Eldorado Gold announces amended investment plans in Greece [upd]

Eldorado Gold Corporation announced that it will implement significant changes to its investment plans in Greece and it will suspend construction and development activities regarding  the Skouries mining project in Halkidiki, northern Greece.

In a press conference this morning, Paul N. Wright , President and Chief Executive Officer of Eldorado Gold said that investors needed clarity of regulation and government partners to truly build an industry that everyone can benefit from. As he stated:
“The Greek Government must rely on the policies, procedures and laws in place to expedite the approvals needed for investment projects. We are both bound by the rule of law. It is our responsibility to act in accordance with environmental, labour, and commercial regulations. It is the Greek Government’s legal responsibility and contractual obligation to grant permits and licences in a timely manner enabling the investment to succeed. Approvals must not be held hostage to political interventions and other agendas propagated by a vocal minority. We welcome fair, modern and transparent regulation and its consistent and constructive implementation.

The fact is, clear and sound regulation helps us do our jobs. Mining is one of the few businesses that can still transform societies and provide quality of life for people together with other industries. In Halkidiki we were starting to see a regeneration of the area with young people moving back to fill skilled jobs not only with Hellas Gold but within the municipality as an economic spinoff of our investments. There is significant potential for northern Greece to become a leading metals mining jurisdiction for the benefit of all stakeholders. But Greece must provide the political will and the regulatory environment to enable us to do so. Only then will we be able to move forward with our full investment plan in Greece.

…I wish to emphasize that these investments are seen a litmus test by all potential large investors – both domestic and international. They should serve as an advertisement for investing in Greece. It is personally very disappointing to be here today telling you otherwise“.

The Skouries mining project

In an announcement yesterday Eldorado Gold said that in order for its Greek subsidiary, Hellas Gold, to complete the construction and development of its mining projects (the “Kassandra Mines”) in Halkidiki, northern Greece, it needed the approval of various routine permits and licenses from a number of government agencies, predominantly under the direction of the Ministry of Energy and Environment. Hellas Gold received approval for its Environmental Impact Study in 2011, yet since 2012, the Ministry and other agencies have not entirely fulfilled their permitting and licensing obligations primarily, as a result of the lobbying efforts by anti-development interest groups. In addition, during 2015, the Ministry revoked or suspended certain permits of Hellas Gold, which has had a negative impact on the Company’s schedule and budget to develop its assets.

Hellas Gold has been forced to seek remedy in the courts of law in order to address these permitting delays and various court decisions have been made in the Company’s favour, and others remain outstanding. A building permit, that would allow Hellas Gold to complete the construction of the Skouries processing plant, has been delayed for over three years. According to Eldorado Gold, Hellas Gold is presently unable to complete its development plans in Halkidiki “as a result of the actions and/or inactions of the Ministry and other agencies regarding the timely issuance of routine permits and licenses, which is not only a legal responsibility, but also a contractual obligation of the Greek State”.

Construction and development activities at the Skouries Project (with over US$300 million invested to-date), will be suspended. Environmental protection works and care and maintenance activities will continue to be performed in order to safeguard the environment and the assets of the Company at site at a cost of approximately US$1 million per month.

As part of Phase 2 of the Olympias Project , the underground mine is being readied to produce ore at a mining rate of approximately 385,000 tonnes per year. As of the first quarter 2017, ore from the mine will then be treated at the Olympias mill, where refurbishment at a cost of approximately US$55 million is expected to be completed in 2016. However, refurbishment plans are dependent on the Ministry granting the required installation permit. In December 2015 , Hellas Gold submitted all necessary documentation to the Ministry required to obtain this permit, which must be granted within 60 days from the time of submission according to the Greek mining regulations. Should the Ministry fail to issue the installation permit by the end of the first quarter 2016, Hellas Gold will also be forced to suspend all construction and development activities at its Olympias Project . There are currently approximately 500 people working on the Olympias Project .

The Stratoni Mine currently has a life of mine of approximately three years based on the known proven and probable reserves. Geological potential exists to expand resources and extend mine life, however, in order to delineate additional resources, a mining development and drilling campaign would be required at an estimated cost of US$25 million over the next three years, assuming timely issuance of any permits that may be required.
Eldorado is currently evaluating the merits of implementing this programme in light of the current investment climate in Greece .

Approvals by the Ministry for the Perama Hill Project’s Environmental Impact Study and for a drilling permit required at the Sapes Project in Thrace, northeastern Greece , have been pending for over two years. The Company has decided to put both projects on care and maintenance with expenditures being kept at the minimum level required to preserve the title and rights to both projects.

SOURCE/PHOTO: Eldorado Gold Corporation