Canada’s Eldorado Gold Corp said on Wednesday it received a positive ruling from arbitrators on its planned metallurgy plant in Greece, but is awaiting mine development permits as it considers its next steps.
Eldorado, which froze investment and suspended operations at its Skouries project last November after years of permit delays, said it was evaluating the panel’s decision.
Shares in the Vancouver-based miner bounced 10 percent higher on Thursday morning before edging back to a 3.5 percent gain, at C$1.18 mid-session on the Toronto Stock Exchange.
Greece had argued that Eldorado’s 2014 technical report on the Madem Lakkos metallurgy plant, which will process Skouries and Olympias concentrate, was in breach of a 2003 contract on its acquisition of mining assets in the Halkidiki region.
The panel’s decision does not guarantee that Skouries will get the permits required for development, said Haywood Securities analyst Kerry Smith. Greek courts have ruled in the company’s favor several times, but the mining ministry then stalled permit approvals, he said.
“There’s still a lot more that has to happen before Eldorado would be in a position to say it feels comfortable going ahead and committing to spending the (approximate) $700 million to build Skouries,” he said, noting the company has already spent some $435 million on Skouries since 2012.
Eldorado said the decision provides a foundation to advance dialogue with Greece.
“We look to the Greek state to fulfill its obligations under the transfer contract including issuing the outstanding permits for the Skouries project,” Eldorado Chief Executive George Burns said in a statement.
Last week, Eldorado filed an updated technical report on Skouries that it said reduces the project footprint by 40 percent. It will take about two years to build the mine, which has 3.77 million ounces of gold reserves and 779 million pounds of copper.
Eldorado forecast 2018 development capital for Skouries at $20 million with future care and maintenance costs estimated at $3 million to $5 million annually.
Eldorado, which also filed updated technical reports for projects in Turkey and Canada last week, does not have the $1.3 billion required for those projects and Skouries, said Eight Capital analyst Craig Stanley in a note to clients.
The miner ended 2017 with $485 million in cash, $250 million undrawn on lines of credit and $600 million of debt due in late 2020, Stanley wrote.