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European Goldfields receives possible takeover offers, declines further comment

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European Goldfields (TSE:EGU)(LON:EGU) confirmed Tuesday that it has been approached by third parties regarding potential corporate transactions, it said.

The gold miner said it has not received any formal offers, and declined further comment on the subject.

European Goldfield shares spiked 20.48 percent on speculations, to $12 as of 2:37 pm EDT.


The statement came following a report by Britain's Sky News, claiming that Eldorado Gold Corp (TSE:ELD)(NYSE:EGO) made an offer for the Europe-focused gold producer.

It also follows a $600 million funding agreement that European Goldfields entered into with Qatar Holding, an Arab investment fund which owns Harrods, the London-based luxury department store, as well as stakes in Sainsbury's (LON:SBRY) and the London Stock Exchange (LON:LSE).

In return, Qatar will receive warrants to purchase 40.44 million shares of the company. It also has an option to acquire another 9.37 million shares of European Goldfields, in which it already holds about 10 percent interest.

The $600 million loan will be used primarily for the development of European Goldfields' Skouries and Olympias gold projects in Greece, for which the environmental permit was recently granted, as well as general corporate purposes.

Under the terms of the deal, the facility will have an interest margin of 7% above 6-month Libor per year, and will be repayable in eight equal installments beginning in 2015, the company said.

European Goldfields is now poised to become Europe's largest primary gold producer with production of 300,000 to 400,000 ounces a year when at full capacity.

The company has three projects – Olympias and Skouries in Greece and Certej in Romania – and one producing mine: Stratoni, a lead, zinc and silver operation.

Its reserves are an impressive 10 million ounces of the precious metal, while its resource figure is an incredible 24 million ounces. It expects to generate first gold from the tailing on the Olympias site in the second quarter of 2012, and will go underground in the final quarter of 2015. 

The Skouries copper-gold mine, meanwhile, should deliver first ore in the first three months of 2014.

Quick facts: European Goldfields

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TSX:EGU
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