Eldorado scores key win in row with Greece over projects
Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) has won a key battle in its ongoing row with Greece after an arbitration panel ruled in favour of the company’s plans to build a plant for treating concentrates form the Olympias and Skouries projects, in the country's north.
The panel rejected allegations that a technical study submitted by Eldorado was deficient and in violation of a transfer contract and the environmental terms of the project.
The panel’s verdict rejects the Greek government's motion that the company violated its contractual obligations by submitting a deficient plan for the Madem Lakkos metallurgy plant, Eldorado said.
Authorities had also argued Eldorado breached a 2003 contract by which its subsidiary Hellas Gold acquired the Kassandra assets — Olympias, Skouries and Stratoni — in the country’s Halkidiki region.
The company’s President and CEO, George Burns, hailed the ruling. “We believe this decision provides a foundation to allow us to advance dialogue with the Greek government in order to define a mutually-agreeable and clear path forward for our Kassandra investments,” he said in the statement.
Burns added the company expected the Greek government to fulfil its obligations under the 2003 contract, including issuing the outstanding permits for the Skouries project.
Speculation surrounding the outcome of the arbitration lifted the company’s shares on Tuesday. It closed almost 6.6% higher in Toronto to Cdn$1.14 — the stock’s best day in six months.
In September, the Vancouver-based firm threatened to halt new investments in its three key projects unless the government granted it permits and showed a willingness to engage in talks.
As a result, Eldorado was almost immediately granted several of the pending permits, with Greek authorities saying they were open to engage in talks with the company. The miner then postponed its decision to leave the country, but warned it reserved the right to place its assets on care and maintenance and to take prompt legal action to protect both the company and its assets should negotiations proved unsuccessful.
As talks with authorities stalled, the gold miner stopped in November all development and investment in its Skouries gold project located in the country’s northern region of Halkidiki.
Eldorado also initiated legal actions against the government in order to enforce and protect its rights in Greece. The measures include three lawsuits against the Ministry of Energy and Environment for failing to issue routine installation permits, which Eldorado said caused unjustifiable delays to the development of Skouries.
Last week, the company filed a new technical report for the gold project, which said it "significantly" reduces the development's environmental footprint.
For this year, the company has forecast $20 million in development capital with future care and maintenance costs at Skouries estimated at $3 million to $5 million annually.