Eldorado seeking $1.13 B in damages from Greece

Eldorado Gold’s Skouries Project in Greece. Source: Eldorado Gold Corp.

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Eldorado Gold’s Skouries Project in Greece. Source: Eldorado Gold Corp.

Eldorado Gold Corp. [ELD-TSX; EGO-NYSE] said Tuesday September 18 it is seeking $1.13 billion in damages arising from delays in the issuance of permits for its Skouries Project in Greece. That amount includes damages for out of pocket costs and loss of profits, the company said.

Eldorado said the application is a non-judicial request for payment and does not initiate legal proceedings. It has been filed with the Greek State by Eldorado’s Greek subsidiary, Hellas Gold.

“The application represents a good faith attempt to resolve the matter with the Greek State as it relates to costs incurred resulting permit delays to the Skouries project,” said Eldorado CEO George Burns.

“Eldorado has always acted in a manner consistent with finding a mutually-agreeable solution to responsibly developing Skouries,” he said. “We hope that this matter can be resolved in an amicable manner without needing to go down the route of arbitration.”

Eldorado is a gold and base metals producer with mining, development, and exploration operations in Turkey, Greece, Romania, Canada and Brazil. The shares were unchanged Tuesday at $1.13.

News of the payment application comes five months after an arbitration panel rejected the Greek State’s motion that the technical study for a metallurgy plant designed to treat concentrate from the company’s Olympias Mine and Skouries Project (once it reaches the production stage) was in breach of its transfer contract.

The transfer contract refers to the document, dated December 12, 2003, whereby Eldorado subsidiary Hellas Gold acquired a basket of Greek assets, (collectively known as the Kassandra assets, and including the Olympias and Skouries properties). The transfer document was ratified by Greek National law.

The company still needs to receive four key permits and the support of the Greek government for mining and the development of the Skouries Project in order to proceed.

The arbitration panel ruling was considered highly significant for Eldorado as its assets in Greece account for about 60% of the company’s net asset value.

They include the Olympias gold-silver-lead-zinc mine which is located in the Halkidiki Peninsula in northern Greece.  In 2018, Olympias is expected to mine and process 390,000 tonnes of ore at an average grade of 7.5 g/t gold, producing 55,000-65,000 ounces of payable gold at operating costs of US$550-US$650/oz.  Olympias also produces significant amounts of lead-silver and zinc concentrates.

Skouries is a high-grade gold-copper porphyry deposit which is also located in Halkidiki Peninsula.

According to an updated technical report, which was released on March 21, 2018, proven and probable reserves at Skouries stand at 3.8 million ounces of gold at 0.74 g/t, and 1.7 billion pounds of copper at 0.49% copper. That material is expected to support a 23-year mine life with average annual production of 140,000 ounces of gold and 67 million pounds of copper. Production would come from both open-pit and underground operations.

The estimated capital cost of developing the open pit and phase one of the Skouries underground operation is $689.2 million.

However, back in November, 2017, Eldorado announced its intention to begin moving the Skouries Project into care and maintenance as a result of ongoing permitting delays. It said development capital expenses at the site were expected to be $20 million in 2018 as the project fully transitions into care and maintenance.

Key components include a SAG mill, the size of which is unprecedented by Greek and European standards. The parts were transported on a specially designed fleet of trucks.

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