January 26, 2016 / 12:00 AM / 3 years ago

Eldorado sees up to $1.6 billion charge from Greece writedown

A general view of the construction site of a mine of Hellas Gold, a subsidiary of Canadian mining company Eldorado Gold Corp, in Skouries, in the Halkidiki region, northern Greece in this February 15, 2015 file photo. REUTERS/Alexandros Avramidis

(Reuters) - Eldorado Gold Corp (ELD.TO) said it expects to write down the value of its assets in Greece by $1.2 billion-$1.6 billion, after the Canadian miner suspended majority of mine construction and development in the European country.

The company also forecast 2016 gold production of 565,000-630,000 ounces on Monday, much lower than the estimated 723,532 ounces it produced last year.

Eldorado Gold (EGO.N) said earlier this month it would suspend construction at its Skouries project and warned that it would do the same at its Olympias project if it did not receive a permit by the end of March. It has halted development work its Perama Hill and Sapes projects but could restart at a later date.

The Vancouver-based miner had appealed to Greece’s top administrative court to annul a government decision that revoked a mining permit in northern Greece on environmental concerns.

A majority of judges of Greece’s top administrative court ruled in favor of Eldorado in November and the court annulled the government’s decision earlier this month.

Eldorado remained committed to its portfolio of Greek assets, Chief Executive Paul Wright said in a statement on Monday.

The company said it expects all-in sustaining costs to be between $940 and $980 per ounce this year, compared with an average $841 per ounce in 2015.

Average cash cost is expected to be between $585 and $620 per ounce in 2016, compared with $552 per ounce last year.

Up to Monday’s close of C$3.23, the Toronto-listed shares had fallen 47 percent since the Greece government first voiced opposition to Eldorado’s operations in January 2015.

Reporting by Manish Parashar in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila

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