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European Goldfields shares soar on Greek environmental approval

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European Goldfields (LON:EGU, TSE:EGU) shares shot up over 10 percent after the group’s 95%-owned subsidiary Hellas Gold SA got environment approval to develop its Greek assets.

Earlier today the Greek Ministry of Environment Energy and Climate Change (MOE) issued a statement confirming that Hellas Gold could now progress the mine development projects.

Hellas submitted a final Environmental Impact Study (EIS) for the projects last August and the approval was initially expected before the end of 2010.

Specifically the approval is for the continuation of operations at the Mavres Petres deposit of the Stratoni Mine; the mining and processing of ore and metallurgical treatment of the concentrate at the Olympias project; the development of mining and processing at the Skouries project; and the expansion of the port facilities at Stratoni.

More recently investors have been anticipating a positive outcome.

Last month analysts at UBS reckon pointed to the weakness of the Greek economy as a key influencing factor in the approval process.

“We remain positive on the stock as we would not expect the Greek government to reject capital investment, given the current state of the economy and when the environmental study on a local level has been approved,”  UBS analyst Ben Davis said in a note to clients last month.

Similarly Goldman Sachs analyst Eugene King was also expecting a positive result. “While the delays to the permits are frustrating for investors, we believe permits will be granted,” the analyst told clients on the 16 June 2011.

In the meantime the shares have rocketed, rising around 30 percent in the past two weeks alone. This afternoon the shares were up 85.5p, about 10.5 percent, to trade at 897.5p.

Quick facts: European Goldfields

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TSX:EGU
Market: TSX
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