Gold miners invest in Greece, potential as major gold producer

As Greece's big-fat asset strip off is once again underway, the government has fast-tracked approvals for gold production. Gold miners predict Greece could soon be the biggest European producer of gold.

The Greek government has tendered bids for natural gas and oil exploration, with analysts considering Greece's natural resources could make it the richest country in Europe. Now gold miners are turning their attention to Greece, preparing to invest heavily in gold mining. Canadian company Eldorado Gold Corp. (ELD) announced plans to invest €1.3bn to develop two sites in northern Greece, the Skouries and Olympias mines, the FT reported. It is also waiting for permits to open a mine in Thrace. Additionally, Bloomberg reported Australian company Glory Resources is also investing in gold production in Greece. Jeremy Wrathall, Chairman of Glory Resources, said: “We think Greece has the potential to be a major gold producer. It is bizarre that Greece is virtually unexplored because of the political situation that prevailed before the crisis. Modern exploration techniques have not been used in Greece at all.” Infamous Greek red tape, combined with environmental rules, deterred gold miners but now the bureaucracy has swept aside by regulators in Athens. Eldorado's projects would create 1,500 jobs; Glory's 200. Bloomberg reported "Glory forecasts that it will pay about $80 million in taxes and $22 million in royalties during the current estimated life of project, based on a gold price of $1,200 an ounce." Eldorado will pay a tax rate of 20 percent. Just one percent of revenue will be paid to local communities until a royalty is introduced. Although the gold mining projects will create much needed jobs there has been local opposition to the plans, pitting mining against tourism. The companies are prepared to invest in the hope that the opposition will be won over by the potential gains.