Greece’s Ministry of Energy has issued a notification to Eldorado Gold‘s subsidiary Hellas Gold to suspend technical studies related to the company’s Skouries and Olympias projects in Halkidiki.

Greece has ordered the suspension on the $1bn project saying that the company has violated the contract terms.

Greece’s Energy Minister Panos Skourletis was quoted by Reuters as saying: "We are recalling our approval of the technical studies, which will result in the halting of operations at Skouries and part of operations in Olympiada.

"The company has violated some terms."

Skourletis however said that the operations at the mines could resume if the company complies with the contract terms.

The suspension order has come following completion of pilot scale test work on the Olympias Phase III flash smelting process.

The ministry contends that the test work should have been done at site in Halkidiki instead it was completed at Outotec’s metallurgical and smelting facility in Finland.

According to Eldorado, the test work is a part of the technical studies pertaining to both the projects.

Eldorado said it will take legal action once a review of the ministry’s decision is completed.

"We are recalling our approval of the technical studies, which will result in the halting of operations."

Eldorado Gold chief executive officer Paul Wright said: "We are most disappointed and perplexed by this entirely inappropriate decision of the Ministry of Energy, which puts 5,000 direct and indirect jobs in Greece at risk, including the jobs of 2,000 Greek employees and contractors of Hellas Gold.

"We have received numerous favorable decisions of the Council of State – Greece’s Supreme Court on administrative and environmental matters – over the course of the last three years, which confirm the legality of our activities in Halkidiki.

Halkidiki operations and projects are expected to continue as normal, however, Hellas Gold may have to suspend all its mining and development activities in the region following the ministry’s decision.

Image: Olympias Site 2013. Photo: courtesy of Eldorado Gold Corp.