Eldorado Gold has decided to suspend all mining and development work in northern Greece starting next week after the leftist government on Wednesday revoked approval of technical studies for the project.
The Vancouver-based gold miner also said it will be taking legal action against the decision, including filing an injunction request before the Greek Supreme Court on administrative and environmental issues.
The company says the Greek government has objected to some test work related to the technical reports being done in Finland rather than at the mine site in Halkidiki.
Eldorado Gold chief executive Paul Wright said in a statement that the company is "most disappointed and perplexed by this entirely inappropriate decision" and that the company can't continue operations while the Ministry of Energy is "openly hostile to our activities."
The work suspension means 2,000 people employed by Eldorado and its contractors at Halkidiki will be at least temporarily out of work, the company said.
The Greek Environment Ministry accused the company of holding the workers "hostage," saying Friday that the company had an obligation to continue operations not affected by the alleged violations.
Eldorado says the government has suspended technical studies on the Skouries and Olympias gold mines it is developing in Halkidiki, but the suspension does not extend to the company's operating silver-lead-zinc Stratoni mine in the area.
The mines under development have been controversial in the country, with many fearing they will cause environmental contamination and affect tourism.
The project has divided residents with supporters and opponents staging multiple demonstrations and, at times, clashing. Eldorado has fought several legal battles as it works to develop the project.
The suspension comes as the country struggles with an acute financial crisis and a change of leadership as Prime Minister Alexis Tsipras announced his resignation on Thursday.
Eldorado says it has spent $450 million US developing the Skouries and Olympias mines since 2012.
Eldorado shares lost 14 per cent in heavy trading Friday.