Canadian company set to develop Greek gold mines

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Greece encouraged to “overcome reluctance” at foreign-backed projects.

Canadian gold mining company Eldorado Gold is set to invest €1.3bn (£1.08bn) in a bid to develop gold mining sites in northern Greece, with a view to producing 350,000 ounces of gold per year.

Eldorado is hoping that Greece can “overcome a historic reluctance to allow foreign-backed mining projects”, having released details of its intentions on Monday December 19. It aims to be in full production by 2015.

The Canadian company has agreed to acquire European Goldfields, the current concession-holder for the Olympias and Skouries mines, which has been carrying out preparatory work at two mining sites.

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Paul Wright, Eldorado’s president and chief executive told the UK Financial Times: “This is an opportunity that will show whether an international mining company with high-profile institutional shareholders is able to work in Greece.”

Attempts to develop the site have been delayed for the past five years, despite planning permits being grated several years ago.

The Greek government has previously cited tourism as the reason for disallowing the development of the mining site but the Financial Times suggests that as Greece enters its fifth year of recession its politicians have had to review their policies.

The two mines would produce about 350,000 ounces of gold annually, making Greece one of Europe’s largest gold producers.

Wright is quoted “We are used to dealing with problematic jurisdictions,” and says that the final few legal issues will be smoothed out soon.

At present Eldorado operates gold mines in China and Turkey. The Greek mine projects would create 1,800 jobs in a region where unemployment is said to be close to 20%.

Eldorado is expected to fund the mine development from its own balance sheet, with an apparent $400m (£255m) cash reserve available to cover start-up costs.

“Greece has the potential to become a serious gold producer, but more exploration needs to be done – very little has happened over the past 20 years,” Wright told the Financial Times.

The announcement of Eldorado’s plans follows Scotgold Resources recently winning planning approval to develop gold mines in west Scotland, after planning was rejected due to aesthetic issues relating to the local Loch Lomand National Park. The Coconish mine near Tyndrum, Scotland, is set to produce 80,000 ounces of silver and 20,000 of gold per year, a quarter of which will be processed in the UK and braded as Scottish gold.
 

 

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