Visible mineralisation at Eldorado Gold's Skouries project, in Northern Greece
Photo by: Eldorado Gold
VANCOUVER (miningweekly.com) – The TSX-listed equity of Canadian gold and base metals producer Eldorado Gold lifted off recent 52-week lows on Wednesday, after the company announced a favourable ruling by an arbitration panel in its dispute with the Greek government over its Madem Lakkos metallurgical plant.
Vancouver-based Eldorado said the panel had rejected the Greek State’s claims that the 2014 technical study for the plant, which is meant to treat concentrates from the Olympias and Skouries operations, was in breach of the provisions of the transfer contract.
The project forms part of the company’s Kassandra mines investments, which include the Skouries and Olympias projects, as well as the operating Stratoni mine, in Halkidiki. Eldorado paid nearly $2-billion for the Kassandra mines in 2012 and, since the acquisition, the group had invested more than $1-billion in Greece.
“We believe this decision provides a foundation to allow us to advance dialogue with the Greek government in order to define a mutually agreeable and clear path forward for our Kassandra investments. We look to the Greek State to fulfill its obligations under the transfer contract, including issuing the outstanding permits for the Skouries project,” Eldorado president and CEO George Burns said in a statement.
Eldorado advised that it is working to improve its environmental impact in the country, pointing to its recently submitted updated technical study for the Skouries project, which reduces its footprint by 40%.
Delays on its two main mining projects in Greece have been driven by setbacks in receiving permits and licences, reflecting the risk of operating in a jurisdiction with higher political risk and a lack of proven mining legislation and regulations. In November, Eldorado moved to suspend development at the $710-million Skouries development and launched three legal actions as a result of frustration regarding the permitting delays.
Eldorado in September threatened the leftist Greek government with halting further investment at its development projects, on the back of government dragging its feet with issuing required permits. Soon after, the Ministry of Energy and Environment issued several long-overdue routine permits for the Olympias project.
The Greek economy had shrunk by more than 25% since Europe’s sovereign debt crisis began in 2008. Since 2010, the country has been under bailout programmes with stringent belt-tightening requirements. It has been working on attracting investments like Eldorado’s – the largest single foreign investor in the country at present – to end the bailouts and tackle high unemployment rates.
However, differences with the country, especially over compliance with environmental regulations, have dragged on – at times very publicly – for years, forcing Eldorado in January 2016 to amend investment plans because of a lack of necessary permits and licences.
Eldorado’s Toronto-quoted stock rose as much as 14% early in the Wednesday trading session to hit an intra-day high of C$1.30 a share, building momentum from a gain of 6.5% to C$1.14 apiece on Tuesday. The battered equity, however, is still down more than 35% since the start of the year and had lost three-quarters of its value in the past 12 months.