Eldorado Gold gets go-ahead for land clearing at Skouries

VANCOUVER — Greece’s highest court has temporarily cleared the way for Eldorado Gold (ELD-T, EGO-N) to restart surface clearing at its 95%-owned Skouries gold project.

The ruling by the Suspension Committee of the Council of State reverses a June 29 “provisional order” by the President of the Fifth Section of the Council of State that stopped the company from cutting down any trees in an area of Halkidiki that includes the company’s Skouries gold project and certain areas of its Stratoni zinc-lead-silver mine.

While the order has now been reversed, Eldorado noted that at no time did it affect the company’s other operational, development, and exploration activities at the Stratoni mine, Olympias, Skouries, and Piavista projects.

The June provisional order itself stemmed from a May 28 lawsuit filed by locals who oppose the mine and challenge the legality of how Eldorado acquired the forest land. A court hearing on the original lawsuit is expected in the fourth quarter.

Eldorado pointed out in its statement that Hellas Gold, its 95%-owned local subsidiary, has submitted to the Council of State documents that demonstrate it is legally entitled to go ahead with the clearing of the forest area in Halkidiki. The Ministry of Environment, Energy and Climate Change, a local pro-mining labour association, and the office of the Secretary General to which the regional forestry department reports also submitted supporting documentation. The Suspension Committee was supplied the documentation before it decided to reverse the suspension.

In announcing the reversal, Eldorado also emphasized the positive economic benefits it is bringing to Greece. The company has 680 employees and contractors in the country on its payroll and expects to double that over the next five years as it invests roughly US$1 billion into its Greek projects.

The company significantly increased its Greek exposure after acquiring European Goldfields in February, which gave Eldorado 95% control of Hellas Gold and its holdings. The $2.4-billion takeover gave Eldorado control of the Skouries gold project with proven and probable reserves of 138 million tonnes grading 0.81 grams gold per tonne for 3.6 million oz. gold and the Olympias project with proven and probable underground reserves of 13.6 million tonnes averaging 8.7 grams gold and 132 grams silver for 3.8 million oz. gold and 58 million oz. silver. Eldorado also secured the operating Stratoni zinc-lead-silver mine and an 80% interest in the Certej project in Romania in the takeover.

Eldorado dropped 91¢ or 7% to $12.41 on July 4 when it announced the court suspension of its tree cutting. On news of the reversal it climbed 40¢ or 4% to $10.36. The company has 551.7 million shares outstanding.

This is not the first time the portfolio of Greek properties Eldorado acquired has run into trouble. In 2002, then owner TVX Gold had its Stratoni operation suspended and its permits at the nearby Olympias project revoked. TVX started finding permitting troubles with its Greek properties soon after acquiring them in 1995. Then, as now, the problems with permitting stemmed from local opposition and concerns over environmental degradation.