Eldorado Gold to book up to $1.6 billion charge after halting work in Greece

Eldorado Gold to book up to $1.6 billion charge after halting work in Greece

Construction of a concrete batching plant at Skouries mine. (Image courtesy of Eldorado Gold)

Canada’s Eldorado Gold (TSX: ELD) (NYSE:EGO) said Monday it expects to write down the value of its assets in Greece by US$1.2 billion-US$1.6 billion, after it halted majority of its operations at one of its four projects in the European country.

The Vancouver-based company has been at odds with the Greek government for some time and earlier this month suspended work at its Skouries gold mine, one of the four projects the company has in Greece. At the time, it said it was reviewing all of its activities in the country.

The Vancouver-based company has been at odds with the Greek government for some time and earlier this month suspended work at its Skouries gold mine, one of the four projects the company has in Greece.

The miner, however, said it remains committed to having a presence in Greece and has budgeted $155 million in development spending at the Olympias project — about two-thirds of Eldorado's total development budget for 2016.

In terms of production, the gold miner forecast an output of 565,000-630,000 ounces for the year, much lower than the estimated 723,532 ounces it produced in 2015.

Eldorado unveiled its expected charge alongside preliminary operating results for 2015 and production and cost guidance for 2016. The company is the second top Canadian gold miner in less than a week to unveil plans for large impairment charges after Toronto-based Barrick Gold (NYSE, TSX:ABX) said it would book up to $3 billion in charges due to a continued slump in gold prices.

The yellow metal has fallen more than 40% since its 2011 peak, and it is currently trading at around $1,104 an ounce.

Eldorado will release it results for 2015 on March 23.