Saturday March 7, 2015 Search
Weather | Athens
20o C
11o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Greece welcomes gold miners to rank first in Europe

By Thomas Biesheuvel

For three years, Steve Sharpe’s company prodded Greek officials for permission to drill for gold. Before approval was finally granted this year, European Goldfields Ltd.’s battered share price attracted a takeover bid.

“No way on earth would I go back to Greece,” said the Canadian producer’s former head of business development, who left to head a mining company across the border in the former Yugoslav Republic of Macedonia (FYROM).

Delays like Sharpe’s are less common after the economic collapse in Greece spurred a new urgency in the government to create jobs. Eldorado Gold Corp. (ELD) and Glory Resources Ltd. (GLY) are developing four mines that should turn Greece into Europe’s biggest producer of the precious metal by 2016.

Gold mining is gathering momentum after Greece began what it called a “fast-track” approvals program. The Canadian and Australian companies said their projects will add about 425,000 ounces by 2016, worth $757 million at the Oct. 5 spot price, to the 16,000 ounces the country produced in 2011.

“There’s clearly evidence that Greece has woken up to the potential of their mining industry,” said Jeremy Wrathall, chairman of Perth-based Glory Resources. “Politicians increasingly realize that a pro-mining stance is appropriate due to job creation potential.”

Greece is set to overtake Finland as the continent’s largest gold producer within four years, as regulators in Athens sign off on mines kept on hold for more than a decade by official red tape and environmental rules. Finland, which mined 220,000 ounces last year, currently ranks 40th among the world’s gold producers.

Perama Hill

Greece was Europe’s largest bauxite producer and the world’s biggest supplier or perlite, used in insulation and as a soil replacement in horticulture, in 2010, according to the U.S. Geological Survey. Gold is currently the only metal targeted for fast-track approvals.

Eldorado Gold is leading the gold inflow. The Vancouver- based company gained three mines last year through its $2.4 billion acquisition of European Goldfields, trumping a rival offer from Qatar Holding LLC, the country’s sovereign wealth fund.

Eldorado is developing European Goldfields’ Skouries and Olympias mines and the Perama Hill project that it already owned. The three sites will produce about 345,000 ounces by 2016, while Glory estimates its Sapes mine will have output of about 80,000 ounces a year.

That may be just the start. “We think Greece has the potential to be a major gold producer,” said Wrathall. “It is bizarre that Greece is virtually unexplored because of the political situation that prevailed before the crisis. Modern exploration techniques have not been used in Greece at all.”

Workforce doubled

Greece will account for about 21 percent of Eldorado’s 2016 gold production of about 1.7 million ounces, according to BMO Capital Markets research. The company targets output of 660,000 ounces this year. Eldorado’s Greek 2016 operations would generate revenue of more than $500 million a year at $1,500 an ounce, based on average forecasts compiled by Bloomberg.

Eldorado has doubled its workforce in the country to 800 since the takeover and plans to increase that to 1,500 when it’s in full production. Glory Resources says it will employ about 200 when in production. Greece reported that 3.79 million people were employed in the second quarter with 1.17 million unemployed.

Eldorado says it will pay a tax rate of 20 percent in Greece, where there is presently no royalty in place. The company said it plans to pay about 1 percent of revenue to local communities until a royalty comes into effect.

Royalty payments

Glory forecasts that it will pay about $80 million in taxes and $22 million in royalties during the current estimated life of project, based on a gold price of $1,200 an ounce. The discovery of more reserves would extend the life of the mine and the payment of royalties and taxes.

The Skouries and Olympias mines are in Central Macedonia, a region of Greece with 25.1 percent unemployment at the end of the second quarter. Eastern Macedonia and Thrace, site of the the Perama Hill and Sapes mines, had a 24 percent jobless rate. Both are higher than the national average.

Greece, which reported 10,300 mining and quarrying jobs in the second quarter, is in its fifth year of recession. The economy is forecast to contract 6.9 percent this year, the same as in 2011, according to the Athens-based Foundation for Economic and Industrial Research. Since 2008, the number of jobless has more than tripled to a record, reaching a level of 23.6 percent.

That has led to government support for mining, according to Eldorado’s Eduardo Moura, vice president and general manager for Greece, and Sharpe, now CEO of Euromax Resources Ltd. (EOX)

‘Enormous change’

In 2011 Greece implemented the “Fast Track” program to spur investment in projects that are of national importance, including gold mines. The environment ministry has speeded the issue of permits.

“We noticed an enormous change in Greece in the time we were there driven by the financial crisis,” said Sharpe. “With tourism falling and with the crisis they were collapsing into with the Euro they really had no choice.”

European Goldfields battled for more than five years to win environmental licenses to mine the Skouries and Olympias gold projects. The company’s stock plunged or surged by more than 10 percent at times as speculation or reports of permit delays or imminent approvals reached investors.

TVX Gold Inc. repeatedly clashed with local government officials and courts and eventually abandoned Greece in 2003 after its permits for Olympias were declared illegal and annulled. TVX had spent more than $250 million developing gold projects in the country.

Mining protests

TVX also operated the Stratoni mine which it closed after Greek government officials ordered the company to suspend operations because an exploration tunnel extended under a nearby town. Residents were concerned the company would start mining below their homes.

Environmentalism and local opposition remain the biggest obstacle to gold mining in Greece, according to Euromax’s Sharpe. “There is a strong groundswell of opposition to those mines going ahead. These are not brownfield industrial sites, there is a clear choice between tourism and mining,” said Sharpe. “They can just point to TVX and the mess they left. It’s a very easy case to make.”

Local villagers and mining protesters from Thessaloniki clashed with police at the Skouries site last month, according to local press reports.

Eldorado’s Moura is betting more than $3 billion that objectors to expanding gold exploration in Greece will be swayed. The company intends to invest about $1 billion in the next five years.

“I think people realize we are part of the solution, that part of the economic recovery will be due to mining,” said Moura. “I’m convinced that people who oppose our projects will come to realize that mining can be a positive force for change.”

[Bloomberg]
 

ekathimerini.com , Wednesday October 10, 2012 (10:45)  
ECB asks for cut in recognized deferred tax assets
New NPLs in Jan-Feb put at 2 billion euros
Interest alive in property investment sector
Businesses reluctant to tap financing
Greece sends proposals, but no decision due at Mondays Eurogroup
Greece submitted to Eurogroup chief Jeroen Dijsselbloem Friday an outline of seven reform proposals to form the basis for discussion at Mondays meeting of eurozone finance ministers, but th...
Samaras braces for second round of in-party strife
After a marathon meeting of New Democracys MPs where party chief Antonis Samaras sought to affirm his status as top dog inside the conservative opposition, the former prime minister is brac...
Inside News
BASKETBALL
What a difference a year makes, for Olympiakos
Just over one year after Olympiakos's drabbing at the hands of Armani Milano, the Greeks returned to northern Italy and scored a nine-point victory to stay alone on top of their Euroleague g...
TRACK & FIELD
Tsatoumas just misses out on a Euro medal
Louis Tsatoumas narrowly missed out on a medal at the European Indoor Championships in Prague on Friday, as despite faring below his usual standard he was third until up to the last few jump...
Inside Sports
COMMENTARY
PISA, Schengen, mediocrity and isolation
Greeces most serious problem is not the economic and political crisis, though it did contribute greatly to it. At the root of our evil lies our great isolation, not only from our partners i...
EDITORIAL
New blood, fresh ideas
New Democracy needs new blood and fresh ideas. Former Prime Minister and conservative chief Antonis Samaras should be credited with keeping Greece on its feet and he is one of the very few p...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. What a difference a year makes, for Olympiakos
2. Tsatoumas just misses out on a Euro medal
3. ECB asks for cut in recognized deferred tax assets
4. New NPLs in Jan-Feb put at 2 billion euros
5. Interest alive in property investment sector
6. Businesses reluctant to tap financing
more news
Today
This Week
1. BoG chief Stournaras briefs PM Tsipras on ECB's decisions on Greece [Update]
2. Cash-strapped Greece repays first part of IMF loan due in March
3. Greek and German bruisers limber up for 'rumble in the eurozone'
4. Greece must repay loans in full, bailout fund head says
5. Greek reforms list cites tackling evasion, fiscal savings, source says
6. Greece sends new letter with details on reforms, sources in Brussels say
Today
This Week
1. Greece to make international protest over Turkey reserving Aegean air space
2. The Greek tax drama
3. Varoufakis to make six reform proposals at Monday's Eurogroup
4. Tsipras reversal draws Greek sympathy as party rumblings rise
5. Greece's lenders skeptical on new bills but focus on funding needs
6. A unionist agenda
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2015, H KAΘHMEPINH All Rights Reserved.