Eldorado Gold Announces Amended Investment Plans in Greece

TSX: ELD NYSE: EGO                                                                          

VANCOUVER, Sept. 11, 2017 /CNW/ – Eldorado Gold Corporation (“Eldorado” or the “Company”) today announces plans to suspend investment at its operating mines, development projects and exploration assets in Greece.

Despite repeated attempts by Eldorado and its Greek subsidiary, Hellas Gold, to engage constructively with the Greek government, the Ministry of Energy and Environment (the “Ministry”) and other government agencies, delays continue in issuing routine permits and licences for the construction and development of the Skouries and Olympias projects in Halkidiki, northern Greece. These permitting delays have negatively impacted Eldorado’s project schedules and costs, ultimately hindering the Company’s ability to effectively advance development and operation of these assets.

With the exception of a care and maintenance program and necessary environmental safeguarding costs, Eldorado and its Board of Directors have decided that under present conditions no additional investment will be made into the Kassandra Mines (Olympias, Skouries, Stratoni) in Halkidiki, the Perama Hill and Sapes projects in Thrace, and any exploration activity in the country.  Funds that were budgeted to be invested into community spending and infrastructure development will be phased out.  Similarly, tax revenues at the municipal, regional and national levels will also be affected.

Actions will be taken to place the Skouries and Olympias projects and the Stratoni mine on care and maintenance starting on September 22, 2017.  Suspension and termination of contractors and employees will be done in accordance with applicable labour regulations in Greece.  Environmental protection works and care and maintenance activities will continue in order to safeguard the environment and the assets. The Company estimates that a total of US$30 million will be spent to prepare for care and maintenance activities, with sustaining maintenance costs of approximately US$25 million annually.

The Company is also awaiting additional detail from the Greek government regarding the pending arbitration process.  Eldorado has not yet received formal notification of arbitration but is confident that any potential arbitration will again demonstrate the Company’s adherence to all applicable laws and regulations.  The Council of State (Greece’s highest court on environmental and administrative matters) has repeatedly confirmed the legitimacy of our permits and actions with 18 decisions in the Company’s favour.

The Company would re-assess its investment options in Greece upon approval and receipt of the required permits, coupled with a supportive government open to discussions surrounding the use and implementation of best available technologies.

George Burns, President and Chief Executive Officer of Eldorado Gold, commented:

“It is extremely unfortunate to find ourselves at this impasse when we should be advancing an important commercial project in partnership with Greece and adding another 1,200 jobs to our current workforce of approximately 2,400 people in Greece.  Eldorado’s investment in Greece is about building a world-class operation that can exist as a long-term partner to Greece and has the ability to promote advanced skills and training for its people and deliver well-paying jobs to sustain families and local businesses.  Of equal importance, as a commercial partner, this business can provide much-needed tax and export revenue for generations.”

“Eldorado has been a committed, responsible and patient partner to the Greek government and the people of Greece.  Since acquiring the Kassandra Mines for nearly $2 billion in 2012, Eldorado has invested an additional $1 billion in the country.  That figure would double if Eldorado were able to fully develop its Olympias, Skouries and Perama Hill assets.  However, as a result of the delay in issuing permits by the Greek government, Eldorado is unable to continue investing in the country.  We have a responsibility to our shareholders to allocate capital to projects not only with the best rates of return, but also in locations where host governments are supportive of our investment and work with us to grow a sustainable future.  As such, Eldorado cannot continue to put capital at risk without these permits and will pursue all avenues to advance its investment and contractual rights.”

“Should the Greek government wish to work within the framework of its contractual obligations with Hellas Gold, issue permits in a timely manner and support the investment, Eldorado will then be in a position to re-evaluate its investment plans in the country.”

Skouries Project (Halkidiki)

Construction and development activities at the Skouries project, with over $350 million invested to-date and a current workforce of 530 people including contractors, will be suspended effective September 22, 2017. 

Olympias Project (Halkidiki)

The refurbished Olympias processing plant is close to completing the commissioning phase and commercial production from Phase 2 was planned during the fourth quarter 2017.  Current headcount at Olympias is approximately 950 people including contractors.  Commissioning work and further development activity will be suspended effective September 22, 2017.  To date, Eldorado has invested over $400 million at Olympias. 

Stratoni Mine (Halkidiki)

The Stratoni Mine currently employs approximately 830 people including contractors and had a life of mine of approximately one year based on known proven and probable reserves at the beginning of 2017.  Geological potential exists to expand resources and extend mine life and Eldorado is currently undertaking a drilling campaign to test the lower portion of the Mavres Petres orebody.  Additional investment would be required over the next two years to further delineate additional resources. All mining operations and exploration activities will be suspended effective September 22, 2017.

Perama Hill and Sapes Projects (Thrace)

Perama Hill and Sapes are currently on care and maintenance pending approvals by the Ministry of Energy and the Environment for Perama Hill’s Environmental Impact Study and for Sapes’s drilling permit, both of which have been pending for over three years. 

Press Conference

George Burns, President & CEO of Eldorado Gold will host a press conference at the Athens Hilton Hotel today, September 11, 2017 at 11:00 AM local time (GMT+2) to discuss Eldorado’s amended investment plans in Greece.  His speech will be available shortly after the press conference at www.eldoradogold.com. 

Conference Call

George Burns will host a conference call today, September 11, 2017 at 8:00 AM ET (5:00 AM PT) to discuss Eldorado’s amended investment plans in Greece.  The call will be webcast and can be accessed at www.eldoradogold.com.

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5 economic benefits of gold mining investment in Greece

The contribution of mining to Greece’s economic growth and development has a history as old as the civilization itself. Since 1,000 B.C., Greeks have been using their mineral resources to build cities, establish trade networks and expand empires.

Revenues from the high-grade silver mines of Laurion, south of Athens in Attica, financed the emergence of Athens as a cultural, economic and military capital in the 5th Century B.C. Further north, the gold deposits of central Macedonia and Thrace funded Alexander the Great’s conquest east and the creation of an empire that, at its peak, stretched across three continents.

Today, the Olympias and Skouries mines that Eldorado Gold is developing in Halkidiki have the potential to make Greece a leading gold producer in Europe.

“The benefits these projects are estimated to generate for local communities, municipal and national governments and the Greek economy are significant ,” says Eduardo Moura, Vice President and General Manager of Eldorado’s operations in Greece. “With mine lives of approximately 25 years each, we see great potential for these projects to contribute to Greece over the long term.”

Here are five benefits Greece is already realizing from Eldorado’s investment in Halkidiki:

1. Jobs

In a country where unemployment exceeds 23%, Eldorado has created more than 2,000 new jobs in the past five years. We are proud that 87% of our employees in Greece are hired from local communities.

We now have approximately 2,400 employees and contractors, and we estimate another 3,000 direct and indirect jobs will be created when Olympias and Skouries reach full production.

Employees take a break at our Olympias project.

2. Taxes and wages

Our projects have the potential to sustain generations of Greeks in family-supporting jobs. In the past three years, we have paid approximately US$100 million in employee wages and benefits. We estimate we will pay more than US$1.5 billion in salaries and benefits over the course of our operations.

In the same timeframe, we will also generate more than US$1 billion in taxes for the Greek government.

3. Community investment

Eldorado currently contributes about €3 million annually to local infrastructure improvements, healthcare accessibility and civil services. Eldorado’s support has helped build new water supply networks, repave roads, update biological treatment plants, and rejuvenate local spaces. Eldorado also supports the Paleohori Healthcare Centre in Halkidiki. Contributions have helped modernise facilities and equipment and with other day-to-day operating costs.

We estimate Olympias and Skouries could contribute approximately US$80 million towards local community and infrastructure projects over the course of their 25 year mine lives.

Greek Orthodox Church in the village of Paleohori, Greece

4. FDI revenues

With foreign direct investment (FDI) in Greece 57% lower in 2015 versus 2014, Eldorado’s projects are a valuable source of revenue for the Country. In 2015, our investment of more than US$200 million accounted for almost 20% of FDI in Greece. (FDI in Greece in 2015 was US$1.1 billion according to the OECD).

With plans to invest over US$1 billion in the 25 years Olympias and Skouries will be in operation, Eldorado will continue to be one of the larger foreign investors in Greece.

5. Export revenues

Greek exports will also be positively impacted by the metals mined from Olympias, Skouries and Stratoni. When in full production, annual export revenues of approximately US$450 million per year (depending on metal prices) would help Greece to pay for the goods and services it currently imports. Mineral exports will also help to reduce Greece’s current trade deficit.

Stratoni processing and export facility

source: http://blog.eldoradogold.com

 

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Eldorado Reports 2015 Year-End and Fourth Quarter Financial and Operational Results

In the annual review of  Eldorado Gold, ( read the full review here) there is a detailed report on the progress of the company’s investments in Greece , as follows :

 GREECE

In order to complete the construction and development of its Kassandra mining projects in Halkidiki, northern Greece, Hellas Gold, a subsidiary of Eldorado, requires the approval of various routine permits and licenses from a number of government agencies, predominantly under the direction of the Ministry of Environment and Energy (the “Ministry”).

Hellas Gold received approval for its Environmental Impact Study in 2011. Since 2012, the Ministry and other agencies have not entirely fulfilled their permitting and licensing obligations primarily as a result of the lobbying efforts by anti-development interest groups. While Hellas Gold is presently unable to complete its full development plans in Halkidiki as a result of the actions and/or inactions of the Ministry and other agencies regarding the timely issuance of routine permits and licenses, the Company remains committed over the long-term to the projects and its numerous stakeholders within the country.

Olympias

The Olympias plant treated 589,675 tonnes of tailings at a grade of 1.99 grams per tonne during 2015. A total of 16,396 ounces of gold were produced during the year. The Olympias plant ceased treating tailings during the first quarter of 2016.

On March 22, 2016, the Company was granted the required installation permit to begin the next phase (“Phase II”) of Olympias.  During 2015 basic engineering for Phase II was completed, and full implementation began with detailed engineering and procurement of long lead items was well advanced by year end. Underground mine development and refurbishment continued at Olympias during 2015, with underground ore production for Phase II projected to begin before the end of 2016. During 2015, 659 meters of underground access were rehabilitated and 1,901 meters of new development were completed. In addition, approximately 330 meters were advanced on the main Stratoni-Olympias decline, bringing total decline advance project-to-date to 1,950 meters. Capital costs incurred in 2015 were $97 million, consisting of $72 million in construction capital and $25 million in capitalized cost for tailings retreatment.

Skouries

Engineering design work for the processing plant and surface facilities progressed during 2015, with engineering at over 93% complete by year end. During the year a substantial amount of the equipment and various steel structures required to complete construction of the plant and facilities were delivered to the Skouries site, with over 80% of the procurement scope completed by the end of the year. Work continued on construction of the process plant and road access was completed to the base of the tailings dam.

Work on the development of the Skouries underground mine design was advanced during 2015 from scoping level through prefeasibility level. The underground mine design is expected to be completed in 2016. The mine is projected to produce 4.5 million tonnes per year using shaft and ramp access with sub level open stoping along vertical development intervals of 60 meters. The open pit is expected to be used for disposal of mill tailings during the life of the underground operation. The open pit is projected to operate for a period of 8 years to be followed by 22 years of underground mining. During 2015 a total of $112.9 million was spent at Skouries, excluding capitalized exploration and capitalized interest.

On January 11, 2016, the Company announced that construction and development activities at the Skouries project were being suspended due to delays in the issuance of routine permits and licenses by the Greek permitting authorities. Environmental protection works and care and maintenance activities continued to be performed in order to safeguard the environment and the assets of the Company at site at a cost of approximately $1.0 million per month.

Stratoni

Stratoni produced 31% less concentrate than in 2014 mainly due to lower mine output. Mine output was impacted by fewer available underground production faces as well as an extended mine shutdown related to Kassandra mines’ permitting issues. Stratoni reported a loss from mining operations of $12.5 million (2014: gross profit $0.6 million). The loss included a write down of inventory to net realizable value of $3.3 million. In addition to the shortfall in production, the profitability of mining operations was impacted by weak lead and zinc prices. Capital expenditures for the year included upgrades to health, safety and environmental equipment, and upgrades to the water treatment plant.

In 2016, the Company expects to process 220,000 tonnes of ore at grades of 6.2% lead, 10.0% zinc and 163 grams per tonne silver.  Sustaining capital for the year is expected to be $10.0 million.

The Mavres Petres Mine currently has a mine life of approximately three years based on the known proven and probable reserves.  Geological potential exists to expand resources at Mavres Petres and extend mine life, however, in order to delineate additional resources, a mining development and drilling campaign would be required at an estimated cost of $25 million over the next three years, assuming timely issuance of any permits that may be required.

Perama Hill

Project engineering was completed during the year on Perama Hill and the project was placed on care and maintenance pending receipt of the Environmental Impact Assessment approval. In 2015, a total of $1.0 million was spent on the Perama Hill project.

source: eldoradogold.com.,  ellinikoschrysos.gr

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