Greece deals major blow to Eldorado’s Skouries mine

Greece deals major blow to Eldorado’s Skouries mine

Skouries — Grading and flotation buildings. (Image courtesy of Eldorado Gold)

Contrary to what it said last week, Greece leftist new government has revoked a key approval that Canada’s Eldorado Gold Corp (TSX:ELD) (NYSE:EGO) needs to complete its Skouries project, the company said Monday.

The move, which may force the company to reconsider its investment plans, sent the company’s shares plummeting.

Eldorado was trading 8.6% lower to $6.59 in Toronto and almost 7.7% to $5.36 in New Yorkat 9:51 am ET.

“The company believes the decision of the ministry has no legal basis and will, if necessary, act to protect the legal rights of the company, employees and stakeholders,” the miner said in today’s statement.

Locals divided

Skouries has had locals divided since early 2011, when the Vancouver-based firm’s subsidiary Hellenic Gold received government approval to mine in the northern peninsula.

Some claim the mine, owned 95% by Eldorado, may hurt tourism and the environment, while others believe the operation is good news for Greece because 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.

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