April 4, 2018 / 1:48 PM / in 6 months

Eldorado Gold says Greece arbitration ruling is positive

TORONTO, April 4 (Reuters) - Canada’s Eldorado Gold Corp said on Wednesday that an arbitration panel in Greece has ruled it has a valid technical plan to build a metallurgy plant to process concentrate mined from Skouries and Olympias.

Vancouver-based Eldorado, which decided to freeze investment and suspend operations in Skouries last November following a years-long permit tussle with Greece, said it will now consider its next steps.

Greece has argued that Eldorado’s 2014 technical report on the Madem Lakkos metallurgy plant was in breach of a 2003 contract, related to its acquisition of mining assets in the Halkidiki region.

The ruling “should reduce the level of perceived political risk related to the company’s Greek build-out, which has been a key headwind for Eldorado shares the last few years,” RBC Capital Markets analyst Dan Rollins said in a note to clients.

“We expect the first test on this front will be receipt of the remaining permits/approvals for Eldorado’s Skouries project which is in the final stages of being place on care-and-maintenance following ongoing regulatory delays advancing the project forward.”

Last week, Eldorado filed an updated technical report on the Skouries development that it said reduces the project footprint by 40 percent.

The mine, which has 3.77 million ounces of gold reserves and 779 million pounds of copper, has a 21 percent after-tax internal rate of return and net present value of $925 million, the report said.

Eldorado Chief Executive George Burns said the ruling provides a foundation to advance dialogue with Greece on path forward.

“We look to the Greek state to fulfill its obligations under the transfer contract including issuing the outstanding permits for the Skouries project,” he said in a statement.

For 2018, Eldorado has forecast $20 million in development capital for Skouries with future care and maintenance costs estimated at $3 million to $5 million annually. Last year, as permitting delays slowed development in the second half, Skouries’ capital expenditure came in at $73.2 million. (Reporting by Susan Taylor; Editing by David Gregorio)

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