TORONTO (Reuters) - Canada’s Eldorado Gold Corp ELD.TO EGO.N said on Thursday that it received formal notice of arbitration from Greece, a further advance in its long-running permit tussle, but not enough for the miner to reconsider a looming investment freeze.
Eldorado warned on Monday that it would halt new investment starting Sept. 22, blaming years-long permit delays and a lack of information on an arbitration process that Greece announced in June to settle differences over mine development.
The Vancouver-based company said Thursday that the arbitration notice alleges its technical study for a metallurgical plant to treat concentrates is deficient and therefore violates the project’s environmental terms.
Eldorado said it was confident its study met requirements.
Shares of the company added nearly 4 percent on Thursday to close at C$2.90 on the Toronto Stock Exchange and $2.38 on New York.
The rise builds on a 16 percent gain booked on Wednesday, after two key permits were granted for Eldorado’s Olympias operations and the Canadian government publicly pledged its support for the company.
“Despite the Greek government’s refusal to engage with Eldorado, we believe that this matter could still be resolved through good-faith negotiations. We again invite the (energy and environment) ministry to engage with us for such purpose,” Chief Executive George Burns said in a statement on Thursday.
“Upon approval and receipt of all the required permits and a government that engages in good faith with the company, we will then be in a position to re-assess our investment options in Greece.”
Eldorado is still awaiting permits for two other projects.
“We expect the next week will be a key period for Eldorado’s investments in Greece as we see how the government reacts to Eldorado’s hardline stance on future investment,” RBC Capital Markets analyst Dan Rollins said in a note to clients.
“We anticipate the start of arbitration over the coming days and appointment of an Eldorado nominee to the three-person arbitration panel.”
The arbitration relates to a plan submitted in 2014 for a metallurgical plant to treat Olympias and Skouries concentrates, Eldorado said.
“The technical study in question seems to be the same one that the ministry took issue with in 2015 over the testing of the flash smelting being done in Finland rather than Greece, although it is unclear as to whether that is the only issue being considered in the arbitration,” Scotiabank analyst Tanya Jakusconek said in a client note.
Additional reporting by Nivedita Bhattacharjee; editing by Meredith Mazzilli and G Crosse