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Eldorado Gold to suspend investment in Greece
Eldorado Gold Corporation recently 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 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."