It would be difficult for a gold mining company to not be making money with gold at its recent price levels. Eldorado Gold (EGO)
is no exception, posting increasing levels of profit. Eldorado Gold is a global mining company and claims to be one of the lowest cost gold producers, giving the company some of the best margins in the gold mining space.
EGO has gold producing mines in Turkey and China plus an iron mine in Brazil. Additional gold mines are under development in Greece and Brazil.
The fortunes of Eldorado Gold can be tracked using three metrics: The company's average cost to produce an ounce of gold; the average price received per ounce; and the number of ounces produced and sold. For the first quarter of 2011, Eldorado Gold reported these results:
- Average cash production cost: $462 per ounce.
- Average price received: $1,397 per ounce.
- Total production: 148,600 ounces.
And second quarter results:
- Average cash production cost: $477 per ounce.
- Average price received: $1,510 per ounce.
- Total production: 162,400 ounces.
The increases in production and gold prices thus allowed Eldorado Gold to post a 40 percent increase in net income of 14 cents per share in the second quarter, up from 10 cents in the first quarter. Estimated earnings per share for the full year are 63 cents, growing to just under $1 in 2012.
With the second quarter financials, Eldorado Gold management lowered the company's full year gold production projections down to a range of between 700,000 and 725,000 ounces from the previously planned 770,000 ounces. Construction on the planned expansion of two mines is behind schedule.
Analyst forecasts on Eldorado Gold are mixed. The analysts at Macquarie recently lowered their rating on the company from neutral to underperform. In the same week, Desjardins Securities analyst Brian Christie reiterated his buy rating on EGO, raising his target price to $22.
This Canadian mining company also trades on the Toronto Stock Exchange under the symbol ELD. It reports next on Oct. 27.
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