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Eldorado Gold Receives More Permits From Greek Authorities

- By Alberto Abaterusso

Eldorado Gold Corp. (EGO) is uptrending again.

Following the news released by the Canadian miner through its website, Eldorado Gold has informed its shareholders that it has received some of the permissions needed from the Greek government to operate and continue to invest in Greece.


The miner received two permissions from the Greek authorities Thursday. The first permission is to operate Olympias asset, one of the three Kassandra mines, and the second permission concerns the modified electromechanical installation at Kokkinolakkas facility for tailings management. Eldorado Gold has also received the "approval of the Technical Study for the Old Olympias Mine Closure and the Installation Permit for the paste plant at Olympias" as reported in its news release.

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Eldorado Gold closed Sept. 14 at $2.39 per share, up 10 cents or 4.37% on the New York Stock Exchange from the previous trading day. The gold stock is up 15% since the beginning of the week.

As I anticipated in my previous article on this issue, receiving the needed permits from the Greek authorities will work as a catalyst to the market value of Eldorado Gold. Only a couple of days ago the company informed the stock market of its intention to halt operations, explorations, developments of current mineral projects and investments in Greece because of the inactivity of the Greek government in releasing the necessary authorizations to build a word-class producing asset in Greece with all the related benefits for the country, local communities, workers and families of the company's workers.

Since Eldorado Gold is still waiting to obtain other permits from the Greek authorities consisting of "the amended Electromechanical Installation permit for the Skouries flotation plant as well as other matters including, but not limited to, the relocation of antiquities at the Skouries site," reports the company, we certainly will see more upsides in the market value of this Canadian gold stock as Eldorado Gold receives the remaining authorizations from a government that will hopefully be open to discussing the best available technologies' usage and as well as the pending arbitration process acquires in clarity. The arbitration is in accordance with the Greek State and Hellas Gold's contract provisions. Hellas Gold is the subsidiary through which Eldorado Gold operates in Greece.

Concerning the pending arbitration, Eldorado Gold received from the Greek government notice alleging that "the Technical Study for the Madem Lakkos Metallurgical Plant for treating Olympias and Skouries concentrates in the Stratoni Valley, submitted in December 2014, is deficient and thereby is in violation of the Transfer Contract and the environmental terms of the project."

Eldorado Gold says that "it is highly confident that the subject Technical Study is robust and consistent with the Transfer Contract, the Business Plan and the approved environmental terms of the project" and that the opening of any other possible dispute settlement with the Greek authorities will prove Eldorado Gold is complying with Greek laws and regulations.

George Burns, Eldorado Gold's president and CEO, commented on the news release saying that the authorizations Hellas Gold just got over the last two days represent "a positive step forward" and that Eldorado Gold is open to negotiating with the Greek authorities to find a solution to those issues that are still open.

This indicates that Eldorado Gold is fully committed to responsibly building a safe and world-class asset in Greece in respect to the Greek low and environmental regulations.

Eldorado Gold currently has a market capitalization of $1.8 billion, a price-book (P/B) ratio of 0.49, a price-sales (P/S) ratio of 4.24, an EV-EBITDA ratio of 14.58 and an EVO - the enterprise value per ounce of proven and probable gold reserves - of $106.08. According to the last metric, Eldorado Gold is one of the cheapest gold stocks at the moment, and it couldn't be otherwise because of the issue the company is experiencing in Greece. The step-by-step resolution is the real catalyst to this gold stock's market value.

Disclosure: I have no position in Eldorado Gold.

This article first appeared on GuruFocus.