Aug 27, 2009
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Eldorado to buy Sino Gold for $1.8 billion

Aug 27, 2009

SYDNEY/BANGALORE (Reuters) - Canada's Eldorado Gold Corp (ELD.TO) said on Wednesday 26 August it will buy Sino Gold Mining Ltd (SGX.AX) for $2.0 billion, in an all-share transaction to give it greater exposure to China's growing gold industry.

A successful gold pour at Kisladag for Eldorado Gold Corp - Photo: www.eldoradogold.com

Shareholders in Australia and Hong Kong-listed Sino Gold will receive 0.55 Eldorado shares for each share held. The offer was worth A$7.24 per Sino Gold share, a premium of 21.3 percent, based on the companies' closing share prices on Tuesday 25 August. Sino Gold shares were halted from trade on Wednesday 26 August.

Eldorado bought a 19.9 percent stake in Sino Gold, which operates China's second-biggest gold mine, from South Africa's Gold Fields (GFIJ.J) in June, and there was talk it could launch a full takeover.

Under Australian laws, a company acquiring 20 percent stake in another is required to make a full takeover bid.

Eldorado said the merger would create a global gold producer with combined market capitalization of about C$6.4 billion.

The combined gold production of the companies is 550,000 ounces from four mines, Eldorado said, adding that this is expected to grow to 850,000 ounces by 2011 from six mines.

Sino Gold (1862.HK) reported an 11 percent rise in first-half underlying profit to A$22.2 million ($18.56 million) and said it aims to double its gold production by 2012 to more than 400,000 ounces.

It said in August that it plans to double gold production by 2012.

China has emerged as the world's top gold mining nation, surpassing South Africa in 2007.

China produced more than 9 million ounces in 2008, nearly 12 percent of world mine production and nearly double its own production of a decade ago.

The Chinese government has increased its gold reserves 75 percent to 1,054 tonnes since 2003.

Some analysts expect China to overtake India as world's largest consumer of gold in 2009.

(By Denny Thomas and Ajay Kamalakaran. Additional reporting by James Regan in Sydney; Editing by Lincoln Feast)

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