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Eldorado Gold saw its share price plummet after it released a lower-than-forecasted 2015 production outlook.
The third week of January has not been kind to Eldorado Gold (TSX:ELD) and its shareholders. The company’s share price has dropped 13.54 percent since Monday and was down nearly 19 percent on Wednesday alone.
By market close on Wednesday, shareholders had shed just over 12 million shares, up from an average of 2.77 million a day, with the company’s share price closing at $7.66.
The fall started after the company released its 2014 operating results on Tuesday, highlighting record annual production of 789,224 ounces with sustaining costs of $780 per ounce. However, it’s the company’s 2015 outlook that seems to have precipitated Wednesday’s fall.
Gold production for 2015 is estimated to fall within the range of 640,000 to 700,000 ounces of gold — a stark fall from this year’s production guidance. CEO Paul Wright did not comment on the fallen guidance, but did say of Eldorado’s 2014 results, “[t]he Company delivered another solid year with all of our mines either meeting or exceeding the original 2014 guidance. Costs were kept within the lower quartile of the industry average, crucial when we are faced with a period when metal prices remain depressed across the board.”
A report by Josh Wolfson and Jon French with Dundee Capital Markets recommends investors sell shares in the gold company. The analysts had maintained a “neutral” recommendation for Eldorado earlier, but the company’s lowered production guidance and the lowered outlook for the Kisladag project turned the tide.
“2015 production guidance of 640-700 koz was 14% lower than our 783 koz est., while cash operating cost guidance of $570-615/oz was 18% above our $502/oz est. (sic),” they state in their report.
Despite the gloom and doom of the outlook, Eldorado shares are generally outperforming the iShares S&P TSX Global Gold Index Fund (TSX:XGD), with a positive return of 16 percent compared to a 10-percent drop seen by most other companies.
Securities Disclosure: I, Nick Wells, hold no direct investment in any of the companies mentioned in this article.