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Canada's Eldorado agrees to buy rest of Sino Gold

Canada's Eldorado agrees to buy rest of Sino Gold

Canada's Eldorado Gold Corp. said Wednesday it has agreed to swap about US$1.8 billion in stock for all remaining shares of Australia's Sino Gold Mining Ltd., one of the largest gold mining groups in China.
Eldorado said the deal has the unanimous support of Sino Gold's board, and would allow it to complete the takeover of Sino Gold begun in June when it acquired a 20 percent stake in the company from Gold Fields Ltd. in Johannesburg, South Africa.
Eldorado chief executive Paul Wright said it makes the new Eldorado "the unequivocal leader among international gold producers operating in China."
He said while a number of companies have attempted to develop operations in China, only Eldorado and Sino Gold conduct material business in the country.
Sydney-based Sino Gold is the largest international gold explorer and miner in China, with an 82 percent stake in the Jinfeng gold mine in southern China's Guizhou province, a mine that produced 151,000 ounces last year.
Vancouver-based Eldorado operates or is developing gold mines in Turkey, Greece, Brazil and China.
Under the all-stock deal, Sino Gold stockholders will receive 0.55 Eldorado shares for each share of Sino Gold that they own. The shares are worth 2 billion Canadian dollars (US$1.8 billion).
Eldorado said the offer is a 21 percent premium to Sino Gold's closing share price on the Australian Stock Exchange Tuesday.
The deal, which is still subject to regulatory and court approval in Australia, is slated to close in December. Sino Gold shareholders also need to approve the transaction.
Eldorado said the deal would create a gold producer with combined market capitalization of CA$6.4 billion (US$5.5 billion).
Wright said China is a "very mining friendly country" that is "blessed" with geological potential, a supportive government and strong mining laws.
"Clearly this business combination has everything to do with China," he said.
"China remains relatively unexplored and the future of the Chinese gold industry remains very bright."
The combined company's headquarters will remain in Vancouver with a major office based in Sydney, Australia.
Jake Klein, president and CEO of Sino Gold, said the best value creating opportunity for its shareholders is as part of leading low-cost intermediate gold company.
"We believe that this merger with Eldorado gives our shareholders exposure to such a company on attractive terms," he said.
Eldorado Gold shares closed down 58 cents or nearly 5 percent to CA$11.38 on the Toronto Stock Exchange Wednesday. It has traded between CA$12.37 and CA$3.44 in the past 52 weeks.