Earnings call: Eldorado Gold Q3 2024 results show steady progress

Eldorado Gold Corporation (NYSE:EGO ) has shared its third quarter 2024 financial and operational results, demonstrating a solid performance with safe coal production of 125,195 ounces, aligning with its full-year guidance.

The company reported an increase in cash flow and net earnings, attributing the improvement to higher gold prices and volumes. The Scurius project is nearing completion, and the company has finalized a three-year Collective Bargaining Agreement to boost production at Olympias.



Key Takeaways



Eldorado Gold's Q3 2024 production aligns with annual targets, with safe coal production at 125,195 ounces.The company finalized a Collective Bargaining Agreement at Olympias, aiming to increase production capacity.Cash costs per ounce sold were at $953, with all-in-sustaining costs at $1,335 due to increased royalties and labor costs.Adjusted gold production guidance for the year is now set between 505,000 and 530,000 ounces.Operating cash flow and net earnings rose, with liquidity reaching $885 million, including cash and available credit.The Scurius project is 79% complete, with capital investment totaling $82.7 million for Q3 2024.Gold production at various sites was reported, with Lamaque showing the lowest cash cost per ounce.



Company Outlook



Eldorado Gold is on track to meet revised gold production guidance, with a 7% increase in year-to-date production.The company expects cash growth throughout 2024, driven by strong gold prices and project financing drawdowns.Scurius project's total cost guidance is between $350 million and $380 million, with no impact on the expected first production in Q3 2025.



Bearish Highlights



Increased Turkish taxes and mining duties in Quebec contributed to higher expenses.Production at Kisladag and Olympias showed some weaknesses.



Bullish Highlights



Higher gold prices led to increased revenue and a beneficial impact on net earnings.The finalized Collective Bargaining Agreement at Olympias supports production expansion.



Misses



Adjusted gold production guidance was lowered from the upper end of 555,000 ounces to 530,000 ounces.



Q&A Highlights



Underground development targets for the Scurius project have been adjusted, but this will not affect the production timeline.Labor costs are increasing, reflecting broader inflation trends.Dividends may be considered for reinstatement after reaching commercial production in 2026.The company is open to M&A opportunities, though not actively pursuing them.

Eldorado Gold Corporation's third quarter of 2024 showcased the company's commitment to financial stability and responsible mining practices. The company's operational improvements and safety enhancements were evident in its performance, with the Scurius Copper Gold project making significant progress towards completion. Eldorado Gold continues to focus on delivering value to its shareholders while maintaining a conservative approach to capital allocation and cost management. The company's financial position remains robust, supporting its growth strategy and long-term objectives.



InvestingPro Insights





Eldorado Gold Corporation's (EGO) solid performance in Q3 2024 is further supported by data from InvestingPro. The company's revenue growth of 20.22% over the last twelve months as of Q2 2024 aligns with the reported increase in cash flow and net earnings. This growth is particularly impressive given the challenging economic environment and reflects the company's ability to capitalize on higher gold prices and increased production volumes.

InvestingPro data shows that Eldorado Gold's market capitalization stands at $3.42 billion, with a P/E ratio of 19.64. This valuation appears reasonable considering the company's growth prospects and operational improvements. The Price to Book ratio of 0.94 suggests that the stock may be undervalued relative to its assets, which could be attractive for value investors.

Two key InvestingPro Tips are particularly relevant to Eldorado's recent performance:

1. "Net income is expected to grow this year" - This aligns with the company's reported increase in net earnings and positive outlook for cash growth throughout 2024.

2. "Operates with a moderate level of debt" - This supports Eldorado's strong financial position, with reported liquidity of $885 million, including cash and available credit.

These insights complement the company's Q3 results and outlook, providing additional context for investors. InvestingPro offers 6 more tips for Eldorado Gold, which could provide further valuable insights for those considering an investment in the company.



Full transcript - Eldorado Gold Corp (EGO) Q3 2024:





Operator: Thank you for standing by. This is the conference operator for the third quarter 2024 results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations, Communications, and External Affairs. Please go ahead, Ms. Gould.

Lynette Gould: Thank you, operator, and good morning, everyone. I would like to warmly welcome you to our third quarter 2024 results conference call. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures and risk factors in our management's discussion and analysis. Joining me on the call today, we have George Burns, Chief Executive Officer; Paul Ferneyhough, Executive Vice President and Chief Financial Officer; Louw Smith, Executive Vice President Development, Greece; and Simon Hille, Executive Vice President, Operations and Technical Service. Our news release yesterday details our third quarter 2024 financial and operating results. This should be read in conjunction with our third quarter 2024 financial statements and management's discussion and analysis, both of which are available on our website. They have also both been filed on SEDAR plus and EDGAR. All dollar figures discussed today are US dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast, and you can download a copy of the slides from our website. After the prepared remarks, we will open the call for Q&A. At this time, we will invite analysts. I will now turn the call over to George.

George Burns: Thanks, Lynette, and good morning, everyone. Here is the outline for today's call. I will provide a brief overview of Q3 results and highlights. I will then pass the call over to Paul to go through our financial results and then on to Louw and Simon to review our operational performance. Turning to slide four. During the third quarter, we achieved safe coal production of 125,195 ounces, aligning with our progress towards full-year guidance. At Olympias, we successfully concluded the CBA negotiations and reached a mutually beneficial agreement with the union workforce in early August. This three-year agreement, combined with increased productivity in our underground operations and is contemplated in our guidance, supports the 650,000-ton per annum expansion, an increase from the 500,000 tons per annum, positioning Olympias for long-term profitability. Total cash cost and all-in sustaining costs were in line with our expectations at $953 per ounce sold and $1,335 per ounce sold, respectively. Costs increased primarily as a result of higher royalties, driven by higher gold prices, in addition to higher labor costs during the quarter. Paul will touch on our costs in more detail later in the call. We are in a strong position as we head into the fourth quarter with our year-to-date production having increased 7% compared to the same period in 2023, an increase of 12% compared to the same period in 2022. We have maintained but tightened our guidance ranges on gold production and cost, while slightly lowering the bottom end of the range. We also increased the upper end of capital but the operational and financial performance to date. We now anticipate gold production to be between 505,000 and 530,000 ounces versus previous guidance of 505,000 to 555,000 ounces. As a result of inventory buildup at Kissevah, caused by slower leach light cycles and work stoppages totaling 17 days in Q2 at Olympias. Total cash cost to be between $910 and $940 per ounce sold versus the previous guidance of $840 to $940. All-in sustaining costs are expected to be between $1,260 and $1,290 per ounce sold versus previous guidance of $1,190 to $1,290 per ounce sold. The tightened cost guidance is towards the high end of our previous guidance, primarily the result of lower production and higher royalties in Greece and Turkey due to increased gold prices. Depreciation is expected to be between $250 million and $260 million, down from $280 million to $290 million as a result of lower depreciation at Kisladag and Olympias, combined with favorable adjustment to ARO depreciation at FMQ Group in Q1 2024. Sustaining capital guidance is expected to be between $135 million and $145 million versus previous guidance of $135 million to $160 million, primarily due to deferral of projects at Olympias. Skirdie's capital is expected to be between $350 million and $380 million versus previous guidance of $375 million to $425 million. The lowering of the guidance is driven primarily by work that is not on the critical path that has been rescheduled to later in the project phase. And the slower than expected mobilization of contractors on-site during the first three quarters of 2024. Our growth capital at the operating mines is expected to be between $145 million and $160 million versus previous guidance of $122 million to $144 million. Capital has increased over the prior guidance, primarily driven by waste stripping and accelerated spending for the second phase of the North Leach pad at Kisladag. At Skurries, we remain on track for first production in Q3 2025 and have significantly derisked the project since we put it back into construction in April 2023. With all major contracts signed, including the filtered tailings building structure, which is on the critical path. We have approximately a thousand people at the site, including our operational readiness team, which is in the process of operationalizing both the surface and underground mine. Thus far, we are seeing productivity slightly beating our assumptions. We are steadily progressing towards the year-end target of 1,300 workers on-site. Our focus, once we have the additional personnel on-site, will turn to integrating them to our assumed productivity levels to maintain the schedule and budget. We are managing this closely and taking proactive measures, such as rescheduling some non-critical work on process control facilities to mitigate potential challenges in a tight construction labor market. Turning to slide five, year-to-date, our lost time frequency rate increased to 0.91 per million work hours compared to 0.71 in the same period in 2023. Positively, our total recordable incidents for the first nine months of 2024 have decreased to 3.11 from 4.70 per million hours worked compared to the same period in 2023. Our commitment to providing and sustaining a safe, healthy workplace remains steadfast. We acknowledge that this is an ongoing journey of continuous improvement. Our health and safety focus in 2024 continues to be based on preventing potential incidents and further empowering our employees to promote a positive health and safety culture. I would also like to congratulate our team in Quebec. A number of supervisors were recently recognized for leading their teams to achieve 200,000 hours without a lost time incident. This stands as a testament to their dedication to maintaining a safe and healthy workplace. Additionally, congratulations to members of our Kisladah and Ifm Chukuru mine rescue teams in Turkey, who collaborated in the third mine rescue competition, tying for first place in the best mine rescue team award. I will stop there and turn the call over to Paul for a review of our financial results.

Paul Ferneyhough: Thank you, George. Slide six provides a summary of our third quarter results. Our operations delivered in line with our guidance, and we continue to be encouraged by high gold prices that contributed to our strong overall financial results this quarter. As George highlighted, we have tightened our annual guidance ranges and continue to see potential upside in cash flow generation if gold prices remain at their current levels. Eldorado reported net earnings attributable to shareholders from continuing operations of approximately $101 million or $0.49 per share in the quarter. This compared to the same quarter in 2023, the net earnings were positively impacted by higher revenue due to higher volumes sold and prices realized, and again on deferred consideration due from G Mining that was recognized in the quarter. The deferred consideration relates to the sale in 2021 of the Tocentan Zino mine. Following G Mining's declaration of commercial production in early September, we are set to receive $60 million in September 2025, the first anniversary of the declaration. It should be noted that G Mining has the option to defer $30 million of the consideration for one additional year, after which the balancing payment will increase to $35 million. Following the inclusion of one-time nonrecurring items, adjusted net earnings were $71 million or $0.35 per share for the quarter. The adjustments in the quarter accounted for the reversal of two principal items. Firstly, a $50 million net of withholding tax gain on the G Mining deferred consideration, and secondly, a $33 million unrealized loss on derivative instruments. Our free cash flow in the quarter was negative $4.8 million or positive $98.3 million excluding the capital investment in the Scurius project, reflecting the strong performance of our underlying operating assets. In the third quarter, cash flow generated by operating activities before changes in working capital was $166.5 million compared to $97.5 million in the same quarter in the prior year. The increase is principally driven by revenue, which increased by $87 million driven by higher volumes and realized gold prices, partially offset by higher production costs that increased by $26 million, $10 million of which related to higher royalties. Third quarter total cash costs were $953 per ounce sold, and all-in sustaining costs were $1,335 per ounce of gold. Our costs increased compared to Q3 2023, primarily as a result of higher royalty expenses and increased labor costs. The higher royalty expense in Q3 impacted ASIC by approximately $70 per ounce when compared to our original full-year guidance. In addition, increased sustaining capital investment at LaMac, FMCARO, and Olympias contributed to higher ASIC for the quarter compared to the same period in the prior year. Capital expenditures on a cash basis were $169 million in the third quarter, including investment in growth projects at Kisla Dag, where we focused on planned waste stripping and the northeast leach pad and related infrastructure. At Scurrios, we continue to advance major earthworks and infrastructure construction. The project invested approximately $83 million in the quarter. It's worth noting we have restarted investing our own in the project in the fourth quarter this year following the catch-up of the project finance funding to our agreed 80/20 split. Current tax expense of approximately $40 million for the third quarter increased from approximately $21 million compared to the same period in 2023. The increase is primarily due to, firstly, capital gains tax of $9.9 million on the recognition of the deferred consideration related to the sale of the Tokentino mine, and secondly, increased Turkish taxes of $5 million, and finally, increased mining duties in Quebec of $3.4 million. Deferred income tax recorded an $11.4 million recovery in Q3 2024, compared to an expense of just over $30 million in the comparable quarter in the prior year. In the quarter, deferred tax included an $8.2 million expense reflecting the use of tax pools in excess of accounting deductions in Canada, a one-time $5.9 million expense for Dutch tax exposure accruals, and both of these were offset by an $8.3 million net recovery primarily related to local currency asset revaluation due to the weakening of the Turkish lira against the US dollar. Turning to slide seven, our balance sheet remains well funded to meet our investment requirements. We ended the quarter with total liquidity of $885 million, including $677 million of cash and cash equivalents and $208 million of available credit capacity. Cash increased over the quarter as a result of positive cash flow from our producing mines combined with drawdowns from the project finance facility for the Scurius development. We expect to build cash during the remainder of 2024 as we benefit from strong gold prices and the drawdown of our project financing. This build will be partially offset by the restart of equity contributions from Eldorado to the Scurios project as mentioned earlier. In summary, we are focused on maintaining a solid financial position, providing Eldorado with the flexibility to respond to opportunities whilst delivering our growth strategy, all while continuing to be committed to responsible mining as a foundation for our business as encapsulated in our values of collaboration, integrity, drive, and agility. With that, I'll now turn the call over to Louw to go through the Greek asset highlights.

Louw Smith: Thanks, Paul, and good morning. Starting on Slide eight at our Scurrios Copper Gold project, at the end of Q3, overall project progress was 79% when including the first phase of construction. This compares to 76% at the end of the second quarter. During the summer months, we anticipated slower progress due to vacations and the rescheduling of non-critical work, but we are now seeing an upward trend and expect this momentum to continue over the next three quarters. Detailed engineering has advanced and is now 78% complete and continues to be focused on the critical items. We are expecting additional progress over the balance of the year and expect to be approximately 90% complete by the end of the year. Work continues to ramp up on construction of major earthwork structures, including the haul roads, water management ponds, low-grade stockpile, the integrated extracted waste management facility, primary crusher process facilities, and filter tailings facility. Productivity improvement initiatives by the Earthworks contractor, including a partial second shift, continue to yield improvements. Work continues to advance on the filtered tailings building, which is on the critical path. In September, the first contract for the building was awarded, which included the building structure and mechanical installations. Piling has completed for the filtered tailings building, and concrete work is progressing to enable construction of the structural steel. With three active drills on-site, the piles for the filter buildings and work on the process plant is progressing well. Realigning of the flotation tanks was completed as planned, and structural and mechanical work is in progress. Off-site pipe spool fabrication continues, and delivery of HDP piping to the site has commenced. Scaffolding is advancing to support electrical cable tray and piping, and the contractor continues to ramp up to support increasing levels of activity. Work is also progressing on the underground development to support test hope mining in 2025. Approximately 70% of the equipment and operator licenses have been received to date, and development mining is ramping up. While we have lowered our underground development for 2024 to between 500 and 600 meters, we are still on track for the testopes during the plant commissioning period in 2025. Moving on to slide nine. During the third quarter, the capital investment at Scouriers was $82.7 million, slightly less than our spend during the second quarter. This brings our year-to-date spend at scourriers to $227.1 million. In addition, our overall committed spend for the project is $788 million. As George mentioned earlier, we have lowered and tightened our guidance range to be between $350 million and $380 million and do not expect it will have an impact on first production in Q3 2025. The photos on the slide and the next few slides will show the advancement of work underway. In addition, we have provided a link of a progress update video in our Q3 news release. Showing here, construction of the three thickeners progressed on plan during the quarter. On the right side of the slide, there are series of photos showing the progress in the interior of the main process plant. Turning to Slide ten. The two photos on the left-hand side are the primary crusher. Progress continued to advance on the construction of the foundation with retaining walls and stabilized excavations nearing completion. Construction of the Kasia building will commence in November. On the right-hand side is the filter tailings area where you can see three rows actively working. The contractor's productivity has continued to increase, and to date, 388 piles have been completed out of a total of approximately 871 at the filter facility. On the next two slides, you will see the advancement of work on the support infrastructure, including the process controller and building process plant substation, water pump station, lime plant, air blowers building, and flotation reagent plant areas. On slide eleven, infrastructure on the west side of the building is shown, including the secondary substation where foundation and steel work is progressing well. Alongside advancements at the pump house and the control building where work commenced earlier this year. On slide twelve, infrastructure on the east side of the main process building is shown, including construction works progressing on the lime plant, air blowers building, compressor building, and flotation reagent area. We expect to provide progress updates as we advance towards the first production in the third quarter of 2025. Moving to Olympias on Slide thirteen. The third quarter gold production was 21,211 ounces, and total cash costs were $1,210 per ounce sold. During the third quarter, as George mentioned, we successfully signed a three-year CBA agreement in August, and there were no work stoppages during this period compared with the second quarter. With the plant expansion of the mold to 650,000 tons per annum from 500,000 tons per annum, we have started ordering the long lead items, including the grinding mill, thickeners, and flotation cells. Total cash costs were impacted by increased labor costs, which included one-off and backdated payments and higher royalty expenses as a result of higher realized gold price, as well as higher gold ounces sold. I will stop there and hand over to Simon to discuss the Turkish and Canadian operations.

Simon Hille: Thanks, Louw. Starting in Turkey on Slide fourteen, at Kisladag, third quarter production was 41,084 ounces, with total cash cost of $899 per ounce sold. Total cash costs were primarily impacted by increased royalties as a result of increased average realized gold price. Production was slightly below plan as a result of a few contributing factors. The crushing circuit availability has been impacted due to maintenance issues leading to slightly lower stacked tons for the year to date. We are working on a solution and expect to have a modified edge block installed in the first quarter of 2025. In addition, a small portion of the ore coming from the center portion of the HVGR contains particles that are greater than ten mills, which has slightly reduced recovery due to the larger particle size. As we continue to analyze data following the ramp-up with the HPGR and the agglomeration drum, we are seeing leach cycles extending beyond the planned 220 days, which has led to an increase in gold inventory. We have responded to these operating challenges through irrigation optimization activities, which have demonstrated positive results through a drawdown of gold inventory, partially offsetting the longer leach cycle. Additionally, as we have previously discussed, the geometallurgical study has commenced with drilling currently underway. During the year, we have been constructing the absorption, desorption, and recovery plant, which became operational this week with the first gold pour. The new north ADR plant is expected to provide a number of benefits, which will be realized at both facilities, including reduced carbon handling requirements, optimization of stacking, irrigation, and extracting cycle, and decoupling of the north and south heap leach facilities for maximum cost efficiency. Congratulations to the Kisladag team on their drive to achieve this significant milestone. At Efemcukuru on slide sixteen, second quarter gold production was 19,794 ounces at a total cash cost of $1,325 per ounce sold. Gold production throughput and average gold grade at Efemcukuru were in line with plan for the quarter. And now moving to the Lamaque complex on Slide seventeen. Lamaque delivered production of 43,106 ounces at a total cash cost of $728 per ounce sold. A slight decrease in the quarter compared to the prior year's quarter, primarily due to lower grades processed, partially offset by increased throughput. Total cash cost increases were affected by higher sales volumes, slightly higher royalties due to higher average realized gold price, and additional costs incurred in labor contractors and equipment rentals. The team remains focused on driving productivity with development rates increasing in both Triangle and Ormat mines during the quarter. This positive trend is expected to carry forward into the fourth quarter. We remain on track to take a bulk sample from the ORMAC deposit and announce our inaugural reserves by the end of 2024. We had an advanced development to 173 meters compared to a plan of 150 meters for the month of September and to over 200 meters in October. To date, we have stockpiled 11,500 tons of material of the targeted 25,000 tons we were planning to put through the mill in December from Ormac. I'll stop there and turn it back to George for his closing remarks.

George Burns: Thanks, team. As we head into the fourth quarter, we are in a strong position to achieve our tightened gold production and cost guidance. Gold production levels are up 7% year to date compared to this time last year, and we continue to build momentum towards first gold production at Skirties next year. The record high gold prices have significantly boosted our margins, and the regions where we operate have also benefited from higher royalties and increased tax payments. By maintaining disciplined cost control and capital allocation, alongside elevated gold prices, we expect continued margin expansion, driving further growth in free cash flow from operations. Thank you for your time. We will now turn it over to the operator for questions from our analysts.

Operator: Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing any keys. Our first question is from Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu: Thanks, George and team. Maybe my first question is on Scurius and the progress at Scurius. As you mentioned, underground development is now targeted for 500 to 600 meters, previously 2,200 meters. Fairly sizable gap, I would say. But as you said, George, it's not going to impact your Q3, Q4, Q4 first production. But my question is, it's not going to impact the timing of first production, but could this impact, you know, the ramp-up and the speed of that ramp-up after first production? Is there a way for you to catch up on underground development?

George Burns: Yes, Cosmos, thanks for the question. So the way I would describe it is Scurius underground really isn't an important part of the production profile in the first several years. And in fact, it ramps up over, say, the next seven or eight years and at the end of a decade becomes the sole feed to the plant. So, you know, we really put an emphasis on getting the underground going as part of the initial construction to really check the box on all our technical assumptions, you know, the size of the stopes, and we wanted to get early information so that we could further optimize. We have hopes still that we can make the stopes larger than what's currently in our feasibility study. Now, the reason for the slower ramp-up in the development really was our transition from the pre-contractor who had been doing the development to date to our finished contractor. That's really going to ramp it up and do the test of mining. We're bringing in European expertise on underground mining to be able to mine these large, more technical stopes. They're part of the Scurius design. So, yes, I can tell you the delays were related to getting our European workers and their equipment certified and licensed to operate. But the initial productivity we're seeing out of this workforce is pretty fantastic. We will be able to continue to catch up as they employ more workers, and it really has no material impact on the next several years of Scurius operations.

Cosmos Chiu: Yeah, that's good to hear. Maybe that leads well into my next question here. As you mentioned, you know, total CapEx of this project is $920 million. You've spent slightly over $410 million so far with $770 million committed. So in terms of that, you know, $920 million versus the $411 million that's spent, the difference, can we expect that to be spent in 2025? Or it sounds like maybe not given that some of the underground might be, you know, pushed out a little bit in terms of development. I'm just wondering about the timing of the spend and if the $920 million is still a good number to use.

George Burns: Yeah, we're still confident and comfortable with the $920 million. Our employee count on construction has been rising all year. And as we said, we're expecting a further increase over the fourth quarter, and then that larger workforce will continue to execute construction through into the third quarter. So you're going to see a significant ramp-up on spending in Q4 and then even more in Q1, right through into commercial production. Regarding, you know, a few things that might not happen by commissioning time, yeah, there's some noncritical infrastructure that has been delayed a bit from archaeological studies that were done. Some of that might spill later in the next year and perhaps even beyond, but it will have no impact on our ability to operate. And then on the underground piece, you know, we're still going to get the planned test stopes into the mill in the third quarter or fourth quarter of next year. So no impact on the underground portion of production next year. And, you know, we'll update the market in the new year with guidance on everything. But again, the underground spend next year is immaterial to our commercial production or even the next couple of years of operations. It's really another year of test stoping in 2026 and then ramp-up of infrastructure to then support higher mining levels, you know, over the next five years. So all that I just said is not very material to the project for next year.

Cosmos Chiu: Of course. Maybe one last question, George. As you mentioned, you've tightened your 2024 production guidance. If I take your, you know, tightened guidance, it implies that you'll be increasing in Q4 production by about more than 10% quarter over quarter. I think Simon kind of touched on it, but could you maybe, you know, again summarize which ones will be the drivers?

George Burns: Sure. So the first thing I would say is we're in a better position this year than last year with our year-to-date production, and as you know, we've been growing over the last couple of years, and you're going to see that expand even further ultimately to 45% production growth by 2027. So we're on track to deliver that high-quality growth. In terms of the fourth quarter, and even the year, you know, our production at Lamaque and Efemcukuru are going to be stronger relative to original guidance, and we're a bit weaker at Kisladag and Olympias for the reasons we noted. And you're going to see a strong quarter at Lamaque consistent with prior years. And, you know, at Olympias, you know, we're collecting bargaining is in a good position now, and expecting a strong quarter out of Olympias in the fourth quarter relative to the challenges we had in Q2. So at any rate, we're comfortable with our updated guidance and expecting a good fourth quarter.

Cosmos Chiu: Great. Thanks, George and team. Those are the other questions I have. Have a good weekend.

Operator: Thank you. The next question is from Mike Parkin with National Bank. Please go ahead.

Mike Parkin: Hi, guys. Thanks for taking my questions. On slide fourteen, you noted you're doing some sub-cell collections, this deep ripping procedure, new approach to solution. I can't remember off the top of my head, but you guys use stackers, don't you, for placing the agglomerated, well, I guess it's a mix of agglomerated and non-agglomerated ore on the pad. So what's causing you to add ripping on the new pad only? And did you do that on the old pad?

Simon Hille: Great question, Mike. Yes, we use a conveyor system that takes the crushed and agglomerated ore from the crushing facility to our heap leach pad. And at the end of the grasshoppers, we have a radial stacker. You're right. That radial stacker minimizes compaction of, say, haul trucks delivering the ore to the pad. In our case, we've got these rubber tire grasshoppers and rubber tire grass conveyor. So there's a bit of compaction. You've got maintenance and other light vehicles. And it's a typical practice where you do ripping to try to fluff up the crushed ore and maximize the ability to get good permeability throughout the ore. So I can just tell you in all copper and gold leaching, ripping is a pretty important part of efficient and good permeability. The challenge with a dozer doing that ripping is it does it in one direction. And, you know, you can pull it in multiple directions. But what we can do with these track hoes is rip it in every direction. And we can do some ripping without removing drip emitters if we have a particular pad that's seeing a bit of ponding or not getting good permeability. So it just does a lot better job of fluffing up the ore and maximizing permeability through the pad. And, you know, I think, you know, we only agglomerate roughly a third of the total crushed material. And that third that goes to the agglomeration drum gets mixed with the other two-thirds. We're kind of counting on the transfer points between grasshoppers to mix and further agglomerate the entire feed to the pad. So, I mean, that's one of the things we're studying over the next several quarters is, you know, what happens if we add more agglomeration drums? You know, and we're also looking at particle size. What can we do to crush a bit finer? That's probably more screening. And at the end of the day, is there an ability to further optimize recovery and total production, including even debottlenecking the plant? So that's the study underway. Back to your specific question, it's just a better way to rip the surface and to further optimize permeability in the pad.

Mike Parkin: Are you seeing any concerns around structural integrity? I remember when we were there a year ago, you had samples of, like, the column tests showing that the agglomeration really listed well on a structural kind of integrity in terms of resisting compaction. Is that kind of proving up in the pad application versus the column test?

Simon Hille: Yes. Thanks, Mike. Yeah, we continue, you know, prior to putting the agglomeration drum into circuit, you know, we didn't have a lot of cement as a binder to create that stability. So with the agglomeration drum, we do add that cement, and it does create those agglomerated balls as well as some further strengthening into the actual pad.

Mike Parkin: Okay. That's it for me, guys. Thanks.

Operator: Thanks, Mike. The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

Tanya Jakusconek: Great. Good morning, everyone. Thank you so much for taking my question. Maybe George, I just wanted to come back to the noncritical work that you've kind of deferred at Scurius. Can you just review with me what you've deferred? So part of it is the underground development. What else has been deferred?

George Burns: Yeah. So the underground development was deferred really just due to delays in getting licensing of the workforce and permitting and equipment. The archaeological impacts are noncritical infrastructure, such as our truck shop for the open pit. So we have workarounds for that. You know, we'll use what I've used at many startup operations, C containers as a wall and a lid over the top for doing maintenance until we can get the truck shop constructed. So workarounds are in place. Depending on the timing of getting this archaeological clearance, you know, it might still get done next year. It might not, but it will not impact our ability to operate. And I think you can remember the Sarnego operation in Argentina when we built that in a prior company. It was in two years before the truck shop was built. Had no impact on the operations. So it's a truck shop, is one of the issues. And another one, we have an office planned for both the underground and open pit, separate facilities. The open pit office is also being delayed by these archaeological studies. So we'll be using the underground office and other facilities during the interim phase while we get that office constructed. So again, it's noncritical infrastructure that was planned to be worked on this order index that'll be delayed to some degree.

Tanya Jakusconek: Okay. So, really, what I'm taking from you is that it's really the truck shop and sort of the office that you can operate from, you know, other areas. And just as an aside, what's taking so long for this archaeological permit? Are there some on it? I mean, I remember, like, I think there was a vase or something that we were reviewing with this permit. And a vase that was found.

George Burns: Yeah. Well, I mean, so in the open pit near the outcrop, there was a furnace that was deemed to be back in the days of Alexander the Great where they were processing it or outcrop, so we moved that a couple of years ago. In this case, on kind of the edge of the pit, where this infrastructure was going to be put in, they've been doing these archaeological studies, and unlike North America, you know, there's a long history of civilizations in Greece and other European countries. And there's lots of artifacts. So even though this is up in the foothills about Aegean, they have found some things, and you know, they want to make sure that this area is cleared appropriately. And so just to describe it, you've got, I don't know, around forty, fifty people laborers with wheelbarrows and archaeologists that are sifting through the sands and the surface, and they're obviously finding some things because we have a lot of activity. But they really have to complete the work to determine, you know, what's there, how significant is it, could it be moved, are we going to have to work around and leave it in place. Those are the sort of things that happen typically in Greece on any construction project. Fortunate to say this is the only activity and it's not critical to our startup and we'll have workarounds for it. So I'd say a normal process in Greece.

Tanya Jakusconek: Okay. So, yeah, so it's separate from that furnace of Alexander the Great. Okay. Just wanted to come back to and I don't know who wants to take this question. Just on the inflation, you mentioned that, you know, you're seeing higher labor costs. So just wanted to review with you. I have in my notes here from previous calls that about and maybe this is if someone can correct me if I'm wrong, I had about thirty percent of your cost is labor. That's yourself employed, and then about forty percent is I include the contractors. So I'm going to start first. Is that a correct number that I have?

George Burns: I think twenty-seven percent is the number, so you're very close. Twenty-seven percent in Q3.

Tanya Jakusconek: Okay. So sorry. Did I hear forty-seven? Or twenty-seven?

George Burns: Twenty-seven, two seven.

Tanya Jakusconek: Okay. So two seven is all of your employees?

George Burns: All for labor. Yes.

Tanya Jakusconek: Okay. Labor. And does that also include contractors or is that separate?

George Burns: The contractors are separate that gets billed as a single item. So that twenty-seven percent is our workforce.

Tanya Jakusconek: And what would be the percentage that would be contractors? And the reason I'm asking, George, is I'm just trying to understand if you have different inflation in yourself, you know, your own workforce at twenty-seven percent, and how is that different from the contractors? That's all I'm trying to get.

George Burns: I don't have the contract percentage, but I would tell you there isn't a significant difference other than timing. You know, obviously, where we have union operations in Turkey and Greece, I mean, do our collective bargaining and immediately there's a change in labor cost. The contractors are on different schedules. So timing would be a bit different, but I would say that the inflationary pressures are very similar.

Tanya Jakusconek: And when you did your current agreement at Olympia for sort of inflation rate, did we see there for labor?

George Burns: So we signed a three-year agreement on Olympias. And it averages about three percent over the three-year contract. So, you know, fairly consistent with inflation in Europe.

Tanya Jakusconek: Yeah. That's good to hear. Okay. And then the other thing that I wanted to make sure I understood, you know, there was such a big, I think it was mentioned that seventy dollars an ounce was the impact from an increase in gold price in your royalties, I think it was this quarter. If I can remember correctly, and I just need to understand my sensitivity again, I think you did your budgets at nineteen hundred. And I think for every hundred dollar move, it was about twenty dollars per ounce impact on your cost. Maybe I could just have that confirmed and just so that I understand that when you go to give guidance next year, I can kind of understand what the gold price impact would be on your cost.

Paul Ferneyhough: So Tanya, it's Paul here. In the third quarter compared to our budget, just to give you a sense, the royalty cost is around a hundred and five dollars per ounce more. And so we had our budget set at nineteen hundred dollars, our realized prices were two thousand four hundred and ninety-two. And so the difference there, a six hundred dollar increase in realized prices gave us a hundred and five dollars an ounce more in royalties.

Tanya Jakusconek: Okay. Perfect. That's a great sensitivity to have. And then finally, another number that would be very useful for us is how are you thinking, and I appreciate all of your reserves are based on, you know, looking at cutoff grades, etcetera. So I'm thinking you're going to be reporting your reserve very shortly, usually in early December. So we're just like, two months away. Oh, no. Not even two months. Months of it. Can we just, you know, maybe talk a little bit about how you're thinking about your reserve and your cutoff grades and, you know, ultimately, I think I had a fourteen hundred dollar gold price for your reserve. Maybe someone can share how you're thinking about that as we come to your reserve base.

George Burns: Sure. So, yeah, our current reserves are at fourteen hundred. We do expect to update our reserve statements for the end of the year. We're not looking at a material change in price assumption. And we essentially look to our peers to take a look back three, five-year look back on metal prices. But we continue to believe it's appropriate to stay conservative on metal price and reserves to ensure we have solid margins in any gold price environment. Even though we're in a pretty good bull run and it appears to be continuing, you know, we're not going to count on that from a reserve and resource statement perspective. So as you say, we'll be updating the market with the definitive price assumptions for this year's reserve update. Just don't expect any material change.

Tanya Jakusconek: And when you say material change, I mean, I would I'm assuming it, you know, it's like a, you know, less than ten percent. Would that be not material to you?

George Burns: Yeah. Less than ten percent would be not material.

Tanya Jakusconek: Okay. Thank you. And thank you for all my questions. I really, really appreciate it, and I'll let someone else. Thank you.

George Burns: Thanks, Tanya.

Operator: Once again, if you have any questions, please press star then one. The next caller is Lawson Winder with Bank of America Securities. Please go ahead.

Lawson Winder: Thank you very much, operator, and good morning, George and team to you guys in Vancouver. And thank you for the update. Very comprehensive today. One thing I wanted to follow-up on with respect to Tanya's questioning on labor inflation is just I might have missed it, but did you disclose what is the built-in annual increase in labor inflation with the new CBA? And if not, can you share that and whether there's any difference year to year? Is there a consistent each year of the contract?

George Burns: Yeah. So for a collective bargaining agreement on Olympias, it's a three-year agreement. Over the three years, it's kind of averaging three percent each year. So fairly close to inflation. There was additionally a one-off payment that isn't cumulative on the base that was tied into our decision to move forward with the expansion of Olympias. So anyway, I'd say it was a good win-win agreement with our workforce, and wage increases are consistent with inflation in Europe.

Lawson Winder: Yeah. Fantastic. Thanks for that. And then just looking at and thinking about capital allocation, and the gold price is up obviously significant. You guys are clearly benefiting from that. Despite the spending on Scurius, is there any thought internally to essentially reinstating the dividend near term, or is that a decision that just has to wait until the completion of Scurius?

George Burns: Yeah. I mean, dividend definitely is a focus of the company. And our view is when we set and reestablish our dividend and our dividend policy, we want it to be sustainable. And so for us, the focus will be in 2026, after we're in commercial production.

Lawson Winder: Okay. And probably an obvious answer to my final question on capital allocation, but just as you look at potential options for growth, obviously, you have a lot in the portfolio. What about external options for growth? Does Eldorado or what's your stance on M&A is really the question. I mean, does Eldorado feel that you can be opportunistic, should opportunities come along, or is that something that's just off the table for now?

George Burns: Well, I mean, we have a corporate development team, and like every company, we're always looking for opportunities. You know, obviously, with our focus on Scurius, that's priority one. If an exceptional opportunity came along, we're definitely going to look at it. We'd be opportunistic. So I'd say it's not a primary focus. It's a secondary focus for us.

Lawson Winder: Okay. Well, thanks very much, George. I appreciate it.

Operator: Thank you. That is all the time we have for questions today. This concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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Source: Investing.com