Status Report: Frontier Pacific Mining - Eldorado Gold

Eldorado (EGO) issued the following response Thursday to Frontier Pacific's (FRPMF.PK) offer rejection on May 27:

Eldorado notes that Frontier has failed to adequately respond to, or address, the many benefits that Frontier shareholders stand to gain from a combination with Eldorado. Eldorado also believes that no new material information concerning Frontier has been disclosed in the Directors' Circular, or related press releases and filings, that is either: (i) meaningful technical data which has been prepared by or under the supervision of a "qualified person" and is supported by a substantive and appropriate technical report; or (ii) not already publicly known and inherent in Frontier's share price. Accordingly, nothing has been provided by Frontier that would change Eldorado's view that its Offer is full and fair.

 

Regarding the Perama Hill project, Eldorado states the following:

Eldorado's discovery during the course of its due diligence in Greece of two active petitions launched by local municipalities for the annulment of the pre-approval act issued by the Greek Ministry of Public Works, Town Planning and Environment in respect of the Perama Hill project. The petitions were commenced in the Counseil d'Etat, the Supreme Administrative Court of Greece. If the petitions are granted, it could set the permitting process for Perama Hill back to where it stood in 2000 and require, among other regulatory work, the issuance of a new preliminary site plan for Perama Hill and the filing of a new environmental impact study on Perama Hill. This information confirms and underscores Eldorado's consistent view that significant permitting and regulatory work remains outstanding at Perama Hill.

 

The key here, of course, are the opposing perceptions of the Perama Hill permit process ongoing with the Greek House of Parliament. Eldorado's claim that the permit process may be compromised by two petitions seems somewhat of an exaggeration and, to be perfectly frank, a scare tactic. The key phrase above is "If the petitions are granted", which in the context of a Government permit situation is fairly unlikely. This of course is a broad assumption and based on absolutely no precedent involving mining permits and/or the Greek government.

Nevertheless, at this point it is believe the Perama Hill permits are much more likely to be granted than rejected, regardless of the petitions.

Although Eldorado's posture gives the impression that it has no intention of increasing the offer, but as discussed previously there is essentially no chance of a transaction occurring here at the current offer level.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.