Eldorado mine arbitration to start in September

Greece plans to start an arbitration process this month to settle its differences with Canada’s Eldorado Gold Corp over its gold mine development plans in northern Greece, its energy minister said on Thursday.

Greece had previously planned to start the process last month. “We have decided to resort to arbitration to stop the tug of war which has been going on for many years and have things cleared up,” Energy Minister Giorgos Stathakis told Greek state television.

Stathakis said the arbitration process will begin on September 15 and will last three months. Eldorado is developing the Skouries and Olympias projects in northern Greece, where it also operates the Stratoni mine. Skouries has been a particular flash point with the authorities, with differences lasting for years over testing methods applied to comply with environmental regulations. [Reuters]

source: ekathimerini.com
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Tensions mount between Eldorado Gold and Greek government

Greek Energy Minister Panos Skourletis says Eldorado Gold Corp. chief executive Paul Wright shorted the shares of his own company, comments the miner dismissed as “utter nonsense,” as tensions mount between the Canadian company and the government in Athens.

Eldorado shares fell 19 per cent to $3.53 on Jan. 12 on the Toronto Stock Exchange, the biggest one-day decline since December 2008, after Mr. Wright announced at a press conference in Athens that the company was suspending its investment plans for its Greek mines, blaming the attitude of the government.

“[Mr.] Wright is a CEO, he’s smart and he’s experienced; he gave a press conference knowing that the share price of the company would tumble,” Mr. Skourletis said when asked for an update on the country’s talks with Eldorado Gold in a wide-ranging interview on Thursday. “Why did he do that? In my opinion, and I told him when he was here, he played games with the share price. ‘You have told your friends that you are going to say these things at the press conference so that they could sell beforehand and then buy at lower prices.’”

The minister’s comments are the latest in a battle of words between the two sides that have failed to reach agreement over Eldorado’s plans to develop its mines in Greece. The country’s ruling Syriza party has said the company’s activities are polluting the environment. Mr. Skourletis last summer revoked a development permit for one of Eldorado’s mining sites. The decision was annulled by Greece’s top administrative court.

“I am absolutely certain that he shorts the company’s shares,” he said about Mr. Wright. “His compensation is tied, among other things, to the company’s share price, and he plays games with it.”

The minister provided no trading details to back his claim.

Mr. Skourletis’s allegations are “without basis and offensive,” Eduardo Moura, Eldorado vice-president and general manager for Greece, said in an e-mail, when asked to respond to the comment. The company’s spokeswoman in Vancouver, Krista Muhr, replying on behalf of the CEO, said the allegations are “utter nonsense.”

Elorado is not a heavily shorted stock, relative to other gold miners. In the week before Mr. Wright’s January comments in Athens, short positions in Eldorado rose to 1.9 per cent of the company’s free float, according to Markit data. That was slightly up from the 1.7-per-cent short interest on Dec. 31, which was a 52-week low.

By comparison, short interest in Barrick Gold Corp. was at 2.2 per cent of free float at the time, while Agnico Eagle Mines Ltd. was at 5.3 per cent and Iamgold Corp. at 7.6 per cent. Newmont Mining Corp. was at 0.5 per cent. (A short sale occurs when the seller borrows stock from a brokerage, and sells it, expecting the price to fall. If it does, the seller will buy stock at the lower price to replace the stock that was borrowed.)

Mr. Wright has recently been buying Eldorado shares. He added 18,569 shares at $3.83 a piece on Feb. 8, according to data compiled by Bloomberg. That brings his total to 1.17 million shares.

Eldorado closed at $4.01 a share on Tuesday on the TSX, for a market value of $2.87-billion.

Its shares have tumbled 39 per cent in the past year, the most among 19 competing miners tracked by Bloomberg, as it has gone back and forth with the government to develop its mines in Greece. Last month, the company said that a preliminary review indicates an after-tax impairment expense of $1.2-billion to $1.6-billion “primarily related to its Greek assets.”

“Eldorado’s commitment to Greece has resulted in over $700-million of investment into the country since 2012,” Mr. Moura, its vice-president, said. “The failure of the ministry on numerous fronts has forced the company to revise our investment plans; however, we remain committed to our Greek projects and the creation of jobs and long term development for the benefit of all stakeholders.”

According to Mr. Skourletis, one of the closest allies of Prime Minister Alexis Tsipras, the company “blackmails” the government and the environmental watchdog in Greece to approve permits for further development of the mines “with eyes closed,” or risk a suspension of the investment and laying off of hundreds of miners. “They are colonialists, not investors,” Mr. Skourletis said.

The company denies violating environmental legislation, citing rulings by Greece’s top administrative court. “The Council of State – the Supreme Court of Greece on environmental and administrative matters – has repeatedly confirmed the integrity of our permits, including five rulings since 2014 declaring null and void various decisions of the Ministry of Energy and Environment,” Mr. Moura said.

While Mr. Skourletis acknowledged the court’s decision, he said that “the Council of State has ruled on specific aspects of the case, it hasn’t ruled on whether it’s a good or bad investment.”

Eldorado submitted licensing applications to further develop its mines in Northern Greece in December, the minister said. Authorities are required by law to respond within three months, and they will do so by the end of March, the minister said. If the miner complies with its environmental and planning commitments, then the government won’t stop the project which was licensed by the previous government, as there’s “continuity in state decisions,” Mr. Skourletis said.

He added, however, that the company probably wants to halt its investment to Greece anyway.

“Eldorado may want to stop the investment in Greece, and they just want to put the blame on the Greek government,” he said.

Consequently, it was announced that Mr Paul Wright is to file a defamation suit against Mr Panos Skourletis.

In a statement released last Thursday, Hellas Gold noted that any compensation arising from the case would go to Greek charities.

source: theglobeandmail.com,   Nikos Chrysoloras and Paul Tugwell, Bloomberg News, ekathimerini.com

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Greece says Eldorado must resume mining operations before talks on investment can continue

Greece has asked Canadian miner Eldorado Gold Corp to reverse its decision to halt much of its Greek mining operations and safeguard jobs as a condition for the two parties to continue talks on the country’s biggest foreign investment.

The Vancouver-based miner has been in a dispute with the Greek government after Energy Minister Panos Skourletis in August revoked the company’s permit to further develop its Skouries mine in a forested area of northern Greece on environmental concerns.

The case is widely seen as a test of the leftist government’s approach to foreign investment.

On Monday Eldorado said it would suspend construction at the Skouries project, putting more than 600 jobs at risk. It also warned it would do the same at its Olympias mine, risking another 500 jobs in northern Greece, if it didn’t secure necessary permits by the end of March.

Skourletis met Eldorado Chief Executive Officer Paul Wright on Wednesday.

“I told him that a condition for any talks from now own is the company taking back its decision,” the minister said after the meeting.

“We can’t discuss while being blackmailed,” he said.

Eldorado went to Greece’s top administrative court to annul the government’s decision to revoke its mining permit and a majority of judges in the court ruled in its favor in November, but the official decision is still pending.

The government has also delayed several other licenses Eldorado needs to develop its projects on the Halkidiki peninsula.

Greece needs investment to spur its economy but the leftist government has shown a reticence to allow foreign ownership of big projects.

Eldorado has created around 2,000 direct and indirect jobs in Greece, which suffers from a jobless rate of 25 percent, the highest in the euro zone.

The Canadian company has spent more than $700 million since 2012 when it took over the project on the Halkidiki peninsula and planned to invest another $1 billion in its quest for gold, copper and zinc at the Olympias and Skouries sites.

[Reuters]

Source:ekathimerini.com, ANGELIKI KOUTANTOU, 14.01.2016

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Massive gold reserves in Greece offer unique opportunity for Eldorado Gold

It’s no secret that economicturmoil and extreme uncertainty in Greece pose major threats to the global economy. Barring several setbacks and challenges, namely from Greece’s left-wing government, Eldorado Gold Corp. offers great potential in the country, as it has given itself the ammunition to achieve success in the near future through its gold projects.

Eldorado owns three gold projects in Greece: Olympias, Skouries and Perama Hill , along with an operating zinc mine called Stratoni. The company’s strong Greek presence doesn’t end there; among the seven companies that SNL tracks with projects in the country, Eldorado comes in second with $36.39 billion in reserves and resources in-situ value. The other companies combine for $43.90 billion.

Larco SA, the company with the largest in-situ value, owns an open pit nickel mine called Larco Nickel that has 2.5 million tonnes of contained nickel reserves and resources, although only 353,000 tonnes are classified as reserves. While the reserves and resources were last reported as of 2006, SNL has estimated Larco Nickel’s production at 18,000 tonnes for 2014.

SNL Attributable Greek project reserves and resources in situ values

SNL Eldroado active mine attributable in situ values by country

Additionally, Greece accounts for the largest chunk of Eldorado’s reserves and resources in-situ value, highlighting their commitment to future production in the country.  Turkey comes in second place at $21.01 billion in reserves and resources in-situ value.

Together, the Olympias, Skouries and Perama Hill projects account for 8.5 million ounces in attributable gold reserves, followed by the  Kisladag mine in Turkey with 8.1 million ounces. However, unlike the Kisladag mine, which is expected to close in 2020, the Olympias and Skouries mines are projected to be operating until 2040 and 2043, respectively. SNL data also captures zinc and copper reserves in Greece for comparison’s sake. The 950,950 tonnes of attributable zinc reserves and 728,650 tonnes of attributable copper reserves represent a much larger but less valuable portion of Eldorado’s operations in Greece.

Eldorado’s potential in Greece has not come without several roadblocks . In March, Greece’s then-newly elected government dealt a major blow to the Skouries project when it revoked a construction permit that would allow an essential processing plant to be built. This was primarily due to environmental and tourism concerns regarding the project. However, in late April a Greek court overturned a 2013 decision by a local environmental group that also denied the company approval for the plant. Per a June news release from Eldorado, “The Company expects commissioning of the Skouries Project in the first quarter of 2017 pending anticipated near-term resolution of outstanding approval challenges.”

Clearing regulatory hurdles will allow Eldorado to move forward with the Skouries project, which together with Olympias will offer new opportunities for both the company and Greece.

Eldorado already invested $450 million between these two projects and is not backing down despite risk in the country. The company’s Investor Presentation from June highlights that it continues to employ over 2,000 people in Greece — where unemployment figures remain north of 25% — and that it will pay at least $1 billion in taxes to the Greek government over the next two decades.

SNL Eldorado attributable gold, zinc, copper reserves by project in Greece

SNL data illustrates the stark contrast of Eldorado’s attributable in-situ values for gold, zinc and copper projects, which represent some of the company’s primary commodities. Stratoni, the company’s only operating zinc mine in Greece, has an in-situ value of $164.2 million based on its total attributable reserves and a nominal zinc price of $2,161/tonne. Skouries provides the company with an in-situ value of $4.58 billion in copper reserves based on a nominal price of $6,283/tonne. Conversely, Eldorado’s three gold projects account for $9.74 billion in attributable in situ value, based on a nominal gold price of $1,150/oz.

These figures — combined with the fact that there are only 76,000 tonnes of attributable zinc reserves at Stratoni, make clear the rationale behind Eldorado’s continued commitment to its Greek gold projects despite the country’s ongoing financial crisis. Eldorado can expect to see a substantial increase in Greek gold production starting in 2016 when phase two construction at Olympias is complete and in 2017 when Skouries commences production. By 2020, Eldorado has estimated 123,420 equivalent ounces of annual gold production at Olympias alone.

 

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