Eldorado Gold Corporation has announced its wholly-owned subsidiary, Hellas Gold SA has entered into an amended Investment Agreement with the Hellenic Republic to govern the further development, construction and operation of the Skouries, Olympias and Stratoni/Mavres Petres mines and facilities in northern Greece (collectively the Kassandra Mines).
The Agreement amends the 2004 Transfer Agreement between Hellas Gold SA and the Hellenic Republic, and provides a modernised legal and financial framework to allow for the advancement of Eldorado’s investment in the Kassandra Mines.
Eldorado stated: “The Agreement is mutually beneficial to Eldorado and the Hellenic Republic. For Eldorado, it provides investor protection mechanisms including a permitting framework similar to other large-scale foreign investment agreements in Greece. For the Hellenic Republic, it provides enhanced fiscal revenues, environmental benefits, and community development opportunities.”
The Agreement includes an optimised Investment Plan for the Kassandra Mines which will allow for:
- Completion of construction at Skouries and transition of the project into production;
- Expansion of Olympias to 650,000 t/y;
- Upgrades to the port facilities at Stratoni to allow for bulk shipment of concentrates;
- Further investment in exploration at Mavres Petres-Stratoni;
- Continued study of on-site gold processing methods.
The Agreement will be formally submitted to the Greek Parliament for ratification, with a vote expected to take place in an upcoming parliamentary session. The Agreement takes effect once published in the Greek Government Gazette, which follows parliamentary ratification.
“Today is a major milestone, marking a new beginning for the Kassandra Mines and for Eldorado Gold in Greece,” said George Burns, President and CEO. “This agreement is the culmination of dedicated, determined efforts and reflects a true desire from both parties to deliver a commercial framework that can realise the potential of the Kassandra Mines for all stakeholders. Both Olympias and Skouries have the potential to be tier-one assets that, when combined with the rest of our portfolio, will be transformational for Eldorado.
“We now have a modernised investment agreement that will provide a stable, commercial path for Eldorado in Greece, as well as a strong precedent for future investment in the country once ratified by the Greek Parliament. Together, we are building a positive legacy for generations to come as we continue to commit to operating responsibly and with care for local communities and the environment.”
Key benefits of the agreement
- Investor protection mechanisms, similar to other large-scale foreign investment agreements in Greece;
- A permitting framework allowing for a clear path to production and stable operations;
- Increased fiscal revenues for all levels of government, including a 10% increase in royalty rates for all contained metals;
- Enhanced opportunities for local communities, including the creation of approximately 3,000 jobs and an $80 million commitment to community projects over the life of the mines; and
- Reduced environmental footprint through the use of best-available techniques (BAT) at the EU level, as well as global best practices, such as dry-stack tailings, improved water management systems and other design and monitoring improvements.
Next steps at Skouries
The company is advancing several key pieces of technical work on the Skouries project, including additional engineering and feasibility-level updates to the capital cost estimate. An application for dry-stack tailings was submitted to the Ministry of Energy & Environment in late 2020 with approval expected once the Ministry has completed its review. The Company is continuing to evaluate financing options for Skouries. Once re-started, the company expects to complete construction in approximately 2.5 years.
Skouries is a high-grade gold-copper porphyry project that is partially constructed and currently in care and maintenance. Skouries is expected to operate for approximately 23 years based on current reserves, initially as an open pit and underground mine, followed by underground mining only.
Highlights of the project as outlined in the Technical Report for Skouries dated January 1, 2018 include:
- Proven and Probable reserves of 3.8 million ounces of gold at 0.74 g/t Au and 1.7 billion pounds of copper at 0.49% Cu, support a 23 year mine life at an average annual production of 140,000 oz of gold and 67 million pounds of copper with production from both open-pit and underground
- Estimated capital cost of $689.2 million, including $87 million in contingency, to fully develop both the open pit and Phase I of the Skouries underground, generating an estimated after-tax project NPV $925 million at a 5% discount rate, an internal rate of return of 21.2%, and a payback period of 3.4 years (at a gold price of $1,300/oz and a copper price of $2.75/lb).
- The project design specifies a dramatically-reduced environmental footprint reflecting some of the best-available control technology, and utilisation of filtered dry stack tailings.
Olympias is a gold-silver-lead-zinc mine that Eldorado refurbished and put back into production at the end of 2017. Olympias produced over 58,000 oz of gold in 2020. The company’s current guidance shows production increasing to between 65,000 and 70,000 oz of gold a year in 2023. Olympias has a mine life of 21 years based on current reserves and outlined in the most-recent Technical Report (dated December 31, 2017).