Qatar to Invest $1 Billion in European Goldfields to Start Up Greek Mines

Qatar Holdings LLC will invest about $1 billion in European Goldfields Ltd. (EGU), the London-listed company behind one of the biggest gold-mining projects in Greece.

Qatar will acquire a 10 percent stake from Ellaktor SA (ELLAKTOR) and will have an option to buy another 5 percent from the Greek construction company, Ahmad al-Sayed, the chief executive officer of Qatar Holdings told reporters in Athens today. It will also provide European Goldfields with a $600 million financing facility, he said.

The investment comes a year after Greece signed a memorandum of understanding with Qatar to attract $5 billion of investment from the Gulf state into Greece’s debt-ravaged economy. Greek Finance Minister Evangelos Venizelos in September said the economy will contract 5.5 percent in 2011, its third year of recession, and continue to shrink next year.

“Hopefully this will have a positive impact on the local economy,” al-Sayed said. By “investing in the company we are giving them the security of financing to start operating.”

The deal was signed in a ceremony in Athens today in which Greek Prime Minister George Papandreou and Qatar’s Emir Hamad Bin Khalifa Al Thani were both present. Qatari investment is a vote of trust in the Greek economy, Papandreou said after the signing.

Other recent Qatari investment in Greece includes the planned merger of EFG Eurobank Ergasias SA (EUROB) and Alpha Bank SA to form Greece’s largest bank, with Qatari-backed Paramount Services Holding Ltd. holding the biggest stake. Qatar also plans to develop the site of the former Athens airport.

Qatar Holdings is continuing to look at initiatives to create new investment opportunities in Greece, al-Sayed said, without mentioning specific projects.

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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