As a result, the company has already ceased all mining and milling at its Hellas division, affecting about 500 employees.
TVX insists it has met all its obligations and emphasizes it has spent more than US$250 million turning the complex into one of the largest private foreign investment projects in the country.
TVX President Sean Harvey says operations will resume if “restrictions placed upon Stratoni are lifted, the required permits for extension are granted, and certain obligations by the Greek State pursuant to the acquisition agreement are fulfilled.”
In September, TVX applied for permission to extend Stratoni’s mining operations underneath the nearby village of Stratoniki. John Raisbeck, chief executive officer of TVX Hellas, told Reuters the request is being examined, though a mining inspector ordered the company to move back 100 metres from an existing boundary.
TVX has struggled with local officials over permitting issues since 1995, when it acquired the Hellenic Gold Complex, which includes the Madem Lakkos and Mavres Petres zinc-lead-silver mines and the nearby Stratoni milling complex.
The Madem Lakkos skarn deposit consists of irregular zones of galena, sphalerite and pyrite that occur within marbles and along the contacts between marble and overlying schists and gneisses.
The Mavres Petres mine had been dormant, but as a result of exploration drilling in 1999, it was placed back in production.
The mill’s two flotation circuits can process 1,200 tonnes per day, producing lead and zinc concentrates averaging 70% lead and 53% zinc.
During the first nine months of 2001, Stratoni provided TVX with 1.5 million oz. silver, plus 19,600 tonnes lead and 21,300 tonnes zinc. Of that, 505,000 oz. silver, 6,400 tonnes lead and 7,200 tonnes zinc were produced from 92,000 tonnes of ore in the third quarter.
During the first nine months of 2001, Stratoni milled 262,200 tonnes of ore, or 84% more than in the corresponding period of 2000. The improvement reflects the implementation of a 6-day mining schedule, continuous milling and the adoption of mechanized mining methods.
Meanwhile, TVX still awaits a decision by the Greek Conseil d’Etat, the country’s highest administrative law court, regarding the validity of permits already issued for the nearby Olympias gold project. The company says a decision could come in the next few months.
Assuming the court rules in TVX’s favour, the company figures it will be at least another six months before it receives a final construction permit, assuming there are no other legal challenges.
In 2000, SNC-Lavalin pegged Olympias’s capital costs at US$258 million. The company says US$40-50 million of that amount can be covered by European government grants.
TVX says Olympias’s production in the first five years should average 235,000 oz. gold, 2 million oz. silver, 19,700 tonnes zinc and 18,200 tonnes lead. Over the subsequent 14 years, production would average 153,000 oz. gold, 2.4 million oz. silver, 31,300 tonnes lead and 25,000 tonnes zinc. Cash costs are pegged at US$72 per oz. gold (net of byproduct credits) for the first five years and US$50 per oz. thereafter.
The operation’s internal rate of return is estimated at 16.7%, and the net present value is about US$199 million, at a 5% discount. Tax credits are not considered, but the required metal prices are: US$325 per oz. for gold, US$5.50 per oz. for silver, US55 per lb. for zinc and US25 per lb. for lead.
Also, TVX may buy and then cancel up to 17 million shares, or 4.8%, of its 357 million outstanding shares.
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