ECONOMY

Eldorado Gold says Greece blocks work at Skouries mine

Eldorado Gold Corp., battling to develop a mine in Greece in the face of government opposition, said it was blocked from completing construction of a processing plant at the site.

The company’s local unit received a formal notice from the Ministry of Productive Reconstruction, Energy and Environment revoking the approval needed to complete construction work at the Skouries plant, Vancouver-based Eldorado said Monday in a statement.

“The company believes the decision of the ministry has no legal basis and will, if necessary, act to protect the legal rights of the company, employees and stakeholders,” Eldorado said.

The Skouries mine, which has attracted opposition concerned about its environmental impact, is under construction in northern Greece. In 2013, police said they made arrests after masked attackers burned cars and machinery at the mine. The company said the project employs about 2,000 people directly or as contractors.

“The recent move by the ministry does escalate the level of risk/uncertainty,” Dan Rollins, a Toronto-based analyst at RBC Capital Markets, said Monday in a note to clients. “We believe the most rational outcome is for higher taxes and royalties given the need for the anti-austerity government to fund increased social spending.”

The notice from the newly elected Greek government indicates that it may reverse the decision once it completes a review, the company said in the statement.

Eldorado, whose other Greek assets include the operating Stratoni mine, fell 6.6 percent to C$6.74 at 10:09 a.m. in Toronto.

[Bloomberg]