The company made the decision after protracted permitting and licensing delays at its Skouries and Olympias projects in the country. According to Eldorado, the delays have hindered its ability to “effectively advance development and operation of these assets.”
Eldorado will place both projects on care and maintenance starting on September 22. The company’s Stratoni mine will also be placed on care and maintenance, and Eldorado will not make any further investments in its Perama Hill and Sapes projects. Skouries, Olympias and Stratoni are located in Halkidiki, and are known as the Kassandra mines, while Perama Hill and Sapes are located in Thrace.
“It is extremely unfortunate to find ourselves at this impasse when we should be advancing an important commercial project in partnership with Greece,” said George Burns, president and CEO of Eldorado. According to Burns, the company has invested $1 billion in Greece since acquiring the Kassandra mines in 2012, and that figure would double with the development of Olympias, Skouries and Penama Hill.
“However, as a result of the delay in issuing permits by the Greek government, Eldorado is unable to continue investing in the country. We have a responsibility to our shareholders to allocate capital to projects not only with the best rates of return, but also in locations where host governments are supportive of our investment and work with us to grow a sustainable future,” he commented.
The announcement came during an annual trade fair in Thessaloniki, where the Greek prime minister typically lays out economic policy. “It might be a move of political pressure towards the government at a crucial time,” Interior Minister Panos Skourletis said of Eldorado’s statement. He added that Greece is friendly toward foreign investment, but because Eldorado is focused on mining, it is a special case.
“Such kinds of investments no longer exist in the rest of Europe. They’re not allowed due to the great environmental cost they have. So it’s wrong to connect this particular case with the general picture in the area of investments (in Greece),” he noted. The Kassandra mines have faced opposition since before Eldorado was in the picture, largely from locals concerned about their potential environmental impact.
The Greek government said at the end of August that arbitration with Eldorado would begin this month. Eldorado said in Monday’s press release that it is still awaiting formal notification of arbitration, but “is confident that any potential arbitration will again demonstrate [its] adherence to all applicable laws and regulations.”
In addition to its Greek assets, Eldorado has projects in Turkey, Romania, Brazil and Canada. Its most recent acquisition came earlier this year, when it bought Integra Gold in a deal valued at about C$590 million; through the transaction, Eldorado gained control of the Quebec-based Lamaque South gold project. The company will reassess investment options in Greece if it receives the required permits.
As of 1:40 p.m. EST on Monday, Eldorado’s share price sitting at C$2.38 on the TSX, down 4.42 percent; it was down 5.34 percent on the NYSE, trading at US$1.96.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.