Eldorado Gold Bids for Frontier Pacific

Apr.22.08 | About: Eldorado Gold (EGO)

Eldorado Gold Corp. (NYSE:EGO) stock was down just under 1% on Monday morning, after the company splashed out and made a bid for Frontier Pacific Mining Corp. [FRP/V], owner of the Perama Hill gold and silver development project in Greece.

Eldorado's bid is valued at approximately C$0.90 per share or C$148-million. On a fully diluted basis, the offer would be valued at C$157-million.

In a note to clients Credit Suisse analyst Anita Soni said:

The deal would increase Eldorado's resource base by approximately 13%, currently at 10.4 million ounces and if developed, Perama would add 130 thousand ounces per year, bringing Eldorado to the 500 thousand ounces per year mark.

Additionally, it allows Eldorado to increase its foothold in Europe and diversifies Turkish exposure as it currently owns the Kisladag mine and Efemcukuru development property in Turkey.

Ms. Soni added that based on the fully diluted deal value of C$157-million, she calculated a value of $115 per ounce of measured and indicated resources. That compares to Northgate Minerals Corp.'s (NXG) offer for Perseverence [PRSVF.PK] at $229 per ounce, and Newmont Mining's (NYSE:NEM) acquisition of Miramar (MNG) at $335 per ounce.