Eldorado Gold (TSX: ELD; NYSE: EGO) will “temporarily postpone” a decision it made earlier this month to suspend its investments in Greece on Sept. 22 due to permitting delays and cryptic threats of arbitration.
In mid-September the company received three long overdue permits and a formal notice of arbitration, prompting George Burns, Eldorado Gold’s president and CEO, to describe the “dialogue” underway with the Ministry of Energy and Environment as “constructive.”
But the mining executive also warned he is prepared to suspend operations in the country should talks between the two break down.
“We preserve the right to place our assets on care and maintenance and to take prompt legal action to protect the company and its assets in Greece should our dialogue with the Ministry of Energy and Environment prove unsuccessful,” he said in prepared remarks.
Just days after threatening to suspend its investments in the country, Eldorado received a three-year operating permit for its Olympias gold-silver-lead-zinc project and a modified electromechanical installation permit for its tailings management facility. The ministry also approved a technical study for the closure of the old Olympias mine, and granted the installation permit for Eldorado’s paste plant at Olympias.
The Ministry of Finance and Ministry of Energy and Environment also issued a formal notice that Greece is launching arbitration against Eldorado’s subsidiary, and for the first time, explained exactly what the grievance entails.
The government alleges that the December 2014 technical study Eldorado submitted for a metallurgical plant that would treat concentrates from both Olympias and the Skouries gold-copper project is deficient and violates the transfer contract and the project’s environmental terms.
Eldorado Gold’s Stratoni silver-lead-zinc mine on the Halkidiki peninsula in Northern Greece. Credit: Eldorado Gold.
Now that Eldorado knows what the arbitration is about, management says it is “highly confident” its technical study “is robust and consistent with the transfer contract, the business plan and the approved environmental terms of the project.”
Eldorado still needs an amended electromechanical installation permit for the flotation plant at Skouries, and there are other outstanding issues, such as the relocation of antiquities at Skouries, the company says.
It also lacks approval for its Perama Hill gold-silver project’s environmental impact assessment, which has been outstanding for the last three years.
The mining company paid nearly US$2 billion to acquire its Greek assets in 2012 and has since invested more than US$1 billion in developing Skouries and Olympias.
Eldorado Gold employs 2,400 employees, contractors and suppliers in Greece.
Eldorado’s shares fell 6% to $2.34 after its near-suspension of investment in the country on Sept. 11.
At press time its shares were trading at $2.75.
Think the caption under the first picture should read “Grinding and flotation facilities…” not “grading”. Don’t expect this comment to be published, just feedback in case there is opportunity to correct.