Eldorado Gold inks revised investment contract with Greece

The Skouries project (Image courtesy of Eldorado Gold.)

Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) said Friday it had inked an amended investment agreement with the Greek government covering the miner’s operations in the north of the country.

The new contract between Eldorado’s subsidiary Hellas Gold and Greece replaces a 2004 transfer agreement between the parties, securing continued operation and further development.

Hailed as a “new beginning”, the agreement covers the Vancouver-based company’s Skouries, Olympias and Stratoni/Mavres Petres mines and facilities in the country, collectively known as the “Kassandra Mines.”

The deal covers all the miner’s projects in northern Greece, which have repeatedly stalled over licensing delays and environmental concerns

President and CEO George Burns said the agreement was mutually beneficial.

“For Eldorado, it provides investor protection mechanisms including a permitting framework similar to other large-scale foreign investment agreements in Greece.

“For the Hellenic Republic, it provides enhanced fiscal revenues, environmental benefits, and community development opportunities,” he said in a media statement.

Total investment committed has been increased to $3.1 billion from $1.4 billion. “All the three mines will remain open and will be upgraded, while a total of 3,070 of workers will be employed, up from 1,650 today,” Greek Energy Minister Kostas Skrekas said.

The deal will allow the company to finish construction at Skouries and transition the project into production.

It would also help it expand production at the Olympias gold-silver-lead-zinc mine to 650,000 tonnes a year.

The revised plan covers upgrades to the port facilities at Stratoni to allow for bulk shipment of concentrates and boost of exploration work at Mavres Petres deposit, part of the company’s Stratoni project.

Eldorado has also committed to continue studying on-site gold processing methods in order to reduce the operations’ environmental footprint.

Ironing out issues

The company’s projects in northern Greece have repeatedly stalled over licensing hold ups and environmental concerns. In 2017, the miner halted all operations in the country due to government delays in issuing permits for Skouries and Olympias, two of the company’s key assets.

While Eldorado resumed activities shortly after, progress at its projects has also been hindered by community opposition revolving around the possible environmental impacts of gold mining in a densely forested area.

The company has submitted revised proposals since, focusing on the use of best-available techniques (BAT) at the European Union level, as well as global best practices, such as dry-stack tailings.

The country’s government has responded by granting the miner some key permits.

Greece and Eldorado, the country’s biggest foreign investor, have been negotiating the new investment contract for over a year, as the state seeks higher royalties from mining projects and job creation.

The agreement will now be formally submitted to the Greek Parliament for ratification, with a vote expected to take place in an upcoming Parliamentary session.

The nation’s conservative government has vowed to attract foreign investment to boost an economy that shrank by a quarter during a decade-long financial crisis.

Eldorado also has mining, development and exploration operations in its home countryTurkey, Romania and Brazil.