European Goldfields shares dive after news reports on Greek permit delays

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Chart forEuropean Goldfields (EGU.TO)

European Goldfields’ (TSE:EGU)(LON:EGU) shares plummeted roughly 20% on Thursday after a news report from Thomson Reuters threw the company’s environmental permitting process for its Greek projects into question.

Dual-listed European Goldfields operates in Greece through its subsidiary Hellas Gold, which runs a lead and zinc mine in the northern part of the country. The company submitted what was the largest environmental impact study (EIS) ever in Greece to develop goldfields in the surrounding area. Hellas even signed letters to arrange a $300 million debt facility for the mission.

The official public consultation period for the permit ended last December, and the receipt of the permit was originally expected earlier this month.

However, Reuters cited Greek’s environment minister Tina Birbili as saying that the permit issue is “polarising”,  as the prospect of the company running multiple goldmines has met opposition from local activists. “There must definitely be more consultation,” Birbili continued.

As a result of the reports, European Goldfields’ stock price fell sharply early in the morning, but shares were suspended from trading pending a response from the company.

Later this afternoon, the company confirmed in a statement that “it has not been officially notified by the Greek authorities that there is any issue regarding the permitting process or the timing of such.”

European Goldfields went on to note that Birbili was further quoted as saying in a news briefing later today that “the environmental study is under evaluation and the Ministry will issue the terms [of the permit] once that is complete”. There was no indication when there would be a final decision on the matter.

The company said that it has also not been asked to provide any additional information regarding groundwater or groundwater pollution, as there have been concerns from locals over groundwater reserves.

It added that it even received confirmation from a Special Technical Committee of the Ministry that the final EIS “conformed with all tehcnical requirements under Greek and EU environmental legislation”.

After the suspension of the company’s shares was lifted, its stock price climbed slightly to $12.38, but then fell back again to morning levels of $11.53 as of 2:40pm EST.

Aside from its projects in Greece, European Goldfields also has a pipeline of gold and base metal assets in Romania and Turkey.

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