What: Shares of Eldorado Gold (NYSE:EGO) are down 12% at the time of this writing, following news that the Greek government has suspended operations of two mines in Northern Greece owned by Eldorado.
So what: The impact of today's news has a lot to do with your investing time horizon. The two facilities in question here, Olympias and Skouries, are not major producers for the company today. Skouries is still under development and Olympias only accounts for 2% of the company's total production.
The reason that these moves are significant, though, is that Eldorado is investing heavily in these two mines and expects them to become major gold sources in the coming years. Once completed, the two facilities are expected to produce 200,000 ounces of gold annually for more than 25 years, which would translate to about 30% of total production for Eldorado. It may not impact the bottom line much today, but without them coming on line in the coming years, it could seriously hamper the future outlook for Eldorado.
The reason that the Greek government has suspended operations at these mines, it said, is that the two mines had violated some of the terms of the technical studies related to mine safety. This isn't anything new, though, as the company has faced local and national pressure related to the development of these mines for years.
Now what: It's hard to say what to make of this situation. Political environments are one of the most unpredictable things when it comes to evaluating a company, as a change in governmental leadership can quickly turn the prospects of a company around. For now, this shouldn't really impact the company much, and unless there are more nefarious reasons for suspending operations, it appears that these issues can be resolved. However, the longer these issues persist, the more it will impact the future of Eldorado. So investors in this stock should be very mindful of what happens with these mines in the coming years.
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