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Shares of Greece exposed (TSE:ELD) (NYSE:EGO) rose 1.72% defying the global trend in the face of the game of chicken being played by Greece and the European Union and the IMF on Monday.
Indeed Canada’s reached an important regulatory milestone for one of its projects in China even if the Greek crisis overshadows that success.
was awarded a mining permit for its Eastern Dragon project in China and the company should start some preliminary work in July with production possibly starting as early as the end of the first quarter 2016 according to BMO Capital Markets analyst Andrew Kaip who says the mine could have a net present value of US$296 million.
The project will sustain Eldorado’s long-term growth of even as the economic situation in Greece will overshadow the company given that some 50% of its assets come from facilities located in Greece.
But Kaip is optimistic and he maintains a "market perform" recommendation with a target price of C$6.
is Greece’s largest foreign investor and it has been targeted by Greek and EU authorities who allege the company has avoided taxes by shifting the tax burden to mailbox companies in the Netherlands. Moreover the Syriza government party has threatened to reduce Eldorado’s operations on environmental grounds.
In April Greece’s highest Greek administrative court Monday overturned a decision made in 2013 by the local authorities of northern Greece blocking Eldorado from building a processing plant in the region.
Since 2012 Eldorado has invested C$400 million in a gold mine located in the Skouries forest and wants to invest another $ 700 million by 2017 to develop the project.
The ruling strengthened Eldorado’s position with the government of Prime Minister Alexis Tsipras who had revoked the building permits in March about two months after coming to power. Indeed in the midst of the debilitating and credit crunch which has contributed to an unemployment rate of over 25% Tsipras faced protests from thousands of miners in Athens against the government's decision.
Eldorado has over 2000 people under direct employment and many contractors in Greece rely on the company contributing to the overall economy. Since 2012 the company has invested over US$450 million on the construction and development of two mines in Greece - Skouries and Olympias. Once these two mines reach commercial production Hellas Gold (Eldorado's Greek subsidiary) will become one of Greece's top exporters.
The company has committed to invest US$310 million on the development of Skouries and Olympias in 2015 which it says will generate additional jobs and taxes for Greece.
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