European Goldfields granted Greek mining permit

LONDON: Greece granted European Goldfields a long-awaited permit on Friday that allows it to mine for gold in the north of the country, a move set to turn the London-based firm into the European Union's largest primary gold producer.

European Goldfields, which operates a lead and zinc mine in the Halkidiki region, submitted an environmental impact study (EIS) last year, seeking permission to mine for gold and other metals at nearby sites.

But Greece delayed approval of the study, due to local opposition and to ensure the project would have the least possible environmental impact.

Environment, Energy and Climate Change Minister George Papaconstantinou signed the approval, the ministry said.

"By approving the environmental terms of the project in Kassandra, Halkidiki, the ministry believes a new horizon is opening up for mining activities in Greece," it added.

Shares in European Goldfields were up 9.6 percent at 1446 GMT. The stock has surged 34 percent this week in London on anticipation of the news.

"It's been a long time coming," Chairman Martyn Konig told Reuters in an interview. "This was the final approval, this was the most important part of the jigsaw. Now we have to start to look to the development of the projects."

Former finance minister Papaconstantinou has only been in his job for three weeks after a reshuffle.

"Greece has gone through a huge amount of challenges over the past month or so," Konig said.

"The new minister has put a clear marker down that inward investment and job creation has to go hand in hand with environmental and social issues and I think he has made a big demonstration of that by moving as quickly as he has."

The ministry said the permit was in line with stricter environmental rules and that European Goldfields had committed to take action to boost growth in the area or to pay a sum equivalent to finance such action.

The measures will be spelled out in a joint agreement between the two parties, the ministry added.

"Within the EIS we have worked to, and way beyond, the strictest environmental rules of the EU and Greece," Konig said.

European Goldfields plans to invest about 1.3 billion euros ($1.9 billion) in the project which, in full operation, will employ about 1,800 people.

The EIS was the final approval needed for its Olympias and Skouries projects which the company hopes will, along with its Certej project in Romania, transform it into a mid-tier producer with gold output of around 400,000 ounces a year by 2014.

The company has bought the large capital items for Skouries, enabling it to avoid the long delays and cost inflation hurting the mining sector. Konig also said that Olympias, which is mainly a refurbishment, will not require large capital items.

The miner will give new resource/reserve estimates for the two projects shortly, based on higher gold price assumptions.

European Goldfields is now seeking to finalise its financing arrangements, Konig said, adding it hopes to have positive news in the next quarter on its Certej permit.

COPYRIGHT REUTERS, 2010