Stratoni dodges a bullet, another on the way

The Conseil d’Etat, Greece’s supreme administrative court, has rejected a local action group’s request for an immediate suspension of TVX Gold‘s (TVX-T) Stratoni silver-lead-zinc operation.

However, the operation’s future is still in doubt as a hearing over the same group’s petition of annulment is currently slated for June 7. The petition requests that the Greek government rescind the mining permit that was recently granted to allow for the continuation of mining operations at Stratoni.

Mining and milling at Stratoni were suspended late last year after an order by a local mining inspector. The restrictions were lifted on Feb. 15, 2002, when the Greek Government issued a new mining permit. TVX received the permit after a team of six professors from the National Technical University of Athens found its proposed mining method both safe and appropriate, including drilling underneath the village of Stratoniki. The permit includes limitations on the amount of explosives that can be used.

On Mar.1, the Conseil d’Etat annulled valid permits granted by the Greek Government to TVX, with respect to the development of the nearby Olympias project.

The move forced TVX to write down Olympias’ carrying value by US$200 million and record the charge in the fourth quarter of 2001. The company is considering it options to “recover its significant investment in Greece.”

TVX’s CEO Sean Harvey no long considers his company’s Greek operations part of its long-term growth strategy and has said, “a poor business environment leaves the future of the operation [Stratoni] uncertain.” Harvey adds that for Stratoni to survive it must remain profitable.

TVX’s permitting woes in Greece go all the way back to 1995, when it originally acquired the Hellenic Gold Complex, which includes the Madem Lakkos and Mavres Petres zinc-lead-silver mines and the nearby Stratoni milling complex.