Eldorado Gold exits China with sale of remaining mines, project
(Adds analyst comment, context, background)
By Nicole Mordant
VANCOUVER, May 16 (Reuters) - Eldorado Gold Corp will exit China after 11 years, selling its stakes in two mines and one development project there to Yintai Resources Co Ltd for $600 million in cash, the Canadian miner said on Monday.
Eldorado, the largest foreign gold producer in China, has been looking for the past two years at ways to increase the market's valuation of its Chinese assets, including listing them in Hong Kong or selling them.
Eldorado said it would sell its 95 percent interest in the White Mountain mine, its 90 percent stake in the Tanjianshan mine and its 75 percent holding in the Eastern Dragon project to Shenzhen-listed Yintai, a nonferrous metals mining company that controls the Huaaobaote polymetallic mine in Inner Mongolia.
The deal came less than three weeks after Eldorado agreed to sell another Chinese asset, its Jinfeng mine, to China National Gold Group for $300 million.
Shares of Eldorado rose as much as 5 percent to C$6.65 on the Toronto Stock Exchange after the transaction was announced. They were last off their highs at C$6.44, up 11 Canadian cents.
The $600 million sale price represented "good value" for Eldorado as it was at a premium to his value for the assets of $375 million, Mackie Research analyst Barry Allan said in a note.
Eldorado, which has gold mines and projects in Turkey, Greece, Romania and Brazil, said it planned to use the proceeds from the sale to Yintai to expand its business "based on long-lived, low-cost assets."
Eldorado entered China in 2005 with the purchase of Afcan Mining, giving the company the Tanjianshan mine in northern China that began production in November 2006. In 2009 it bought Sino Gold, giving it the Jinfeng and White Mountain mines.
The transaction is expected to close in the third or fourth quarter.
BMO Capital Markets and Cutfield Freeman & Co are financial advisors to Vancouver-based Eldorado on the transaction.
(Reporting by Nicole Mordant in Vancouver; Editing by Lisa Von Ahn and Meredith Mazzilli)
