Canadian mining company suspends work at Greek site, lays off 600
Workers at a gold mine complex in Skouries, northern Greece, on Oct. 11, 2012. (Nikolas Giakoumidis / AP)
The Associated Press
Published Tuesday, January 12, 2016 7:44AM EST
Last Updated Tuesday, January 12, 2016 12:57PM EST
ATHENS, Greece -- Eldorado Gold's stock dropped almost 20 per cent Tuesday after the miner said it was rethinking activities in Greece and suspending work immediately at one of its projects because of a disagreement with the country's environment ministry.
Shares in Vancouver-based Eldorado (TSX:ELD) were down 83 cents or about 18 per cent at $3.53 around noon on the Toronto Stock Exchange after having hit $3.30 earlier in the session, close to its 52-week low of $3.26.
CEO Paul Wright said about 600 people would be laid off at Eldorado's Greek subsidiary as a result of the suspension at Skouries and a further 500 jobs at another project were also likely to be cut later in the year.
Wright accused the Greek government of using the mining project as a "political toy" but insisted the company had no plans to pull out of Greece.
"It's not dissimilar to building a kitchen and putting in the floor and furniture but not being allowed to put in a wall and roof over it. It's a bit silly," Wright told a news conference in Athens.
Environment Minister Panos Skoutletis responded that "the Canadian company is trying to change facts on the ground" in a provocative manner.
"The government will not be blackmailed. The decisions it takes will be based on public interest, environmental protection, and will be taken after studying all the facts," Skoutletis said.
Later Tuesday, the environment ministry said it was imposing a total 1.7 million euros (US$1.84 million) in fines on Hellas Gold, a Greek subsidiary of the company, for a total 21 alleged breaches of environmental safety regulations.
It said the alleged breaches were committed between 2012 and mid-2014.
Eldorado says it has invested more than US$700 million since 2012, including taxes to the Greek government, on the development of its Skouries and Olympias projects.
Elected a year ago, the left-wing government has expressed support for resident protest groups near Skouries who oppose the project on environmental grounds.
There have also been both pro-mine protests, including one in April 2015 that attracted an estimated 4,000 supporters of the Skouries mine that caused police to shut down major roads in Athens for several hours.
The company announced Monday, after North American stock markets closed, that it would be making significant changes to its investment plans in Greece, including a suspension of work at the Skouries project. It says it would spend about US$1 million per month to maintain the site's assets and safeguard the environment.
Eldorado also warned that Phase 2 of its Olympias underground mine, which is scheduled to begin producing ore by the first quarter of 2017, could also be suspended if it doesn't receive a necessary permit by the end of March. Hellas Gold currently employs 500 people at that site.
And its Stratoni Mine, which currently has about three years of known reserves, is under review "in light of the current investment climate in Greece."
The mine requires additional development and drilling that would cost US$25 million over the next three years, the company said.
Eldorado says it will provide further plans for 2016 on Jan. 25.
With files from The Canadian Press