstep with Skouries and quite a wonderful thing to have 2 brand-new polymetallic copper or gold, whichever way you want to look at it, primarily mines coming online in this year. I think that's quite incredible. To your question on wildfires, yes, there were significant wildfires in the region last year. We had to evacuate our site for almost 4 weeks. We evacuated at the time, we had 567 people. We evacuated them all within 2.5 hours. It is actually a record for Saskatchewan. And we lost about just under a month in terms of our schedule. But how George outlined G Mining Services and the team at Foran. Even with that, it did not impact the schedule one bit. So to lose the month of May, which in Canada is one of your best construction months in the year, they still were able to achieve the schedule on -- that they had set out. So it's quite incredible and full credit and testament to the team that we have in place.

That's good to hear. And then maybe one last question. As I mentioned, I don't cover Foran. I don't have a model on it. But if I look at consensus numbers, it looks like consensus is CAD 2.4 billion in terms of NAV, the sort of acquisition price earlier today was higher. So Dan, as you mentioned, Tesla, the Tesla zone is clearly an upside sort of potential to it. I guess my question is, the technical report, the latest one that's out, does it include the Tesla zone? How does the kind of market look at NAV at this point in time? And how can -- or is the Tesla zone valued within the -- by the market? How is it being valued by the market right now?

Sure, sure. So Cosmos, just to help you get up to speed, as you said, you don't cover the company, and we can spend some more time together going forward. So McIlvenna Bay, the technical report you referred to, look, that's a snapshot in time, and that snapshot in time was a number of years ago, and that is only referencing Phase 1. Now we aren't here for Phase 1, these kinds of assets, these BMS systems, the reason why they are called company makers is because of their scalability, i.e., they expand and you have Phase 2, Phase 3, Phase 4, which we are planning at Foran. And also they go for multiple decades and multiple generations and hence, the name company maker. So I think that's probably where the distortion in the value of the technical report being that it referenced Phase 1 only. And as you said or alluded to with Tesla, we will be announcing the maiden resource on that later this year. And then we will be accelerating the expansion to Phase 2 given the combined company and the tremendous free cash flow that comes with the combined company.

I'd just like to add, if you reflect on Eldorado's history, in 2017, we acquired the Integra Advanced Exploration Project in Quebec. We came out of the gun with a $430 million acquisition. And you fast forward today, today, the Street NAV is $3.2 billion. That's a 650% increase in value creation. From an internal perspective, it's 900%. And that's adding in the exploration upside that we see right around the Triangle underground mine that was known at the time. Well, it was a resource when we acquired. Since then, we've discovered a second ore body and both of those have massive upside potential. And we see really exciting exploration beyond those 2 underground mines. So is Eldorado focused on the opportunity that we have with Foran? We see similar metrics. We see a large land package with massive exploration upside. Our exploration geologists are extremely excited about working with Dan's team to bring value forward. And combined, we got the balance sheet to attack the opportunity. So for us, a massive opportunity to expand the value they've already created and bring that additional value to both sets of shareholders.

The next question comes from Tanya Jakusconek with Scotiabank.

George, Chris, and Dan. Maybe just to continue on the transaction. Maybe just a little understanding, was this an auction? Or was this a -- how did this all come about? George, you mentioned you've done your due diligence. So how long has this been in the works? And what did you do? And perhaps a breakup fee as well? That's my first question.

Yes, I'll start with how does it come together. So over the last couple of years at Eldorado, we've been focused head down to deliver the massive growth opportunities and really, last year, we started focus on -- we're about ready to close our 5-year strategy with this year delivering Skouries, delivering an expansion and mine life extension at Lamaque, expanding our plant at Olympias. And as I said, we've largely derisked and are about ready to create that value. And so we've been working for the last 6, 7 months on what the next 5-year strategy would look like. I can tell you, you've seen a lot of acquisitions, divestitures of assets in Canada. We didn't look at those. We were head down. And generally, most of those have been older assets that need capital or higher cost assets. And so as we were looking at the new strategy and looking at this asset, again, we reflected on what we created when we acquired Integra. And the more we looked at it, the more we did our due diligence, the more excited we got about this opportunity. And so bottom line is we got the balance sheet to do this. We see enormous growth opportunity for both companies, and we're excited to deliver the catalyst right in front of us and to grow those catalysts for decades based on this combination.

In terms of break fees, Tanya, it's customary break fees for a deal of this size in the space.

And in terms of...

Go ahead.

Yes, Dan Myerson here. So in terms of auction, no, we don't run an auction process. As George outlined with the 5-year strategy, we had a very similar one at Foran. Over the last 5 years, when we essentially started the company, we -- our focus was to permit the mine, to finance the mine and to build the mine. Now we've done that, and we had to look at the next step for growth. And that's how the match and marriage happened. And yes, as we outlined earlier in the call in terms of growth and free cash flow generation and as George said, in terms of low-cost operations, I think it's hard to find something better than this combined company. So we were very excited about that. And that's how we've got to where we are today.

Yes. So just to answer my question, I'm trying to understand how long this process has been going on for. So if you were heads down doing all of this, does this mean this was a 2026 focus? Or did it start sometime like mid-'25? I'm trying to understand when this all came about.

Second half of last year, Eldorado was focused on due diligence, and we've been ramping up our understanding of the opportunity up to this point. So it's been the last 6, 7 months.

Okay. And I'm assuming that you've done -- gone to site several times and other for technical due diligence. Just trying to understand.

Yes. We've had our executive and technical teams to site, and they've done reciprocal due diligence on our key assets and both excited and comfortable with what we're embarking on.

Okay. And so my question then is on the timing of it when you said you're at the point of moving Skouries into production? And would you not have thought you got a re-rate there on a stand-alone as well, George?

Well, I think we're going to get a re-rate based on this combination with 2 fantastic assets coming into production at the exact same time. And this is a 0 premium deal at spot. So in our book, both companies, we think this is a great deal.

And I would echo that. You could ask the Foran side the same question. You could say, would you not have wait and done a re-rate. I think we've done the exact same thing. We'll re-rate 2 brand-new copper, gold assets -- copper, gold assets together, I think it's just going to be tremendously powerful.

And the last thing on our side, I would say is that we have an enormous amount of growth happening this year stand-alone in Greece. And this acquisition allows us to expand our footprint in Canada, a jurisdiction that gets, I think, high valuation, and it's very supportive of our P/NAV going forward. So this is a 1 plus 1 equals 3.

Maybe, Dan, if you can just go through the risks. You talked about the ramp-up in commercial production, I think you mentioned mid this year. Maybe just -- at what point do you get to steady state and just maybe go through the risks like George reviewed the mining risks at Skouries. And maybe you can kind of give us a similar idea of what's been done on the mining side, how your block model is looking and et cetera, et cetera, just so that we can understand some of the risks. We don't cover Foran -- trying to understand.

Yes, yes, yes. No, absolutely. I'll take just one step back. So in terms of risk in mining, the major risks, I always divide them into 3 buckets. Number one, permitting risk. That's gone because this is fully permitted, and we are in the best jurisdiction within Canada and 1 of the top 3 in the world. Number two is financing. That's gone because we fully financed the mine. And as I said earlier on the call, there's no streams or anything like that on the asset. So you have full exposure to the multi-metal mix. And number three is execution. And as George explained, with G Mining Services and the Foran management team, we have built an integrated project management team that has just done such an incredible job. So the execution is largely done as of the end of December, we're 85% complete. We're now into wet commissioning at the mine. And yes, in terms of the mine, it's going incredibly well. We have fired at least 5 stopes and continue to do so. We have built up a significant stockpile of ore ready for hot commissioning over 200,000 tonnes of ore. And yes, it's going incredibly well on the mine side. So from a risk perspective, look, they're largely all behind you. You're now just going into commissioning and ramp up.

And sorry, ramp up to full capacity. When is that happening? When is that scheduled for?

So we allow around 8 or 9 months to do so. However, we like to be conservative and under promise, over deliver. So we'll see how it goes, but second half of this year.

[Operator Instructions] The next question comes from Lawson Winder with Bank of America.

Could I -- just to start off with on the approval side, can you just confirm that are there any required approvals from Investment Canada or any other similar organizations in either Turkiye or the other regions in which you operate?

I can speak to the Canada side for Lawson. There's nothing required from Canada. It's 2 Canadian companies coming together. So if anything, it's a wonderful thing for Canada to have an emerging Canadian champion.

We don't expect any approvals in the overseas jurisdictions.

Okay. Fantastic. And then just George and Christian, how do you view Turkey now in light of this additional footprint within Canada? I mean should we think about this as part of a diversification away from Turkey? Or is Turkey still an area where you see potential for growth? And could we anticipate some sort of M&A transaction in Turkey at some point? Or should we think of that as being off the table?

Yes. I'd speak to this way. We like all 3 jurisdictions. Canada, as I said earlier, investors look to Canada as a premier jurisdiction. We expect our P/NAV to improve with the rebalancing of our portfolio towards Canada. Greece, we're the only metal miner there, but it's an emerging mining district. The Tethyan belt runs right through Greece. We're the only operator there. We've got now 2 great mines, one in production and expanding, another one just about ready to produce. And we have the Perama project in Northern Greece. And we have massive exploration upside around this that we're focused on. And we just put out a press release so you can look at those details. Turkiye is fundamentally foundational for Eldorado. We've been producing there for a couple of decades. We've got 2 great assets. We are definitely the operator of choice in country. We're investing in 5 early-stage exploration projects that we're very excited about. And yes, we'd love to grow our business in Turkey as well. Right now, this combined company is focused on Skouries and McIlvenna Bay, where we're going to create enormous value this year. But yes, Turkiye, for sure, we're committed to that jurisdiction, and we'll look for opportunities into the future to grow value.

And Lawson, this is Christian here. I mean, I think what we've been articulating, we love the balance of our portfolio, and we want to keep that balance. And we've got such exciting growth and opportunity in Greece. With this, the Canadian portfolio becomes very similar in scale and excitement in terms of growth. And Turkiye, we want to continue to invest in. So that balance, I think, is what brings in diversity, enhances multiples, creates value. We have such a long-term view on this business. This is one of the longest mine life -- average mine life businesses, we believe, in the sector in our peer space. And so we look at it long term, and we're investing in all 3 of these jurisdictions over the long term. So we're very excited.

And then in terms of those projects that you mentioned, it seems from the catalyst slide, that next project would likely be Perama Hill followed by the Tesla expansion at McIlvenna. Would that be a reasonable assumption?

That's correct. I mean -- I'd say they're in a little bit different phases. So for Perama Hill, we're focused on permitting. So we submitted an EIA in December this year. Will be continuing consultations with communities for support and trying to get an approval on an EIA, which then sets us up for construction perhaps next year. Tesla, I mean, for that, it's really getting drilling, dropping the vertical progress in McIlvenna Bay as quickly as we can to get access as quick as we can, but I'd say less complicated from a permitting perspective.

And if I could ask just one final question, Dan, for you. I mean, I think you have a very exciting project here. There is another corporate shareholder in your registry. From your point of view, why does Eldorado make sense?

Yes. I think the big one was -- look, the cultures of the 2 teams match perfectly. That was number one. Number two was, as I think Christian and George both outlined, the long-life nature of the assets within Eldorado and their commitment to sustainability. Like this combined company, 5 out of its 6 assets are going to have dry stack tailings. That's just unheard of for a mining company. And then three, why Eldorado? Well, what we've done is we've just multiplied the re-rate potential that's going to happen from developer to producer, not by 2, it's by like 3 or 4 because the combination of 2 brand-new gold copper assets in the world is just incredible. I mean these assets, Lawson, are just so difficult to permit -- and not just permit and build and CapEx and all of that. And we've gone through the last 5 years to be ready now where I think the timing is just incredible, as you see with the commodity prices. So we're very grateful to be a part of such a growth company, and I think it's going to be very exciting to see where it can go from here.

[Operator Instructions] This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.