Here is the video summary of the August 13th INK Morning report which looks at soaring Eldorado Gold (ELD) and the risk that it may spring a financing on investors, just as New Gold (NGD) recently did.
INK Research and Canadian Insider are both subscriber-supported. We do not accept payments from issuers or promoters for stock coverage. This video first appeared on INKResearch.com.
Script:
Eldorado Gold produced 91,803 ounces of gold in Q2. Over half of the production came from two mines in Turkey. Meanwhile, its Olympias mine in Greece produced 6,924 ounces.
The company's Greek operations potentially got a boost when the centre-right New Democracy party won a majority in legislative elections on July 7th. With a business-friendly government in office, the prospects have improved for the Skouries mine project which is currently on maintenance mode due to permitting delays.
The newest mine is Lamaque located in Quebec which produced 33,140 ounces in Q2. Building it contributed to the company's negative free cash flow over the past year.
However, that has not bothered investors over the past 3 months as the stock has doubled. While it is encouraging to see some recent insider buying, we fear a potential financing could usher in cloudy skies.
On August 6th the company said it had filed a preliminary shelf prospectus that would allow it to offer up to US$750 million in securities implying there is a significant risk of a financing over the next two years.
If that happens, at least investors will not be taken by surprise like they were with New Gold's bought deal financing announced last week.
Generally, even as the price of gold grind higher, financing risk is a factor that investors still need to have on their radar screens.
Our report which is not a recommendation to buy or sell securities is available through INKResearch.com or the Canadian Insider Research Club. Good luck friends and thanks for listening!
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