VANCOUVER (miningweekly.com) – Moody's Investors Service has downgraded Canadian miner Eldorado Gold’s corporate family credit to B2 from B1, citing high geopolitical risks, limited mine diversity, and execution risks related to its material development projects.
"The downgrade of Eldorado's rating reflects the high execution risk with its projects, particularly at the Kisladag mine, in Turkey, and at its operations in Greece, combined with continued cash consumption driven by spending on projects," commented Moody's VP and senior analyst Jamie Koutsoukis in a statement.
Moody’s decision weighed on Eldorado’s projects, on which it plans to spend $1-billion in capital over the next three years. It will build a mill at the Kisladag mine to account for lower expected gold recoveries from heap leaching. It will also look at building its Lamaque mine, in Canada, and build its Skouries mine, in Greece. The analyst stressed that Skouries will not proceed until all permits have been issued.
However, because its production is concentrated in just a few mines, development plans have a significant impact on the company's credit. Eldorado is also expected to generate lower cash flow from operations, as production will be affected by Kisladag's underperformance.
Moody’s sees projects taking longer to develop, resulting in higher leverage above 4x through 2019.
Eldorado’s senior unsecured note ratings were downgraded to B2 from B1. With a negative outlook, the agency reaffirmed Eldorado’s ‘speculative grade’ liquidity rating and calculates a probability of default rating to B2-PD from B1-PD.