by Greg Klein | January 12, 2016
Saying a three-year building permit delay reflects a much wider problem, Eldorado Gold TSX:ELD on January 11 once again threatened to suspend its Greek projects. The company now wants a clear commitment to due process before it invests more money in the country.
Over 600 employees and contractors will lose their jobs with the suspension of the advanced-stage Skouries gold-copper project, where the company has already sunk around US$300 million. Another 500 jobs at Olympias, a gold-silver-lead-zinc past-producer also on northern Greece’s Halkidiki peninsula, depend on an installation permit arriving in Q1. As for the nearby Stratoni silver-lead-zinc mine, Eldorado “will continue to evaluate our investments.” Its other northern Greece projects remain on care and maintenance due to two-year delays over an environmental decision for Perama Hill and a drill permit for the Sapes project.
The company says its decisions result from “actions and/or inactions of the ministry and other agencies regarding the timely issuance of routine permits and licences, which is not only a legal responsibility but also a contractual obligation of the Greek state.”
Stratoni is one of Eldorado’s six operating mines, along with two gold producers in western Turkey and three more in China. An iron ore mine in Brazil remains on care and maintenance. The 95%-held Stratoni’s mine life is down to three years but the company suggested a US$25-million drill program could extend that lifespan.
A five-week suspension of all Halkidiki projects last autumn ended with a court injunction that temporarily overruled a ministry of energy and environment order that Eldorado move its metallurgical tests from Finland to Greece.
But now Eldorado says not even a court decision ordering the Skouries building permit would be “sufficient for us to go back to Skouries and hire everybody back,” president/CEO Paul Wright told a January 12 conference call. He insisted the company needs to see “this government coming to grips with the fact that this is something that’s good for society … and that they have a contractual obligation to fulfill their role. And we’re going to need to see that manifested in behaviour patterns and results from the government before we’re prepared to go back at this…. We’re no longer prepared to advance our project under the protective cover of the judiciary.”
Opposition to Eldorado’s projects have resulted in large demonstrations as well as vandalism and violence. But the company claims the support of most Halkidiki residents.
Eldorado last threatened to shut down its Greek operations in August, just as an election was called. The incumbent, anti-austerity Syriza party won enough seats to form another coalition government. Eldorado’s January 11 announcement precedes a January 13 meeting with the ministry of energy. Wright declined to say what would be discussed or whether the meeting affected the timing of his announcement.
The company promised additional capital and operating figures with its 2015 results and 2016 guidance, to be released January 25.