(Adds stock decline, company comment, analyst comment, background on Eldorado)
By Angeliki Koutantou and Susan Taylor
ATHENS/TORONTO, June 8 (Reuters) - Greece will seek arbitration to settle its differences with Canada’s Eldorado Gold Corp over gold mine developments, the country’s energy ministry said on Thursday before the company’s stock dropped more than 6 percent.
Energy Minister George Stathakis has requested that the state’s legal advisers prepare for the arbitration process to begin, the ministry said, without specifying terms or assets.
Shares of Vancouver-based Eldorado declined 6.35 percent on the Toronto Stock Exchange to C$3.98.
Eldorado is developing the Skouries and Olympias projects in northern Greece, where it also operates the Stratoni mine. Skouries has been a particular flash point with authorities, with differences persisting for years over testing methods applied to comply with environment regulations.
“We have not received details on the arbitration other than what the Ministry has released on their website regarding their intentions,” said a spokeswoman for Eldorado, currently hosting an analyst mine tour in Greece.
“At this point nothing has changed with our development plans, outlook, etc.”
Eldorado said it will comment after receiving legal documents outlining the arbitration.
“The arbitration could in part be focused on the use of flash-smelting at the Skouries project, which has been central to some past disputes with the government,” Scotiabank analyst Tanya Jakusconek said in a note to clients.
“The market will likely perceive that there is a risk of further project delays, particularly at Skouries.”
Greece says it wants to ensure that Hellas Gold, the Eldorado unit developing the projects, respects its contractual obligations.
“The aim is to safeguard public interest by developing the region’s mineral resources in line with the existing environmental terms and standards,” the ministry said in a statement.
A ministry official told Reuters last week that the three-member arbitration panel would include government-selected judge, an Eldorado-selected judge and a third selected by the president of Greece’s Supreme Court.
Its decisions would be binding, but could be subject to further appeal.
Early this year, Eldorado shelved expansion plans for its flagship Kisladag mine in Turkey and deferred a development decision on a Brazil project, citing lower gold prices. It also operates in Romania.
As gold miners seek less geopolitical risk in a lacklustre bullion market, Eldorado agreed to buy fellow Canadian mine developer Integra Gold Corp last month for C$590 million ($437 million).
Integra’s June 5 circular says Eldorado increased its bid and reduced its break fee after two other proposals emerged. ($1 = 1.3493 Canadian dollars) (Reporting by Angeliki Koutantou in Greece and Susan Taylor in Toronto; editing by Jason Neely, Bernard Orr)