Greece: Eldorado suspends work, lays off 600 after spat with government

Published by MAC on 2016-01-12
Source: Globe and Mail, Reuters

Eldorado halts work at Greek mine, citing ‘openly confrontational’ government attitude

Ian McGugan

The Globe and Mail

12 January 2016

Eldorado Gold Corp. is putting its plans to develop a mine in northern Greece on hold because of what it calls “an openly confrontational attitude” on the part of the Greek government.

The Vancouver-based company said its subsidiary, Hellas Gold, is suspending construction of the Skouries gold and copper project because the country’s Ministry of Energy and Environment has blocked the issuance of “routine” permits and licenses required for work to be completed. Eldorado has already spent about $300-million (U.S.) on the project, located on the picturesque Halkidiki peninsula in the northern part of the country.

Eldorado added that it would also halt work on its Olympias processing plant by the end of March if it does not receive a required permit by then. The Olympias project, also located in Halkidiki, employs 500 people.

Hellas Gold has been seeking approval from the Greek government for the Halkidiki developments since 2011 but has faced opposition from anti-development and environmental groups that say the projects would hurt tourism and the environment.

Last year, the government revoked or suspended some of the permits that had been previously granted. Eldorado has been locked in legal battles to overturn those judgments.

“This has been an incredibly frustrating four years,” chief executive Paul Wright said in a conference call Tuesday. He said the Skouries projects have become a “political toy” within Greece.

Eldorado has been one of the largest foreign investors in Greece, but is signalling that its patience is running out. In addition to its projects in Halkidiki, the company said it is mothballing two projects in Thrace, in northeastern Greece. The Perama Hill and Sapes projects have been waiting for various government approvals and permits for more than two years.

The decisions to suspend work have “nothing to do with metal prices,” Mr. Wright said. He said he was unwilling to proceed until he saw a clear road ahead for development of the projects and a more constructive attitude on the part of government.

He expects to meet with the Greek Minister of Energy on Wednesday and said he remains optimistic about reaching an agreement that will allow the company to proceed.

“Since 2012, we have created approximately 2,000 direct jobs in the country and invested in excess of $700-million (U.S.) towards development of the Skouries and Olympias projects – including tax payments in excess of 120-million Euros to the Greek government,” Mr. Wright said in a statement released late Monday.

“However, since the beginning of 2015, the Ministry has adopted an openly confrontational attitude towards our business and investments.”

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Eldorado Gold Corp suspends much of its mine construction in Greece as permit delays continue

Nicole Mordant

Reuters

11 January 2016

Eldorado's Greek assets make up about 30 per cent to 40 per cent of the Vancouver-based miner's net asset value, according to analysts' estimates.

Canadian miner Eldorado Gold Corp on Monday said it was suspending much of its mine construction and development in Greece after a year of confrontations with the Greek government that included permits being revoked and delayed by the state.

Eldorado said it would suspend construction at its Skouries project and warned that it would do the same at its Olympias project if it did not receive a permit by the end of March. It has halted development work its Perama Hill and Sapes projects but could restart at a later date.

It is also considering whether to halt future expansion of its Stratoni mine, which has around three years of life left.

Eldorado said in a statement that it would prefer to create more jobs and carry on with construction and development in Greece.

“However, we have a duty to all our stakeholders and the significant time and process risks created by Greece’s Ministry of Energy and Environment have left us with no choice but to reduce activities and personnel,” Eldorado Chief Executive Officer Paul Wright said.

Eldorado has created around 2,000 direct jobs in Greece, it said. It did not say how many jobs would be affected by its reduction in activities.

Eldorado’s Greek assets make up about 30 per cent to 40 per cent of the Vancouver-based miner’s net asset value, according to analysts’ estimates. Its stock is down 40 per cent in the last 12 months, largely due to its problems in Greece.

It has invested more than US$300 million in the Skouries project.

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Greece won’t negotiate with Eldorado unless it resumes operations

Cecilia Jamasmie

Mining.com

14 January 2016

Greece’s left-wing government is asking Canadian Eldorado Gold to resume halted mining operations and preserve jobs currently in the line as a condition for the two parties to continue talks on the country's biggest foreign investment.

Environment and Energy Minister, Panos Skourletis, accused the Vancouver-based firm of staging a “political show” and of “blackmail”, adding that Eldorado should understand that “Greece is a modern European democracy,” according to local paper The Greek Reporter.

Eldorado has been in a dispute with the Greek government after Skourletis revoked last year the company's permit to further develop its Skouries mine in northern Greece.

The country’s ruling Syriza party has opposed the gold project, in the Thrace region, siding with many local residents who have staged several demonstrations. They claim the mine will destroy the environment and harm the area’s tourism potential.

There have also been pro-mine protests, including one in April 2015 that attracted an estimated 4,000 supporters of the Skouries mine and forced police to shut down major roads in Athens for several hours.

Ultimatum

On Monday Eldorado said it would suspend construction at the Skouries project, putting more than 600 jobs at risk, after a year of confrontations with local authorities that included permits being revoked and delayed by the state multiple times.

The company also warned it would do the same at its Olympias mine, also in northern Greece, which would leave another 500 unemployed. The company said it would go ahead if it didn't secure necessary permits by the end of March.

Eldorado has already halted development work at its Perama Hill and Sapes projects.

The company is not the first miner to struggle in Greece. In the 1990s, the Skouries and Olympias projects belonged to TVX Gold Inc., which failed to develop them because of local opposition. Eldorado has said it believed it could do better, in part because of its experience in developing mines in both neighbouring Turkey and China.

Currently the company employs 2,000 workers in an area with an unemployment rate above 30%.

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Eldorado’s plans in Europe start to crumble

http://miningwatch.ro/en/romana-planurile-eldorado-gold-in-europa-incep-sa-se-naruie/

15 January 2016

Eldorado Gold suspends the development of the copper and gold mine in Skouries, Greece. They also announced the possible closedown of activities at Olympias (the underground mine held in the same Halkidiki region), should the Greek government not issue the permits requested. The news generated a wave of mistrust in the company’s ability to develop their mining projects in the European Union, which entailed a rapid 19% drop in its shares at the stock exchange.

This low-cost company, known for the projects developed in countries where other mining operators failed, is heavily challenged. They have to justify before investors the loss of more than 300 million dollars, the amount spent in Skouries so far. The decision to suspend activity could no longer be avoided as the issuance of a construction permit which would have allowed the completion of the processing plant is still pending. The mining project at Skouries faced from the very beginning opposition from the local community, which sees the mine as a direct threat upon water resources in Halkidiki peninsula, the third most popular tourism destination in the country.

These new financial difficulties come on top of the financial losses incurred in 2015 with the projects held in the European Union. Eldorado develops the Certej project in Romania, currently under the permitting stage, an investment at the limit of profitability. In June 2015 Eldorado Gold notified their shareholders on the impairment of the mining project at Certej as a result of the depreciation of equipment and land purchased with the Certej mine. The loss of about 250 million dollars was announced based on a reevaluation of the assets acquired, while the mining operator had to publicly admit that their market value is much lower. On the other hand the company had to pay $63.5 million related to an increase in the corporate income tax rate in Greece.

All these financial losses occur in the context of very low trading prices for copper and gold on the world market. “Considering that the good’s price on the market is significantly lower than its production cost, it will be very difficult for Eldorado to obtain funding for developing new mines – either in Greece or in Romania”, said Roxana Pencea, Campaign Manager at Mining Watch Romania.

Following Eldorado’s announcement, the Greek Minister of the environment, Panos Skourletis said: “The Government will not be blackmailed. The decisions it makes are based on the public interest and environmental protection and will be taken after studying all data.” At the same time the minister fined Hellas Gold with 1.7 million Euro for a total of 21 breaches of environmental protection regulations (for offences committed between 2012-2014)”.

“In their decision to invest in these mining projects Eldorado Gold has constantly ignored the local community and Greek laws. By forcing the implementation of this project against the will of local people, Eldorado undertook the political risk that their projects would be rejected one day. Their ease in risking investors’ money in this case should be a strong alarm signal for all those who fund the opening of new gold mines in Europe”, said Maria Kadoglou from Hellenic Mining Watch.

Notes:

Skouries is the largest of the three mining perimeters called ‘Cassandra mines’. These were transferred in 2003 from TVX Hellas SA to the Greek state, for 11 million Euros. On the same day they were sold, without any public bid, at the same price, to Hellas Gold SA. Now 95% of Hellas Gold is held by Eldorado Gold (TSX:ELD), a Canadian company with projects in Romania, Turkey, Brazil and China.
The gold mine at Certej would be the first cyanide gold mining operation opened in Romania. The mining project is held by Eldorado Gold through its subsidiary Deva Gold. The first construction permit for Certej mine was declared illegal and cancelled in court. The project footprint has 456.2 ha, currently covered by forests, pastures, agricultural land and residential areas. A significant part of the project is located in the Natura 2000 site – ROSPA 0132 Metaliferi Mountains. The mine, having an estimated annual output of 3 million tonnes, requires deforestation of 187 ha to locate two open pit mines and two tailings dams. The tailings dams, with 169 m high and 70 m high rockfill dams respectively, are an additional issue of concern as they will be located in the close vicinity of several densely populated villages.