In issuing stalled permits to Canadian-listed miner Eldorado Gold Corp., the recently elected Greek government is brandishing business-friendly chops that may help open the door to more foreign investment.
"We're seeing a lot of activity in Greece with the new government in terms of supporting foreign direct investment," said Eldorado Gold President and CEO George Burns in an interview with S&P Global Market Intelligence. "It's a significantly better environment recently for us."
Greece's center-right New Democracy party, led by Prime Minister Kyriakos Mitsotakis, won a majority government in July campaigning on a pro-business platform that included a vow to clear the way for Eldorado Gold's suspended Skouries gold-copper project. The miner put Skouries on hold about two years ago amid permitting delays and sought €750 million in payment for damages after an arbitration panel ruled in its favor regarding the dispute.
"Getting these permits unblocks what was in our way," Burns said.
Haywood Securities analyst Kerry Smith said in a Sept. 4 note that the approvals show Mitsotakis' New Democracy Party is following through on its promises. While Eldorado Gold still needs outstanding permits before Skouries construction can resume, Smith said the recent development is a good start.
In Eldorado Gold, Smith sees an undervalued miner, in part given the potential for resolution of the permitting feud. He reiterated a "buy" rating for the company with a C$15 per share target.
Since forming government, Mitsotakis has restated plans to cut red tape and reform government. In a Sept. 7 address at the 84th Thessaloniki International Fair, he declared, "Greece is no longer Europe's black sheep."
Still, others have cast doubt over how much flexibility Mitsotakis has in pursuing policies that include tax cuts. Greece's former Prime Minister Alexis Tsipras has said fiscal constraints, stemming from a financial crisis about a decade ago, will limit Mitstotakis' ability to keep promises. "He will soon find himself faced with the dead ends and inconsistencies of his policies," The Guardian quoted Tsipras as saying.
While the latest construction-related approvals are positive for Eldorado Gold, Burns said the miner still needs additional permits to build the mine along with other reassurances. In particular, he said Eldorado Gold requires approval of a modified environmental impact assessment and wants foreign direct investor protections before it can, or will, restart major capital spending.
The government has yet to approve a modified Skouries design that Eldorado Gold submitted in 2017, replacing plans for a conventional wet slurry tailings facility with a dry stack tailings design, Burns said. The change will shrink the footprint of the project and boost water management and tailings safety, Burns said.
Skouries is designed to produce 140,000 ounces of gold and 66.9 million pounds of copper a year, on average, over a 23-year mine life, according to a March 2018 technical study.
Beyond Skouries, Eldorado Gold will consider stepping up investment so long as permits flow, Burns said. The company has a number of largely dormant exploration properties it could invest in should the government issue drill permits, he said.
The miner could also consider new assets in Greece. "Should we come up against another opportunity we will definitely be looking at it," Burns said.
