 Good day fellow investors! I'm finishing my gold miners overview and a company most of you think I think wanted me to analyze is El Dorado gold. The performance wasn't good at all in the past year. I analyzed it from some of parts value perspective a year ago something more but then I didn't analyze something that's very important for El Dorado and that is the debt part and the financing. In this video I'll go through the overview of the company then discuss the issues that have plagued the company in the last year and a lot has changed since I last analyzed it and then also discuss the financing and evaluation of the mines El Dorado owns and has. So let's start! So El Dorado has global operations from Romania, Brazil, Greece, Turkey and Canada. The business plan is to grow to 600 000 ounces in production by 2021 by developing the Lamac project Kishladaq new mill Olympias and FN Tsukuru. So they hope to produce 600 000 ounces but to do that they need to refinance their current debt that's coming in in 2020 their revolver bank revolver also coming due in 2020 that they have hope to get to build the Kishladaq mine mill and that is the key issue here but more about that later in the conference call notes. Let's start with a sum of parts value their operations let's start with Kishladaq that was a big blow for ego recently as the company reached a new ore about a year ago and the gold recoveries fell and thus the plant was worthless because they needed to build they decided to build a new mill to extract the gold to recover the gold so they decided to build a new mill the cost is around 500 million and the net present value of the project is 434 million at a 5% discount rate and gold at 1300. So Kishladaq was a big big blow for the company from a value of if everything was going okay as planned of I think it was 1.2 billion they went to needing to spend 500 million to get out the net present value of 400 million that is at 5% if I increase that to 10% which should be normal for Eldorado we are at 200 million if we lower the price of gold to 1200 not 1300 that they used we are at 100 million so they are spending 500 million and this is the difference from plus 1 billion they went to minus 500 million for questionable value so Kishladaq unfortunately went from 1 billion to zero and that's immediately 1 billion of ego's market cap and that's a huge blow here you can see the net present value calculations if I translate the 5% discount rate to a 10 or 15% discount rate lower prices of gold the net present value gets close to zero very quickly and then puts also in question why are they spending the 500 million they will have to pay a high interest rate a high yield that on the 500 million so it practically puts the value the current value of Kishladaq at below zero nevertheless let's put the value of 200 million but it was close to a billion just a few years ago Effing Tsukuru is the second mine they own in Turkey and it produces around 100 000 ounces per year they are still drilling to replace resources and that is a cost two all in sustaining costs are around 766 per ounce so all in all it can provide 25 million cash flow for the next 10 years the value should be around 125 million let's put 100 million Lamak they acquired Integra Gold that owns the Lamak project not so long ago and they paid more than what was the present value the value of the deal was what 500 600 million Canadian dollars let's put it at 500 million US dollars and then they made a pre-feasibility study that didn't have like the economic assessment a net present value of 500 million but just 205 million also gold prices were 1300 if i lowered that to 1200 net present value of 10 percent we are below zero nevertheless they are almost close to building it so their production overview is expected to be pretty high good grades and they should get some cash flows out of this let's put the value of 200 million on this even if it is stretched and who knows why they paid so much well that is something that runs through Eldorado it's in their genes to pay much on higher gold prices and you'll see later a table Certe project in Romania they would need 539 million to develop this with after-tax cash flows of around 70 million over 11 years needless to say this project is worthless at current gold prices higher gold prices would help it but that's it and even if higher gold prices we are still at an internal rate of return below 20 which is a minimal for respectable miners they have the iron villanova mine that's on care and maintenance and the tocan tizinho mine in brazil again 441 million in needed capital the net present value is 317 giving me a 10% discount rate lower gold prices and we are at 100 million so really who is going to spend 400 million on a small mine in brazil with a low net present value now we're coming to the interesting part of Eldorado we have Greece Olympia Strattoni Scuris and Perama Hill Perama Hill the net present value is below 200 million let's put it at 100 million again development capital 250 million scuris is spending permits in Greece it would be a big mine with more than 300 000 gold equivalent ounces produced but you have to agree with the greek government and that's taking also already very very long however they already spent a lot on the mine and they have to spend another 690 million to develop the mine so even if they get a permit from the greek government which might happen in 2019 when the new government comes to Greece if the right-wing party wins the elections then still they have to spend that money and the net present value at 8% is down to 600 million that falls to 400 million with gold at 1200 so including the capital already spent the value with if they get the money it goes to 400 million so with the risk option for Greece i really think we should positively attach a value of 300 million Strattoni mine the mine barely breaks even with extremely high all in sustaining costs Olympia currently in phase two but from 2022 potentially to produce another 300 000 gold of gold equivalent ounces if i put the 40 million cash flow up to 2025 and then 50 million one onwards from phase three i get to a net present value of 280 million some of parts kisladag 200 fm tsukuru 100 lamak 200 total 1.2 billion the difference between last year and 2.4 billion is of course kisladag and lamak that lost 300 million kisladag lost i know almost a billion there if i look at the balance sheet there is 595 million in debt but also 590 million in short-term assets with only 93 million in short-term liabilities thus the net debt is 95 million fundamental value of ego should be 1.2 billion as the net present value of the assets minus 100 million of debt that's 1.1 billion on 792 million shares outstanding the value per share should be 1.48 however we have to mention some risks that are not so innocuous that financing how are you going to get to the value of those projects and if you need to sell some assets at a fire sale there will not be high competition for them especially at these low gold prices so they might not get what's the real value of their projects especially with the risks they are incurring for their minds in Greece just a few notes from the conference call everybody is worried about the 600 million in debt that comes due November 2020 kisladag needs 520 million so there goes their cash and they have another open credit line that also ends in 2020 so there might be looking at 900 million in refinancing in 2020 if that happens and gold prices are below 1200 then that's a big trouble for ego and there might be concerns about eldorado being a going concern in 2020 token tizinho might be sold but what's that 100 200 million and then it all boils down to Greece that most valuable mines are in Greece and that's a big problem especially as kisladag blew out if they don't get the permits in Greece and then again if they don't get to the money to develop those then the value goes down down and down very very quickly so they need 500 million for kisladag 700 million for scurris 250 million for pirama 539 million for serte and all in all they need at least two billion to develop their projects that are all borderline profitable and certainly don't justify the usual 20 internal rate of return miners need the key with ego is that they have always been betting on higher gold prices and always hoping that higher gold prices will take them out of the dirt their track record is disastrous so sena gold purchase price 1.5 billion cumulative cash flow 600 million sold later brazzauro deal minus minus net value outflow minus 33 billion european gold fields the greek assets they already spent 3 billion on those so that was a huge outflow when you had what they invested in scurris and what they paid for those assets so very bad deal integra gold also lost 300 million on the new pre feasibility study compared to the economic assessment and what they paid so if i put the two billion into perspective to develop whatever they do then the net present value of financing on a 10 interest rate minimal for el dorado is about 1.2 billion so 200 million per year if i deduct the 1.2 billion from the net present value i get to a negative value of 0.2 billion so that is el dorado the financing is i think the key here now the value of the mines if gold prices go up then the financing also becomes easy so it's really a very very big optionality on sustainably higher gold prices if that doesn't happen by 2020 when they have to refinance and let's say in 2020 gold goes at 1 000 just before it explodes it might happen that somebody snaps ego like it has happened now for tacho just a small margin at the 2020 market cap saves it makes a great deal like those deals are often made in the gold environment so the upside might be limited by a takeover and the downside is huge as we see ego bleed bleed and bleed so this is a more in-depth analysis this is the kind of analysis i do before investing in something because before significantly investing in something so i'm not going to invest in el dorado you can check my stock market research platform there are other 15 in-depth analysis of miners like el dorado harmony tacho and many others so see if you like this perspective on investing thank you for watching looking forward to your comments i think we all understand el dorado is a bet on higher gold prices grease and refinancing and that is what is pressuring the stock price especially as they didn't deliver on kishla dug as it was expected lamak was another flop so a lot of flops from the management and also we've seen the flops in the past thank you for watching don't forget to subscribe don't forget to check my platform lock in the low price still in 2018 forever because the price will go up in 2019 because we are already getting a crowded group of people there see you in the next video