Eldorado to acquire Sino Gold for $1.8 billion

Canada's Eldorado Gold Corporation (Eldorado) plans to acquire China focused gold miner, Sino Gold Mining Limited (Sino Gold) of Australia, for an approximate transaction value of $1.8 billion in an all-stock deal, in order to strengthen the company's exposure to China, the world's largest gold producer.

Both the companies issued a joint statement yesterday announcing the signing of a Scheme Implementation Deed under which Eldorado proposes to acquire all the issued outstanding shares of Sino Gold by offering Sino Gold shareholders 0.55 Eldorado shares for each Sino Gold share they own.

The proposed exchange ratio corresponds to A$7.24 per Sino Gold share, based upon Eldorado's closing price of C$11.96 on Toronto Stock Exchange (TSX) Tuesday, representing a premium of 21 per cent to the Sino Gold's closing price of A$5.97 on the same day in Australian Securities Exchange (ASX).

Eldorado already owns close to 58 million Sino Gold shares, representing 19.8 per cent stake in the gold miner, which it acquired in June from South Africa's Gold Fields for $282 million.

Sino Gold requested a trading halt on its shares yesterday following the buyout proposal.

Eldorado's president and CEO, Paul Wright said: ''The business combination with Sino Gold enables Eldorado to realize its vision of establishing a leading presence in China. Eldorado and Sino Gold have similar approaches and cultures based on establishing strong regional businesses through empowerment of local management, responsible operations and careful attention to maintaining long-term social license.''