Aug 4, 2017
Greece plans to start an arbitration process this month to settle its differences with Canada’s Eldorado Gold Corp (ELD.TO) (EGO.N) over its gold mine development plans, the energy ministry said on Thursday.
Energy Minister George Stathakis met Eldorado’s management in Athens on Wednesday and the two sides discussed the issue, the ministry said in a statement.
Shares of Eldorado dropped to a 14-year low of C$2.31 on the Toronto Stock Exchange on Thursday.
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 authorities, with differences persisting for years over testing methods applied to comply with environmental regulations.
“The ministry believes that resorting to arbitration with (Eldorado unit) Hellas Gold is the best solution to sort out all (outstanding) issues,” the statement added.
The arbitration process is expected to finish by the end of the year, a ministry spokesman told Reuters.
Greece said in June that state legal advisers had been asked to prepare for arbitration and that it wanted to ensure Hellas Gold respected its contractual obligations.
Licensing for Olympias is in the final stage, while permits for Skouriesare pending, the ministry said.
Last month, Eldorado slashed its 2017 production forecast for Olympias due to ramp-up issues, to between 20,000 and 30,000 ounces from 40,000 to 50,000 ounces. It also pushed back its production target for Skouries by one year, to 2020, because of ongoing permit delays.
“We have not yet received formal notice of arbitration and permits applied for remain unissued,” Eldorado Chief Executive Officer George Burns said in a statement on Thursday.
“We continue to evaluate all capital spending and development timelines at our projects in Greece. At this time, commissioning at Olympias and reduced development works at Skouries are continuing.”
Early this year, Eldorado shelved expansion plans for its flagship Kisladag mine in Turkey and deferred a development decision on a Brazil project, citing lower gold prices. It also operates in Romania.
As gold miners seek less geopolitical risk in a lackluster bullion market, Eldorado agreed to buy fellow Canadian mine developer Integra Gold this summer for C$590 million.