By William MacNamara in London
Greece is poised to become one of Europe?s largest gold producers after George Papaconstantinou, environment minister, approved the long-delayed mining project of European Goldfields, the Aim-listed miner.
On Friday European Goldfields received final approval to build two large gold mines in the north of the debt-saddled country. The company lodged its permit application in April 2006 and has faced years of delays that were compounded by the country?s political uncertainties.
Martyn Konig, executive chairman, said Mr Papaconstantinou was instrumental in gaining final clearance for the mines. ?The new minister understands the growth and the jobs creation side of this business as much as the environmental side of things.?
Greece passed a ?28bn ($40bn) austerity package at the end of last month, a precondition for receiving further financial aid from the European Union. Mr Papaconstantinou, the former finance minister and a key player in earlier bail-out deals with the EU and International Monetary Fund, left that role in June following a cabinet reshuffle.
European Goldfields will now spend an initial $500m to build mines called Olympias and Skouries near Thessaloniki. The company plans to spend ?1.3bn in Greece over the life of the mining projects, Mr Konig said. The investment will provide a new source of taxable income for Greece.
It is the first company to receive modern-day licenses to mine and export gold in a country that has produced the precious metal since the age of Homer.
Shares rose 9 per cent in London to 885p, making European Goldfields the third-largest company by market value on Aim.
?This is the news we have all been waiting for,? said Louise Collinge, mining analyst at Evolution Securities. ?It has been a story of permitting delays for many years now.?
The company will produce about 350,000 ounces of gold when the two new mines enter full production in 2015, according to one gold mining analyst. European Goldfields says the figure will be 500,000 ounces by 2015, including byproduct metals such as silver and lead.
With the price of gold above $1,500 per ounce, the eastern Mediterranean has come back on the gold industry?s map. Small mining companies are stepping up exploration in Turkey, while Egypt has restarted gold mining through London-listed Centamin Egypt.
Analysts have mentioned European Goldfields as a potential takeover target but cautioned that obtaining permits was a precondition of any buyer interest.
?We are in a political environment that is more stable and gives us a framework to do business,? Mr Konig said. ?That has to be attractive to larger gold mining groups. We will be on the radar of a few groups.?
The need to gain clearance from archaeological experts was one reason for delays in obtaining the licences.
? The Financial Times Limited 2011