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Reviving mining in Northern Greece: The Skouries project financing journey

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Mining has been a part of northern Greece’s history since at least the 6th century BC, with gold and silver mines thriving under the rule of Philip II of Macedon and his son, Alexander the Great. Despite Greece not being recognized as a major mining jurisdiction today, mining activities have persisted in northern Greece since ancient times with few interruptions.

The term “Kassandra mines” originated around 1893 to describe a mining region in the Halkidiki Peninsula, where the French-Ottoman SA company obtained mining rights. Subsequently, the Greek Limited Company of Chemical Products & Fertilizers (GLC-CPF) took over these rights in 1920, further developing infrastructure and initiating production at the Olympias mine in the 1970s, which continues to operate today.

After GLC-CPF went into liquidation in 1992, the National Bank of Greece (NBG) kept the Kassandra mines operational until 1995 when the mining rights and infrastructure were sold to TVX Hellas, a subsidiary of TVX Gold. TVX embarked on expanding operations but faced regulatory challenges and adverse decisions by the Greek Council of State, leading to the abandonment of its plans by 2003. Consequently, the region experienced economic decline, prompting the Greek government to implement a special social program for former mine workers.

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In 2004, the mining licenses and assets were transferred to Hellas Gold SA, which, in 2006, obtained approval for a special business plan to develop the Olympias and Skouries mines. Eldorado Gold acquired Hellas Gold in 2012 and initiated construction of the Skouries mine in 2013. However, political shifts in Greece created hurdles for the project’s development, leading to a temporary suspension of construction in 2016.

Following negotiations, Hellas Gold and the Greek government signed an amended investment agreement in 2021, laying the groundwork for significant new investments in the Kassandra mines under a revised legal and regulatory framework.

Earlier this year, after securing project financing, Hellas Gold resumed construction of the Skouries mine, a high-grade gold-copper porphyry deposit expected to yield approximately 140,000 ounces of gold and 67 million pounds of copper annually over a 20-year lifespan. The project’s restart has generated thousands of jobs, attracted substantial private investment, and revitalized local and national economies, reminiscent of the region’s prosperous mining history.

The financing for the Skouries project, led by NBG and Piraeus Bank, comprises a €680 million ten-year term facility, with €200 million funded through the Greek Recovery & Resilience Facility (RRF) provided by the EU via the Greek State. Additionally, the European Bank for Reconstruction and Development (EBRD) contributed C$81.5 million through an equity investment in Eldorado Gold.

Notably, the Skouries project financing encountered several unique challenges, including navigating the Greek legal framework, securing funding from the RRF, and devising an appropriate contracting strategy. Through collaborative efforts and innovative solutions, these challenges were addressed, demonstrating the flexibility and adaptability of project financing in diverse contexts.

In conclusion, the Skouries project represents a significant milestone in Greece’s mining sector, showcasing the resilience and collaborative spirit of all stakeholders involved.

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