It is no secret that economic turmoil and extreme uncertainty in Greece pose major threats to the global economy. However, in the face of several setbacks and challenges, not least Greece’s left-wing government, multinational miner Eldorado Gold operations offer great potential for the Greek economy, says global mining and research company SNL Metals & Mining analyst Tom Manzella.

Eldorado owns three gold projects in Greece, namely Olympias, Skouries and Perama Hill, along with its operating Stratoni zinc mine, which are all located in the north of the country.

The company’s strong Greek presence does not end there; among the seven companies with projects in the country that SNL tracks, Eldorado comes in second with $36.39-billion in reserves and resources in situ value. The other companies combined equate to $43.9-billion in value.

Exploration, mining, smelting and marketing of ferronickel company Larco General Mining & Metallurgical, the company with the largest in situ value, owns the openpit Larco nickel mine, in Athens, which hosts 2.5-million tons of contained nickel reserves and resources, although only 353 000 t is classified as reserves.

Manzella says that, while the reserves and resources were last reported as of 2006, SNL estimated Larco nickel production at 18 000 t for 2014.

He highlights that Eldorado’s potential in Greece has not come without several “roadblocks.”

In March, Greece’s then newly elected government dealt a major blow to the Skouries project when it revoked a construction permit that would have allowed an essential processing plant to be built.

Manzella explains that this was primarily owing to environmental and tourism concerns regarding the project.

However, he notes that, in late April, a Greek court overturned a 2013 decision, also based on opposition from a local environmental group, which denied the company approval for the plant.

According to a statement issued by Eldorado in June, the company expected the commissioning of the Skouries project to take place in the first quarter of 2017, pending an anticipated near-term resolution of outstanding approval challenges.

Manzella says that clearing regulatory hurdles will allow Eldorado to move forward with the Skouries project, which, together with Olympias, will offer new opportunities for both the company and Greece.

He further points out that Eldorado has already invested $450-million in these two projects and is not backing down despite the risk in the country.

A company investor presentation in June highlighted that it continued to employ over 2 000 people in Greece — where unemployment figures remain north of 25% — and that it would pay at least $1-billion in taxes to the Greek government over the next 20 years.

Additionally, Manzella notes that Stratoni, which is the company’s only operating zinc mine in Greece, has an in situ value of $164.2-million, based on its total attributable reserves and a nominal zinc price of $2 161/t.

“Skouries provides the company with an in situ value of $4.58-billion in copper reserves, based on a nominal price of $6 283/t. Conversely, Eldorado’s three gold projects account for $9.74-billion in attributable in situ value, based on a nominal gold price of $1 150/oz.”

He says that these figures – combined with the fact that the attributable zinc reserves at Stratoni amount to only 76 000 t – make clear the rationale behind Eldorado’s continued commitment to its Greek gold projects despite the country’s ongoing financial crisis.
Manzella states that Eldorado can expect to see a substantial increase in Greek gold production starting in 2016, when Phase 2 construction at Olympias is complete, and in 2017, when Skouries starts production.

By 2020, Eldorado estimates, it will produce 123 420 oz of gold at Olympias alone.

Additionally, Manzella points out that Greece accounts for the largest chunk of Eldorado’s reserves and resources in situ value, highlighting the company’s commitment to future production in the country.

Together, the Olympias, Skouries and Perama Hill projects account for 8.5-million ounces in attributable gold reserves, followed by the Kisladag mine, in Turkey, with 8.1-million ounces.

However, Manzella says that, unlike the Kisladag mine, which is expected to close in 2020, the Olympias and Skouries mines are projected to be operating until 2040 and 2043 respectively.

“SNL data also captures zinc and copper reserves in Greece. The country has 950 950 t of attributable zinc reserves and 728 650 t of attrib- utable copper reserves, which represent a much larger, but less valuable, portion of Eldorado’s operations in Greece,” he concludes.