What: Shares of Eldorado Gold Corp. (NYSE:EGO) have declined more than 19% as of noon today on the news that the company plans to suspend all mine construction and development in Greece.
So what: For months now, Eldorado Gold and the Greek government have had a stare-down over some new mines under development. In August last year, the government revoked a mining permit for Eldorado based on environmental concerns that also sent the company's shares plummeting. Since the two couldn't come to an agreement about the Skouries mine, Eldorado plans to stop all work there for the foreseeable future. Another of Eldorado's mines, Olympias, could suffer the same fate if an environmental permit is not received by March.
These two mines are such a big deal is that they were very lucrative prospects for Eldorado. Once both mines were on line, they would represent production of about 200,000 ounces of gold annually, about 30% of Eldorado's current production rate. Also, the two mines were expected to have lives of 25 years. If Eldorado were to lose both, it would put its future in jeopardy.
Now what: The most important part of that statement is the word "if." There is still a lot of uncertainty when it comes to Eldorado and its operations in Greece. It's possible that it will lose the Olympia mine as well, but its relationship with the government could also warm and Eldorado could recommence operations at Skouries. Investors looking at this as a potential buying opportunity would be best served to hold off until the dust settles and either Eldorado gets to work in Greece or the company comes up with a plan B.
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