Eldorado Gold to take legal action against Greece
Published by MAC on 2015-08-20Source: Reuters, Mining.com
The disappointing reaction of Eldorado Gold to the Greek Government's suspension of its mining operations over alledged contract violations is no surprise, given the on-going precedent set by Canadian companies (see: Gabriel Resources sues Romania for $2.5 billion damages).
What is interesting is the way in general that the parent company will take legal action on behalf of the subsidiary, but if the subsidiary is sued for wrong-doing the parent often denies involvement.
For background on the situation in Greece see: Eldorado Gold devastates Greek communities but avoids paying tax
Eldorado Gold to take legal action against Greece over mine halt
Cecilia Jamasmie
Mining.com
20 August 2015
Canada’s Eldorado Gold has threatened legal action against the Greek government after the country’s energy ministry halted production at the company’s Skouries gold and copper mine in northern Greece.
In a statement late Wednesday, the Vancouver-based firm confirmed its subsidiary Hellenic Gold had been accused of violating the terms of certain required technical studies. However, the miner says such tests were indeed conducted, but at a facility in Finland, not on-site, as the Greek authorities demand.
“We are most disappointed and perplexed by this entirely inappropriate decision of the Ministry of Energy, which puts 5,000 direct and indirect jobs in Greece at risk,” Eldorado chief executive officer, Paul Wright, said in the statement.
“ … We will once more take legal action against a decision of the Ministry in order to safeguard the rights of Eldorado, Hellas Gold, our Greek employees and the communities and stakeholders that support our projects in Halkidiki.”
The mine has been a bone of contention ever since Hellenic Gold was granted approval to mine in the northern peninsula, back in 2011.
Some claim the operation, owned 95% by Eldorado, may hurt tourism and the environment, while others believe it is good news for Greece, as it will generate new jobs and bring hundreds of millions into the struggling economy.
Test case
Skouries was the flagship project of the previous government’s foreign investment drive and, for many, remains a test case that would reveal whether Greece could protect foreign investors despite local opposition.
Eldorado has invested more than $450 million since 2012 on construction and development of the Skouries and Olympias mines in Greece, and million this year to advance construction at Skouries.
In April, one of Greece's top courts handed a key victory to the Canadian gold miner, rejecting a decision that blocked its plans to build a key processing plant at Skouries.
Eldorado shares were hit hard by the news Wednesday, trading 10% lower to $4.90 at 10:01 a.m. in Toronto, the steepest intraday fall since Jan. 30.
Eldorado stock tumbles as Greece halts activity at Canadian-run mine
Reuters
19 August 2015
ATHENS — Greece has suspended the mining operations of Canada’s Eldorado Gold in northern Greece, saying the company violated contract terms, in a setback to one of the top foreign investment projects in the country.
The $1-billion project is considered a test case for Greece’s ability to attract foreign investment to help revive its economy, but has been beset by problems due to opposition by local residents on environmental grounds.
Eldorado stock was down nearly 8 per cent early Wednesday afternoon on the Toronto Stock Exchange.
Energy Minister Panos Skourletis said on Wednesday that the project had been halted but could resume if the company fulfills contract terms. The project includes gold mines already in operation and two factories under construction that will enable the company to process gold and other minerals in Greece rather than overseas. Greece, which has just secured its third international bailout, badly needs such projects to help diversify its ailing economy.
“We are recalling our approval of the technical studies, which will result in the halting of operations at Skouries and part of operations in Olympiada,” Skourletis told reporters after meeting Prime Minister Alexis Tsipras. “The company has violated some terms.”
Vancouver-based Eldorado Gold Corp took over the project in 2012, promising to invest $1-billion over the next five years as part of a plan to eventually source up to 30 per cent of its global gold production in Greece.
An energy ministry source said the government considered Hellas Gold, Eldorado’s Greek subsidiary, violated the terms of its contract by failing to provide authorities with details on its techniques which would make gold extraction safe.
Details of methods applied in Finland were supplied instead, and were not accepted, the source said without elaborating. Eldorado was not immediately available for comment.
The decision to halt operations is the latest twist in a long-running saga over the project in Greece’s Halkidiki region. It has been dogged by controversy over the potential environmental impact and faced uncertainty after the leftist Syriza party of Prime Minister Alexis Tsipras came to power in January as the party had sided with residents during its election campaign.
In March the government revoked authorization to complete the construction of a processing plant at the Skouries site.
Residents of the area have been opposed to the project for years, fearing environmental damage. They have mounted repeated legal appeals against the development, with two such petitions rejected by Greece’s highest court earlier this month.
Greece halts operations at Canada’s Eldorado Gold mine
Cecilia Jamasmie
Mining.com
19 August 2015
Greek authorities have temporarily suspended work at one of the mines run by Canada’s Eldorado Gold in northern Greece, after determining the company had violated some terms.
According to the country’s energy and environment minister, Hellenic Gold — a subsidiary of the Vancouver-based company— infringed the terms of technical studies. The revocation of those studies approvals, Panos Skourletis added, meant work in the gold-copper Skouries mine must stop for now, Agence France Presse reports. He didn't provide further details.
The Skouries mine has had locals divided since early 2011, when Hellenic Gold was granted approval to mine in the northern peninsula.
Some claim the operation, owned 95% by Eldorado, may hurt tourism and the environment, while others believe it is good news for Greece, as it will generate new jobs and bring hundreds of millions into the struggling economy.
Truth is Skouries was the flagship project of the last government’s foreign investment drive and, for many, remains a test case that would reveal whether Greece could protect foreign investors despite local opposition.
Eldorado has invested more than $450 million since 2012 on construction and development of the Skouries and Olympias mines in Greece, and had planned to invest another $200 million this year to advance construction at Skouries.
In April, one of Greece's top courts handed a key victory to the Canadian gold miner, rejecting a decision that blocked its plans to build a key processing plant at Skouries.
A spokesman for Eldorado's subsidiary said the company had not received any formal notice from the Greek government so was not in a position to comment.
Eldorado shares were down more than 8% at $4.99 in TSX noon trading. Its NYSE-listed shares were also down over 9%.